THE TRANSITION FROM FILM-BASED TO DIGITAL PHOTOGRAPHY
Case Objectives and Use
After reading and studying this case, students should be able to (1) understand the forces of change that were reshaping the business environment for firms in the photography industry in the twenty-first century; (2) understand the risks involved in developing corporate level strategy when the cash cow business is in a declining market; and (3) Understand the risks involved in competing in a market against newer and more nimble competitors. This case was developed for use in undergraduate and MBA level courses in strategic management. The case is designed to be positioned in the course during discussions of corporate level strategies. The case could also be used to illustrate a rapidly changing industry environment and the pressures the changes cause for traditional firms in the industry. The case may also be appropriate for undergraduate and graduate courses in marketing strategy.
In 2003, Eastman Kodak Company faced one of the biggest challenges in its long history: what should the company do now that demand for its traditional film products was rapidly declining. Should the company turn its back on traditional photography (about 70% of company revenues) to embrace new digital photography technologies? Was this strategy too risky for the company given that the digital photography arena was highly competitive and that many competitors had a head start on developing a coherent digital strategy. Should Kodak, a company whose name was synonymous with film and photographic papers, really exit a market so central to its identity?
Stockholders and stock analysts were questioning whether Kodak was moving rapidly enough into the digital photography market. As the price for digital cameras and photo printers declined, consumers were embracing the new technologies much quicker than Kodak executives had expected. Although international...