Kodak Case Study and Analysis
1. Has Kodak followed the same generic strategy before and after 1993? What do you feel is the best generic strategy for the digital imaging business? Printer industry?
Prior to 1993 I would say that Kodak’s generic strategy was broad differentiation. They were a well established company in business for more than 100 years, had a very strong brand identity, very strong reputation for their research and development, and a very broad distribution network. Kodak was known for getting into many different projects, products, and industries. The company was a dominant competitor for many years in all of the industries they served. They also held a large number of patents for technology that they developed as market leaders. I believe this shows how they differentiated themselves from their competition. They acquired vast amounts of cash and assets as well. This is part of the reason that I did not see them as more of a low-cost provider. They were more focused on technology and innovation. As with any technology driven industry things began to change, and although still a dominant force, Kodak was beginning to decline in strength. They were getting lost in the middle with their strategy due to a lack of focus. They involved themselves in too many industries/markets. A new CEO, George Fisher, was named to head the company in 1993. Portions of the company were sold off, focus was placed on drastically cutting costs, and the main focus was on the digital imaging industry. Under Fisher digital print stations, new digital cameras, and thermal printers were introduced. The company had its new strategy – focused low cost provider.
The generic strategy that I feel works best for the digital imaging business is that of narrow cost focus. I feel this is the best fit because the market is mature, has been deeply penetrated, and has a number of strong competitors to battle with, has low barriers of entry for new competition, and substitute products are easily obtained and the differentiation gap has closed as the market has matured. Although there may still be some room for a focused differentiation strategy to try and identify unmet consumer needs or untapped markets, I don’t see this being the best overall approach. I feel that the same generic strategy would work for the printer industry as well. Kodak had some key developments in the printer industry that could be used as a differentiation tool, but there seemed to be too much focus on cost and price wars that supposedly were not being engaged in. One of the largest consumer dissatisfactions with home printers was the cost of ink. Kodak addressed that concern by offering more expansive printers and lower cost ink. 2. In doing a five forces competitive industry analysis for the digital camera industry, which force is the strongest and would you project the industry to be more or less profitable during the next five years? Which forces would cause this to be true?
Rivalry Among Present Competitors - Rivalry is high because many well known brands such as Cannon, Sony, and Olympic are the dominant players of the industry. And these competitors are trying to differentiate their products through new features and functions. Rivalry is really unfavorable in the camera industry.
Threat of New Entrants - Threat of new entrants is low. Since rapid pace of technological change, new entrants will need large amounts of financial support to do development and research. Therefore, threat of new entrants is low and it is favorable for the camera industry.
Bargaining Power of Suppliers - Supplier power is medium in the camera industry because the number of suppliers is limited due to the fulfillment of government requirements for electronic products. Under this force, the camera industry is moderately unfavorable.
Bargaining Power of Buyers - Buyer power is medium, which makes the camera industry moderately unfavorable. Customers have...
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