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Kodak Group 1 Ppt

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kodak eastman : meeting the digital evolution

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Kodak Group 1 Ppt

  1. 1. Eastman Kodak : Meeting the Digital ChallengesGroup: 1 Anjali Tyagi Gina MatthewsJulie RocherNishant Chauhan Samir Gandhi<br />
  2. 2. Overview :Sep 2003, Eastman Kodak’s CEO, Dan Carp, presented a Digital Imaging Strategy to its investors that would involve $ 3 billion of new investment.The strategy called for rapid acceleration in Kodak’s technological & market development of its digital imaging business.Kodak’s dividend would be slashed for this purpose & thus, the company’s shareholders became louder & bolder in raising dissatisfaction with this decision.<br />
  3. 3. Also, Carl Icahn, who had acquired 7% of Kodak’s stock, opposed Carp by stating that a massive investment of this kind may or may never generate returns.Add to that, Kodak’s growth was declining & net income by down by two-third’s.Also, the competition in the digital business was getting aggressive, profit margins were reducing & Kodak’s lack of experience in the hardware business added to the uncertainty.The challenge in the case is to determine whether to go ahead with this $ 3 billion investment plan or to focus on its established products & markets<br />
  4. 4. About Kodak<br />Eastman Kodak Company-Established in 1901 by George Eastman.<br />Slogan – “ You press the button, we do the rest”<br />Provide a fully integrated photographic service supplying the camera and film through to processing and printing.<br />Business principles<br />Mass production at low cost <br />Reinvesting profits for business growth<br />International distribution<br />Extensive advertising<br />Customer focus<br />Growth and development<br />Fair treatment of employees<br />
  5. 5. Creating a Digital strategyTo emphasize focus on digital imaging business & develop a strategy 3 themes were emphasized:1) Incremental Approach: Buildinga presence by introducing products & services according to advancement of technology & customer’s acceptance. For this purpose, they came up with a lot of hybrid cameras offering mix of digital & traditional photography.<br />
  6. 6. 2) Distinct Strategy for Consumer and Commercial Markets: Differentiated product range for each segment in both markets reflected in their price differentials 3) Alliances: In order to become a key player in digital imaging & add competitive advantages by utilizing external resources, Kodak partnered with large software & hardware firms, such as Microsoft, Intel, HP and Olympus to develop many new products & services.<br />
  7. 7. Hybrid initiatives Kodak launched in the 1990s<br />
  8. 8. ‘You’ve got pictures’ was co-developed with AOL and launched in 1998. This system gave consumers the opportunity to drop film rolls off and have them delivered to their AOL email address<br />Photo Net, established in 1997, was another initiative that can be considered similar to ’You’ve got pictures’<br />
  9. 9. Evaluation of Incremental ApproachThese products & services had in common that they sought to increase the value of using Kodak’s filmMost of these hybrids faced a sharp decline once digital imaging started to grow rapidly. It is of course hard to tell whether the revenues generated before the revolution compensated the R&D money.And it’s hard to say whether spending that money on pure digital products would be a wiser decision. However, it became clear that no one wanted a hybrid, but rather a fully digital system <br />
  10. 10. Easy Share System (Consumer Market)An integrated systems approach for the consumer market in order to make digital imaging easy.The system includes: 1) The broad range of Easy Share digital cameras 2) Transfer of images from camera to PC at the touch of a button<br />
  11. 11. 3) Easy Share software allows downloading, organizing, editing & emailing of images.4) The system enabled the picture experience anytime, anywhere: at home, at retail or on the road (kiosk).<br />
  12. 12. Commercial Sector : Health Imaging Commercial Imaging Commercial Printing<br />
  13. 13. Kodak’s Resources & Capabilities<br />
  14. 14. Failure One – A Paradox between Logic & Creativity in StrategyThe most important step in any strategy is the very strategic choice of the initial approach<br />Issues<br />
  15. 15. How Kodak Missed the Information Age<br />
  16. 16. Failure Two – A Paradox Between Revolution & Evolution in StrategyEven when a business strategy is formulated and agreed, there are often differences on how best to implement strategic change<br />
  17. 17. Film= Huge profits and market dominance<br />
  18. 18. DigitalImaging = Uncertain, low profits, low volumes at the given time<br />
  19. 19. Stock price<br />
  20. 20. Failure Three – A Paradox Between Markets & Resources in StrategyWhat is the true source of competitive advantage? <br />
  21. 21. Failure Four – A Paradox Between Competition & Co-operation in StrategyHow an organisation should respond to rival businesses is a paradox between competition and co-operation<br />
  22. 22. Kodak has two alternatives to choose from:1)$ 3 Billion investment plan & try to gain dominant position in the digital market OR2) Abandon the above plan & establish core competency in those sectors where it had a strong market position & where margins are strong: commercial & medical imaging markets & supply of photo-finishing services & consumables <br />
  23. 23. Plan A :- Better quality of products & services in digital business- Ease of use & Convenience-Future potential of Digital industry-Technological know-how-Easy to capture market & form alliances because of their brand- Deviate business from falling films &traditional photography businessPotential problems:-Established Competitors like FUJI, Sony, Canon-Mobiles-Rising Debt & unfavorable financials- Shareholders Dividend slashed <br />
  24. 24. Plan B :-Print media & Commercial printing is strong revenue generator-Core competency & Leadership in printing-Costs saving-Less competition compared to digital business-High margins, Health Imaging & Commercial Imaging have better returns -Problems in execution of new productsPotential Problems:- Lag behind in the Digital Industry-E-services- Falling Traditional business- Films were becoming outdated<br />
  25. 25. Kodak V FUJI<br />
  26. 26. Recommendation:1) Scrap the $ 3 Billion plan2) Develop core competency in existing products & markets.3) Outsource Digital Business & maintain existing Easy Share System4) Focus traditional photography & films in current & emerging markets & reap the maximum cash since it’s a cash cow.5) Pay Dividend <br />
  27. 27. Conclusion:-Kodak delayed in realizing that Digital business is the way to go in the future. -Kodak’s vision of digital photography is not ready since the company is not yet prepared.-Hence, they should start this on small scale, & thus, not sell Kodak health and home product division for paying debts.<br />
  28. 28. Thank you <br />
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