The Kodak Eastman company was started by George Eastman. The founder was an American. He was fascinated by still photography and cameras. George Eastman always believed that still cameras and photography are an amazing invention but it needs to improve. Kodak 3 was an initiative towards this improvement. Eastman noticed that cameras were too large and difficult to handle and were not user friendly. He thought of something smart and easy to use. He left for London in 1879 to start a company in order to bring this innovation into practice. He started the company with aim to bring revolution in the industry of photography (Collins, 1990). He selected London due to its popularity for being center of photography and business world. In 1879, it was the best place to start the business. He received first patent of plate-coating machine. This plate was an efficient way to get pictures on film in cameras. It was just a step stone in creation of cameras for everyday people.
Expanding the business successfully and equipped with innovation, Eastman Kodak, manufacture products in Canada, Brazil, Mexico, U.K, Germany, France, Australia and U.S.A. Company is operating with the primary idea of mass production with low cost and focus on customer.
Current state of Eastman Kodak:
Eastman Kodak Company is a printing and picture company. Currently Kodak Company is operating in three major segments. CDG (consumer digital imaging group), GCG (Graphics communication group) and FPEG (film, photofinishing and entertainment group). Digital capture and devices consumer inkjet system, retail system solutions and consumer imaging services are included in CDG. Digital printing solutions, prepress solutions and business solutions and services are included in GCG. Film capture, Entertainment imaging, industrial materials and traditional photofinishing are included in FPEG. The company acquired relief plates business of Tokyo Ohka Kogyo, on March 1, 2001. It sold its Image sensor solutions business to platinum equity on November 2011.
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How can an organization which had 80% of the market at a certain point, fail?
Not only gaining a high position in market is important but retaining this position. There are many ways to increase market share just as being cost effective, offering products and services at lower prices and with high quality, offering unique and innovative products. All these factors play very critical part in gaining market share but here is something more important to be considered seriously. Companies having larger market share, must be able to adopt new opportunities and must be flexible enough to incorporate required technological changes as per requirements of industry environment in which it is operating. If an organization does not take these factors in to account, it will probably lose its market share, no matter how large this market share is it. For instance Eastman Kodak Company does not show flexibility for adopting and incorporating technological changes. It has to face the threat from alternative technologies introduced in the industry. Video tape recorders and video cameras proved to be great threat for Kodak as their introduction destroyed the position of Kodak in market of film based home move business where it has monopoly. VCRs and then introduction of DVDs and other latest video technologies proved to be disruptive for Kodak. Management must see this technological transformation as sign of quick change. Rather company went for diversification and acquisitions realizing that Kodak does not have time to venture new activities internally.
Kodak had great opportunities to offer innovative and advanced products to its customers and retain its larger market share. But it did not realize the importance of changing world to film and related technologies that advanced the products offered by the imaging industry. The situation was demanding in change of technology of products being offered to customers, but managers at Kodak did not take initiative to incorporate this change. The managers presented a conservative approach and went for diversification and acquisition in relatively new technologies (Reilly & McCabe, 1986). As Kodak’s imaging business was in decline, it can get the opposite situation to this in form of increased market share and profitability, if new digital technologies be adopted and incorporated in the process by Kodak. Eastman Kodak company out their investments at wrong place in acquisition and joint ventures rather than investing in emerging technologies and face the results in form to decreased market share and profitability. Investing in digital technologies and competing in market while incorporating necessary changes quickly could prove to be great for increasing market share and profitability for Kodak.
Nature of competition faced by Kodak:
Kodak faced intensive and uncertain competition against all its products. The basic threat was the transformation in technology. The emerging technology, digital technology and video films brought about a totally new trend in the industry that Kodak failed to follow and incorporate. The other intense competition came from Japan who defeated Kodak in its main market of color film and paper market where it was making 75% of its profits. The important competitor from Japan was Fuji who used cost cutting manufacturing plants and latest technology in mass production films. As Fuji and other Japanese companies was presenting the same greater quality with more vivid colors at cheaper prices so customers were more attracted towards Japanese products? This resulted in a drastic shift in market share of Kodak.
Why Kodak face difficulties:
The increased competition and changes in industry were compelling signs for Kodak to consider the way it is carrying out market and production operations. The first important liability for Kodak was to be more cost effective as its new competitors i.e. Fuji who are using efficient low cost production system and providing low price products with high quality. Kodak, although having operation in more than one county but it proved slow to introduce innovations (Festa, 1992) and improvements in productivity and quality. Its production operations that are expanded in more than one country also gave Kodak a cost disadvantage. Moreover, specific conservative management style also proved harmful for it. Situation required Kodak to internally improve its operations to be more cost effective and improve its productivity to counteract its rising costs. But Rather Kodak assert influence on other side of business operations and looking forward for acquisitions and joint ventures in diversified portfolio of business and start entering in the markets for which it has little or no experience. These practices proved as disastrous one for Kodak.
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What caused Kodak’s demise?
The most disastrous action for Kodak has been its decision to go for mergers and acquisitions. While perusing this strategy, Kodak wasted a huge part of its retained earnings. Kodak was not going only for joint ventures and acquisitions but it was also trying to diversify its operations instead of investing in new emerging digital technologies. Kodak had experience in still photography and imaging, but it invested in number of businesses where it has little or no experience. Kodak entered in the industries where it didn’t know about intensity of competition, competitive forces. It also invested in the industries where already an intense competition existed. Due to these irrational investments, Kodak was forced to retreat from many of these markets. Kodak was compelled to withdraw its investments from these industries simply by selling its assets and by closing its operations (Lederberg, 1971). Besides all these factors, a fast decline in information systems group which attributed Kodak to increased competition and bringing new products in market and reduced earnings from operations. All these factors collectivity proved to be responsible for demise of Kodak.
Role of Leadership:
Leadership’s role is very critical in for success or failure of organizations. Kodak’s leadership and its decisions also have great impact on its performance. Colby Chandler for example, played a critical role in directing Kodak in very irrelevant way. He focused on four main things as action strategy, to increase the control over existing market of Kodak for chemical based imaging business, make Kodak leader in electronic imaging, diversify business practices of Kodak and reduce costs and improve productivity. No doubt these objectives by Chandler aimed to bring improvement, but he failed to understand the ultimate need of change brought by transformation of technology into digital type. The decisions of joint ventures and acquisitions reduced the profitability of company to great extent.
George fisher came with some new strategy and play a wise role in order to brought positive change in performance of Kodak in market place. He realized the need to change the conservative approach of management and hired people from outside the Kodak for restructuring. Fisher’s role had been very critical for Kodak as he realized the whole situation very quickly and take immediate actions to extract valuable resources of company from useless operations and acquisitions and invest them at right place. He played his role very actively and led the way of success by taking daring initiatives. Carp and Perez also came with new aim and enthusiasm to bring about positive change for the company. They tried to restructure the main positions, cut costs and increase profitability of the company.
Kodak suffered a lot due to poor decision making and planning by its leadership and management’s conservative style. Although George Fisher did remarkable job to bring Kodak back to its position of 80%market share, but still it was too late to take all things right to their place. George Fisher became CEO in 1989 and it was 2004, when company announced what it should do very earlier. By 2004, it is realized and announced by company to sweep out all unnecessary operations and practices to cut down the costs. This brought share price 20% up, but it is too late for Kodak to retain its position in market. Kodak needs to increase profit margins in all its digital divisions if it is to survive. Things that started to change in positive way to restructuring efforts, again started to go in negative way till 2007 and became worst since 2011. Keeping in view the detailed history of Eastman Kodak Company, it can be predicted that it needs more innovative approach by management in order to survive till 2013.
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