Eastman Kodak Essay Example

Eastman Kodak Essay Through this slogan formulated by its founder George Eastman, Eastman Kodak Company revolutionized and set off as the pioneer in modern imaging. From its initial introduction of the dry glass plate process technology and machine, Kodak has further introduced novel technologies in imaging, which throughout the years, redefined societys life styles. Through its basic principles of low-cost mass production, extensive advertising, focus on customers and international distribution, Kodak has become one of the worlds most recognized brands with its products becoming the markets beacon for the photographic industry for more than a century now. With the emergence of competition and antitrust concerns, Kodak has evolved, through diversification strategies, into an enormous company catering to pharmaceutical, health care, electrical, computer and chemical products among others. The company, as a consequence, moved away from its core competencies, was unable to compete with its rivals competently and has suffered from heavy losses. As his first move to answer this predicament, newly appointed chief executive officer George MC Fisher has cut down costs and debts through divestiture of non-imaging related business segments. At present, Kodak is engaged primarily in developing, manufacturing and marketing traditional silver-halide photoimaging products, services and solutions for consumers, professionals, healthcare providers, the entertainment industry and other commercial customers. In its continuing thrust to foster long-term growth, development and success, Eastman Kodak Company is now faced with the dilemma to sustain in the mature and slow-growing silver-halide business. In addition, the company is contending with a legion of competitors to achieve and sustain a dominant position in the emerging digital imaging business, which at the moment poses encouraging and promising opportunities. We will write a custom essay sample on Eastman Kodak specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Eastman Kodak specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Eastman Kodak specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Technological Environment. The influx of technological advancements into the photographic marketplace has presented the industry with a unique set of challenges and possibilities. Technological discoveries and enhancements may foster, or even hasten, the growth of the traditional silver-halide market. The Advanced Photo System (APS), for example, a product of technological advancement currently being developed by nig industry players may bring silver-halide-based products into a higher level. In addition, with the onset of digital technology, the industry is faced with chance to expand its business through venturing more into digital imaging which is currently putting forth enticing opportunities. On the downside, considering the electronic nature of the products offered in line with digital imaging (eg. Scanners, printers, etc.), entry of potential competitors, particularly from the electronics group who may have equally competent resources and capabilities, is at a height. As a result, the structure of the industry may be altered. Socio-Cultural Environment. With societys increasing awareness over environmental preservation, possible hindrance in the growth of the players in the industry is present, The film marketed by these companies, as an example, are currently packaged in plastic non-biodegradable tube cases. As a response to environmental concerns and grievances, repackaging using nature-friendly materials may be ensued. This also holds true with single-use cameras (SUCs) which is primarily composed of plastic non-biodegradable materials. Here, companies may either reduce its margin or impose higher prices over its products in repackaging its products to be environmental-friendly brought by a possible increase in its production cost. The markets culture may also impede the entry of global industry players. As an example, with Japans resistance to Western influence and its societys higher preference over locally made products, foreign industry players would most likely have difficulty in penetrating in this geographical segment. In addition, with the fact ascertained that photographic products are usually used in instances of special occasions (eg. weddings, birthdays, holidays, fiestas, etc.), regularity of celebration of these occasions would deeply affect the demand of the products. Economic Environment. The global scale of the photographic market presents some threats to its core business. Sales in its geographical segments would generally differ according to a countrys economic state. Sluggish economy or economies under recession would decrease sales as a result of delayed spending on leisure goods?. In addition to the state of the economy, tariff and foreign trade laws may render leisure good spending in lull brought by higher prices as a result of the duties imposed on the goods. Tourism economy, as a whole, has a direct effect on the industry. As the number of tourists increase, usage of photographic materials would most likely increase demand. Legal or Political Environment. Legal influences may hamper the growth of some players in the industry. Antitrust laws, for example, may limit expansion of industry players through its provisions. On the brighter side, however, this may protect the position of a company in the market. This holds true in the case of Kodak and Polaroid in the late 1980s when Kodak engaged into marketing instant cameras. Foreign laws, in addition, in its move to protect local firms, may thwart the entry of global producers in its market. Furthermore, patent and proprietary rights laws would deter firms to expand, venture, and produce patented products. Threat of New Entrants. With great barriers, the threat of new entrants in the industry is at a low level. This is brought about by the sizeable investment required in procuring manufacturing equipments for a potential entrant. Furthermore, marketing costs are also high for these entrants for it to be able to topple down existing players or even penetrate the market. This is in view of the current industry players, which if characterized, are established and successfully positioned in the market obtaining brand loyalty. Also, with the length of these companies operations in mind, they have been riding down the experience curve; as a result, economies of scale and cost advantage have already been achieved. In addition, prospecting players must introduce into the market differentiated products that are more enhanced than that offered by existing players, which would require it to spend a substantial amount in research and development projects. However, with the emerging digital imaging in view, the risk posed by potential industry entrants may be shifted from a low level to a moderate one. This is in view, as stated in the earlier part, of the electronic nature of some products offered by the digital imaging technology which has the possibility of attracting electronic companies who may possess capabilities and competencies that could equal or even exceed that of the current industry players. Rivalry Among Established Competitors. Firms under the photographic industry operate in an oligopolistic environment were few of the member firms share dominance such as Eastman Kodak, Agfa and Fuji Films. Competition among these firms is at a fierce level given the fact of its slow-growth particularly in the traditional silver-halide photography. Here, with demand conditions at a moderate level of progress, firms closely compete to capture and increase market share through price wars. Exit barriers within the industry is at a high level as well contributing to the intense rivalry among industry players. Bargaining Power of Buyers. The influence set forth by the buyers in the industry is at a moderate degree. Though products offered by the firms in the industry have attained brand loyalty, cost advantage and economies of scale and has a lesser threat of substitute products (further discussions to be made in the later part), still, firms are forced by buyers to bargain for lower prices by the quantity of their purchase?. In addition, with price wars evident among industry players, buyers take advantage on playing off with these firms to obtain cheaper costs or even present a threat of providing for a lesser shelf space. Bargaining Power of Suppliers. The pressure exerted by the suppliers over the firms in the industry is at a low degree. Silver, for example, a major raw material in the industry is widely available. It is evidenced with the fact that in the past years, no direct relationship can be established that price of the commodity has been affected by fluctuations in the availability and price of raw materials. In fact, the photographic industry consumes about one-fourth of the global demand for silver. Furthermore, with the high level of availability of packaging materials, in this case plastic tubes and canisters, and boxes, bargaining power of suppliers is at a lesser scale. Threat of Substitute Products. With high switching cost to substitute products, in this case video cameras, a low extent of threat is shown. Aside from the cost factor, accessibility of outputs and simplicity of operation ensure the industry of low level of preference toward substitutes. Here, pictures can easily be obtained and seen without the use of any other devices, unlike videotapes which requires videocassette players for it to be viewed. In addition, cameras are more preferred than video recorders or cameras with the fact that video recorders are more complex in operation as compared with cameras. As a part of a hyperactive competitive environment, Eastman Kodak must be able to efficiently and effectively strategize in order for it to be able to sustain its position in all areas of the market, existing and emerging alike. However, the success of the companys adopted strategy would depend upon the reaction of its competitors; thus, it is imperative that in its strategies, competitors competitive profile must be given proper consideration. Kodak is faced with a legion of competitors; among which, Polaroid, Agfa, Fuji and Konica pose as the major rivals of the company. Polaroid. Between the latter mentioned competitor, Polaroid shows the lesser degree of competition with the fact that Kodak is unable to directly compete in the instant photo imaging business as a result of a previously ruled antitrust lawsuit. As a result, competition between the two companies would be on attracting and capturing the markets preference between instant photography and traditional silver-halide imaging. Agfa. Agfa, known as the Kodak of Europe for its typically the same business strategy, enjoys dominance over the European market. As the second largest chemical manufacturing company, the company offers its products (particularly in its developing equipment and imaging business) at a lower price compared to that of its competitors through the concept of vertical integration a strategy previously enjoyed by Kodak until the time it has divested of its chemical manufacturing business, Eastman Chemicals, in 1993?. Its current move to increase market share in the US market through its advertisement campaign of free film rolls clearly shows the seriousness of the company to compete with Kodak. In addition, with its less-priced products at hand, the company demonstrates a greater degree of competition for Kodak. Fuji Photo Film Company. Among its competitors, Fuji presents to be the closest rival of Kodak. With its product offerings at the same nature with that of Kodak, the degree of their rivalry may also be evidenced by the continued battle of lawsuits. The fierce competition between these firms stem from Fujis offering of low-priced films which stirred and reduced Kodaks market share by 10%. Also, Fujis strong foothold in the Japanese market which hampered Kodaks position and made the latter felt in an unfair situation contributed to the perceived battle. Recently, in its move to topple over Kodak, Fuji moved for an establishment of a US division focusing solely on digital imaging. Through this move, the company will be able to market products which it has already offered in its Japanese market. Furthermore, it has proposals of hooking-up with computer companies for its products to be integrated in computer systems. These, among others, present a more pronounced competition for Kodak. Other Competitors. Aside from the earlier discussed companies, Konica is another competitor of Kodak in the imaging business. It has been said that together with Agfa and Fuji, Konica was able to decrease Kodaks market share in the traditional imaging and photofinishing business. Though at a lesser degree, private label films also compete with Kodak. Other competitors of Kodak are camera manufacturers such as Canon, Minolta, and Olympus. With the dawn of digital imaging, electronic and computer companies agitates competition to be stiffer.