2. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
COMPANY
PROFILE
Eastman Kodak Company was
incorporated in New Jersey in 1901.
Business originally established by
George Eastman in September 1880.
Previous CEO, Chandler, diversified
Kodak into four business groups:
1. Imaging 2. Information Systems
3. Health 4. Chemical
In 1990, Kay Whitmore is the new CEO
of the Eastman Kodak Company
3. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
SWO
T
STRENGTH
• High brand awareness & recognition
• Worldwide distribution presence
• Cash rich
• Strong control in photofinishing process
• Expert in chemistry industry
• Market leader in film business
• International presence
• Diversified portfolio
• Strong R&D
4. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
SWO
T
WEAKNESS
• Growth without clear strategic direction
• Disadvantage cost structure in core business
• Information System group experiencing huge
loss over the year
• Outsource manufacturing process to
competitors
• Product cannibalized each other
• Technology oriented company
• Lack of innovation
• Failed to capture many lucrative opportunity
related to core businesses
5. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
THREATOPPORTUNTY
• Form new strategic alliance with
Walt Disney
• Growing in popularity of 16-ounce
PET bottles and plastic related
products
• High profit margin in healthcare
• New imaging technology e.g.
digital
• Exploit lithium ion battery
• Competitive threat from Fuji in core
business
• Competition in newly acquired
companies
• Change in customer preferences
• Emergence of new technology
• Price war in film and photographic
industry
• Potential litigation from Polaroid
SWO
T
6. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
FINANCIAL POSITION
•For the past years, the debt level of the company has significantly increased.
The company is considered as highly leverage.
•The company still has the ability to pay back debt very healthily because its
current ratio is around 1.2. It is still liquid. > Low risk of Bankruptcy in 1992.
•Asset utilization has been fluctuating a lot in recent years due to aggressive
acquisitions of many companies some with unstable earnings from each segment.
•The company has low net profit margin due to a very competitive industry it
enters.
•Company’s performance is affected by exchange rate.
The financial situation of the company is still healthy.
7. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
MARKETING
ANALYSIS Market leader in film business
• Continuously losing market share to Fuji
• More premium than competitor with high
quality product offering
Position to be expert in photography
Price war
No market research
• Failed to deliver products that meet
customer preference
• False believed about what consumers want
Customers are consumer market & business market
Biggest threat from Fuji
Highly competitive industry that requires R&D and
good marketing team.
8. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
MARKETING
ANALYSIS
Information system market requires
company to have technical expertise in
producing equipment at low cost and
good features.
In health market, brand’s credibility has
played crucial role in gaining customer’s
trust.
Chemical group has faced highly
competitive products that they compete
on efficiency.
Well known Kodak’s brand can help
consumer identify it products easily.
Requires heavy R&D
9. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
MANAGEMENT
CRITIQUE
Technical mindset and lack of marketing
orientation
Management culture is CONSERVATIVE results in:
• Slow response to market change
• Risk adverse
Organization culture is in transition
Weak management
• Unclear rationale of acquisitions results in
unclear strategic direction
• Unaware of the competitive threat the
company’s is facing
• Failed to manage new ventures and
acquisitions
10. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
COMPETENCIE
S
Distinctive Competency:
Complete presence in the value chain of film & photographic industry
Sustainable Distinctive Competency : Kodak’s Brand
11. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
PROBLEM
STATEMENT
How can the company solve its lack of marketing orientation
issue in order to retain its competitive advantage?
What should Kodak do to maintain its competitiveness in order
to effectively compete with existing and potential competitors
in its core business?
How can Kodak successfully manage its acquired companies in
order to become a truly conglomerate company?
How can the company ensure its existence in the current
business with changing industry trends
How can the company solve its cost disadvantage structured
in order to become more efficient?
12. How can Kodak successfully manage its acquired companies in order to
become a truly conglomerate company?
COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
SELECTED PROBLEM
STATEMENT
• Sales of the company’s core business operation decline at rate of
approximately 22% for the past 5 years
• Decline in sales is due to fierce competition from Fuji Film and missed
opportunities by the management
• To counter competition and lessen its dependence on the core business,
Kodak began diversification strategy
• Kodak is under immense threat of being taken over and dismantles, if the
company fails to successfully manage the acquired companies
13. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
ALTERNATIVES
1. Decentralized decision making authority to each division
2. Transform executive and management teams
3. Hire expert in managing conglomerate company
4. Acquire Chinon
5. Create control mechanism to motivate executives to
improve their divisions performance
14. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
ALTERNATIVES
10. Develop training program in order to become more
market oriented
6. Introduce nutritional supplement product in order to c
capture the growing opportunity in healthcare industry
7. Introduce lithium-ion battery to become a leader in
growing consumer electronic industry
8. Slowly divest Information System group
9. Implement cost cutting strategy among all divisions
in order to enhance company efficiency
15. Transform executive and
management teams
COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
RECOMMENDATIONS
Decentralized decision making
authority to each division
16. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
RECOMMENDATION 1
Rationale
Transform executive and
management teams
• Management team is filled with engineers
and scientists - technical orientation
• Neglect the marketing aspect when coming
up with new product
• Lack of marketing orientation --- missed
opportunity and losing competitiveness
• Lack expertise and industry knowledge to
manage acquired companies
17. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
RECOMMENDATION 1
Implementation
Transform executive and
management teams
• Evaluate current management from each
division
• Slowly eliminate poorly performed executives
and who don’t fit with company’s divisions
acquired
• Replace with people who have expertise and
industry knowledge
• Instill the management team with qualities of
technical and marketing skills
• Implement control mechanism
18. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
RECOMMENDATION 2
Rationale
Decentralized decision making
authority to each division
• Conservative values rather than
Entrepreneurial values
• Centralized decision making process
• Long functional lines – slow response to
changing business trend and slow to capture
new business opportunities
• Lack of communication and poor
interdivision relations between divisions
contributed to poor operating performance
19. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS
RECOMMENDATION 2
Implementation
Decentralized decision making
authority to each division
• Conduct preliminary analysis to get the
most efficient flow of information between
divisions
• Shift decision making task from centralized
manager to each division manager
• Evaluate its effectiveness in responding to
the competitive threats and changing trends
Position to be expert in photography with products ranged from film, camera to finishing process
With diversify portfolio, current Kodak’s customers exist in both consumer market and business market
Information system : very competitive industry and many large competitors like Canon and IBM
In health market: very high profit margins and opportunities on supplemental nutrition.
Chemical group: the company is the major suppliers of chemical products, though tense competition> price war, Successful Kodak’s PET
fear that the company will be taken over - undertaken many acquisitions that are unrelated to the company’s core business.
Step 1:Evaluate the current management team in each of Kodak’s four business divisions – Imaging, Chemicals, Health and Information Systems. At this stage Kodak should evaluate the current management to match each division operational and cultural needs with required skills and leadership culture.
Step 2:Begin the transformation process by slowly eliminating executives who have poor performance and don’t fit well with the company's division acquired and replace those executives with the people who have expertise and industry knowledge.
Step 3: Instill the new executive and management team with both qualities of technical and marketing skills and implement a mechanism that will monitor and evaluate the performance of new management team in each division.
Step 1:Conduct preliminary analysis regarding the most effective structure for the organization that will result in the most efficient flow of information between divisions and will encourage collaboration and interdivisions relations.
Step 2:The task of making decisions will shift from centralized group of seniors’ managers to each division managers. However, the centralized group of managers will have power to reject any decisions that they feel is against the corporate goal.
Step 3: Evaluate the new decision making process for its efficiency and effectiveness in responding to the competitive threats and changing industry trends.
