UNIVERSITY OF GONGAR

COLLEGE OF BUSINESS & ECONOMICS

DEPARTMENT OF MARKETINGMANAGEMENT

MASTERS OF ART MARKETING MANAGEMENT

MANAGEMENT THEOREY& PRACTICIES:

EASTMAN KODAK COMPANY CASE STUDY GROUP ASSIGNMENT

Section (2)

Prepared by;-

Hayat
Helen
Hiwot
Hiwot
Hidija
Hunegnaw
Kalkidan

Submit to

Dec,2022

GONDAR: ETHIOPIAN
Table of Contents
1. Case Study...............................................................................................................................................1

1.1A Shake-Up at Eastman Kodak Company..........................................................................................1

2. Introduction.............................................................................................................................................3

2.1 A Historical Perspective....................................................................................................................3

3. Problem identification.............................................................................................................................4

3.1Centralized structure...........................................................................................................................4

3.2 Bureaucratic leadership.....................................................................................................................4

3.3 Remote control..................................................................................................................................5

3.4 Delays in work...................................................................................................................................5

3.4 Lack of employee loyalty..................................................................................................................5

3.5 Upper Management Can Focus on the Long Term............................................................................6

3.6 Decisions Are Made Quickly.............................................................................................................6

3.7 Employees Feel More Empowered....................................................................................................6

3.8 Highlights Employees for Development............................................................................................6

3.9 THE RISE AND FALL OF KODAK................................................................................................6

4 SWOT Analysis of Eastman Kodak.........................................................................................................7

4.1 Strength.............................................................................................................................................7

4.2 weakness............................................................................................................................................7

4.3 Opportunities.....................................................................................................................................8

4.4 Threats...............................................................................................................................................8

5.Analysis and Evaluation...........................................................................................................................9

5.1Analysis of Industry and Competitors................................................................................................9

5.2 Industry and Market Segment............................................................................................................9

I
 5.3 Changing Elements..........................................................................................................................10

6: Strategic Characteristics of Eastman Kodak..........................................................................................10

6.1 Analysis of Company......................................................................................................................10

7: Alternatives and Recommendations......................................................................................................11

7.1Alternatives......................................................................................................................................11

7.2 Recommendation.............................................................................................................................11

8. Conclusion.............................................................................................................................................12

References.................................................................................................................................................13

II
 1. Case Study
1.1A Shake-Up at Eastman Kodak Company

Eastman Kodak Company was incorporated in New Jersey on October 24, 1901, as successor to Eastman
Dry Plate Company, the business originally established by George Eastman in 1880. The Dry Plate
Company had been formed to mass-produce the dry plates needed for early cameras. After George
Eastman developed silver-halide paper-based photo graphic film and invented the first portable camera,
he formed his new company to capitalize on his inventions. From the beginning, Eastman was aware of
the need to reduce costs to bring his products to the mass market, and he quickly adopted scientific
management principles to improve production efficiency. Eastman also developed a people-oriented
approach. Over the years, Eastman Kodak became known as “Mother Kodak” because of the bonds that
developed between the organization and its members. Until the 1980s, Kodak never had layoffs and
turnover was very low. It was quite common for both managers and workers to spend their entire working
careers with Kodak, and for whole families or successive generations of families to be employed by the
company at its Rochester, New York headquarters and manufacturing plants. With success, however,
decision making became centralized at the top of the organization. A group of long-term managers made
all significant operating decisions and then communicated the decisions down a very tall hierarchy to
managers at lower levels. When it came time to decide who would be promoted, seniority and loyalty to
Mother Kodak were more important than a person’s performance; fitting in and being a member of the
“Kodak Team” were the keys to success. This management approach worked well while Kodak had a
virtual monopoly of the photographic products market, but it became a liability when Kodak faced stiff
competition from foreign competitors like Germany’s Agfa and Japan’s Fuji Film. These companies,
having found new ways to produce film and paper at costs lower than Kodak’s, began to challenge
Kodak’s dominance. Managers at Kodak were slow to respond to the challenge. The organization’s tall,
centralized structure slowed decision making, and its conservative orientation made managers reluctant to
change. In the 1980s, things went from bad to worse for Kodak as its share of the market and profits fell.
Top management had to address the problems. After much soul searching, top managers decided they had
to totally change Kodak’s organizational structure to make the company more competitive. They divided
the company into four separate product divisions and began a massive downsizing of the workforce.
Kodak’s policy of lifetime employment was discontinued as managers announced the first layoffs in its
history. Top managements goal was to flatten the organizations hierarchy and push authority and
1
responsibility to employees at lower levels. Top management hoped that decentralized authority would
help lower-level managers become more entrepreneurial and more inclined to search for new ways to cut
costs. These changes helped Kodak, but were not enough to reverse its decline. In 1994, in a break with
the past, Kodak appointed a CEO from outside the company to change the organization further. George
Fisher, former CEO of Motorola, took charge. Fisher was renowned for creating a climate of innovation
at Motorola and for helping that company to become a market leader in the cellular telephone industry.
To increase the rate of new product development and to help the company regain market share, he has
been striving to change Kodak managers’ conservative management style into an entrepreneurial
approach. Fisher also has continued to restructure the company, laying off thousands more employees and
managers and selling many of Kodak’s divisions. The Kodak of today is very different from the Kodak of
10 years ago, and a new set of principles guides managers and workers.

2
 2. Introduction
2.1 A Historical Perspective
George Eastman “the founder of Kodak Empire” was born in 1854. He was only 14 when he
dropped out from high school. He started his career from an insurance company. Then he served
as clerk by his mid-twenties. He had a very innovative and inventive thinking. He had also an
ability of leadership and specialized skills in accounting. During his short trip to tourist place, he
had come up with the idea of dry plate photography. He derived it from wet plate photographic
technique which was much weightier and complex in handling. He passionately engaged to make
it portable. After a long struggle he succeeded to invent gelatin emulsion formula based on dry
plate photography. He refined the formula into photographic film and awarded as a pioneer of
the company. George Eastman founded the Kodak in 1880 and was incorporated in the State of
New Jersey in 1901.The headquarter of the company is in Rochester, New York. It was
registered with its trademark “Kodak”. Its main business is to provide services to customers,
corporations, and innovative professionals by unleashing the power of pictures and printing to
improve their lives. The first camera was offered to market in 1888. The basic objectives were
set to mass production at a lower cost, extensively advertising, customer focus and international
distribution. The slogan was related to “you press the button; we do the rest”. The major
competitor is Canon, a Japanese based company. Before 1990 the employees were up to 75000
and market share was 89%. Its major products are related to film roll, cameras, x-rays papers,
color film, stereoscope cameras, printers (high speed), photo cd’s and instant cameras. Different
segments have related to digital printing, graphics and entertainment. Its major subsidiaries are
Eastman Chemicals and FPC (Inc.). Its major laboratories that are having a significant scientific
worth has been working since 1912 and have a lot of scientists and publications. The company
held a very dominant position in the market up to the century. Being a leader of industry, it had
captured 89% market share until 1989. After ninety’s, the company was entered in the declining
pattern Research Journal of Finance and Accounting www.iiste.org ISSN 2222-1697 (Paper)
ISSN 2222-2847 (Online) Vol.5, No.17, 2014 128 due to reluctant with the digital revolution.
The company badly loses its sales volume as well as its market share in its business landscape.
After the decade of eighty’s in 20th century, its sales-volume decreases to avalanche position and
in next decade company completely loses its financial worth due to inability to perform in the
3
market place. Finally, it has declared as bankrupt in 2012. The study significantly emphasizes the
reasons of bankruptcy of Kodak Empire. Appropriate financial techniques and tools are applied
to investigate the root causes of its failure. The study also suggests the future implications for
restructuring and revitalizing the company position. (Schreiner, 2012) , (Http://www.kodak.com

3. Problem identification
3.1Centralized structure
Centralization refers to the process in which activities involving planning and decision-making
within an organization are concentrated to a specific leader or location. In a centralized
organization, the decision-making powers are retained in the head office, and all other offices
receive commands from the main office. The executives and specialists who make critical
decisions are based in the head office. In case of our case study Kodak a Shake-Up at Eastman
Kodak Company we identified the following problems because A Shake-Up at Eastman
Kodak Company was follow centralized structure

3.2 Bureaucratic leadership

Centralized management resembles a dictatorial form of leadership where employees are only
expected to deliver results according to what the top executives assign them. Employees are
unable to contribute to the decision-making process of the organization, and they are merely
implementers of decisions made at a higher level.
When the employees face difficulties in implementing some of the decisions, the executives will
not understand because they are only decision-makers and not implementers of the decisions.
The result of such actions is a decline in performance because the employees lack the motivation
to implement decisions taken by top-level managers without the input of lower-level employees.
According to our case study A Shake-Up at Eastman Kodak Company was Bureaucratic
leadership

4
3.3 Remote control
The organization’s executives are under tremendous pressure to formulate decisions for the
organization, and they lack control over the implementation process. The failure of executives to
decentralize the decision-making process adds a lot of work to their desks.

The executives suffer from a lack of time to supervise the implementation of the decisions. This
leads to reluctance on the part of employees. Therefore, the executives may end up making too
many decisions that are either poorly implemented or ignored by the employees. In the case of
our case study Kodak company was follow remote control this makes the company employee
difficult to control that make the company not to gain profit.

3.4 Delays in work

Centralization results in delays in work as records are sent to and from the head office.
Employees rely on the information communicated to them from the top, and there will be a loss
in man-hours if there are delays in relaying the records. This means that the employees will be
less productive if they need to wait long periods to get guidance on their next projects.in the case
of our case study Kodak was vast company so in order to do research or upgrade their product
the always wait the head office that makes the delays of work and minimize the productivity of
the organization

3.4 Lack of employee loyalty

Employees become loyal to an organization when they are allowed personal initiatives in the
work they do. They can introduce their creativity and suggest ways of performing certain tasks.
However, in centralization, there is no initiative in work because employees perform tasks
conceptualized by top executives. This limits their creativity and loyalty to the organization due
to the rigidity of the work. In the case of our case study Kodak follow centralization organization
structure that makes the employee to not initiative on their work and limits their creativity and
loyalty to the organization.

Some of the benefits of operating with a decentralized organizational structure include:

5
3.5 Upper Management Can Focus on the Long Term

A decentralized organizational structure alleviates the burden of day-to-day tasks and gives
upper managers and executives more time to focus on the long-term goals of the organization,
such as setting its mission and devising growth strategies.

3.6 Decisions Are Made Quickly

In contrast to a centralized organization, where decisions usually take a long time to be made,
decisions in decentralized organizations are made much more quickly. This is because lower-
level managers, and in many cases regular employees, have the authority to make and implement
decisions without having to seek and wait for approval from higher-ups. This is beneficial in
situations where quick decisions are the key to operational success.

3.7 Employees Feel More Empowered

Decentralized organizations provide employees with the opportunity to make decisions that
impact their work. This serves to give these employees a sense of importance, value, and
belonging within the organization, thus leading to an increase in employee engagement and a
reduction in turnover. At a time when resignation activity is at an all-time high, this is crucial.

3.8 Highlights Employees for Development

Delegating decision-making authority to lower-level managers and regular employees is a great
way to reveal those who potentially have the skills to progress to higher positions within the
organization in the future.

3.9 THE RISE AND FALL OF KODAK

 Decision making became centralized at the top of the organization.
 A group of long-term managers made all significant operating decisions and then
communicated the decisions down a very tall hierarchy to managers at lower
levels
 The organization’s tall, centralized structure slowed decision making, and its
conservative orientation made managers reluctant to change

6
  Decide who would be promoted, seniority and loyalty to Mother Kodak were
more important than a person’s performance
 Fitting in and being a member of the “Kodak Team” were the keys to success
 Managers at Kodak were slow to respond to the challenge
 The Razor and blades business plan was initially successful but turning blind to
other strategies was not wise for Kodak.
 Research and development is the core part of marketing success but Kodak
ignores its altogether.
 Competition from foreign competitors like Germany’s Agfa and Japan’s Fuji
Film.
 Kodak wasted time promoting the use of film cameras instead of emulating its
competitors. It completely ignored the feedback from the media and the market

4 SWOT Analysis of Eastman Kodak

4.1 Strength
Kodak has more than 100 years of history in photographic film industry.
This history has brought about the benefit and also the strength of the Kodak brand name and Kodak’s
worldwide distribution network.Kodak has its own international distribution network. In the past, when
Kodak’s focus was on the camera and photo developing business, it made a strong distribution network,
which helped to maintain the sales volume by distributing to retailers and it also helped to introduce the
new products to customers. A strong customer base was also built, which includes a huge amount of
target customers who changed from the traditional camera to the digital camera.
List of Strengths:
 Many products lines
 Broad market coverage
 Manufacturing competence
 Brand name reputation
 Diversifying its product lines depth and width

4.2 weakness
A key weakness of Kodak was its ability to bring its technology to market. The product development of
Kodak was targeted on the high-priced products, which were used in professional markets. It reflects
Kodak’s lack of concentration on the consumer market and therefore a loss of money in this market.
Promotion is another weakness, when Kodak launched a new product, there was lack of promotion.
List of weaknesses:

7
  Poor marketing plan

 Loss of corporate control
 Growth without direction

4.3 Opportunities
Due to Kodak’s successful history and good reputation they have the ability to easily obtain government
contracts. According to the Kodak official website there are six services departments: Consumer Imaging,
Digital & Applied Imaging, Entertainment Imaging, Health Imaging, and Kodak Professional and
Document Imaging. These departments give Kodak the opportunity to move into government and big
business ventures. These ventures could build an incredible professional image for Kodak and by word-
of-mouth could create and promote products to other large businesses. This image can also be transferred
down to the more traditional consumer.
List of Opportunities:

 Expand core business

 Exploit new market segments
 Widen product range
 Diversify into new growth business

4.4 Threats
The threats mainly come from competitors. There were 45 digital camera manufacturers producing more
than 100 models priced below $1000 in 1997. Kodak produces various types of products, but their
competitors also produce these products. For example, in film production and digital cameras Fuji is the
major competitor. In the photo-printer category, Hewlett-Packard is the main competitor. The digital
imaging business is an intensive capital business. Investors need to invest a lot of money into research
and development. . Unfortunately in the photo equipment industry it is difficult to differentiate from your
competitors. When a company launches a new product with special features, other companies can easily
and quickly imitate and/or copy this new product and its special features.

List of Threats:

 Attacks on core business

 Increase in domestic and foreign competition
 Change in customer tastes
 Risk in new product
 Increase in industry rivalry
 Slower market growth

8
 5.Analysis and Evaluation

5.1Analysis of Industry and Competitors

Eastman Kodak (EK) is a firm operating under Photographic and Optical Equipment/Supplies Industry
commonly referred to as Consumer Durables and Apparels. The following is an analysis of Photographic
and Optical Equipment/Supplies Industry under which EK operates and its level of competition.

5.2 Industry and Market Segment

Photographic and Optical Equipment/Supplies Industry’s products are broadly categorized into five
including equipments for taking still picture; motion picture equipment; chemicals for preparing photos;
films, paper, plates, and cloths for sensitized photos; and equipment for photocopying and microfilming.
Innovative technology has played a great role in enhancing the success of photographic equipment’s’
markets. For instance, with the new development of digital cameras and the One Time Use (OTU)
cameras that are disposable, the market has significantly increased commanding huge number of sales as
well as new entrants of firms to meet the growing demand (Congressional Budget Office). Amazingly,
digital cameras outsold the traditional cameras in 2003 indicating the role of innovative technology in the
industry as well as the markets. a growth of 1.5% of the market as compared to previous years (Bureau of
Economic Analysis n.d.). In addition, this total revenue of approximately $ 20,726.90 million with a total
of $ 11,057.80 million industries’ gross product coming from about 1,931 establishments and 2,124
enterprises. This indicates that the market is rapidly growing having approximately 86 firms.

Within this growing industry and its market there are about 86 companies that have contributed to such
positive result. Consequently, with the 86 firms in the industry competition has immensely grown leading
to quality products through innovative technology that has seen development of digital cameras (Eastman
Kodak, 2009). However, the main competitors to Eastman Kodak Company include Canon, Fujifilm,
Hewlett-Packard, Ricoh, Sony, Xerox, Nikon, Olympus, Lexmark, and Seiko Epson Corporations
amongst others. provides a brief overview of these corporations and how they are offering significant
competition to Eastman Kodak within the industry. Exhibit 3 provides financial performance of five
companies in Photographic and Optical Equipment/Supplies Industry, Kodak and four other main
competitors. In ROA (Return on Assets) and RIC (Return on Invested Capital) are provided that give
indication of a bad performance by Kodak in the latest years where the corporation has had negative
values. In addition, the performance of Eastman Kodak by segments

9
5.3 Changing Elements
Innovative technology is the most emerging driver of this sector. The majority of goods developed by
Eastman Kodak and other companies in this field are essentially influenced by innovative technologies
(Consumers Union of U.S, 2009). This is why it was necessary to rock the industry with the advent of
digital cameras, thereby commanding a larger share than that of conventional cameras. Therefore, most
firms in this industry have been able to reach out the market through advancements of technology.
Imaging and photographic has taken a different direction especially in the 21st century hence the need for
creativity and innovativeness.

6: Strategic Characteristics of Eastman Kodak

6.1 Analysis of Company
Business Model
Market Positioning: Kodak has targeted consumers who are adult and post baccalaureate of about
25 to 40 years of age, actively involved in various activities, having so much passion about relationships
and friendships, and with a lot of interest in capturing images both still and motional. This market
segment is very rich as majority of people between the ages of 25 and 40 are far much active in taking
images and sharing the same through various digital devices. In addition, its market position has focused
on the marketing philosophy that states “Kodak is preferred by adults who are active, busy and care about
meaningful relationships and want to encapsulate and share important moments in their lives, because
Kodak’s products enable them to capture, share, display, and store pictures and create keepsakes, with
more ease than competitors like Canon, Nikon, and Fujifilm”. Products: Eastman Kodak’s main products
are within the four segments as portrayed in Exhibit 4. Nevertheless, Kodak as a firm has failed to
provide products that distinguish benefits to consumers. Most of its products are produced in haste as a
result of pressure from competitors and this leads to poor quality products. Consequently, the firm suffers
reduction in the market share hence profitability as indicated in the financial statements from income
statements, balance sheet, cash flow statement, and ratio analysis respectively. A lot of risks thereby face
products manufactured in this kind of manner. For instance, there is a possibility that such products may
have some defects in them and this discourages consumers from purchasing the same.

Pricing: Applying the economic value pricing indicated in Exhibit 11, Kodak has been able to price most
of its products. In this case, Kodak struggles to deliver products while that provides a demand for price
premium over its competitors. For instance, most of the cameras offered by Kodak range between $ 80
and $ 160 while its competitors sell the same models of cameras for a record price of between $ 110 and $
500 (Kavajecz, 2009). Kodak enjoys the benefit of four of its products being ranked amongst the top nine
cameras that are doing very well in the market. Exhibit 12 provides comparison of pricing by Eastman
Kodak Corporation.

Placement: Kodak placement is almost similar to that of its competitors. There are products that are sold
through the website while others are distributed to consumers through various distributional channels
available in the industry. Most of the products sold directly by Eastman Kodak through its websites are
digital cameras, inkjet printers, and digital picture frames owing to the fact that they are very sensitive.

10
The key strategic issue with regards to Eastman Kodak Company is the fact that they manufacture
products hurriedly after their competitors. This is due to lack of proper innovative and inventive
strategies. Consequently, Eastman Kodak Company should have more people brought on board to work
on innovative and inventive technology, which will help in creating unique products of high quality.

Marketing and Promotional Strategies

Eastman Kodak firm employs various strategies to ensure that they retain existing consumers while
attracting others (Kodak, 2009). The following are some of the strategies employed by Eastman Kodak
firm;

Understanding of the consumers through market research that helps in creating variety of products to fit
various needs and classes.

Developing attainable and specific marketing objectives such as increasing sales, which is the ultimate
objective for the firm.

Reselling analysis through ensuring that consumers are always directly linked to their preferred retailers
so as to acquire products of their choices.

Kodak has efficient and effective marketing communications that is focused at triggering emotions hence
providing arguments that favor some of the products they manufacture in a bid to have a better brand
name.

7: Alternatives and Recommendations

7.1Alternatives
There are various alternatives that Eastman Kodak can employ in order to attract more customers and
retain existing ones thereby achieving higher profits. Some of those strategies include;

Reducing middlemen along their distribution channels to make the end product cheaper

Increase research and development for enhancing innovative technology, which will assist in coming up
with new products

Setting up more subsidiaries in countries that they have not ventured.

Increasing the time taken to produce a product so as to minimize various defects associated with hurriedly
made products

There is need to employ more people within product development as well as quality assurance
department.

7.2 Recommendation
In conclusion, looking at all the above alternatives they are all viable even though some are costly in
terms of expenses hence are likely to cause an increase in costs of sales. The best alternative amongst
11
the aforementioned ones therefore is for Eastman Kodak Company to engage in research and
development that will improve their inventive and innovative technology for the purposes of developing
products that are unique and of high quality

8. Conclusion
In order for a company to be successful in any industry, it must adapt to its consumer tastes. The same
applies in the photography industry, where companies like Kodak must be able to evolve with new
consumer preferences. If a company does not offer the products and services that consumers demand then
there is a high probability that consumers will shop elsewhere.
In the photography field it is important that the products and services be not only user friendly, but offers
a variety of features and easily transferable data. Some important features include zoom range, video
recording, time between taking pictures (on digital cameras), and memory card and the length of time
needed to transfer pictures. Companies in this industry must ensure that its products appeal to long time
photographers, and are easy to learn for those who are new to the field.
In addition, price and customer awareness are important. Cameras must be affordable, as consumers are
becoming more and more price conscious. Also, in an industry where the printing of photos is decreasing,
it is imperative for consumers to be made aware of the quality and affordability of professional printing in
order to maintain market share and profit. If consumers believe it is expensive to print photos, they will
be inclined not to print and store pictures on a disk or print at home with a low quality printer.

12
References
Bureau of Economic Analysis. National Economic Accounts. Retrieved on November 13, 2011 from
https://www.bea.gov/national/index.htm#gdp

Charlene, B. (2008). Talking with the Groundswell. In J. B. Charlene Li., Groundswell. Boston, MA:
Harvard Business School Publishing Corporation.

Congressional Budget Office. Appendix A – CBO’s Economic Projections for 2009 to 2019. Retrieved on
November 13, 2011 from https://www.cbo.gov/ftpdocs/100xx/doc10014/AppendixA.7.2.shtml

Consumers Union of U.S. (2009). Retrieved on November 13, 2011 from

https://www.consumerreports.org

Dobbin, B. (2009). Retrieved on November 13, 2011 from

https://www.huffingtonpost.com/2009/01/29/kodak-to-slash-up-to-4500_n_162133.html

Eastman Kodak. (2009). Filings and Annual Reports. Retrieved on November 13, 2011 from
https://www.capitaliq.com

FactSet Research Systems. (2009). Fact Set Fundamentals 2009.4A.

Google. Eastman Kodak Company Financials. Retrieved on November 13, 2011 from
https://www.google.com/finance?q=NYSE:EK&fstype=ii

Kavajecz, K. (2009). Module 5, Risk, Returns and the Capital Asset Pricing Model. Madison, WI.

Kodak, E. (2009). About Kodak. Retrieved on November 13, 2011 from www.kodak.com

[/sociallocker]

13