BA401 Strategic Management: KODAK

Nanapat T. 5202640503Vishal N. 5202641410Yotsawat C. 5202641519

COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS

COMPANY PROFILE

Eastman Kodak Company was incorporated in New Jersey in 1901.

Business originally established by George Eastman in September 1880.

Previous CEO, Chandler, diversified Kodak into four business groups:

1. Imaging 2. Information Systems 3. Health 4. Chemical

In 1990, Kay Whitmore is the new CEO of the Eastman Kodak Company


SWOT

STRENGTH

• High brand awareness & recognition • Worldwide distribution presence• Cash rich• Strong control in photofinishing process • Expert in chemistry industry• Market leader in film business• International presence• Diversified portfolio• Strong R&D


SWOT

WEAKNESS

• Growth without clear strategic direction • Disadvantage cost structure in core business • Information System group experiencing huge

loss over the year• Outsource manufacturing process to

competitors• Product cannibalized each other• Technology oriented company • Lack of innovation • Failed to capture many lucrative opportunity

related to core businesses


THREATOPPORTUNTY

• Form new strategic alliance with Walt Disney

• Growing in popularity of 16-ounce PET bottles and plastic related products

• High profit margin in healthcare• New imaging technology e.g.

digital • Exploit lithium ion battery

• Competitive threat from Fuji in core business

• Competition in newly acquired companies

• Change in customer preferences• Emergence of new technology• Price war in film and photographic

industry• Potential litigation from Polaroid

SWOT


FINANCIAL POSITION

• For the past years, the debt level of the company has significantly increased. The company is considered as highly leverage.

• The company still has the ability to pay back debt very healthily because its current ratio is around 1.2. It is still liquid. > Low risk of Bankruptcy in 1992.

• Asset utilization has been fluctuating a lot in recent years due to aggressive acquisitions of many companies some with unstable earnings from each segment.

• The company has low net profit margin due to a very competitive industry it enters.

• Company’s performance is affected by exchange rate.

The financial situation of the company is still healthy.


MARKETING ANALYSIS

Market leader in film business• Continuously losing market share to Fuji• More premium than competitor with high

quality product offeringPosition to be expert in photographyPrice warNo market research

• Failed to deliver products that meet customer preference

• False believed about what consumers wantCustomers are consumer market & business market

Biggest threat from Fuji

Highly competitive industry that requires R&D and good marketing team.


MARKETING ANALYSIS

Information system market requires company to have technical expertise in producing equipment at low cost and good features.

In health market, brand’s credibility has played crucial role in gaining customer’s trust.

Chemical group has faced highly competitive products that they compete on efficiency.

Well known Kodak’s brand can help consumer identify it products easily.

Requires heavy R&D


MANAGEMENT CRITIQUE

Technical mindset and lack of marketing orientation

Management culture is CONSERVATIVE results in:• Slow response to market change• Risk adverse

Organization culture is in transition Weak management

• Unclear rationale of acquisitions results in unclear strategic direction

• Unaware of the competitive threat the company’s is facing

• Failed to manage new ventures and acquisitions


COMPETENCIES

Distinctive Competency:Complete presence in the value chain of film & photographic industry

Sustainable Distinctive Competency : Kodak’s Brand


PROBLEM STATEMENT

How can the company solve its lack of marketing orientation issue in order to retain its competitive advantage?

What should Kodak do to maintain its competitiveness in order to effectively compete with existing and potential competitors

in its core business?

How can Kodak successfully manage its acquired companies in order to become a truly conglomerate company?

How can the company ensure its existence in the current business with changing industry trends

How can the company solve its cost disadvantage structured in order to become more efficient?

How can Kodak successfully manage its acquired companies in order to become a truly conglomerate company?


SELECTED PROBLEM STATEMENT

• Sales of the company’s core business operation decline at rate of approximately 22% for the past 5 years

• Decline in sales is due to fierce competition from Fuji Film and missed opportunities by the management

• To counter competition and lessen its dependence on the core business, Kodak began diversification strategy

• Kodak is under immense threat of being taken over and dismantles, if the company fails to successfully manage the acquired companies


ALTERNATIVES

1. Decentralized decision making authority to each division

2. Transform executive and management teams

3. Hire expert in managing conglomerate company

4. Acquire Chinon

5. Create control mechanism to motivate executives to improve their divisions performance


ALTERNATIVES

10. Develop training program in order to become more market oriented

6. Introduce nutritional supplement product in order to c capture the growing opportunity in healthcare industry7. Introduce lithium-ion battery to become a leader in growing consumer electronic industry

8. Slowly divest Information System group

9. Implement cost cutting strategy among all divisions in order to enhance company efficiency

Transform executive and management teams


RECOMMENDATIONS

Decentralized decision making authority to each division


RECOMMENDATION 1

Rationale


• Management team is filled with engineers and scientists - technical orientation

• Neglect the marketing aspect when coming up with new product

• Lack of marketing orientation --- missed opportunity and losing competitiveness

• Lack expertise and industry knowledge to manage acquired companies


RECOMMENDATION 1

Implementation


• Evaluate current management from each division

• Slowly eliminate poorly performed executives and who don’t fit with company’s divisions acquired

• Replace with people who have expertise and industry knowledge

• Instill the management team with qualities of technical and marketing skills

• Implement control mechanism


RECOMMENDATION 2

Rationale


• Conservative values rather than Entrepreneurial values

• Centralized decision making process

• Long functional lines – slow response to changing business trend and slow to capture new business opportunities

• Lack of communication and poor interdivision relations between divisions contributed to poor operating performance


RECOMMENDATION 2

Implementation


• Conduct preliminary analysis to get the most efficient flow of information between divisions

• Shift decision making task from centralized manager to each division manager

• Evaluate its effectiveness in responding to the competitive threats and changing trends


Q & A

Education

BA401 Strategic Management: KODAK