Top Banner
Case Presentation Kodak’s Strategy 1
37

Kodak's strategy- BRACU (collected)

Aug 23, 2014

Download

Saima Akhanda

The famous "Eastman Kodak" have reached at the edge. They are facing greatest challenge to date.
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Kodak's strategy- BRACU (collected)

1

Case Presentation Kodak’s Strategy

Page 2: Kodak's strategy- BRACU (collected)

2

Group 4

Name IDMd. Asif-Al-Noor 10364040Monira Mahsharan 10264014Marshal Richard 10364057

Page 3: Kodak's strategy- BRACU (collected)

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

Page 4: Kodak's strategy- BRACU (collected)

4

Company Overview

Page 5: Kodak's strategy- BRACU (collected)

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 film1889: Invented perforated celluloid film 1900: The Brownie box camera went on the market

with a price of $1 1935: Introduced color film1960: Brought the Instamatic camera to the market1970: Major sales growth for Kodak. Concentrates on

film and basic cameras

Page 6: Kodak's strategy- BRACU (collected)

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

Page 7: Kodak's strategy- BRACU (collected)

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

Page 8: Kodak's strategy- BRACU (collected)

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

Page 9: Kodak's strategy- BRACU (collected)

9

Brand Logo Evolution

Page 10: Kodak's strategy- BRACU (collected)

10

Kodak Product• Four distinct sub-product

– Digital cameras – Home printing– Online services– Retail kiosks and mini-labs

Page 11: Kodak's strategy- BRACU (collected)

11

External Factors Analysis

Page 12: Kodak's strategy- BRACU (collected)

12

Porter’s 5 Forces Model

To aid firms in analyzing competitive forces in an industry environment.

Question: How competitive forces affect industry

attractiveness

Page 13: Kodak's strategy- BRACU (collected)

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 Moderat

eHigh

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

Page 14: Kodak's strategy- BRACU (collected)

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

Strong bargaining power

moderate to weak

Page 15: Kodak's strategy- BRACU (collected)

15

Porter’s 5 Forces… Cont..

Potential New Entrants• Huge capital & specialized• Not relay on any company

Substitutes ProductsLow switching costLow price of substitutesHigh bargaining power

Strong entry barriers

Strong threats

Page 16: Kodak's strategy- BRACU (collected)

16

Porter’s 5 Forces… Cont..

Rivalry among Competitor• Intense competition among the rivals

Strong Competition

Page 17: Kodak's strategy- BRACU (collected)

17

Industry Analysis through 5-forces: Answer Question 1

Strong entry barriersBuyer in strong positionModerate to weak position of SupplierHuge threat from substituteStrong rivals

Apparently Unattractive Industry

LOW Profit

Potential

Page 18: Kodak's strategy- BRACU (collected)

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

Page 19: Kodak's strategy- BRACU (collected)

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

Page 20: Kodak's strategy- BRACU (collected)

20

Strategic Group mapping

Leica Sony

Samsung

Olympus Nikon

Kodak Cannon

High Price

Low Price

Market share

Firm % Market Share Average PriceCanon 40% $220.00Sony 15% $300.00Samsung 10% $260.00Nikon 10% $250.00

High Market Share

Low Market Share

Price

Page 21: Kodak's strategy- BRACU (collected)

21

Internal Factors Analysis

Page 22: Kodak's strategy- BRACU (collected)

22

Kodak in terms of core competences

Not Rare

Not valuable

Not Non substitutabl

e

Not costly to imitate

Not Core Competence

s

Not able to get

competitive

advantage

Page 23: Kodak's strategy- BRACU (collected)

23

SWOT AnalysisStrength• Existing Brand equity•Distribution Presence•Competitive capabilities• Market advantage•Acquire many strategically aligned companies

WeaknessRapidly 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

Page 24: Kodak's strategy- BRACU (collected)

24

Value chain pre digital age

Image Capture Processing

Projection

Printing

Storage

- Film Camera- Video Camera

- Retailer Processing

- All Retail Stores- Reprints

Page 25: Kodak's strategy- BRACU (collected)

25

Value Chain post digital age

-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 StorageTransmission

Printing

Manipulation

Retrieval

Page 26: Kodak's strategy- BRACU (collected)

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

Page 27: Kodak's strategy- BRACU (collected)

27

Kodak Strategy….Cont..

1. Managing the Traditional Film Business:

• Slow exit strategy from film business• Looking forward to digital technology

Page 28: Kodak's strategy- BRACU (collected)

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.

Page 29: Kodak's strategy- BRACU (collected)

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 .

Page 30: Kodak's strategy- BRACU (collected)

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.

Page 31: Kodak's strategy- BRACU (collected)

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

Page 32: Kodak's strategy- BRACU (collected)

32

Reason For Failure

1.Core competency became core rigidities

2.Lack of market research3.Late mover of digital photography4. Innovation and transformation Failure5.Unwillingness to change

Page 33: Kodak's strategy- BRACU (collected)

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

Page 34: Kodak's strategy- BRACU (collected)

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

Page 35: Kodak's strategy- BRACU (collected)

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

Page 36: Kodak's strategy- BRACU (collected)

36

Thank you

Page 37: Kodak's strategy- BRACU (collected)

37

Any Question