Group: 4

Eastman
Kodak : Meeting
the Digital
Challenges
 Overview :
Sep 2003 : CEO, Dan Carp, presented a Digital
Imaging Strategy involving $ 3 billion of new
investment.

Financing: Partly by cutting dividend, hence

opposition from Shareholders.

Skepticism whether investment would generate

returns.

The strategy called for rapid acceleration in

technological & market development.
Kodak’s growth was declining & net
income was by down by two-third’s and
profit margins reduced.

Aggressive Competition in the consumer

electronics segment and lack of
experience in the hardware business .

The challenge in the case is to determine

whether to go ahead with this $ 3 billion
investment plan or to focus on its
established products & markets.
 About Kodak
• Eastman Kodak Company-Established in 1901 by George
Eastman.
• Slogan – “ You press the button, we do the rest”
• Provide a fully integrated photographic service supplying the
camera and film through to processing and printing.
• Diversification from 1983 – 1993 mainly in 2 areas ‘Imaging’ and
‘Life Sciences’
Business principles
Reinvesting
Mass profits for
production at business
low cost growth

Fair
International Extensive Customer Growth and
treatment of
distribution advertising focus development
employees
THE DIGITAL STRATEGY
3 Themes were emphasized:

1) Incremental Approach:
Introducing products & services according to
advancement of technology & customer’s acceptance. For
this purpose, they came up with a lot of hybrid cameras
offering mix of digital & traditional photography.

2) Distinct Strategy for Consumer and Commercial

Markets:
Differentiated product range for each segment in both
markets reflected in their price differentials

3) Alliances:
To become a key player in digital imaging & add
competitive advantages by utilizing external resources,
Kodak partnered with large software & hardware firms,
such as Microsoft, Intel, HP and Olympus to develop
many new products & services.
 Evaluation
Incremental Approach
Hybrid cameras offering mix of digital &
traditional photography.
In 1994 Kodak launched its “picture maker”.
In 1996 Kodak launched its Advantix
advanced photo system.
In 1994 Kodak launched a Professional
digital camera and Apple quicktake
computer camera.
In 1997 Kodak introduced its own picture
network.
Kodak partnered with AOL to offer” you
have got pictures”.
Consumer Market - Easy Share
System
An integrated systems approach for the consumer
market in order to make digital imaging easy.
The system includes:
1) The broad range of Easy Share digital cameras
2) Transfer of images from camera to PC at the
touch of a button
3) Easy Share’s Software allows downloading,
organizing, editing & emailing of images.
4) The system enabled the picture experience
anytime , anywhere: at home, at retail or on the
road ( kiosk).
Commercial Sector :
1.) Health Imaging : Kodak’s potential to carve
out a strong niche in medical imaging products
using both digital and chemical technologies

2.) Commercial Imaging : Leadership in

certain types of hardware and ability to supply
integrated document management system.

3.) Commercial Printing : Kodak was able to

offer a comprehensive range of hardware
consumables and customer support.
 2000 – Lumisys, Inc
– Leading provider
1999 – Imation – 1994 – Qualex, Inc.
of desktop
Kodak acquired – Key link in online
computed
Imation’s medical photofinishing
radiography systems
imaging business service
and x- ray film
digitizers.
Kodak’s Major Acquisitions
• Declining Profits
• High Debts Finances
• Strong Cash Flows from traditional business and
corporate relations
• Weak at bringing new products in the market Development
• Went into collaborations to for launches. New Product
• Less knowledge about the digital world
• World leader in sensors, color management
software
Technology
• Lacked in digital imaging market
• Retail networks were depreciating Assets Distribution
• Consumers owned PC’s and print capabilities
• Superior Brand
Brand
• Uncertainty of the same image in the digital
business
Kodak’s Resources & Capabilities
 Issues
The most important step in any strategy is
the very strategic choice of the initial
approach

1. ) Most of the picture editing software

and the digital chain was in the hands of
computer hardware and software
companies.

2.) Kodak lacked the electronic imaging

capabilities of Canon, Sony and HP

3.) Supporting finances for Digital

development was difficult.
Kodak has two alternatives to
choose from:

1)$ 3 Billion investment plan & try to

gain dominant position in the digital
market

OR

2) Abandon the above plan & establish

core competency in those sectors where
it had a strong market position & where
margins are strong
Plan A :
- Better quality of products
& services in digital business
-Future potential of Digital industry
-Technological know-how
-Capture market & form alliances
because of their brand
- Deviate business from falling films
&traditional photography business

Potential problems:
-Established Competitors like
FUJI, Sony, Canon
-Mobiles
-Rising Debt & unfavorable financials
- Shareholders Dividend slashed
Plan B :
- Print media & Commercial printing is
strong revenue generator
-Core competency & Leadership in
printing
-Costs saving
-Less competition compared to digital
business
-High margins in Health Imaging &
Commercial Imaging

Potential Problems:
- Lag behind in the Digital Industry
Recommendation:
1) Drop the $ 3 Billion plan

2) Continue to be the leader in

Commercial and medical imaging

3) Outsource Digital Business &

maintain existing Easy Share System

4) Focus traditional photography &

films in current & emerging markets
& reap the maximum cash.

5.) Target , markets like China India

and Russia where there was growing
demand for traditional cameras.

6.) Pay dividends to the shareholders.

Thank you