Kodak Case Study
KODAK CASE STUDY:
MONOPOLY TO OLIGOPOLY
BUS 525: ECONOMICS OF THE FIRM
Casey Fogerson: 11527549
Nicholas Kramer: 11779949
Maher Yassine: 11776418
Sichao Wang: 11480118
Woo Jung: 10989969
Yi-Chun Lin: 11753536
MARCH 10TH, 2014
I. EXECUTIVE SUMMARY
Kodak dominated the amateur photography market primarily through its innovative products: color slide film and color photography. Seeing that Kodak monopolized the market, the United States government stepped in with the 1921 and 1954 consent decrees. These regulations helped ensure that lesser companies can grow in the industry and provide competition. Thus, the industry had evolved from a monopoly to an oligopoly; Fujifilm became the second largest company. The government terminated both decrees due to Kodak losing its market share in the United States and its inability to compete globally. Kodak is now able to fully compete in the aggressive market both nationally and globally with new marketing tactics.
II. STATEMENT OF THE PROBLEM
Kodak is an American technology company that focused on imaging solutions and services for businesses. In 1994, there were five firms in the color negative film industry in the United States: Kodak, Fuji, Konica, Agfa, and 3M. It’s a good illustration (according to Kodak) of an oligopoly. In an oligopoly, only a few companies control the entire market. These firms are in a highly concentrated industry. Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers. Once a company in an oligopoly changes price or strategy both profit and other companies are impacted. In other words, the companies in this industry will change at the same time, especially facing a challenge.
In their current market position, Kodak retains the highest market share. Kodak receives 75% of film sales in dollar amount and 67% of unit sales. For example, Kodak has 241,000 retailers to sell its products, and Fuji, as the main competitor of Kodak, only has
MONOPOLY TO OLIGOPOLY
BUS 525: ECONOMICS OF THE FIRM
Casey Fogerson: 11527549
Nicholas Kramer: 11779949
Maher Yassine: 11776418
Sichao Wang: 11480118
Woo Jung: 10989969
Yi-Chun Lin: 11753536
MARCH 10TH, 2014
I. EXECUTIVE SUMMARY
Kodak dominated the amateur photography market primarily through its innovative products: color slide film and color photography. Seeing that Kodak monopolized the market, the United States government stepped in with the 1921 and 1954 consent decrees. These regulations helped ensure that lesser companies can grow in the industry and provide competition. Thus, the industry had evolved from a monopoly to an oligopoly; Fujifilm became the second largest company. The government terminated both decrees due to Kodak losing its market share in the United States and its inability to compete globally. Kodak is now able to fully compete in the aggressive market both nationally and globally with new marketing tactics.
II. STATEMENT OF THE PROBLEM
Kodak is an American technology company that focused on imaging solutions and services for businesses. In 1994, there were five firms in the color negative film industry in the United States: Kodak, Fuji, Konica, Agfa, and 3M. It’s a good illustration (according to Kodak) of an oligopoly. In an oligopoly, only a few companies control the entire market. These firms are in a highly concentrated industry. Oligopolies can result from various forms of collusion which reduce competition and lead to higher costs for consumers. Once a company in an oligopoly changes price or strategy both profit and other companies are impacted. In other words, the companies in this industry will change at the same time, especially facing a challenge.
In their current market position, Kodak retains the highest market share. Kodak receives 75% of film sales in dollar amount and 67% of unit sales. For example, Kodak has 241,000 retailers to sell its products, and Fuji, as the main competitor of Kodak, only has
Cited: Baye, Michael R., Managerial Economics and Business Strategy. 7th ed. New York: McGraw-Hill/Irwin, 2010. Print. "Brief for the United States : U.S. v. Eastman Kodak Co." Brief for the United States : U.S. v. Eastman Kodak Co. N.p., n.d. Web. 01 Mar. 2014. Greenhouse, Linda. "Kodak Dealt a Setback In Antitrust Case Ruling." The New York Times. The New York Times, 08 June 1992. Web. 01 Mar. 2014. Snow, R. (2008). Tourism and American Identity: Kodak 's Conspicuous Consumers Abroad. Journal Of American Culture, 31(1), 7-19. Sudhir, K. K., Chintagunta, P. K., & Kadiyali, V. (2005). Time-Varying Competition. Marketing Science, 24(1), 96-109 Tsurumi, Y., & Tsurumi, H. (1999). Fujifilm-Kodak Duopolistic Competition in Japan and the United States. Journal Of International Business Studies, 30(4), 813-830 United States v. Eastman Kodak Co., 226 Fed. 62 (W.D.N.Y. 1915). Retrieved from http://www.justice.gov/atr/cases/f0000/0096.htm United States v. Eastman Kodak Co., 230 Fed. 522 (1916), appeal dismissed, 255 U.S. 578 (1921) Retrieved from http://www.justice.gov/atr/cases/f0000/0096.htm