Eastman Kodak Company. Analysis .

Introduction

With the recent trend in the advancement of technology, most companies have been affected with Kodak being one of them. The marketing department of Eastman Kodak has recorded unappealing sales, specifically with a loss of 140 million US dollars for digital cameras. However, experts have identified the causes of the ever weakening market and have responded accordingly. In the recent past, Kodak has been losing its reputation in the photography service provision despite the need to have business success. There has been unanticipated pressures in the need to change with the changing technology. The credibility of Kodak in taking lead in photography with excellent service delivery recorded (Coney, 2005, p. 78). Such a company need to be dynamic and change along with technology. Kodak has openly admitted the current challenges as a way of maintaining its credibility. As a result, it has diversified in to the production of other products like consumables, tangible and intangible photography wares, systems and the accompanying services that are now moving considerably fact in the market. This is through the effort of a highly competent staff who are determined to see Kodak resume the leading company in imaging and accessories.

How Kodak has been adapting and diversifying to other markets

Kodak has not just sat to watch what a change in technology may cause to their business. Instead they have found a ground in the digital printing technology for both digital photographs and general office printing. Lifetime lasting color photos have been invented by scientists inclined to the Kodak company. This technology involves ink jet printing. With Perez as the Chief executive officer for Kodak, he has directed the companies resources in the production of ink jet printers for consumer business. Kodak is determined to dominate the printing market by producing printers that produce photographs of very high quality whose quality remain over six times longer than the photographs from printers made by their major competitor HP. The replacement ink cartridges will are going for half the current market prices for their competitors cartridges. The printers are very cheap and are compatible to computers of varying properties. Kodak has also expanded to introduce multiple task machines that on top of printing photographs will also print ordinary office documents, produce photo copies as well as allow the sending of faxes. It has also extended its operations to include the production of special quality photograph papers and the printing ink for refilling the cartridges.

Porter’s five force model for Eastman Kodak

Based on the principle of the five forces by Porter, five forces have been derived to determine how competitive and attractive the new printing market for Kodak. If Kodak is keen on these micro environment forces it will effect its ability to serve is clients and therefore increase their profit margins. Some of the key issues identified include the threat to the business when substitute products are introduced,threat from pre- existing business rivals who are producing similar commodities, the threat of new venturers in to this imaging business, and the bargaining powers of both the suppliers and clients.

As a result of new entry in the market photography by other companies, mainly due to the profitability of this business, the profit margins for Kodak drastically fell and eventually led to a very big loss that had never been recorded. I response, Kodak has changed tactics to bring un bridgable difference in its products. It has introduced very high quality, effective and cost effective products that are utilizing the most recent advancements of photography technology. Kodak’s new products have substituted the expensive products from its competitors.

Kodak has retained the secret to the inventions of the ink jet printer. This has successfully lowered the intensity of HP’s competitive rivalry and has left Kodak to enjoy an almost exclusive monopoly in their new inventions In the non price aspect of competition, Kodak is the champion, courtesy of the scientists who invented the ink jet printers. This is likely to result to an exponential industry growth for Kodak.

However, Kodak has only the know how on how to make this printers and other products. They also enjoy the fact that the expertise input is from within the company. But they get their inputs from appointed suppliers. These suppliers may fail to support the success of Kodak by raising the cost of their unique supplies. This may cause a reduced profit margin because increased input costs lead to reduced profits.

Macro environment analysis

Kodak has gathered enough information from its business environment to ensure informed decisions are made on how to remain in the competitive edge. It has also planned well on how to respond to the information already gathered by making new development strategies as need may arise. The information gathering is being done on continuously on all business macro environment factors. Through this act, Kodak has taken advantage of business opportunities and made timely responses before any potential harm is caused (David, 2004, p.19).

Through Kodak, the nation’s GDP is set to increase, and new employment opportunities have been created. This will result to the growth of economy. Kodak has ensured that all its operations are within the legal framework and is therefore not in any conflict with the government. However, the government’s position on the anti- monopoly may not be in favor of Kodaks sole sale of this new technology (McGahan,2005,p.103). In accordance to environmental laws, there is clear instruction on how to discard used cartridges. But the copyright laws are a key asset to the Kodak. Kodak has also evaluated the high likeliness of new processes of manufacturing. There is a low probability a new technology that could have any significant impact to Eastman Kodak. No significant ecological concern has yet been established that can negatively affect production of the new products from Eastman Kodak or anything that may alter how the company is perceived by consumers and suppliers (Girant, 2005, p.61).

The company has no negative relationship socially and it has been welcomed by many specifically because of quality products for very low prices. The future threat by volatility in the prices of inputs has been fore casted. The company has plans to welcome tenders from various suppliers of the key materials. However, collaboration of these suppliers may cause a real slow growth rate of Eastman Kodak than it had been anticipated. As the suppliers may also want to increase their profit margins, competition among themselves may demand low prices for their materials but there is a risk of a lowered quality of the raw materials. But a contingency strategy is appropriate and involving sourcing for alternatives (Thomas, 2004, p. 67). Another opportunity for Kodak is the high likeliness to win the support of the government, and there fore obtain a large capital base because most share holders would like to invest in companies with a high probability to succeed. Another opportunity is quick expansion when all the consumers turn to Kodak’s new products.

The analyzes indicate a large probability of Kodaks success. Given the determination of Antonio Perez it is likely that the Chief executive officer will not rest until Kodak leads in the industry (Porter,2006, p. 48). Kodak has made key steps towards achieving their mission. For one, Kodak has started recording profit margins since a long time ago. They have set short term targets, that cumulatively will lead towards achieving their ultimate goal. Some executives have also given special attention to the quality of their printers. Since Parez understands his main competitor, the Hp where he has served for long period, he is going to apply the same efforts to see Kodak come up. He has also hired some experts with whom he used to work while in HP.

To ensure success of Kodak, he has reduced work force cost by a quarter. The company also enjoy wonderful intellectual know how. Parez also has to build a very strong spirit of team work among its employees and motivate them to produce new products to boost the company’s credibility. He is obtaining key institutional information from the Kodak’s CEO, so that he can make informed moves (Jared, 2006, p. 97). Kodak is really moving towards its vision because in the recent accounting year, the sales had improved by more than ten the previous year. Antonio Parez has also changed how Kodak operates and introduces new operation policies to curb future repetition of mistakes once done. He has tried a motivation to the employees through partial compensation (Adenberger, 2006, p. 80).

References

Adenburger, N.M. (1995). Using game theory to shape strategy. Cambridge: Cambridge University.

Coney,A.P. (2005).Discipline in strategy. The McKinsey Quarterly, No.4

David, H.J. (2004). Principles of Strategic Management. New Jersey: Pearson Education Inc.

Ghirant, M.R. (2005). Contemporary analysis of strategy. Oxford: Blackwell Publishing Ltd.

Jared H.D (2006).Achieving competitive advantage. New York: Free Press.

McGahan, A. (2005). Industrial Evolution. Boston:Harvard Business School Press.

Porter, M.E. (2006).Competitive forces in shaping strategy. Cambridge: Harvard Business Review.

Thomas, LW. (2004).Competitive Strategizing. New York: The Free Press.