Kodak strategy
Download as PPTX, PDF34 likes90,100 views
Kodak's 2004 strategy under CEO Daniel Carp had four pillars: 1) Slowly exiting the traditional film business, 2) Leading in distributed digital output like printing, 3) Growing the digital camera business, and 4) Expanding digital imaging services. However, this strategy failed because Kodak's core competencies in film became rigidities as the market shifted digital, they lacked market research, and were late entrants to digital photography. Under new CEO Antonio Perez, Kodak's current strategy focuses on outsourcing manufacturing, investing heavily in digital technologies, building a printer ink business, aggressive patent litigation, and brand licensing.
Kodak strategy
- 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. Kodak Product • Four distinct sub-product – Digital cameras – Home printing – Online services – Retail kiosks and mini-labs 10
- 11. External Factors Analysis 11
- 12. Porter’s 5 Forces Model Question: How competitive forces affect industry attractiveness To aid firms in analyzing competitive forces in an industry environment. 12
- 13. Porter’s 5 Forces: Digital Camera High Numbers of digital Technology,technolo Threat of Threat of New Numbers of digital Competition, know cameras ,trend of how, economies of gy driven, digital market New Entrants cameras ,trend of scales, and high digital market suppliers numbers move fast, investmentChina Entrants suppliers worldwide, of players, lower price worldwide, China base strategy. o base Bargaining Rivalry Among Bargaining Power of Competing Firms in Power of Suppliers Industry Buyers -- - - - Few substitutions, i.e. Threat of Mobile Substitute phone, Camcorder, Products o - -- Traditional Low Moderate High 13 cameras
- 14. Porter’s 5 Force in terms of photographic industry Buyers bargaining power • Have more choice • Switching cost low Strong bargaining power Suppliers Bargaining Power is • Out side the country from global market moderate to weak 14
- 15. Porter’s 5 Forces… Cont.. Potential New Entrants • Huge capital & specialized • Not relay on any company Strong entry barriers Substitutes Products Low switching cost Low price of substitutes High bargaining power Strong threats 15
- 16. Porter’s 5 Forces… Cont.. Rivalry among Competitor • Intense competition among the rivals Strong Competition 16
- 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 Firm % Market Share Average Price Canon 40% $220.00 Sony 15% $300.00 Samsung 10% $260.00 Nikon 10% $250.00 High Price Leica Sony P Samsung r i Olympus Nikon c e Kodak Cannon Low Price Low Market High Market Share Share Market share 20
- 21. Internal Factors Analysis 21
- 22. Kodak in terms of core competences Not Core Competence Not s valuable Not able to get Not Rare competitiv e advantage Not costly to imitate Not Non substitutabl e 22
- 23. SWOT Analysis Strength Weakness • Existing Brand equity Rapidly decreasing sales •Distribution Presence revenue •Competitive capabilities •EBITDA are very low • Market advantage •Acquire many strategically •Work force has been cut aligned companies off • Corporate Culture Opportunity Threat • Digital Image •Competition in traditional • New alliances • Demise of silver halide •On line photo sharing and technology storage •Photo capable mobile phone •Price sensitive •Economic health & terrorism 23
- 24. Value chain pre digital age Storage Image Capture Processing Printing - Film Camera - Retailer - Video Camera Processing - All Retail Stores - Reprints Projection 24
- 25. Value Chain post digital age Retrieval Image Digitalization Storage Capture Transmission -Digital Camera -Digital Cameras Software -Hard Disk - Video Camera -Scanner at home -Floppy Disk/CD -Online (email) -Digital mini-labs -Removable Storage Printing - Kiosks at retailers -Online Services Manipulation Projection 25
- 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 • 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. 30
- 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