TEESSIDE BUSINESS SCHOOL

MEDITERRANEAN UNIVERSITY
COLLEGE

Strategic and Change Management

Case study 5: Eastman Kodak Company

Dr. A. R. Morden

George H. Papadakis, PhD

Kodaks core competencies:

Image of pioneer: established in 1982, Kodak is the first producer of
photographic equipment worldwide.
Brand: Kodaks brand enjoys global awareness and recall and has become
an asset of enormous commercial value.
Quality: Kodak enjoys a reputation for high film quality.
HRM: George Eastman was a pioneer in HRM, lavishing generous health
care and retirement benefits for its employees.
Marketing: satisfying customers, product differentiation and aggressive
marketing through promotion and sponsorship stands at the heart of the
companys philosophy and is repeatedly emphasized by Fisher in his reports.
Innovation: the company is a major introducer of new technologies and
products in the industry with a traditionally clear focus on R&D.

Competitor analysis for Kodak:

Who are Kodaks competitors?
direct competitors: producers of photograph equipment (e.g. Fuji, Polaroid,
Sony, Agfa, 3M, Konica, etc.).
direct competitors: private labels (e.g. Boots in the UK, K-Mart in the USA).

indirect competitors: other leisure goods and services (e.g. video

technologies, personal computers, etc.).
potential entrants: companies with expertise in digital technologies (e.g.
Hewlett-Packard, Microsoft, Adobe, etc.).
What does Kodak compares against its rivals?
the company outperforms its rivals in reputation, quality and innovativeness
however, it lacks operation efficiency, especially when compared to the
Japanese firms

Kodaks strategy:
Competition strategy:
differentiation: based on the strong brand and high quality.
however, intense competition from cost-efficient rivals (Fuji sets its price
about 10% below Kodaks and private labels are 30% cheaper than Kodak)
forced Kodak to work intensively towards reducing operating costs.
there is evidence suggesting that this effort to achieve simultaneously a
differentiation low cost position did not work well, and the company was
stuck in the middle.
critics from FT and Fortune described the company as expensive and
inefficient.

Kodaks strategy (cont.):

Product market strategy:
diversification: entrance in product markets outside its traditional lines by
buying up companies varied as pharmaceuticals, computer systems and
household cleaners.
the move towards diversification is justified by taking in consideration the
continuing stagnation of the imaging sector in Western markets and the
increasing competition by Japanese manufacturers.
the strategy paid of with new revenue sources.
however, it also saddled the company with heavy debts (in financing the
acquisitions) and inefficiencies as it introduced the company in businesses
about which it knew nothing.
this necessitated several SBUs (e.g. clinical diagnostics) to be sold and a
return to the core (films and cameras).

Kodaks strategy (cont.):

Business development strategy:
i) strategic alliances and joint ventures with companies outside the industry
to gain know-how in digital technologies (e.g. with Hewlett-Packard, Apple,
IBM and Microsoft in software).
this cooperative strategies were a dramatic break in Kodaks history the
company has typically been doing everything in-house, a fact that helped in
building an unparallel global brand identity.
however, being a loner is a liability when trying to break in unknown product
markets such as multimedia.
ii) acquisitions with which the company diversified in new product markets.
iii) aggressive internationalization, especially in Asia in order to strengthen
the companys presence in a booming region which accounted for less than
10% of its sales.