Business Perspective

On
Kodak

By: Amandeep Sabharwal

Roll No: 80201180021

The Kodak Company is an American technology company that produces imaging products with its
historic basis on photography. The company is headquartered in Rochester, New York, and is
incorporated in New Jersey. Kodak provides packaging, functional printing, graphic communications and
professional services for businesses around the world. Its main business segments are Print Systems,
Enterprise Inkjet Systems, Micro 3D Printing and Packaging, Software and Solutions, and Consumer and
Film. It is best known for photographic film products. Kodak's journey began in April 1880 when George
Eastman (Eastman), a junior clerk at Rochester Savings Bank, started manufacturing photographic dry-
plates on the third floor of a building on State Street in Rochester, US. The commercial production of the
dry plates impressed a manufacturer of buggy-whips and family friend Henry Alvah Strong. Strong
provided funding support and later, in 1881, Eastman and he formed a partnership under the name
Eastman Dry Plate Company. In the same year, Eastman resigned from his junior clerk post to go full
time into his business.

How Kodak Created Value

In 1888, with the launch of the 'Kodak' camera with a 100-picture film for US$25, Eastman
revolutionized photography. To market this product, the company used the slogan 'You press the
button, we do the rest'. This invention reinforced the company's commitment to bringing photography
to the common man at the lowest possible price. The camera proved to be a commercial success.
Eastman trademarked the 'Kodak' brand name and the word Kodak was incorporated into the company
name. Eastman’s goal was “to make the camera as convenient as the pencil.”
From its inception, Kodak dominated the American photography industry. As late as 1976, Kodak
commanded 90% of film sales and 85% of camera sales in the U.S. Kodak employed over 145,000
workers worldwide.

1996 was the peak year for Kodak. The company had over two-thirds of global market share. Kodak’s
revenues reached nearly $16 billion, its stock exceeded $90, and the company was worth over $31
billion. The Kodak brand was the fifth most valuable brand in the world.

Kodak as Initial Innovators in Photography

George Eastman, made the first time experiment with gelatin as a base for chemical emulation. Before
1878, photographs were typically printed glass or ceramic plates. Kodak’s innovations continued
through the 1980s and 1990s, with products such as disposable cameras, 110 film and disc film. Out of
the three inventions, only the disposable camera continued production to this day. However, Kodak is
no longer making the cameras and their competitor Fujifilm is. The next big advancement in
photographic history came in the 1990s when Kodak created the first digital camera. It was a modified
Nikon film camera with a 1.3 megapixel CCD sensor. With only 987 made and price tag of thirteen
thousand dollars, it was obvious why so few photographers were using it. It was apparent that Kodak
had the ability to think of a product and bring it to life, but not put it in the hands of consumers. It was
companies like Nikon, Canon and Sony that really paved the future of digital photography. Kodak tried
to follow, but continued to be unsuccessful grabbing attention of consumers

The company invented many products that would shape the future of the industry, and many of which
no longer exist. For example, 35mm film was invented by Kodak in 1935 and is still used today.
However, the 110 films that were invented in 1972 failed to make enough of an impact to remain
relevant. Kodak’s ups and downs since its inception eventually lead to the one thing that would make
the biggest impact in its history. In 1975 Kodak invented the first digital camera. Kodak was really an
innovation driver initially. Without Kodak being such an innovator in the photography industry, many
commercial and personal daily activities and businesses would not be the same as they are today.
Kodak created the first consumer film for cameras, and the first digital camera. The two inventions
alone provide that Kodak’s development since its inception played a major role through the history of
photography.
 Kodak – A Strategic Failure

The biggest strategic blunder committed by the management of Eastman Kodak was that it failed to
correctly anticipate the needs of changing time. While the competitors around them were constantly
innovating and coming up with new products in line with the changing needs of the market, the
management at Kodak was happy being stuck with the old products and ways of thinking. A big factor
contributing to the amazing collapse of Kodak was management’s approach towards finding solutions to
strategic problems being faced by the organization.

Kodak totally depended only on the production and sales of cameras and films which allowed
competitors to slowly snatch the market share of Eastman Kodak in the camera industry it previously
dominated. The company decided to diversify into other related but noncore industries. Between the
1980s and the early 1990s, the company tried to diversify into other industries and acquired various
companies in different industries. It acquired the copier services business of IBS, a pharmaceuticals
company, the medical diagnostics business, computer hardware business, Mass Memory business, and
bioscience and lab research firms. However, none of its attempts at diversification were a success. In
fact, they increased Kodak's debt burden.

Kodak could easily have avoided the losses in revenues at the hand of fierce competition from rival
organizations had the management used ways to tackle the changing environment needs. Kodak had
also brought in two CEOs from other industries - George Fisher from Motorola and Antonio Perez of
Hewlett-Packard. The idea was that a CEO from a different industry would bring in new ideas which
would help the company retain its position and business volumes. According to experts, the idea of
putting an outsider in the top place did not work out for Kodak as it made the in-house leadership
unhappy.
 Conclusion

The management of Eastman Kodak committed a number of mistakes in running the business operation
including its complete reliance on internal organizational competencies for an extended period of time
and then abruptly changing the strategy to merge with and acquire a huge number of organizations
sending wrong signals to the investment community. Although Kodak faces a number of challenges
posed by the technologically superior rival organizations but, if it correctly uses management strategies
aimed at constantly changing the organizational policies in line with industry benchmarks there were
bright chances that Kodak can win back its lost position.

With its emphasis on using intuitive approaches to meet emerging challenges in the marketplace, would
have helped Kodak’s management in foreseeing that it needs to move from the traditional film camera
to the digital camera in order to keep in line with changing consumer needs

The story of Kodak should be a cautionary tale to companies of any size. It invented a technology with
consumer potential but failed to adapt to the market changes. Kodak knew that digital photography was
going to become a consumer technology at some point in the future, but they did not anticipate digital
toppling film the way that it did. Companies which fail to take advantage of the reasonable applications
of their intellectual properties are likely doomed to repeat this fate on some level, while companies who
can spot vacated opportunities like this one will have much more success over time, no matter how
profitable the organization was at one point.