Kodak Company and the Digital Revolution

Kodak’s strategy in traditional photography

Kodak’s strategy that ensured its success in traditional photography involved several principles that included mass production of products, low prices of products, extensive advertising and marketing, international distribution, sustained market research and focus on the needs of customers. Kodak was able to make photography readily available and affordable to all people through these principles. First, Kodak developed products that were convenient and easy to use. The use of their product did not necessitate acquisition of special skills in order to enjoy the experience of photography. Secondly, marketing was a key driver of Kodak’s success. Their extensive marketing was aimed at establishing good relationships with customers, retailers, and wholesalers. Good relationships between Kodak and its customers and retailers ensured that Kodak’s products were favored over those of their competitors even though their competitors’ products were of higher quality.

Thirdly, their so-called razor-blade strategy set them apart from their competitors. This strategy involved selling their products at low prices, which plummeted their profits and growth. Fourthly, they focused on their customers’ needs. As such, they spent $120 million to develop the color film, which other companies had failed to develop because it was very expensive. This gave them a competitive advantage over other companies. In addition, they developed new products such as the 110 and 126 cameras, which incorporated new aspects such as medical imaging and graphic arts. Fifthly, its utilization of technology ensured its sustained growth and revenue. Most of its new products that were developed in the 1960s and 1970s utilized silver-halide technology that was not yet being used by their competitors.

Kodak’s strategy from the mid-1980’s onward

Kodak was forced to change its strategy after one of their competitors, Sony, announced that it would produce a digital camera that would have the ability to display pictures on a screen without using a film. This prompted Kodak to adopt a strategy that involved diversification. They purchased a copier services business enterprise from IBM. In addition, they ventured into clinical diagnostics and mass memory business. Kodak adopted an inefficient strategy because they turned their attention to their new ventures and disregarded their main business venture. Instead, they should have turned to business ventures that were directly associated with the film industry. In addition, they should have invested that money in a more viable business venture such as digital imaging. Because of diversifying, Kodak’s market share in the film industry dipped significantly.

Kodak disregarded its earlier strategy of vertical integration because they felt that they had to act swiftly because of technological changes and stiff competition. Kodak believed that the digital revolution was just a theoretical concept and they projected margin erosion. Some of the factors that led to their demise include huge debts, stiff competition, lack of innovation and languid matrix management. Kodak failed in digital imaging because of several reasons. These include scattered production units among different divisions, ineffective middle managers who had little knowledge of digital technology, and extensive diversification.

Their hardware- based digital strategy led to mass production of digital cameras, digital scanners, and an array of non-profitable devices. Their diversified business ventures led to huge debts that made it impossible for Kodak to excel in digital imaging. Kodak should have hired personnel from the digital technology industry and should have focused on one or two aspects of the industry. Kodak relied on their old and outdated model that involved people printing pictures. They failed to realize that the most important aspect of digital imaging was emancipation from printing pictures. They should have focused on developing new ways of sharing or developing pictures that did not involve printing.

Kodak’s position in digital imaging as of 2003

As of 2003, Kodak ranked very low in digital imaging because of its late entry into the digital technology industry. Despite producing equipment that used digital technology since the 1980s, they were unable to withstand the stiff competition they faced. Kodak should have focused on profitable market segments such as mini-labs and online sharing of pictures instead of printing. First, Kodak ought to have invested most of their money in digital imaging instead of investing in unrelated businesses. Sufficient funding would have enabled their managers to conduct extensive market research and hire highly qualified professionals.

They should have tried to establish new applications for their many inventions. Secondly, the management should have sold part of the business instead of trying to recover their lost glory. Selling part of the business would have saved their brand name and aided in raising funds to explore profitable sectors of the industry. Kodak owns more than 11,000 patents that are of high value for the technology industry. If Kodak sold some of the patents to emerging technology companies, it could have used the earnings to explore the digital imaging industry and create leverage against its competitors. Thirdly, the management should not have hired former HP CEO, Antonio Perez. Perez.

He made wrong decisions such as concentrating on printing instead of cameras. He failed to facilitate a quick shift to digital technology because he feared that Kodak would lose their earnings from the film industry. Kodak should have hired someone who was well conversant with the digital technology industry, innovative and someone open to change. Fourthly, unlike other companies, Kodak did not brand their imaging chips on cameras produced by their competitors. This strategy could have helped them to market their imaging chips and improve their brand name. As such, Kodak could have been the leader of the digital imaging industry. In addition, they could also have done the same with their innumerable patents, which even though were invaluable, were rarely used to their advantage.