EASTMAN KODAK COMPANY

Case Study
Strategic Business Analysis
ACCTG 2205

Marron, Eunice Joy S.

Mercado, Shayne Swayze Lyza M.
Nening, Tristan Jay P.
Padrigone, Lara Mae A.

Q1. What was Kodak's digital imaging strategy during 1992-2012?

Fundamentally, Kodak or formally known as Eastman Kodak Company, founded by

George Eastman, was one of the businesses that led the way in the 1990s digital revolution and
played a significant role in shaping the history of photography. Kodak's digital imaging strategy
from the 1990s to 2012 encompassed four main focuses:

1. Business Outsourcing

Kodak adopted the approach of corporate outsourcing in order to adjust to the digital age.
Sensing the evolving market, the business pursued collaborations with other producers, like
Nikon, to jointly create digital cameras such as the Digital Camera System line. Kodak wanted to
use experience and resources to maintain its competitiveness in the quickly changing digital
imaging business, so it partnered with well-established players.

2. Incremental Approach and Process Management

Kodak adopted an incremental approach to manage its transition to digital imaging.

Instead of an abrupt shift, the company gradually introduced digital products, including
professional and consumer cameras, to ease the transition. This phased strategy allowed Kodak
to manage the complexities of technological shifts while minimizing disruption to its existing
business operations.
 3. Market-Specific Strategies

Kodak understood that various markets required different approaches, so, the business
changed its strategy in response to the particular requirements of digital printing, consumer
electronics, and professional photography. In addition to introducing goods for consumers, Kodak
also investigated digital printing technologies for a wider range of market groups and catered to
professional photographers with high-end digital cameras.

4. Emphasis on Printed Images and Traditional Photography Business

Despite the digital shift, Kodak sought to leverage its strengths in printing technology and
traditional photography. The company re-entered the printed image space by introducing digital
print kiosks and online photo-sharing platforms. By emphasizing the advantages of printed images
and tapping into its legacy business, Kodak aimed to bridge the gap between the digital and
physical aspects of photography.

Nonetheless, Kodak struggled to carry out a successful digital transformation in spite of

these strategic priorities, which ultimately resulted in financial troubles and bankruptcy in 2012. In
the quickly changing digital imaging business, the corporation found it difficult to compete with
rivals who were more inventive and dynamic.

Q2. Why did the strategy fail (be specific offering an in-depth analysis)? Use environment
scanning.

Eastman Kodak adopted the Razor and Blade business model, finding success by selling
cameras at a lower price and making profits from high-margin film sales. However, the company
failed to adapt to changing market dynamics and technological advancements. Despite the rapid
innovation in digital photography, Kodak stuck to its traditional film-based strategy for over a
decade.

One of the key shortcomings was the company's insufficient environmental scanning,
particularly in terms of market research. Kodak neglected to adjust its approach in response to
evolving customer trends, preferences, and the emergence of new technologies. The company
also lacked adequate trend analysis, disregarding the importance of adopting new technologies
that could have propelled them forward.

Additionally, Kodak faced challenges in socio-economic analysis, as it failed to comprehend

cultural differences between markets. This oversight hindered the company's ability to tailor its
products and marketing strategies to diverse customer groups, especially when considering
international expansion. Overall, Kodak's reluctance to adapt to changing circumstances and
embrace new technologies ultimately contributed to its decline.

Q3. Was there a better alternative? (Be specific with them and identification of specific
strategies)

Long-term Visioning and Environmental Scanning

A better alternative strategy for Kodak could have combined long-term planning and
staying aware of the business environment. Long-term planning would have helped Kodak focus
on the future, considering new technologies. By diversifying into various technologies beyond
digital imaging, Kodak could have become less dependent on just one type of product, making
the business more sustainable. At the same time, being proactive by scanning the environment
through scenario planning would have given Kodak a structured way to identify different future
possibilities. This proactive approach would have improved Kodak's ability to predict changes in
the market and technology, leading to better preparation and decision-making. By thinking about
various future scenarios, Kodak could have developed strategies that could adapt to different
outcomes, reducing the risk of unexpected changes. Combining long-term planning and
environmental scanning would have made Kodak more flexible and innovative in the ever-
changing market.

Rapid Digital Transformation and Collaborative Partnerships

To propel its growth, Kodak could have embraced an integrated approach involving a rapid
digital transformation initiative and strategic collaborative ventures. The company might have
opted for a swift and focused shift from traditional film-based products to a fully digital-centric
business model, swiftly phasing out film-related operations. This decisive transition would have
allowed Kodak to concentrate its resources on developing and marketing digital imaging products
and services. At the same time, Kodak could have teamed up with established digital technology
companies through strategic partnerships. This collaborative effort would have given Kodak
access to advanced technologies and expertise, speeding up its entry into the market. By
partnering with technology leaders, Kodak could have enhanced its competitiveness in the digital
space, overcoming internal challenges and driving innovation. Combining a strong digital
transformation with collaborative ventures could have positioned Kodak as a dynamic and
influential player in the fast-changing digital imaging market.

Customer-Centric Innovation

To enhance its competitiveness and market relevance, Kodak could have actively invested
in customer-centric innovation. This approach involves aligning product development and
business strategies with the changing needs and preferences of consumers in the digital era. By
prioritizing customer-centric innovation, Kodak would have been better positioned to exceed the
expectations of its target audience. This strategy entails actively seeking feedback, staying
informed about evolving trends, and anticipating the desires of digital-savvy consumers. By
placing the customer at the core of its innovation efforts, Kodak could have cultivated stronger
connections with its user base and gained a competitive edge in the dynamic market. In Kodak's
case, this strategy would have facilitated a more effective transition from film to digital, aligning
its products with the evolving preferences of consumers.

Optimizing Digital Patents

Kodak could have improved its financial situation by taking a more active and strategic
approach to make the most of its digital patents and intellectual property. Instead of facing
financial challenges, the company could have explored opportunities like licensing agreements or
partnerships with other industry players. By capitalizing on its valuable intellectual assets, Kodak
could have generated more revenue, strengthened its finances, and potentially invested in
research and development to stay competitive in the evolving digital imaging market. This change
in strategy would have helped Kodak maximize the value of its digital patents and navigate the
shift from film to digital technologies more effectively. Leveraging its digital imaging patents
through licensing agreements or strategic collaborations could have been a better alternative
strategy. These patents could have helped Kodak smoothly shift from a film-based photography
company to a digital imaging powerhouse if the company had implemented the right strategies
and focus.
 These alternative strategies, if implemented effectively, could have positioned Kodak more
competitively in the digital era and potentially mitigated the challenges that led to its failure.

Q4. It is summer 2012, what advice you would give to the Kodak board about Kodak's next
steps (once again, you must offer specific strategies - by name - and justification on why
your proposed strategies are best).

Kodak ought to stop producing unproductive products and devote its resources to creating
the cutting-edge digital goods that consumers really want. To inspire and draw in customers, the
company should use innovation, research, and development to create new and inventive items.
To make up for the lost market share, Kodak could expand into other industries like entertainment
and film. Kodak should first focus on specific markets in order to maintain the product's high
potential. Thus, employing a diversification approach and providing clients with novel and
inventive products first, focusing on niche markets, is necessary (Kenny, 2009).

Furthermore, for Kodak's management to be successful in the cloud service industry, they
need to devise methods that effectively tackle the issue of market rivalry. It may be beneficial to
use both horizontal and vertical integration strategies to manage market rivalry and achieve
success. Kodak will need to name a few of the top rivals in this area for its horizontal integration
plan. These are some actions that Kodak might take:

Top down and Bottom-up approach

● It would have been easier for Kodak to adjust to the new environment if they had
collaborated with a company that was cognizant of the difficulties posed by the digital
revolution rather than competing with other businesses in the market. In its organizational
structure, Kodak's management needs to have applied a top-down and bottom-up strategy
to project management (Kezar, 2012). This approach might have resulted in deeper insight
into what has to be done, how well the business can handle its issues, and efficient project
management and evaluation. When a CEO or managing director defines the goals and
objectives that should be followed by the entire organization, such a technique is known
as the top-down approach (Grant, 2016).
● When a business involves every employee in its operations, even entry-level workers, it
employs a bottom-up strategy. In most businesses, these two strategies are applied
concurrently to make sure that all team members are in sync and can finish tasks efficiently
 and on schedule. The strategy is also a fantastic way to foster teamwork, and by allowing
workers to participate in decision-making, the business is able to gain insightful feedback
that raises output quality and productivity.

Rebranding

● Rebranding the entire corporation and altering its global networks were other important
considerations for Kodak to take into account. This is because many of the company's
devoted clients are now very old or deceased, and the business was founded more than
a century ago. As a firm, they ought to have welcomed change when they recognized how
profoundly the entire consumer market had transformed. One of the main mistakes Kodak
made that contributed to their demise was to stay true to their heritage and let time pass
them by. The corporation would have guaranteed that they kept their market share and
gained a new market by rebranding in order to draw in a whole new clientele.

Development of digital strategy

● Since Kodak is at the forefront of digital technology, they should have been ahead of their
competitors when it comes to timing. Along with firing the previous management, the
company's board of directors ought to have recognized the critical role that digital
technology will play in their sector. Kodak had to have started a rigorous training program
wherein its staff members were given the skills and knowledge required to adjust to the
shifting demands of the market, rather than employing new personnel from businesses
that had already made a name for themselves in the digital era (Shih, 2016). This would
not only help them keep their loyal employees, but it would also be less expensive than
recruiting and purchasing new managers and businesses.

Diversification

● When creating plans that anticipate change and can be quickly adjusted, they ought to
take a more proactive approach. Kodak's primary error was failing to recognize the
profound impact that digital technology would have on the industry due to its disruptive
nature (Shih, 2016). Businesses can also discover that just when they have extra money
to invest, they shouldn't do so on things that will be worthless in the long run. Eastman
Kodak spent a significant amount of money entering new markets that were unrelated to
their primary business. Businesses should only use their excess capital to fund projects
 that, when combined with their mission and goals, will help them maintain their profitability
status over the long run (Grant, 2016).

Competitor Alliance

● Sometimes it may be beneficial for competitors to establish an alliance in order to tackle

the challenges as a single, stronger unit and handle the negative impacts of market rivalry.
The management will have to collaborate with a certain number of the market's rivals.
● Selecting a companion should be done carefully. For the partnership to succeed, the
partners must possess attributes that Kodak does not. For the cooperation to be more
effective, each partner will need to provide something special and appealing.

Vertical Strategy

● The management of Eastman Kodak might also take into account integrating the
companies in the supply chain through a vertical strategy. Hill and Jones (2013) assert
that this tactic is always required to get rid of intermediaries who might try to take
advantage of the business while supplying raw materials or purchasing its goods. Because
Kodak controls the whole supply chain, the method will help reduce the power of buyers
and suppliers. Its prospects of success in the new sector will increase as a result.

Pursuing a Multi-business Model based on Diversification

● The decision of Eastman Kodak to diversify its product delivery through a multi-business
model is a clear indication of the firm’s strategy to increase its profitability in the market.

The firm is keen on ensuring that it achieves success in the market in order to recover from the
challenges it faced from the late 1990s to 2012. The following are some of the ways through which
Kodak will increase its profitability using this multi-business model.

● The model increases the number of products that Kodak avails to the market. The
increased products will increase its sales, which in turn, would lead to increased
profitability.
● The multi-business model will help Kodak expand its market share both locally and
internationally. The market share taken by the competitors in one industry is compensated
by the profits made in the other industries.
● This model helps the firm to reduce the power of its competitors. The profits earned from
 one industry can be used to expand the operations of the struggling industry. This would
help in boosting the overall success of the firm.
● According to Amit and Zott (2012), the multi-business model is always important in
spreading the risks within a firm. When one industry is affected by the external forces
which are beyond the capacity of the firm, success in the operations of the firm in other
industries can be used to compensate for the losses.
● This model also expands the knowledge and experience of the firm on how to deal with
the market forces. The knowledge learned from one industry can be used to boost the
operations of the other industries. This would increase the profitability of the firm.

It would be important to identify cases where firms have used this model in the past successfully.
A good example is General Electric, a leading electrical firm in the world. The firm co-owns NBC
Universal in the communication industry.

The firm has also invested into the financial industry with a massive success. Another example is
Samsung. The firm has diversified its products, and is currently making a move towards the cloud
computing industry that is dominated by Apple Inc.

Implementation Strategy

● At this stage, it is important to suggest a strategy that Eastman Kodak can use to
implement its strategy to operate in the cloud computing industry. The firm should consider
acquisitions in order to expand its strength in the market. By acquiring some of the
successful upcoming firms in this industry, the firm will be spared the cost of starting from
scratch in this competitive industry (Coulson, 2013).
● The strategy will not interfere with Kodak’s current organizational design because it will
have a full control of the new unit. It is also a fact that this approach will give Kodak full
control of the strategic systems. The management will also define the structure of the
acquired firm. It is always recommended to allow the new firm to operate independently
without interference, but with some guidance from the parent firm.
● This approach will also be important in protecting the type of the organizational culture
practiced at this firm (Kashmanian, Wells & Keenan, 2011). The new firm will be allowed
to operate in a manner that would yield the best success, and for this reason, none of the
two firms will need to adjust its organizational culture in a way that may upset their
operations.
CONCLUSION.

In conclusion, Kodak's approach to digital photography between 1992 and 2012 was marked
by a blend of innovative projects and difficulties adjusting to the quickly evolving technical
environment. With a gradual approach, partnering with other manufacturers, and customizing
methods for various markets, the corporation first adopted digital technology.
Unfortunately, Kodak was unable to carry out a successful digital revolution, which finally resulted
in financial troubles and bankruptcy in 2012.

Reluctance to fully embrace the change to digital and adjust to changing market dynamics
is largely to blame for Kodak's strategy's failure. Insufficient environmental scanning by the
organization, particularly with regard to trend analysis and market research, hindered it from
adjusting its strategy to match changing consumer tastes and new technological advancements.
Moreover, Kodak was unable to customize its methods for a variety of clientele due to its
mishandling of socio-economic analysis, particularly with regard to the comprehension of cultural
variations among markets.

Other tactics that may have put Kodak in a stronger position include environmental
scanning and long-term visioning, customer-centric innovation, maximizing digital patents, quick
digital transformation through cooperative alliances, and diversification into specialized markets.
By addressing the flaws in Kodak's strategy, these substitutes may have encouraged flexibility,
creativity, and competition in the digital photography sector.

In order to direct Kodak's future actions, proposals were made in the summer of 2012 to
discontinue unproductive products, concentrate on customer-centric innovation, diversify into new
markets, and optimize digital patents. A multi-business model built on diversification, a vertical
integration plan, and a strategic collaboration with rival companies may have also been taken into
consideration. Proactive approaches to staff training, organizational reorganization, and
rebranding were also recommended.

Ultimately, successful implementation of these strategies required a proactive, adaptive,

and innovative mindset, aligning Kodak with the evolving demands of the digital era.
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