Kodak Films Fails to competitive with Digital Revolution

Introduction
This discussion looks in to firm's response to challenges they face from transformation and evolution of
technology that subsequently threatens their traditional, successful business. A case study of Kodak is been
given as an example because Kodak has gone through a transition phase in a period between 1980's to 1990's,
due to introduction of new technology in the field of photography specially digital photography. Kodak was
the only one that developed many of the components of digital photography, yet the new form of photographic
technology has had a serious, unconstructive impact on the firm business.

The need for the "change"

George Eastman Kodak Company developed the first snapshot camera in 1888.In 1889, Eastman and his
chemist perfected the transparent roll of film, made it possible for the development of Thomas Edison's motion
picture camera. From 1880's Kodak invested heavily in film and when colour photography was introduced, it
was one of the few companies that had the knowledge and processes to succeed. The company achieved $1
billion in sales in 1962 (Gavetti et al., 2004). By 1976, Kodak captured the majority of the US film and camera
market (90% and 85%, respectively). Kodak's photofinishing process quickly became the industry standard for
quality (Gavetti et al., 2004).
Kodak had always got distinctive competency over its competitors because of the scope and operations of its
business. This helped the Kodak towards the continues growth of their business for more then 90 years. But
from the period 1980's-1990's Kodak encountered problems of market share, revenues, competitors and
technological explosion which was rapidly threatening the survival of their business. Kodak began to realize
that radical changes in the structure of the company and the technology of their products would be vital toward
success of the Kodak brand.
Following are some factors that motivated Kodak to change its organisational structure for the survival of their
business.

Competition from other brands

During the long history of the Kodak Company, Kodak has overcome many threats to the survival of their
business. Highly successful business that turned Kodak into one of the most recognizable name brands in the
world was struggling for survival with the entrance of competitors in market. The Japanese company Fuji
Corporation entered the market attained a high market share not only in Japan, but in the United States as well.
Fuji and other Japanese companies were able to design paper used for printing film at much cheaper rates than
Kodak could offer to their consumers. This became a large problem for Kodak because they were unable to get
an edge on their competition and get a part of that market share. Also with the amount of competition rising in
the market for photographic products, Kodak had to take a cut in their revenue and lower the prices of their
products to remain competitive with rivals.

Technological advancement
According to Christensen (1997), survival of many large organizations is seen to depend on how well they are
able to negotiate the technological currents in their environments. Technological advancement is caused by
improvement in communication and new designing capabilities with an organization. Kodak's status as an
iconic brand was threatened by the technological shift away from its vastly successful business of traditional
film and film processing. The photography industry was changing from a traditional industry to a much more
technically advanced industry. This expansion in the field of technology for the photograph equipment
industry opens the door for other industries (computer industry, software, printers, etc.) to step in and broaden
their product line and offers huge potential for market growth.
Problem in expanding the productKodak also ran into problems when they expanded its core photographic
products business. Fierce competition from companies such as IBM, Apple and Sun affected the market share
that Kodak had been fighting for. Kodak had little knowledge in the field and was up against a group of
dedicated companies with many years of focus and research.
Decreasing market share san important factor that motivated Kodak Company was the decreasing market share
due to the introduction of substitute products by other companies. In 1981 Kodak's sales hit $10 billion, but
then competitive pressures, especially from Fuji, slowed down future increases (Gavetti et al., 2004). There
was an enormous increase in development and production of equipment to produce and record images. The
introduction of portable video cameras gave consumers a way to produce their own images and capture video
easily. It became apparent to Kodak (being a monopoly at first) still that they had fallen behind the competition
on the idea of improving technology and that there was a fast increase in the switch from analog to digital.
Mistakes done by Kodak in changing its architecture
In 1980's, due to high pressure of competition from Fuji corporation and also lack of innovation in
organisation, Kodak had to change its architecture for increase its share price market. During this change of
architecture, Kodak had done some mistakes. These are
Research and designs
The 1980's started weakness among the Kodak Company which was also affecting the survival of their
company. The mistake done by Kodak was the design of new and existing product (camera). Kodak invented
a camera which used a disk with a negative smaller than the one within the pocket-sized Instamatic camera.
Even though it was smaller and easier for consumers to use, it was not able to compare to the sales of Kodak
Instamatic camera. This lead to another problem and that is of the productivity (constantly rising costs of
materials needed for their products).

Performance evaluation
During the late 1980's into the early 1990's Kodak did a mistake by not giving managers equity stake in new
ventures that they were entering. This was one reason for the failure of Kodak managing new ventures and
acquisitions. They began to change the way that employees were paid. Instead of the employees being
compensated by time, they would be paid on level of performance they have completed.

Targeting professional markets

In order to change its organizational structure for the improvement of market share Kodak product
development was targeted on the high-priced products, which were used in professional markets. It reflects
Kodak's lack of concentration on the consumer market and therefore a loss of money in this market.
What it might have done differently?
Throughout the history of Kodak, they have had a lot of success with marketing and selling their products.
There are things it might done to continued their success in market at that time.
The competitors of Kodak continue to design cameras with sleek looks and easy to use buttons and software.
Many consumers see Kodak's cameras as being "cheaply" made. Some of the materials that they use in the
design process could possibly be changed to have more appeal to the potential customers. They should have
advertise more on television, and other types of media.. Even though they have a very long history of
promoting their products, they should have continued advertising their products to remain in consumer's minds
when they go to purchase a product.
They should have spent more money on the research and development areas of the company. If they design
products that appeal to the consumers that the competition has not yet thought of, that would have given them
an edge that can make them extremely profitable. Kodak could also start selling their cameras in bundle
packages
They should had remained at the top in the area of digital photography .They have been overcome many
obstacles and as long as they can compete with the constant competition from previous designers and with
companies that are entering the same market daily, they would have survived.
How this example relate to the concept of Economic Darwinism?
In one of the philosophies given by Charles Darwin, a very famous English naturalist was "survival of the
fittest". Which is most popular concept applied to natural evaluation is know by people. The strongest one is
survived because they have effective qualities and characteristics which help them to best compete with in
their competitors.
We can relate the business of Kodak with the concept of economic Darwinism in following ways explain few
certain points below after the swot analysis of the company .explaining capabilities of companies in respect to
the changing business environment.

SWOT Analysis of Eastman Kodak

Strength
Kodak has more than 100 years of history in photographic film industry.
This history has brought about the benefit and also the strength of the Kodak brand name and Kodak's
worldwide distribution network. Kodak has its own international distribution network. In the past, when
Kodak's focus was on the camera and photo developing business, it made a strong distribution network, which
helped to maintain the sales volume by distributing to retailers and it also helped to introduce the new products
to customers. A strong customer base was also built, which includes a huge amount of target customers who
changed from the traditional camera to the digital camera.
List of Strengths:
 Many products lines

 Broad market coverage

 Manufacturing competence

 Brand name reputation

 Diversifying its product lines depth and width

Weakness
A key weakness of Kodak was its ability to bring its technology to market. The product development of Kodak
was targeted on the high-priced products, which were used in professional markets. It reflects Kodak's lack of
concentration on the consumer market and therefore a loss of money in this market. Promotion is another
weakness, when Kodak launched a new product, there was lack of promotion.
List of weaknesses:
 Poor marketing plan

 Loss of corporate control

 Growth without direction

Opportunities
Due to Kodak's successful history and good reputation they have the ability to easily obtain government
contracts. According to the Kodak official website there are six services departments: Consumer Imaging,
Digital & Applied Imaging, Entertainment Imaging, Health Imaging, and Kodak Professional and Document
Imaging. These departments give Kodak the opportunity to move into government and big business ventures.
These ventures could build an incredible professional image for Kodak and by word-of-mouth could create and
promote products to other large businesses. This image can also be transferred down to the more traditional
consumer.

List of Opportunities:
 Expand core business

 Exploit new market segments

 Widen product range

 Diversify into new growth business

Threats
The threats mainly come from competitors. There were 45 digital camera manufacturers producing more than
100 models priced below $1000 in 1997. Kodak produces various types of products, but their competitors also
produce these products. For example, in film production and digital cameras Fuji is the major competitor. In
the photo-printer category, Hewlett-Packard is the main competitor. The digital imaging business is an
intensive capital business. Investors need to invest a lot of money into research and development.
Unfortunately, in the photo equipment industry it is difficult to differentiate from your competitors. When a
company launches a new product with special features, other companies can easily and quickly imitate and/or
copy this new product and its special features.

List of Threats:
 Attacks on core business

 Increase in domestic and foreign competition

 Change in customer tastes

 Risk in new product

 Increase in industry rivalry

 Slower market growth

The economic Darwinism relationship with Kodak

The nature of business OF KODAK is closely related to the economic Darwinism, the more quickly, more
efficient the company is in market the business is survived this is the major point of Darwinism. Explaining the
relationship these are the following points.

Responsive to change
The strength per eco-Darwinism takes many forms. It's not the bigger size matter i.e. (number of store) nor the
more revenue generated. It's not just one having better cash flow than the competitor. It's not just one has
stronger management than the rest of in same market. Individually the not be deciding factor of survival and
extinction but collectively they are major deciding factor whether one survives or not.
In lesser known Darwinism defines clearly that the "it's not the one who strongest can survive, or not the
sharpest one, is the one who is most responsive to change. In KODAK the fact they bring the change in
organization structure, but they are not as much responsive to their changes are.
Adaption is key
The major key factor in order to survive is the faster ability to adapt change. And also, not only to just adapt,
but adapt quicker than your competitor because this will lead the competitors to adapt faster than you and led
you suffer the economic consequences. The basic challenges are for how quickly you strategically and well
lead your business to adapt to current conditions and the new spending attitude of consumer, as you can know
how alert your competitors are.
The matter with Kodak is when Fuji film enter in market the strategy of Kodak of doing business is not
according as much quicker as compare to the fast change of market and by that Fuji got faster adaption of the
market which than leads in capturing the market share form Kodak.

Financial management
Always look up on the expenses but do not cut down on anything which than create a hamper the company
ability in supporting of their customer. The proper communication should always there between your
customers. Keep maintain the marketing and advertising finding. This is not maintained by Kodak.
The next on is cash flow, during strong spending periods ,always make sure your inventory u get best use of
your inventory investment worked , and focusing on turnover. Mange your expenses with your cash flow to
best of the abilities you have. Kodak losses concentration on these areas. Rather focusing on performance
based focus should be on turnover.

Consumer mentality understanding

Consumer's mentality is also main factor in economic Darwinism but it not the optional now. It's important, to
increase relative value intention company should know how to position and what to sell. Focused should be on
selling that product which can increase their lifestyle and make them more successful. Kodak looking the
consumer mentality but there technology lackness led them fall behind.

Conclusion
In order for a company to be successful in any industry, it must adapt to its consumer tastes. The same applies
in the photography industry, where companies like Kodak must be able to evolve with new consumer
preferences. If a company does not offer the products and services that consumers demand then there is a high
probability that consumers will shop elsewhere.
In the photography field it is important that the products and services be not only user friendly, but offers a
variety of features and easily transferable data. Some important features include zoom range, video recording,
time between taking pictures (on digital cameras), and memory card and the length of time needed to transfer
pictures. Companies in this industry must ensure that its products appeal to long time photographers, and are
easy to learn for those who are new to the field.
In addition, price and customer awareness are important. Cameras must be affordable, as consumers are
becoming more and more price conscious. Also, in an industry where the printing of photos is decreasing, it is
imperative for consumers to be made aware of the quality and affordability of professional printing in order to
maintain market share and profit. If consumers believe it is expensive to print photos, they will be inclined not
to print and store pictures on a disk or print at home with a low quality printer.
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