Business Strategies of Kodak and Fujifilm - Case Study Example

? Kodak and Fujifilm History and core business of the companies Eastman Kodak Company Eastman Kodak Company is an American Multinational film company that was set up in the year 1888 i.e. over 130 years ago by George Eastman with specialization in the development and pioneering of photographic films. The major specialties for this company were the development of imaging and photographic equipment and offering of the said photographic services, as well. This company is headquartered in Rochester, New York and has been incorporated in New Jersey, as well. Throughout this period, the company has undergone through various transformational phases which has seen it even be declared bankrupt in January 2012 (Eastman Kodak Company, 2004). Eastman Kodak Co. is known for its best photographic film products which has for ages, been the central part of its business. Mostly, these products included cameras, printers and other machines for use in the production of film products. This company became very dominant for a longer period of time and history has it that most of the 20th Century, it was the only company that held a high prestigious and dominant position in the industry (Eastman Kodak Company, 2004). The first argument one can give forth is that probably there was no greater competitor back then which left Kodak as the only sole producer of the said photographic materials thus; it thrived as a worldwide monopolist. For instance, the company had nearly 90% of the United States of America film share of the market. The remaining percentage was left to the struggling small companies which were no match to its growth success (Devereaux et al, 2006). In the late 1990s, Eastman Kodak Company started facing financial struggles, which after in-depth analysis, were found to be due to under-performance in its sales prospects leading it to incurring greater transactional and production costs. The resultant effect was the decline in the sales of its photographic materials. Consequently, Kodak’s dismal performance during this period was attributed to the uptake of information technology by firms in their operations. This sudden shift caught the company unawares since it continued producing these film products when the market for the same was diminishing gradually with each passing moment. Sooner or later, the company had no positive sales records. Its slow response to transit to digital photography despite it having invented the current technology in use, in modern digital cameras, led to its fall. However, as a turnaround at around the year 2007, Kodak started using digital photography in its operations, a move which led to it registering profits in its operations. It also focused on digital printing of the films and even started using generating revenues through an aggressive litigation of patents. In the month of January 2012, the company filed for a bankruptcy protection and followed this move in the succeeding month with an announcement that it had ceased production of pocket video cameras, digital cameras, and the digital picture frames. Instead, it stated that its focus would be on the corporate market of digital imaging. August the same year, the company announced for the sale of its commercial scanners, photographic film but not the motion picture film, and the kiosk operations all of which served as measures to emerge from the bankruptcy state. Kodak also sold most of its patents Intellectual Ventures and RPX Corporation, which was an umbrella corporation for companies like Apple, Amazon, Facebook, Samsung, Microsoft, Google and HTC. Fujifilm Company Ltd. This is a Japanese multinational imaging and photography company that was established in the year 1934 and has its headquarters at Tokyo, Japan. The aim of its establishment was to regard it as the first Japanese photographic company producing photographic films. At its inception, this company had only one goal of being a cinematic-film producer but, overtime, it has grown into being a fully fledged multi-dimensional manufacturer and marketer of imaging and information products (Devereaux et al, 2006). Fujifilm is the second largest filming industry after Eastman Kodak and has even proven to be Kodak’s main threat and rival in the market. Initially in history, Dainippon Celluloid Company, which was the first cinematic film producer in Japan, decided to spun its troubled photographic division into the Fujifilm Company that is presently famous with the intent of making dry plates, motion picture film and photographic papers manufacture its core business. However, at such times, the company faced a lot of struggles due to poor quality products and high prices of its products relative to the imports especially by Kodak (Devereaux et al, 2006). At around the 1940s, Fujifilm Company entered the market for optical glasses, lenses and equipment and started producing the same in large scale. This was the same period in which there was a universal deficiency of raw materials for the industry such as silver, petroleum-based chemicals and paper which barred the company from production in large quantities of amateur photographic materials. Thus, it had to enter licensing agreements with Kodak Company, which gave it equal access to Western producers, as a result of black and white amateur roll film products. Its first amateur film roll was released in 1952. Since this time, the company stared gaining ground in its operations. Just like its main rival Eastman Kodak Co., Fujifilm dominated the Japanese film market and became a monopolist too by enjoying a near-monopoly state for a long time. For instance, it became one of the sponsors of 1984 Los Angeles Olympics, an opportunity which Kodak rejected. This made it to set up an industrial unit in the United States that offered equally high quality film products but, at relatively cheaper costs than Kodak. This is how the company got a large share of the US market while Kodak got little of the Japanese market share. The year for this establishment was in 1988under the name, Fuji Photo Film Inc. The branch office was established in South Carolina (Monks & Minow, 2008). It is amazing to note that this company since its establishment has managed to open offices globally under various names, which is what has made it capture a larger portion of the market. The onset of the 21st Century with its technological developments saw Fujifilm Company expand in its operations as it adopted newer technological ways in its production. This fact is what made it to overcome Kodak which was slow to embrace technological change. Fujifilm’s core business has been filming, and through digital technology, it managed to implement management reforms, which were aimed at effecting drastic transformation in its business (West, 2000). 2. Compare and contrast the approach to management that each company has pursued in order to embrace innovation. The underlying process of a firm’s innovation is its creativity. An organization’s creativity is as a result of the creativity of its employees, a variety of social factors and contextual process, which defines and shapes the manner in which organizations relate. Every company usually has difficulties in embracing and managing innovations and Kodak and Fujifilm are no exceptions (Devereaux et al, 2006). Eastman Kodak’s approach The announcement by the company that it would file for a bankruptcy protection would have not been true for this old age company. To reposition itself for this sudden market eventuality, the company positioned itself appropriately so as to be able to embrace the disruptive digital photography by producing the first digital camera in 1975 and the first megapixel sensor in 1986 (Eastman Kodak Company, 2004). Additionally, the company has also managed to make certain acquisitions to aid in improving its operations. For instance, in 2001 it bought Ofoto from Apple which was the early leader in online photo sharing and services as well as from the venture investors. However, even with these innovations, Kodak still failed because it failed to capitalize on the digital innovations which they could have used to build broad customer lines for their electronic products and online services. Ideally, Kodak would have benefited from the institution of a new system for investing and acquiring new business like its rival Fujifilm had it embraced digital technology (Paley, 2006). Another approach to embracing innovation was the establishment of a research laboratory which enabled it to develop Isoflux, which based on a coating process of three-dimensional products, optical lenses and drill bits. Sadly though, the company failed to commercialize the technology successfully especially the digital camera that it invented. This was because it was not ready for the rapid digital changes (West, 2000) Fujifilm Company Contrary to Kodak, this company has been quite successful in its operations in the US, and globally through the various approaches to management it took up. The company has been adopting and innovating in the various ways by which it works, produces its products or even interact with the world generally. First, its management is always committed to meeting quality standards and as such strives to acquire and develop new innovative ways of production and even newer technologies. All these have seen Fujifilm grow in its manufacturing process as well as in its revenues. Additionally, the company has been practicing and committed to fulfilling its corporate social responsibilities to the general public thus, resulting in the expansion of a sustainable society (Monks & Minow, 2008). Another approach to management that has been adopted by the firm has been the outlining of a strategic marketing plan which has seen it meet its marketing targets both locally and internationally as opposed to its rival firm Kodak which failed for not adhering to its market plans. Thirdly, the company has had a very flexible leadership or management team that has ensured that change is embraced at the earliest possible time (Hutt & Speh, 2010). This flexibility in management is an approach which Kodak lacked thus, can be perceived as an advantage to Fujifilm. Kodak acted in a stereotype manner while Fujifilm aced in a flexible manner. The other thing is that, Fujifilm has learnt to comprehensively grasp environmental aspects and the importance of such complex environmental changes which were taking place in the market (West, 2000). A contrasting approach to management and uptake of change by these two rival firms is in the development of digital cameras. While these cameras were developed by Kodak scientists, the company was reluctant in commercializing them for fear of losing market of its expanding film industry. Fujifilm on the other hand, jumped on board to the first instances of innovation and threw all its energies behind the production of digital cameras and aggressively investing in new technologies. Fujifilm Co also invested widely in acquiring new firms in various parts of the world from which it was able to manage its operations (Black, 2010). 3. Other management differences that have impacted on the relative success of Kodak and Fujifilm. Kodak first was declared bankrupt through its act of filing for a bankruptcy protection. Part of its failure was also due to its management team failing to comprehensively addressing the problems beforehand and left it to escalate thus causing major losses. One can say that Kodak was faced with a technological discontinuities challenge which overwhelmed it (Pham-Gia, 2009). Fujifilm on the other hand, did all it could to grasp the opportunity and thus, managed to thrive in the new technological field. The main difference and which was the root cause of Kodak’s woes was the complacency it started practicing with its leaders failing to heed much to the voices of change that was eminently approaching. Fujifilm did the exact opposite of this. Consequently, Kodak’s management team stared becoming arrogant in their approaches to production which clearly denied them success in the Japanese market while Fujifilm was thriving in their own market (Nieuwenhuizen et al, 2008). A good example would be the scenario in which they took Fujifilm to court for infiltrating their US market while they had failed to successfully operate in Japan. 4. Approach to ethics and social responsibility Fujifilm’s approach to ethics and social responsibility has been through the practicing of and commitment to fulfilling its corporate social responsibilities to the society thus, leading to the development of a sustainable society. This impacted on its profitability since the society easily identified with its products as being economical and society friendly. This made the company have an upper hand in new markets approach than its rival Kodak. Kodak on the other hand, due to its complacency never assimilated proper ethics and social responsibility in its operations and thus, a factor that contributed to its economical woes and drop in profitability (Snell & Bohlander, 2013). References Black, K. (2010). Business statistics: For contemporary decision making. Hoboken, NJ: Wiley. Devereaux, C., Lawrence, R. Z., & Watkins, M. (2006). Case studies in US trade negotiation: Vol. 2. Washington, DC: Inst. for Internat. Economics. Eastman Kodak Company. (2004). Kodak's ergonomic design for people at work. Hoboken, N.J: Wiley. Hutt, M. D., & Speh, T. W. (2010). Business marketing management: B2B. Mason, OH: South-Western Cengage Learning. Monks, R. A. G., & Minow, N. (2008). Corporate governance. Chichester, England: John Wiley & Sons. Nieuwenhuizen, C., Rossouw, D., & Badenhorst, J. A. (2008). Business management: A contemporary approach. Cape Town, South Africa: Juta. Paley, N. (2006). The manager's guide to competitive marketing strategies. London: Thorogood. Pham-Gia, K. (2009). Case study: Kodak at a crossroads - The transition from film-based to digital photography. Mu?nchen: GRIN Verlag GmbH. Snell, S., & Bohlander, G. W. (2013). Managing human resources. Mason, Ohio: South-Western. West, N. M. (2000). Kodak and the lens of nostalgia: [...]. Charlottesville [u.a.: Univ. Press of Virginia. Read More