3. What is Kodak's current position in digital imaging? Would Kodak's position be different had the company adopted a different digital imaging strategy in the eights and in the nineties? Evaluate Kodak's strategy starting in the mid-eighties.
Until the 80's photography industry was pretty much based on cameras that used films to capture images. Kodak had 90% market share of film's market and 85% of camera's market by that time. But in 1981 Sony's plans to launch Mavica, world's first digital camera, marked the beginning of a technological industry shock. Kodak's executives where frightened that photography industry would die. To react to this change Kodak went trough seven different restructuring between 1983 and 1993. During that period Kodak developed its strategy based on three main pillars: protect its core business (photography supply, specially films) from Fuji's ascension, explore digital imaging to keep up with market changes, and start to diversify its business trough acquisitions.
Kodak's core business was photography paper, film and others suppliers. Its differentiation was high quality, reputation and learning curving, which until the 80's blocked new competitors in the market - replicating Kodak's process and know-how was very expensive and risky. But in mid-eighties, 20 years after its foundation, Fuji, by adopting a strategy of following Kodak rather than attacking it directly, finally was the first to threaten Kodak's supremacy in US. Fuji's strategy was to offer the same high-quality products as Kodak but 20% cheaper then its rival. After 1984 Olympics, sponsored by Fuji, it had already 12% US market share. Consumers were learning that they could get high-quality pictures with cheaper film. By the end of 1993 Fuji had gained a 21% market share. But instead of developing a focused reaction to Fuji threat, Kodak executives didn't believe American could buy another film. They didn't change their strategy neither reacted to competition,...
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