Kodak Strategy Analysis
During most of the 20th century Kodak held a dominant position in photographic film, and in 1976 had a 90% market share of photographic film sales in the United States. The company’s ubiquity was such that its tagline “Kodak moment” entered common lexicon as a personal event that demanded to be recorded for posterity. Evaluation of Kodak’s strategy and current position in digital imaging Kodak could have sold itself in the 1980s or 1990s at a higher valuation that what it now has or it could have moved faster into the digital technology, capturing a greater share of market and, perhaps, the revenue from cell phone cameras.During 1980s and 1990s, Kodak believed that: * the digital revolution was not going to happen (genuine uncertainty) * any strategy shift will allow cannibalization of their current film offerings * current customers don’t demand it (shifts in customer base) and * there will be margin erosion In 1993 Kodak was struggling for survival owing to lethargic matrix management, huge debt, few new products, shaky morale and cut-throat competition.
Efforts were in progress from Fisher to eliminate debt, fast track products, reinvent corporate culture, increase profitability and introduce organizational changes.Kodak was late to the game in their shift to digital and has been playing catch-up.
Even though they embraced digital imaging from early 1980s and stopped marketing film cameras in 2004, the company could not compete and retain the market share they dominated for such a long time. After consumers stopped buying the film most of the Kodak’s key resources and capabilities became useless, the global distribution lost its value and people started using PCs instead of photo finishing labs.Kodak’s competitiveness as a vertically integrated company diminished and the business model of making money on film did not fit with digital photography. The supplier network was rendered obsolete, knowledge assets in chemistry and manufacturing became obsolete. No management strategy would have changed that. The digital revenues could not compensate for the loss in film revenue; instead digital camera prices declined rapidly reducing marginal profits. Consumer electronics giants such as Sony, Nikon, and HP developed resource bases that were much better than that of Kodak.
The company has strong brand and global presence, was technologically superior with engineers and scientists, invested millions in research, but the threat from Fuji led to downsizing. Kodak entered emerging markets such as china and kept delivering new digital cameras, digital consumer products and services. It recognized the threat and pioneered digital imaging and pushed it even though it rendered film obsolete. Kodak tried to embrace, develop and commercialize digital imaging. The advent of mobile cameras further crippled the recovery for Kodak.Dynamics of competition has changed in the digital world. It is no longer precision mechanics but electronics which is in demand now.
Digital printing business had moderate success, but more and more people are printing at home and this success may not last long. Online picture sharing services is facing stiff completion from Google, Flickr and others. Disruptive innovation has destroyed the value of Kodak’s resources, its global position and its capabilities. The very fact that Kodak is still doing business shows that Kodak is a success story.Its competitors during the film era – Agfa, Konica, Polaroid have all disappeared. I believe that Kodak had a success story since it survived the significant innovative disruption that happened in film photography. What made Kodak survive? Kodak then began a strategy shift.
Previously Kodak did everything in-house, but CEO Antonio Perez shut down film factories and eliminated 27,000 jobs as it outsourced its manufacturing. Perez invested heavily in digital technologies and new services that capitalized on its technology innovation to boost profit margins.