Kodak's strategy- BRACU (collected)

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The famous "Eastman Kodak" have reached at the edge. They are facing greatest challenge to date.

The famous "Eastman Kodak" have reached at the edge. They are facing greatest challenge to date.

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  • 1. Case Presentation Kodak’s Strategy 1
  • 2. Group 4 Name ID Md. Asif-Al-Noor 10364040 Monira Mahsharan 10264014 Marshal Richard 10364057 2
  • 3. Agenda • Company Overview • Product line • External Factors Analysis – Porter’s 5 Forces Model – Industry Driving Forces – Key Success Factors – Strategic Group Mapping • Internal Factors Analysis – Core Competences – SWOT Analysis – Value Chain • Kodak Strategy – Based on Case – Why Kodak’s 4-year Strategy failed – Reasons for Failure – Based on Current Situation • Recommendations • Conclusion 3
  • 4. Company Overview 4
  • 5. Company Overview…. Cont… 1879: George Eastman invented the dry-plate process and filed patent for a machine that coated dry photographic plates 1880: George Eastman established the Eastman Dry Plate Company, at Rochester N.Y. 1884: Introduced paper roll film 1889: Invented perforated celluloid film 1900: The Brownie box camera went on the market with a price of $1 1935: Introduced color film 1960: Brought the Instamatic camera to the market 1970: Major sales growth for Kodak. Concentrates on film and basic cameras 5
  • 6. Company Overview…. Cont… 1980: Fuji emerges as a serious competitor 1994: Kodak abandoned its non-imaging health-related businesses began to invest in digital imaging products for medical practice 1997: Kodak was a high-cost manufacturer with a growing portfolio of digital products which was losing hundreds of millions of dollars annually 1997: Restructuring that eliminated 19,000 jobs and cut more than $1 billion from annual costs 1999: Kodak entered the digital radiography market 6
  • 7. Company Overview…. Cont… 2001: Kodak is pushing aggressively into China, an important growth market 2003: Carp unveiled the plan to invest $3 billion in the next three years in digital products by cutting dividends by 72% - to 50 cents per share 2004: Kodak announced that it would stop selling traditional film cameras in Europe and North America, and cut up to 15,000 jobs January 2005: The Kodak EasyShare-One Digital Camera, the world’s first Wi-Fi consumer digital camera capable of sending pictures by email, was unveiled 7
  • 8. Company Overview…. Cont… December 2010: Standard & Poor's removed Kodak from its S&P 500 index January 19, 2012: Kodak filed for Chapter 11 Bankruptcy Protection The company's stock was delisted from NYSE and moved to OTC exchange. Following the news it ended the day trading down 35% at $0.36 a share February 9, 2012: Kodak announces it will exit the digital image capture business 8
  • 9. Brand Logo Evolution 9
  • 10. 10 Kodak Product • Four distinct sub-product – Digital cameras – Home printing – Online services – Retail kiosks and mini-labs
  • 11. External Factors Analysis 11
  • 12. Porter’s 5 Forces Model 12 To aid firms in analyzing competitive forces in an industry environment. Question: How competitive forces affect industry attractiveness
  • 13. Porter’s 5 Forces: Digital Camera Threat of Substitute Products Threat of New Entrants Threat of New Entrants Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Bargaining Power of Suppliers -- o - -- o - -- Low Moderate High High Competition, technology driven, move fast, numbers of players, lower price strategy. Few substitutions, i.e. Mobile phone, Camcorder, Traditional cameras Technology, know how, economies of scales, and high investment Numbers of digital cameras ,trend of digital market suppliers worldwide, China base Numbers of digital cameras ,trend of digital market suppliers worldwide, China base 13
  • 14. Porter’s 5 Force in terms of photographic industry Buyers bargaining power • Have more choice • Switching cost low Suppliers Bargaining Power is • Out side the country from global market 14 Strong bargaining power moderate to weak
  • 15. Porter’s 5 Forces… Cont.. Potential New Entrants • Huge capital & specialized • Not relay on any company Substitutes Products Low switching cost Low price of substitutes High bargaining power Strong entry barriers Strong threats 15
  • 16. Porter’s 5 Forces… Cont.. Rivalry among Competitor • Intense competition among the rivals 16 Strong Competition
  • 17. Industry Analysis through 5-forces: Answer Question 1 Strong entry barriers Buyer in strong position Moderate to weak position of Supplier Huge threat from substitute Strong rivals Apparently Unattractive Industry 17
  • 18. Industry Driving Forces: Answer Question No2 • Rapid decline in demand for traditional photography equipment in developed economies • Rapid growth in demand for digital cameras in developed economies • Steady decline in demand for film and photo processing • Development of new imaging technology such as photo-enabled wireless telephones and high-megapixel digital cameras 18
  • 19. Key Success Factors • Technological capabilities • Rapid design-to-market cycle times • Reputation for producing high-quality consumer electronics • Reputation for producing high-quality optical devices (cameras, binoculars, microscopes, medical equipment) • Distribution network that includes large electronics chains and local camera retailers • Involvement in multiple segments of the industry value chain—camera production and sales, printing supplies, professional photo processing 19
  • 20. Strategic Group mapping Leica Sony Samsung Olympus Nikon Kodak Cannon High Price Low Price Market share Firm % Market Share Average Price Canon 40% $220.00 Sony 15% $300.00 Samsung 10% $260.00 Nikon 10% $250.00 High Market Share Low Market Share P r i c e 20
  • 21. Internal Factors Analysis 21
  • 22. Kodak in terms of core competences 22 Not Rare Not valuable Not Non substitutabl e Not costly to imitate Not Core Competence s Not able to get competitiv e advantage
  • 23. SWOT Analysis Strength • Existing Brand equity •Distribution Presence •Competitive capabilities • Market advantage •Acquire many strategically aligned companies Weakness Rapidly decreasing sales revenue •EBITDA are very low •Work force has been cut off • Corporate Culture Opportunity • Digital Image • New alliances •On line photo sharing and storage Threat •Competition in traditional • Demise of silver halide technology •Photo capable mobile phone •Price sensitive •Economic health & terrorism 23
  • 24. Value chain pre digital age 24 Image Capture Processing Projection Printing Storage - Film Camera - Video Camera - Retailer Processing - All Retail Stores - Reprints
  • 25. Value Chain post digital age 25 -Digital Camera -Digital Cameras Software -Hard Disk - Video Camera -Scanner at home -Floppy Disk/CD -Online (email) -Digital mini-labs -Removable Storage - Kiosks at retailers -Online Services Image Capture Projection Digitalization Storage Transmission Printing Manipulation Retrieval
  • 26. Kodak Strategy based on case In 2003, CEO Daniel carp revealed 4 pillars Strategy: 1. Managing the traditional film business 2. Leading in distributed output 3. Growing the digital capture business; and 4. Expanding digital imaging services 26
  • 27. Kodak Strategy….Cont.. 1. Managing the Traditional Film Business: • Slow exit strategy from film business • Looking forward to digital technology 27
  • 28. Kodak Strategy….Cont.. 2. Leading The Distributed Output • Now a day digital photography much easer to view & share photo(i.e. integrated display on camera & sharing through electronic mail or kiosks etc.) and its affecting the photography industries. • Then Kodak is able to bring fewer profit through digital technology (i.e. digital print) instead of traditional printing. 28
  • 29. Kodak Strategy….Cont.. 3. Growing the digital capture business • Profit much lower in digital photography than traditional photography • Success in this part of the business is dramatically opposed to the traditional photography business . 29
  • 30. Kodak Strategy….Cont.. 4.Expanding digital imaging service 30 • Strategy take place by expanding product & services. For example Kiosks that could print image directly from mobile phone. • In case of expanding service/online service Kodak acquiring companies like Ofodo to boost Kodak Easy Share Gallery.
  • 31. Low Cost Provider Strategy • Introduced cheapest Inkjet printers Cost $150-$300;Almost 50% less then competitor, i.e. HP, Epson, Lexmark. • Ink Cartridges sold $9.99 Black & $14.99 color. Competitor avg. price $ 30. • Encourage more people to print at home. Photo value pack will allows to print at home for 10 cent, 60% cheaper then HP system 31
  • 32. Reason For Failure 1.Core competency became core rigidities 2.Lack of market research 3.Late mover of digital photography 4. Innovation and transformation Failure 5.Unwillingness to change 32
  • 33. Current Strategy Current CEO Antonio Perez adopt new strategy, such as_ 1. Outsourcing Manufacturing 2. Huge invest in digital technology; 3. Spent hundreds of millions of dollars to build up a high-margin printer ink business to replace shriveling film sales 4. Aggressive patent litigation in order to generate revenue; 5. Expand current brand licensing program 33
  • 34. Recommendation • Discontinue unprofitable products • Change middle to high-level management • Launch new and innovative product • Move to another business segment such as movie and entertainment • Focus on high potential products – Kiosks and mini-lab – Online services such as photo printing and sharing • Emphasize on niche market i.e. medical market and professional 34
  • 35. Conclusion • Great example of strategic failure. • Different models and theoretical concepts were applied to identify key factors that have led the company from where it was to where it stands today. • Lessons we can learn: • External environment can be deceiving • Change happens • Greatest strength can be weakness • Innovation is not the perfect solution • Its not all over till its over 35
  • 36. Thank you 36
  • 37. Any Question 37