KODAK

COMPANY

Submitted by:
Garcia, Desiree Ishi
Canseco, Ma.Edelyn N.

Submitted to:
Ms. Joyce Juanillas

I. Abstract
 Eastman Kodak, 133-year-old firm, has stunned the world, announcing in January 2012 that it has put to
its camera business. Kodak was founded by inventor, George Eastman, and its little yellow film packages
became one of the world’s most popular brands. It, indeed, was an American industrial icon. However,
the company has struggled to keep up with the competitors who were quicker to adapt to digital era
and filed for Chapter 11 protection bankruptcy in mid-January 2012. This research paper includes the
company background, SWOT analysis, reasons why it failed and lessons learned from its failure.

II. A History of Innovation

The story of the Kodak began with the manufacture of dry plates in 1879. George Eastman, Kodak’s
founder and one of the greatest entrepreneurs, received a patent of his plate-coating machine in
London. In 1880, Eastman began the commercial manufacture of dry plates. His successful venture in
manufacturing dry plates caught the eye of Henry A. Strong and a partnership company, the Eastman
Dry Plate, was formed in 1881. In 1883, the company unveiled film in rolls with a universal roll holder
that would be suitable for nearly every plate camera available at that time. In a year later, the company
was renamed as the Eastman Dry Plate and Film Company and in 1889, the name of company became
the Eastman Company. “You press the button, we do the rest” was its motto in 1888, which opened the
door to mass market consumer photography. The company has been called as Eastman Kodak Company
since 1892 and was well-known for its pioneering technology and innovative marketing. In 1969, the film
that was manufactured by Kodak was used on the Apollo 11 missions. Kodak has become a pioneer in
the development of digital cameras in 1975. An Eastman Kodak engineer created a 3.6kg device with a
cassette tape as the equivalent of today’s memory card and took 23 seconds to expose each image. In
1976, Kodak accounted for 90 per cent market share for photographic film and 85 per cent camera sales
in America. It proved that Kodak was a recognized brand that was both profitable and achieved high
levels of sentiment from customers. Until the 1990s, it was rated as one of the world’s five most
valuable brands.

III. The Rise and Fall of Kodak

Since the formation of Kodak, the company has remained the world’s leading film provider. Its revenue
peaked at nearly $16 billion in 1996 and its profits reached at $2.5 billion in 1999. However, since the
turn of the century, the fortunes of the once world’s leading photographic firm has plummeted. Kodak
reacted the digital revolution slowly, hence, it experienced revenues plummet from $ 15 billion to $9.4
billion in 2009. According to the Economist, the revenue was down to $6.2 billion in 2011. According to
MarketResearch.com, the recorded revenues were $4,114 million in December, 2012, a drop by 20.1%
compared to 2011.The firm which employed over 145,000 workers worldwide, also announced cuts of
thousands of jobs and by early 2012, its shares were just trading at around 40 cents dropped from $40-
45.
IV. SWOT Analysis
This section includes the analysis of the strengths, weaknesses, opportunities and threats that Kodak
had faced. The analysis will provide key insights into what went wrong and what forced Kodak almost
out of the market in 2012.

 Strengths

 Brand recognition
Kodak was one of the pioneers in the photography and filming. With a century of
global leadership in the photographic industry has brought about not only the benefit and
also the strength of the Kodak brand name.

 Worldwide distribution network

Kodak brand reputation was supported by its massive worldwide manufacturing distribution
network which helped to maintain and increase the sales volume, market coverage and accessibility
mainly through a significant network of retailers, distributors and online platforms. Its powerful
network established diversified sources of revenue deriving 40.5% revenues from the US, 31.0%
from the Europe, Middle East and Africa, 17.1% from the Asia Pacific and 11.4% from the Canada
and Latin American regions during FY2009.

 Many product lines and a powerful set of complementary technologies

Prior to 1990s, Kodak had put the huge investment in R&D and it achieved a deep
understanding of recording and processing images through its century of innovation and
development of photographic images. Kodak also possessed a powerful set of technologies in
sensing, color management and thermal printing.

 Additional channel for revenue earnings by cross licensing agreements

Kodak had entered into cross licensing agreements portfolios of patents over the years.
It made cross-licensing agreement with LG display and Nokia in 2009 and again in 2010, the
company signed an agreement with Samsung Electronics which allowed both companies access
to each other’s patent portfolio. Moreover, it also signed agreements with other leading
technology companies including Nokia, Motorola, Sony Corp, and Panasonic Corp. For FY2009,
these licensing agreements accounted for approximately 5.7% of the overall revenues, as
against 2.4% in 2008.

 Weaknesses
  Stagnant financial performance throughout the years
Despite the core competency in innovative digital imaging, the financial performance
was poor. It failed to prove the competency to fit the emerging demand. Hence, the market
shares and revenues of Kodak declined gradually whereas the competitors were providing the
market needs.

 Growth without direction

Due to changing leadership very often, Kodak has growth without specific direction. During
CEO Whitmore’s leadership, Kodak entered into the market that did not fit in with its image.

 Opportunities

 Expand core business

Kodak, indeed, was an American industrial icon enjoying similar status as Apple does
today for much of the twentieth century. The market of photography has been changing
constantly. With the world-famous brand in camera, Kodak could expand their core business
with their core competencies. Widen product range While focusing on sustaining their brand
in camera market, Kodak can also widen their product range by producing more attractive
devices and services with the integration of innovative technology.

 Threats

 Intense Competition in the market

Although Kodak was a pioneer in the camera business by bringing handheld cameras to
consumers over a century ago and a leader in imaging technology, competitors like canon,
Nikon, joined the fray in the digital camera market and offered dramatically more-appealing
devices. In addition, smartphones like the iPhone, Samsung, has become a preferred way for
consumers to take a snapshot and demand for a Kodak device plummeted.

V. Reasons for failure

 Failure to adapt the new technology
Kodak and its rival, Fujifilm, saw their traditional business would become obsolete. But
Kodak failed to adapt new technology adequately. Kodak’s unwillingness to change its efficient
ability to make and sell film in developing digital technologies lost the chance that could have
maintained the leading position in digital image processing.

 Disruptive innovation
George Fisher, who was a CEO of Kodak from 1993 until 1999, decided to produce
 digital cameras and offered customers the ability to post and share the pictures online.
Although Kodak made a large amount of business out of digital cameras with revenue reaching
$5.7 billion in 2005, it lasted only for few years before camera phones entered the market.

IV. Recommendation
To maintain the company's success, the company should have moved into the digital world well enough
and fast enough. They should satisfy consumer’s taste because if the company fails to offer the product
or services that consumer’s demand there is a chance that they will find better products. The company
should innovate, develop the ideas, upgrade and avoid complacency. Besides, the Kodak case proved to
us that entering into unrelated industries will not only result in failure but also lose the focus on core
products and services. So, it is obvious that focusing on continuous improvement matters for long term
success.

VII. References
https://www.academia.edu/6509633/Study_on_Kodaks_failure?auto=download

[ http://www.forbes.com/sites/marketshare/2012/02/13/no-more-kodak-moments/

http://www.reuters.com/article/2012/02/09/us-kodak-idUSTRE81816Z20120209

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9024539/Kodak-130-years-
ofhistory.html
http://www.marketresearch.com/MarketLine-v3883/Eastman-Kodak-Company-SWOT-Strategy-
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http://www.telegraph.co.uk/finance/newsbysector/industry/9024382/Kodak-files-for-Chapter-11-
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Eastman Kodak files for bankruptcy protection, Jan 19th 2012, Retrieved from

http://www.bbc.co.uk/news/business-16625725

http://blogs.birminghampost.co.uk/business/2012/01/the-rise-and-fall-of-kodak---w.html

The Last Kodak Moment, Jan 14th 2013, Retrieved from http://www.economist.com/node/21542796
Eastman Kodak Company, © datamonitor.com ]