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Transcript of 2409 system 3 account entrada barulhenta, ento todos
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Case Presentation Kodak’s Strategy
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Group 4
Name IDMd. Asif-Al-Noor 10364040Monira Mahsharan 10264014Marshal Richard 10364057
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Agenda• Company Overview• Product line• External Factors Analysis
– Porter’s 5 Forces Model– Industry Driving Forces– Key Success Factors – Strategic Group Mapping
• Internal Factors Analysis– Core Competences– SWOT Analysis– Value Chain
• Kodak Strategy– Based on Case– Why Kodak’s 4-year Strategy failed– Reasons for Failure– Based on Current Situation
• Recommendations• Conclusion
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Company Overview
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Company Overview…. Cont…1879: George Eastman invented the dry-plate process
and filed patent for a machine that coated dry photographic plates
1880: George Eastman established the Eastman Dry Plate Company, at Rochester N.Y.
1884: Introduced paper roll film1889: Invented perforated celluloid film 1900: The Brownie box camera went on the market
with a price of $1 1935: Introduced color film1960: Brought the Instamatic camera to the market1970: Major sales growth for Kodak. Concentrates on
film and basic cameras
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Company Overview…. Cont…
1980: Fuji emerges as a serious competitor 1994: Kodak abandoned its non-imaging health-related
businesses began to invest in digital imaging products for medical practice
1997: Kodak was a high-cost manufacturer with a growing portfolio of digital products which was losing hundreds of millions of dollars annually
1997: Restructuring that eliminated 19,000 jobs and cut more than $1 billion from annual costs
1999: Kodak entered the digital radiography market
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Company Overview…. Cont…
2001: Kodak is pushing aggressively into China, an important growth market
2003: Carp unveiled the plan to invest $3 billion in the next three years in digital products by cutting dividends by 72% - to 50 cents per share
2004: Kodak announced that it would stop selling traditional film cameras in Europe and North America, and cut up to 15,000 jobs
January 2005: The Kodak EasyShare-One Digital Camera, the world’s first Wi-Fi consumer digital camera capable of sending pictures by email, was unveiled
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Company Overview…. Cont…
December 2010: Standard & Poor's removed Kodak from its S&P 500 index
January 19, 2012: Kodak filed for Chapter 11 Bankruptcy Protection The company's stock was delisted from NYSE and moved to OTC exchange. Following the news it ended the day trading down 35% at $0.36 a share
February 9, 2012: Kodak announces it will exit the digital image capture business
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Brand Logo Evolution
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Kodak Product• Four distinct sub-product
– Digital cameras – Home printing– Online services– Retail kiosks and mini-labs
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External Factors Analysis
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Porter’s 5 Forces Model
To aid firms in analyzing competitive forces in an industry environment.
Question: How competitive forces affect industry
attractiveness
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Porter’s 5 Forces: Digital Camera
Threat of Substitute Products
Threat of New
Entrants
Threat of New Entrants
Rivalry Among Competing Firms in
Industry
Bargaining Power of Buyers
Bargaining Power of Suppliers --
o
- --
o - --Low Moderat
eHigh
High Competition, technology driven, move fast, numbers of players, lower price strategy.
Few substitutions, i.e. Mobile phone, Camcorder, Traditional cameras
Technology, know how, economies of scales, and high investment
Numbers of digital cameras ,trend of digital market suppliers worldwide, China base
Numbers of digital cameras ,trend of digital market suppliers worldwide, China base
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Porter’s 5 Force in terms of photographic industry
Buyers bargaining power• Have more choice• Switching cost low
Suppliers Bargaining Power is
• Out side the country from global market
Strong bargaining power
moderate to weak
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Porter’s 5 Forces… Cont..
Potential New Entrants• Huge capital & specialized• Not relay on any company
Substitutes ProductsLow switching costLow price of substitutesHigh bargaining power
Strong entry barriers
Strong threats
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Porter’s 5 Forces… Cont..
Rivalry among Competitor• Intense competition among the rivals
Strong Competition
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Industry Analysis through 5-forces: Answer Question 1
Strong entry barriersBuyer in strong positionModerate to weak position of SupplierHuge threat from substituteStrong rivals
Apparently Unattractive Industry
LOW Profit
Potential
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Industry Driving Forces: Answer Question No2
• Rapid decline in demand for traditional photography equipment in developed economies
• Rapid growth in demand for digital cameras in developed economies
• Steady decline in demand for film and photo processing
• Development of new imaging technology such as photo-enabled wireless telephones and high-megapixel digital cameras
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Key Success Factors• Technological capabilities• Rapid design-to-market cycle times• Reputation for producing high-quality consumer
electronics• Reputation for producing high-quality optical
devices (cameras, binoculars, microscopes, medical equipment)
• Distribution network that includes large electronics chains and local camera retailers
• Involvement in multiple segments of the industry value chain—camera production and sales, printing supplies, professional photo processing
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Strategic Group mapping
Leica Sony
Samsung
Olympus Nikon
Kodak Cannon
High Price
Low Price
Market share
Firm % Market Share Average PriceCanon 40% $220.00Sony 15% $300.00Samsung 10% $260.00Nikon 10% $250.00
High Market Share
Low Market Share
Price
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Internal Factors Analysis
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Kodak in terms of core competences
Not Rare
Not valuable
Not Non substitutabl
e
Not costly to imitate
Not Core Competence
s
Not able to get
competitive
advantage
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SWOT AnalysisStrength• Existing Brand equity•Distribution Presence•Competitive capabilities• Market advantage•Acquire many strategically aligned companies
WeaknessRapidly decreasing sales revenue•EBITDA are very low•Work force has been cut off• Corporate Culture
Opportunity• Digital Image• New alliances•On line photo sharing and storage
Threat•Competition in traditional• Demise of silver halide technology•Photo capable mobile phone•Price sensitive•Economic health & terrorism
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Value chain pre digital age
Image Capture Processing
Projection
Printing
Storage
- Film Camera- Video Camera
- Retailer Processing
- All Retail Stores- Reprints
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Value Chain post digital age
-Digital Camera -Digital Cameras Software -Hard Disk- Video Camera -Scanner at home -Floppy Disk/CD
-Online (email) -Digital mini-labs -Removable
Storage - Kiosks at retailers -Online Services
Image Capture
Projection
Digitalization StorageTransmission
Printing
Manipulation
Retrieval
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Kodak Strategy based on case
In 2003, CEO Daniel carp revealed 4 pillars Strategy:
1. Managing the traditional film business 2. Leading in distributed output 3. Growing the digital capture business;
and 4. Expanding digital imaging services
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Kodak Strategy….Cont..
1. Managing the Traditional Film Business:
• Slow exit strategy from film business• Looking forward to digital technology
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Kodak Strategy….Cont..
2. Leading The Distributed Output
• Now a day digital photography much easer to view & share photo(i.e. integrated display on camera & sharing through electronic mail or kiosks etc.) and its affecting the photography industries.
• Then Kodak is able to bring fewer profit through digital technology (i.e. digital print) instead of traditional printing.
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Kodak Strategy….Cont..
3. Growing the digital capture business
• Profit much lower in digital photography than traditional photography
• Success in this part of the business is dramatically opposed to the traditional photography business .
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Kodak Strategy….Cont..
4.Expanding digital imaging service
• Strategy take place by expanding product & services. For example Kiosks that could print image directly from mobile phone.
• In case of expanding service/online service Kodak acquiring companies like Ofodo to boost Kodak Easy Share Gallery.
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Low Cost Provider Strategy
• Introduced cheapest Inkjet printers Cost $150-$300;Almost 50% less then competitor, i.e. HP, Epson, Lexmark.
• Ink Cartridges sold $9.99 Black & $14.99 color. Competitor avg. price $ 30.
• Encourage more people to print at home. Photo value pack will allows to print at home for 10 cent, 60% cheaper then HP system
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Reason For Failure
1.Core competency became core rigidities
2.Lack of market research3.Late mover of digital photography4. Innovation and transformation Failure5.Unwillingness to change
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Current Strategy
Current CEO Antonio Perez adopt new strategy, such as_
1. Outsourcing Manufacturing 2. Huge invest in digital technology; 3. Spent hundreds of millions of dollars to build up a
high-margin printer ink business to replace shriveling film sales
4. Aggressive patent litigation in order to generate revenue;
5. Expand current brand licensing program
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Recommendation• Discontinue unprofitable products• Change middle to high-level management• Launch new and innovative product • Move to another business segment such as
movie and entertainment • Focus on high potential products
– Kiosks and mini-lab– Online services such as photo printing and sharing
• Emphasize on niche market i.e. medical market and professional
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Conclusion• Great example of strategic failure. • Different models and theoretical concepts were
applied to identify key factors that have led the company from where it was to where it stands today.
• Lessons we can learn: • External environment can be deceiving • Change happens• Greatest strength can be weakness • Innovation is not the perfect solution • Its not all over till its over
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Thank you
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Any Question