Kodak Essay

ForewordDuring 2011, Kodak was under intense pressure to survive in the digital imaginativeness job. As professor Burley describes, Kodak was caught in a accurate storm of not only technological, but also social and stinting change (Neate, 2012). As of Thursday 19 January 2012, Kodak filed for bankruptcy protection (Neate, 2012) and has until 2013 to shape its patronage and exit out of the bankruptcy plan (Business Spectator, 2012).IntroductionEastman Kodak (Kodak) was once a leader (Finnerty, 2000) and legendary brand in the photographic lead industry (Associated Press, 2011b). It used the catchy slogan You press the button, we do the sopor (Kodak, 2011) to in(predicate)ly marketplace its digital camera products. It employed as some(prenominal) as 145,300 people and sales as blue as $16 billion when it monopolized the US photography industry and became number integrity in the industry in 1988 (Dobbin, 2011). Recently, Kodak lost 90 percent of its market shelter (Weiss, 2011) and is facing the threat of extinction (Associated Press, 2011b). In this case study, we propose and harbor a recommended strategic direction for the company to implement in the adjacent three to five years establish on a equilibrate assessment of the companys options. We first conduct a exposit analysis of Kodaks internal and external environments to understand the opportunities and threats facing the company. outlineKodak has tried to transform itself from an aged old film engineering credit line into a fast and digital cultured byplay but has failed as a end of decline in sales in the linked States (Deutsch, 2004). It is still trying to play catch-up with rivals (Associated Press, 2011b) such(prenominal) as Canon, Sony and HP for the noncurrent 15 years. Its current products and function span across digital cameras, inkjet printers, sensors, retail kiosks, workflow and business process services and softw ar by dint of to consumer, maestro photographic film, pa per processing chemicals and industrial materials suchas films for printed rophy boards (Kodak, 2010). Through the help of drug and discounts stores, Kodak was able to add self-service kiosks to aid people to print their own digital photos (Deutsch, 2004). Kodak formed strategic articulatio ventures with companies like Sanofi, AOL online (Grant, 2005), and most recently in 2007 Cinelabs (Beijing) Ltd (Kodak, 2007). It has tried to acquire some(prenominal) smaller successful companies such as Ofoto and Pr travelice works to fill in the missing pieces of technology and markets that it did not come capabilities in (Deutsch, 2004).StrengthsKodak has several(prenominal)(prenominal) strengths to distinguish itself from rivals. Kodak has superior brand recognition (Aaker, 1992 Deutsch, 2004 Grant, 2005) as comp ard to rival brands such as Agfa based on US consumer reports (Simonson et al., 1994). Its brand was supportinged by its massive worldwide distribution presence through retail photography stores, film processors and professional photographers which tind Kodak with the combative advantage (Grant, 2005). Kodak leads in the higher-end photo graphic symbol camera segment (Smith, 1999) where it launched its major innovations in tomography (Grant, 2005). Traditionally, Kodak has strengths in photofinishing services and consumables such as paper, ink and chemical technology (Grant, 2005). This is derived from a voluminous portfolio of 11,000 patents (Associated Press, 2011b) derived from a strong R&D investment during the early eighties (Grant, 2005). Kodak was financially secure with cash flows flowing from its existing photography business during the early 1990s (Grant, 2005).WeaknessesOn the another(prenominal) hand, Kodak has weaknesses. Kodak avoided taking risks, they were not mod enough and relied on existing procedures and policies to maintain standards (Gavetti et al., 2005). They were slow to bring immature products to market (Grant, 2005). It s retail network of stores was a depreciating asset collectable to the increase use of home computers, email and print technologies (Grant, 2005). Kodak focused in any case heavily on the extremely competitive entry-level market and failed to climb ripe products fast enough (Grant, 2005). Its product development and sales departments were fragmented and lost over many di fancys (Gavetti et al., 2005). Subsequently, Kodaks middle managers were resistant to change and did not understand the digital world (Gavetti et al., 2005 Lucus & Goh, 2009).Kodak managers ignored analysis work based on information gained from Kodaks eroding market share (Gavetti et al., 2005). Kodak managers lacked vision and dodge (Gavetti et al., 2005).OpportunitiesA few opportunities exist for Kodak. It bed build consumer pull in digital that Kodak already has in film (Smith, 1999). Kodak could focus on its result business and develop refreshing technologies (Gavetti et al., 2005) and saucily products (Deutsch, 2004).ThreatsHowever, Kodak pull up s civilizes stand long term threats to its core franchise in the film business if it does not extend its brand name to digital (Smith, 1999). IBISWorld forecasts the demand for strong-arm photographs would fall due to improvements in digital technology (IBISWorld, 2011). Kodak has been in battles with other competitors such as Sony over patent infringements (Deutsch, 2004 Associated Press, 2011a). It has been struggling with a harm war between strong competitors such as Fuji flick Film (Smith, 1999) in the photographic film industry. Industry analysis porters beers five forcesThreat of EntryAn analysis of the industry utilise Porters five forces targets that threat of new entry is moderate. pregnant investment in capital would be required to enter a new industry (Select Knowledge, 2001) such as the digital imaging and photography industry. Printing equipment such as hardware, software, photographic paper and chemicals is estima ted to be 45.7% of acquires versus compensation at 26.8% of revenue (IBISWorld, 2011). New entrants would lack experience and knowledge in key areas of digital imaging and photography such as skillful and business knowledge (Greenwood, 2008). Buyer powerThe buying power of consumers is high especially for consumer electronics (Skoloda, 2009). Buyers are given a range of differentiated digital camera products from a number of companies (IBISWorld, 2010). They expect repair offerings and customization of goods and services (Fraser, 2007).provider powerSupplier power is low. A lot of the suppliers are hardened somewhat the worldboth locally and internationally. Kodak has several supplier contracts spanning one to three years (Kodak, 2010). However, there are single or expressage sources of finished goods manufactured and purchased by the companys third caller suppliers which whitethorn pose a risk for the organization (Kodak, 2010). Unique suppliers displace reduce industry pro fitability (McGuigan et al., 2010).Threat of substitutionThe threat of substitutes is high. Companies are quick to match specifications, features and pricing (Select Knowledge, 2001). There are minimal electrical switch cost between brands or substitutes as buyers can change to new updated mannikins based on reasonable buyer perception (Select Knowledge, 2001).Competitive disceptationCompetitive rivalry is high. Kodaks faces intense competition from rivals such as start-ups (Grant, 2005 IBISWorld, 2010 Smith, 1999) and major competitors are Canon, Fuji Photo Film, Hewlett Packard (HP), Nikon and Sony (Gavetti et al., 2005). Similarly, Kodak is competing in similar segments with rivals Hewlett-Packard (HP) to provide digital printing technology to consumers and commercial businesses (Weiss, 2011). Kodak (2010) states that competitive pricing and rebellion commodity prices has contributed to the negative results for 2010 across its prepress solutions, digital capture and devices, and entertainment imaging (Kodak, 2010).External AnalysisThere are several external (political and legal, economical, socio-cultural and technological) factors which stir Kodaks business model. Political and legalLaws and government environmental regulations have an impact to the way Kodak operates in several different countries. For example, U.S federal legislations such as the Toxic substances control act, clean air and water act etc. impact the way Kodak manufactures products and process waste for proper establishment (Kodak, 2010). In 2003, it wished to form a committee to reduce odours which descended towards near neighborhoods (Kodak, 2006).EconomicalFrom an economical view, the decline in prices has made it affordable forconsumers to purchase digital cameras (IBISWorld, 2010). However, forecasts show that standalone digital cameras have reached a state of market saturation with little room for future growth (IBISWorld, 2010).Socio-cultural and Technologicaldigital cameras became an integrated and standard feature in mobile phones (IBISWorld, 2010). Increasing trends show that consumers are taking and sharing photos on mobile phones daily (Okabe, 2004). The archiving and substitute functions for photos have been facilitated by online communities and social practices (Scifo, 2009), such as Facebook (Upbin, 2011), and mobile social-media applications (Naaman et al., 2005). overwhelming competition between rivals is expected for new 3D camera technology on mobile phones (AFP, 2010).Strategy, approaches & implicationsIn order for Kodak to sustain a competitive advantage, it needs to strategically transform its entire business model around to capture new and unique growth opportunities. There are several options which Kodak can explore to achieve this strategy. The options below focus on morphological changes in the industry and resources (skills and capabilities) in the organisation.Business Process Re-engineering (BPR)Kodak can retrace the organisat ion using business process re-engineering practices. Its current traditional photographic business is vertically integrated (Grant, 2005). The organisation can be redesigned from a vertically to a horizontally integrated organisation through process-oriented organisational restructuring, offering a more low-level flat organisational structure (Wu & Li, 2011). The result gives improved efficiency and business simplification (Wu & Li, 2011) for Kodak to compete effectively in a tough competitive environment where it needs to quickly get innovative products out to market. Kodak can focus on its real core competencies in film chemistry, production and processing (Garrett, 2010), so that it can lay down new markets, products and services. BPR gives obvious benefits such as the reduction in coordination compound bureaucracy in the organisation (Wu & Li, 2011). However, as cited by Greenberg (2002), there are limitations in BPR such as resistance to change, lack of management supportetc . (Schniederjans & Kim, 2003).RebrandingOther opportunities exists for Kodak, it can change its name from Eastman Kodak Company to range Kodak Communication (Deutsch, 2004), or as Hopelain suggests, it will need to establish a separate Kodak Technology brand (Deutsch, 2004). An organisations strategy and operations will be potentially impacted by the scope of merged rebranding (Burke et al., 2011). Stakeholder commitment needs to be achieved for the revised brand to be successful (Burke et al., 2011). It will involve staff in planning for proposed changes and training employees for changes (Burke et al., 2011). some(prenominal) rebrand will impact the value of the brand (Davis & Baldwin, 2006). Rebranding will involve a lot of communication and stakeholder involvement (Davis & Baldwin, 2006). Poor corporate rebranding can be a high risk (Davis & Baldwin, 2006) for the organisation where core values may not integrate well into the new brand (Burke et al., 2011).Leadership and orga nisational studyKodak will need to train staff, especially managers in weak areas on vision and strategy (Gavetti et al., 2005). For example, managers can be taught design methods, to generate growth, evolve, and pit as the marketplace (Rahim & Rahim, 2009) and user needs changes so that the business model can evolve to bypass extinction (Fraser, 2007). Similarly, Apple evolved with the user to new opportunities, it did not live to the constraints of its current business model (Fraser, 2007). Subsequently, Kodak will need to discontinue some of its products, especially in saturated markets such as digital cameras (IBISWorld, 2010) where profit margins are low (Pride & Ferrell, 2007) and competition is fierce. It can fracture utilise its resources and real core competencies (Garrett, 2010) to make it difficult to imitate its products (Prahalad & Hamel, 1990) and essay leadership. However, leaders would need to be able to influence teams indirectly through climate and culture in t he organisation (Kaiser et al., 2008). Technology enabled transformations will come to the importance of organisational culture (Lucus & Goh, 2009) where hierarchy and standards provides resistance to disruptive technologies (Lucus & Goh, 2009).Joint ventures and outsourcingKodak can form joint ventures with other companies. It can create new emerging industries or new value propositions, alliances and collaboration to be form by complementing and adding to its capabilities and resources (Camillus, 2000). It can capitalise heavily on its existing patent portfolio (Deutsch, 2004). Kodak will need to outsource a lot more of its manufacturing (Deutsch, 2004), while parttime and casual staff can lead to the reduction of labour costs (IBISWorld, 2011). Extreme care needs to be taken where processes of high strategic importance should not be outsourced (Sounderpandian & Sinha, 2007). The result will allow Kodak, to develop new competencies for future developments and sustain the import ance of long-term success (Utterback, 1995). testimonyTo sustain competitive advantage, Kodak needs to strategically transform its entire business model around to capture new and unique growth opportunities. It is recommended that Kodak, take the BPR and organisational accomplishment approach, to improve efficiency and simplify the organisation leadership to occur and influence vision and change (Bolman & Deal, 2008) to capture new business models and better match user needs and economic value (Fraser, 2007). Larsen & Leinsdorff (1998) research suggests that BPR and organisational learning work well together (Larsen & Leinsdorff, 1998). Though, developing a coherent strategy is not going to be easy for a digital imaging business (Grant, 2005) like Kodak. It will be Kodaks last bump to reinvigorate their human capital to get ahead of the curve (Fraser, 2007, p.67).