Sharp Case

SHARPINDIVIDUAL ASSIGNMENT 2

SGMT 6800

DINESH REDDY DONTIREDDY

212064341

1. Why has Sharp been so successful for so long? What are its business and technology

strategies?

A) Sharp has succeeded as a technological innovator and an electronic manufacturer since

its inception in 1912 by following its creed of “Sincerity and Creativity”. Facing stiff

competition in Japan, the company also dealt with dramatic global market changes

which influenced the way Sharp conducts business. Sharp’s longevity can be attributed

to the company’s adaptable structure and foresight of what will be adopted by the

market. In addition, Sharp has managed to act both as an end product and a

component company, two objectives that could seemingly conflict, but Sharp has

managed to use this dual attack approach to fire up internal competition, and to build

customers at different levels in the distribution chain.

Business Strategy: The business strategy sharp always followed was to spot the

technologies which were about to go main stream and achieve wide adoption (radio and

TVs) in the market and license the technology to develop products for the market. Also

the company was always omniscient about its position in the specific product market,

being flexible to adapt to new markets when continuing in the existing market was only

a catch up job. Sharp always focused on differentiating its product from the competitors

with continuous innovations or licensing of innovations.

Technology Strategy: While in the early phases of technological development, it is hard

to predict the success a certain product will have with consumers. Sharp’s focus was

always on underlining or nucleus technologies that have applications across product

lines and has always used these innovations across its products like the introduction of

LCD on the calculators, etc. All of its products and technologies focus has been customer

Dinesh Reddy D - 212064341 Page 2

centric. It licensed key technology from other giants like RCA and adapted it to and

improved on it for the local market.

A) Is Sharp at the time of the case an end products company or a components

company? Support your position.

B) How is Sharp able to integrate and coordinate activities across the company?

C) Should Sharp enter into the Intel and/or Apple joint ventures?

D) Where is Sharp today (2012)? Has anything changed?

E) Does Sharp offer any lessons for today’s tech firms? Discuss a firm in your first group

assignment segment? Discuss your final group presentation company?

F)

A) Having understood that he had made a technological disruption with the discovery of

the film, George Eastman using this technology introduced the camera to the average

consumer. Kodak’s primary strategy was simplicity for the consumer with high quality,

low cost mass production. International distribution with extensive marketing supported

this. Taglines like “You press the button, we do the rest” and vision “to make the camera

as convenient as the pencil” managed to get a substantial consumer base. Kodak sold

the camera for a relatively low price but made all the money/growth on selling film. The

more the consumer used the product, more the revenue for the company. The company

was so successful because it managed to take the technology through its S curve, from

invention to the steep climb and kept making additional inventions to keep the curve

growing.

The company was truly successful because the company established many of its process

as industry standard. This process of influencing the industry to establish itself as the


standard and investments in R& D especially in colour film which reaped benefits later,

but the fact that rival brands in spite of excellent quality when properly processed

tended to fare badly. In addition to this new entrants to its market where discouraged as

the film composition’s balance between chemical and physical properties and all the

know-how embedded in manufacturing made it impossible.

G) Compare traditional photography to digital imaging. What are the main structural

differences? How have value creation and value capture changed in digital

photography relative to traditional photography?

A) In traditional photography, a user would capture pictures using the camera onto a film,

which could contain pictures but once clicked the film (that part of the film) could not be

reused, and a new film had to be used to take any additional pictures (major source of

revenue for Kodak), post which, the used film had to be dropped off to a speciality store

of Kodak to process the film with chemicals (market which Kodak dominated) and final

prints where developed after a couple of days.

In case of digital imaging, a user would capture an image using a digital camera, which

would save the image on an electronic sensor which would be saved on a memory stick

or a hard disk/CD/memory stick (generally there is no presence of film, hence no repeat

buys), the picture could be manipulated using software unlike in traditional film

photography where we had to retake the picture. Then they could be

viewed/transferred to the internet and computer screens or could be sent for printing,

which unlike the traditional photography could be done by anyone with a printer and is


not as strongly coupled with processes established by Kodak. No standards where

established by Kodak and hence was not able to capture majority value. The

consumables in the digital photography space were the inkjet consumables which HP

enjoyed a lion’s share.

Barriers to entry for online storage of pictures and photo-finishing were considerably

less as it cost much less to be in this business now. Smaller photo-processing units now

fit into retailer shops enabled local service and a quick one-hour processing time. This

was a far cry from the way traditional photography operates.

H) Evaluate Kodak’s response to Sony’s introduction of the Mavica in 1981. Was it

appropriate?

A) The first reaction from Kodak to Sony’s filmless digital camera Mavica was that of denial.

The then CEO Colby Chandler contended that people still like color prints and was

basically telling everyone that they are still going to bet on films. The company was stuck

in inertia as major part of the revenue came from the film business. Management did

show signs of worry over dependence on the longevity of the silver halide film

technology with some executives showing panic and fear and coming to strong

conclusions about not just the company but also the technology/industry.

They responded by creating a photographic and information management division to

explore new technologies with a strong interest in digital imaging. They wanted to

change the company and its focus but it looked like they did not want to change the way

they worked, which was essentially different to achieve what was required.


The company still saw a silver-halide based future with a blend of new technologies and

spent on extensive research in the fields of chemistry, optics and electronics. This lead to

the invention of the electronic image sensor and the Photo CD.

I believe the invention of the photo CD was not appropriate because, the company

although having a vision of looking into the future wanted to tie everything to previous

technologies. And their inertia and lack of vision to spot the next disruptive technology

of digital imaging free from film was hurting Kodak.

I) Fisher made a valiant effort to transform Kodak. Why did it fail?

A) In August 1993, the members of the board were looking for a CEO with exceptional drive

and energy. They found it in George M.C. Fisher who with his deep understanding of

math and the photography industry tried to realign the company to what he believed as

the core area the company was based on – imaging.

He took the correct initial steps of separating the digital imaging operations from the

traditional sliver-halide photographic division. And also going with the company’s first

core set of strategies to sell globally, it entered china where the film industry was picking

up and made huge investments to shift manufacturing. This paid off for the company.

Continuing with this wave of changes, Fisher got a few similar high energy people from

the industry to head different divisions. He set tight targets for each unit to cut costs and


improve efficiency and tried to make Kodak a lot like Motorola. The issues arouse

because not everyone believed in Fisher’s vision of Kodak becoming a high tech

company which churned state-of-the-art products.

The culture of Kodak was way different from that needed to become a high tech

company. The old-line manufacturing culture continued in the company, although Fisher

was successful in changing the culture at the top, he was not able to change the huge

mass of middle managers as they just did not understand the digital world. People at

Kodak tend to be more polite and issues where not talked about as other companies. It

was more hierarchical and peopled looked to the guy above him for direction which did

not work with the vision.

Also Fisher did not focus on the film business where all/most of the company revenues

came from, instead focused only on the digital market, which resulted in losses for the

company. The very nature of the digital world where the vertical integration Kodak

enjoyed did not work, hampered its growth prospects. No company did it all and Kodak

had to become a horizontal company, and fuji started fighting on price in kodak’s core

business of film to eat away share.

All these factors led to the failure of Fisher’s strategy.

J) Compare the Kodak case to the IBM re-org under Gerstner. Are there any lessons to

be learned in general. What alternatives might Kodak have considered?


A) There are many lessons to be learnt by Kodak from the IBM re-org under Gerstner, but

there is a fundamental difference. IBM’s core strength of Mainframe computers

returned to demand and there was no way it could ever become obsolete, unlike the

Kodak case where the company’s core strength of film has slowly eroded.

Kodak shared with IBM the employee sentiments of being very hierarchical and not very

open to discussion, Gerstner aimed at creating a culture that encouraged sharing across

divisions and openness. He incentivised upper management to implement this change of

culture and bonuses based on creation of several cross-functional committees.

Corporate communications, change from want of managers to leaders, and changing

executive pay to company performance rather than business unit performance let the

alignment of the whole company through the senior management to the new IBM

strategy. Kodak could have used it to drive down Fisher’s new strategy.

Re-organisation of R&D at IBM into Customer-Oriented and Industry-Oriented was I

believe a big step for the company, Kodak could have benefited from this by not having

money spent on many unfocused research areas, instead have aligned all its research to

either the consumer or towards industry.

Co-opetition is one are IBM earned valuable revenue, it licensed out technology and

unused ideas generated in the R&D (the disposable camera for example could have

helped Kodak earn revenue). IBM felt that its competitors where actually compliments

to IBM products. Kodak could have used this to earn revenue from all the ideas

developed in its R&D labs.



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Sharp Case