24 PART I STRATEGIC MANAGEMENT INPUTS

chain, shutting unprofitable film factories and transfer-

ring camera production in Japan to China. In doing so,
STRATEGIC FOCUS flowing from Fuji’s new vision, he formulated a funda-
mentally different strategy and took the necessary
steps to implement by changing the organization and
reconfiguring the value chain.
In order to stay competitive in this market Fuji
changed its mission and expanded its product portfo-

Image courtesy of Fuji © Matthew Beedle Photography 2008

lio to serve its customers with digital cameras and col-
our film, as well as photofinishing equipment and
services. Flat panel display materials, medical imaging,
graphic arts and other businesses constitute its Infor-
mation Solutions segment, and digital colour copiers
and other office products and services comprise the
Document Solutions segment. Through development
and selective application of its advanced digital, net-
work, image processing and other proprietary technol-
ogies, the Fujifilm Group expanded from its original
field of silver-halide photographic films into diverse
new business fields. Following its new vision, the com-
pany phased out the film-centric model and conse-
quently dropped the word “photo” from the company
name and changed it from Fuji Photo Film Co into
Fujifilm Holdings.
Fujifilm Holdings Corporation is now the world’s
From Fuji Photo Film to largest photographic and imaging company. It oper-

Fujifilm: facing a ates with 223 subsidiary companies for research,

manufacture and distribution of products and
turbulent competitive manufacturing facilities in Asia, Europe and the US.

environment
Fujifilm makes a range of digital imaging products,
medical imaging products, office automation systems,
and industrial films and chemicals. In 2009 they re-
In 2000, Fujifilm was in crisis. Digital photography was ported an annual revenue of €3477.6 billion. Yet the
replacing film faster than executives had expected. decline in revenue from photography is ongoing. En-
This rapid shift toward digitalization has strongly re- abled by its vision and its redefined mission, Fujifilm
duced demand for films and photographic products. continues to seek new opportunities.
In 2001 Fuji produced a record two hundred million In 2008 Fujifilm had diversified out of its traditional
films in the Netherlands alone; this amount reduced base in photographic equipment to build on the estab-
by 50 per cent in the five years that followed, as con- lished capabilities of its Medical Equipment/Life
sumers started to switch to digital photography. The Sciences Business. Fujifilm wants to apply both its
CEO of Fujifilm, Komori, realized he needed to change production expertise and nanotechnology techniques,
its vision. For many years Fuji had emphasized film originally developed for film production, to drug mak-
and printing of pictures taken—hence the name Fuji ing. Before the global financial crisis, medical systems
Photo Film. With the advent of digital technology, a and life science products accounted for about €2.2
disruptive technology for Fuji, the company had to re- billion in revenues, a tenth of the company’s total. In
consider what it wanted to be. Fuji chose to prioritize a decade, Komori wanted them to triple to more than
digital imaging and phase out film. Komori also €7.48 billion, to as much as a quarter of the overall
mapped out a two-year, top-to-bottom reorganization figure. The division could become a key growth en-
costing nearly €1.57 billion. In short order, Komori cut gine, offsetting declines in traditional photo film mak-
5000 jobs and streamlined the company’s supply ing, where sales have suffered from the double
CHAPTER 1 STRATEGIC MANAGEMENT AND STRATEGIC COMPETITIVENESS 25

whammy of rising metal prices and a shift to digital
photography. And though the company won’t be im-
mune to an economic slump, its medical business
“should be relatively unaffected” because prices
don’t fluctuate much.
Sources: “Fujifilm, Konica Minolta and Eastman Kodak es-
tablish Everplay Standard. New standard encourages indus-
try participation to develop compatible products and services
for digital photos and motion images”, ANP, February 22,
2006; “Fujifilm’s statement regarding its photography busi-
ness”, January 16, 2006; ANP, August 25, 2006; Mansell,
P. (2008) “Toyama acquisition shows Fujifilm’s Pharma
ambitions”, In-Pharma, March 25; Hall, K. (2008) “Fujifilm
focuses on Pharma”, BusinessWeek, March 17.
Questions
1 What happened to Fuji Photo Film when they first
encountered digital photography?
2 What are the most critical issues for established
firms that face disruptive technologies?
3 How did Fuji Photo Film start to turn around?
4 How does Fujifilm seek new growth? Discuss.

performance.92 (We describe stakeholders and their role in governance more fully in
Chapter 14.) Claims on a firm’s performance are enforced through the stakeholders’
ability to withhold participation or contributions essential to the organization’s sur-
vival, competitiveness and profitability.93 Stakeholders continue to support an orga-
nization when its performance meets or exceeds their expectations.94 When
organizations do not meet stakeholders’ expectations they may try to influence them
to effectuate change. Also, research suggests that firms that manage stakeholder rela-
tionships effectively outperform those that do not. Stakeholder relationships can
therefore be managed to be a source of competitive advantage.95
Although organizations have dependency relationships with their stakeholders, they
are not equally dependent on all stakeholders at all times;96 as a consequence, not every
stakeholder has the same level of influence.97 The more critical and valued a stake-
holder’s participation, the greater a firm’s dependency on it. Greater dependence, in
turn, gives the stakeholder more potential influence over a firm’s commitments, deci-
sions and actions. Managers must find ways to either accommodate or insulate the
organization from the demands of stakeholders controlling critical resources.98

Classifications of stakeholders
The parties involved with a firm’s operations can be separated into three main
groups.99 As shown in Figure 1.4, these groups are the capital market stakeholders
(shareholders and the major suppliers of a firm’s capital), the product market stake-
holders (the firm’s primary customers, suppliers, host communities and unions re-
presenting the workforce), and the organizational stakeholders (all of a firm’s
employees, including both non-managerial and managerial personnel). In addition,
societal stakeholders such as local or regional government, country level or interna-
tional institutions as well as activists, can challenge organizations with demand but
also foster them through their advocacy.
Each stakeholder group expects those making strategic decisions in a firm to provide
the leadership through which its valued objectives will be reached.100 The objectives of
the various stakeholder groups often differ from one another, sometimes placing those
involved with a firm’s strategic management process in situations where trade-offs have
to be made. Obvious stakeholders in firms are the owners. Owners of publicly listed or-
ganizations, are shareholders – individuals and groups who have invested capital in a
firm in the expectation of earning a positive return on their investments. While the ex-
pectation to earn a positive return is common, shareholders can differ in their demands.
In family-owned businesses, ownership is often tightly linked to the relationships within