Kodak and the Digital Revolution

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Kodak and the Digital Revolution

Table of Contents:
1. Introduction
2. Problem Statement
3. Key Issues
4. Alternatives
5. Summary

1. Introduction:

The official history of the company, headquartered in Rochester, New York, Kodak invented in the 1880 dry-plate formula and a machine for preparing large numbers of plate. Through the advent of color film, expansion to China and the introduction of new products, Kodak reached $1 billion sales in 1962 and controlled 90 % of the film market and 85% of the camera sales in the United States. Between 1983 and 1993, Kodak acquired IBM´s copier service business, Sterling Drug and other bioscience and lab research firms. Although Kodak had been the first to introduce an image sensor, the first widely announced digital product was Photo CD. The initial introduction of digital cameras was in the year 1991. Today, Kodak increasingly concentrates on digital technology, but it has been slow in changing from the classic products.

2. Problem Statement:

Kodak manager´s tried to entering the digital market era but they did not move into the digital world well enough and fast enough. They wanted to do it in their own way from Rochester and largely with their own people. Kodak used a razor-blade strategy: it sold cameras for a low cost, and film fueled Kodak´s growth and profits. This strategy was so ingrained in the head of middle managers that they don´t understand the digital world. In 1965 when Fuji entered the U.S. market with photographic paper and supplies, which cost 20 % less than Kodak´s, their managers still ignored internal analyses and lost market share. However, managers were often replaced and specialized people from other businesses were committed. But how can you change when the policies are to maintain the status quo?

3. Key Issues:

Issue 1 – Razor-blade Strategy

The business became heavily dependent on this profitable margin from film, and increasingly paid less...
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