Market Kodak
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In 1888, George Eastman had a vision of simplifying photography so that everyone could enjoy it. He popularized the slogan “You push the button; we do the rest” (Aventail). Mr. Eastmans vision was to take the cumbersome and complex technology; understood only by a few, and reinvent it for use by the general public. Kodak has achieved a great amount of success over the years as it continues to strive to create the finest quality in still picture images. The company believes that there will always be a basic human need to stop and record time, so that we can reflect back on certain special moments. A fortune 100 company, Eastman Kodak has been the dominant force in the world of pictures for nearly a century. The company earned over $14 billion in sales in 1999, which represented a five percent increase over 1998 (Aventail). For closer look at Kodaks past five-year history and competition refer to the table and graphs on the following page (page 2). The companys main focus is to provide products and services in all fields that deal with photographic imaging. These include: film, cameras, x-rays, professional photography, motion pictures, printing, copiers, publishing, business and digital imaging (Aventail). Eastman Kodak currently employs more than 80,000 people in more than 150 countries (Schwab).
The days of growing fat off the high margin, silver-halide film that is packaged in the ubiquitous yellow boxes has quickly become a faded piece of history (Dobbin). The high profile business that turned Kodak into one of the most recognizable name brands in the world has spent the last ten years struggling for survival. To make matters worse, with the technological advance in the popularity of film-less digital cameras quickly becoming the norm, the company must do all it can to stay even with its main competitor in the global arena, the Japanese company Fuji. Fuji has attained a high market share not only in Japan, but in the United States as well. Kodak is developing a digital film processing station to try and compete with its rival. This feature allows customers to manipulate their pictures and print them out almost immediately. Kodak will try and implement this new product globally in the near future but is currently facing various growing more immediate problems. Fuji is plain and simply, out competing Kodak. Kodak took Fiji to court claiming that they were using unfair practices to gain a competitive advantage (Fujifilm). The court struck down Kodaks accusations against Fuji, which left Kodak looking for another plan to tackle its rival in the global marketplace.
Currently, Fuji is getting twice as many sales per employee than Kodak can and additionally retains a bigger market share that continues to climb at a steady rate in almost every country that the companies compete in (Dobbin). With the yen dropping in value against the United States dollar, this provides the Japanese company with just another advantage in the ongoing fight for market share. If Kodak wants to compete globally, it will have to come up with some serious long-term and short-term strategies in both its product development and its marketing department. These concepts will need to be cutting-edge to be able to catch the eye and hold the attention of the fickle technological innovative consumer. Kodak is not the same company that it was back in the seventies. Technology is the driving force in the world today. Technology continues to change at a rapid pace and if you do not keep up with the changes you most certainly face the inevitable prospects of some serious problems. The company cannot live with its head in the clouds and rely on its past successes. The time is long overdue to look ahead and anticipate the changes that are looming just over the horizon and plan for them. Without any hindsight on what will be the new “hot item” that the consumer will be looking for, the company will be doomed to failure.
Kodak needs to constantly keep tabs on Fuji. What is the company doing right? How are they managing to stay profitable and maintain their large chunk of the market share? Instead of listening to how Wall Street thinks the company should be run, Kodaks CEO George Fisher must not lose focus on what needs to be done to bring the company back to the lofty position that it experienced in the past. Get the company moving in the right direction; win back the faith and trust of the consumers worldwide and the company will again be profitable making the folks on Wall Street happy. A major issue that the company will have to address is the constant downsizing and laying off of employees year after year. From 1983 to 1997, Kodak has cut or laid off more than 67,000 positions (Illinois). This is definitely a large derailing factor in the companys future success. How many quality employees will the company be able to recruit in the near future knowing your job could be cut at any moment because the company has a lack of know-how and direction for the immediate future? Without a qualified and technically savvy workforce how can you expect to make quality products for your customers? Most everything today is going digital. If Kodak can concentrate its attention in this area and continue to innovate, it will be able to follow the leads of major camera companies like Cannon and Minolta (Aventail).
In the fall of 1998, Kodak entered into the digital camera marketplace. They supplied the digital camera market with its Digital Photograph Kit. The consumer received a digital camera, easy to use software packages and paper to make quality prints. In addition, the kit provided a photo CD, which contained pictures that could be loaded onto a computer. Sales of this product proved to be disappointing as consumers were slow to move away from their familiar traditional cameras. The new digital cameras also required the user to be connected to a computer. In an effort to bridge the gap between traditional and digital cameras, Kodak teamed up with Intel (Illinois). Kodak intended to use this collaborative agreement to communicate the simplicity of digital imaging that resulted from using Kodak picture CD. In moving to “digitization” the ability to convert traditional film to a digital format through the standard photographic processing method, consumers were able to receive their prints and a CD containing digital images. This new technology extended Kodak well beyond its initial core competencies in film and cameras. Few consumers connected the Kodak brand with computers and computer technology.
In the mid-1990s Fuji began aggressively pursuing the U.S. market, primary through price-cutting. This price war cut deeply into Kodaks margins at the same time that Kodak was investing heavily in digital imaging and digitization. This resulted in a lot of red numbers for the company,