Kodak and the Digital Revolution
Kodak is a multinational American corporation which has become a household name most known for its film products. The company has come face to face with many changes due to the digital revolution which has created a rapid changing photography industry. George Eastman began Kodak in 1880 and introduced the first Kodak camera in 1888 coining the slogan “you press the button, we do the rest.” Eastman held a high standard for the company when it came to competition however with many managerial and product line changes, Kodak has slowly fallen behind in the industry. The company has experienced many shortcomings with the most recent trend of digital photography. According to Exhibit 7, from 1998-2002 Kodak was 2nd to Sony in the U.S. for the percent of units sold. The company is now considering layoffs as market share, film sales, and company revenues are down.
§ The company is faced with multiple managerial problems. First, the company lacked fresh blood in its management team. All of its CEO’s primarily came from the manufacturing jobs within its own company. This hurt the company overall and put a damper on keeping up with technological changes and competition as “Kodak avoided anything risky or innovative.” Second, when the company finally did add new blood to its management team things still didn’t look up. CEO Kay Whitmore was added in 1990 and changed the focus to “film based technology” such as the Photo CD. In an attempt to integrate this new technology with the CD-ROM in a meeting with Bill Gates, Whitmore’s lack of interest made her fall asleep.
§ Over a 10 year span, beginning when Kodak was able to achieve about 90% of the film market and 85% of U.S. camera sales Kodak diversified the company by acquiring many companies related and unrelated to the film and digital camera business. By the end of this massive diversification process led by CEO Colby Chandler, Kodak lost about 5% of its market share.
§ Kodak was forced to waste time restructuring because of poor managerial decisions and abandoned vertical integration. Chandler created multiple divisions to explore new technologies hoping to be able to enter this new market it hadn’t been able to enter. George Fisher, a CEO that came later, again had to restructure the company as Chandler’s vision did not work. Fisher, divested the health segment Chandler’s management team worked to acquired using most of its proceeds to pay off debt and announced the unrelated acquisitions to be a mistake. Under Fisher’s reign though, Fuji was able to again increase its market share requiring Kodak to cut costs and jobs.
§ Kodak’s management team emphasized the importance and its main focus on film sales ignoring the “silver-halide technology” which its competitors began to market and sell in great numbers. The company’s narrow view and primary focus on film also resulted in it falling behind on a new product: the disposal camera. Because of these poor management decisions, Kodak began to lose market share and was behind in development and research to create its own competitive products – overall, Kodak lost out on its chance to be a part of the beginning of the digital revolution. As the case states, “Kodak’s managers ignored internal analysis of Kodak’s eroding market share: ‘they didn’t believe the American public would buy another film’.”
§ A huge mistake by Kodak was to pass up on an opportunity to become the official sponsor of the Olympics in 1981 which was taken by Fuji Photo Film Co. This decision ultimately cost the company market share worldwide as “consumers learned they could get high-quality pictures with film that cost much less than Kodak’s did.”
Proposed Solutions/Evaluations: (since this case was published Kodak has been able to begin breaking ground in the digital photography and printing markets which is what I’ve based by solutions on)
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