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Eastman Kodak: Eastman Kodak: Looking for Looking for

Market Market OpportunitiesOpportunities

Special Topics in MarketingSpecial Topics in Marketing

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ContentContent

Eastman Kodak Overview History Context and Timeline Kodak’s Performance from the Recent Years What went wrong to Kodak Kodak’s Current Performance Kodak’s Market Opportunities

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Eastman Kodak OverviewEastman Kodak Overview

Kodak is a technology company focused on imaging business.

Kodak serves customers with disruptive technologies and breakthrough solutions for the product packaging, graphic communications and functional printing industries.

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History Context and TimelineHistory Context and Timeline

1980: After inventing and patenting a dry-plate formula and a machine preparing large number of plates, George Eastman founded the Eastman Kodak Company.

1884: Kodak became a household name after Eastman replaced glass photographic plates with a roll of film.

1963: Kodak had become an industry standard gaining success from its heavy investment in R&D.

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History Context and TimelineHistory Context and Timeline

1963: Sales topped US$1bn by launching into 1963: Sales topped US$1bn by launching into new product lines such as cameras and medical new product lines such as cameras and medical imaging and graphical arts. imaging and graphical arts.

1981: Sales quickly rose to UD&10bn1981: Sales quickly rose to UD&10bn

Today, KodakToday, Kodak’s principal activities center on the ’s principal activities center on the development, manufacturing and marketing of development, manufacturing and marketing of consumer, professional, health and other imaging consumer, professional, health and other imaging products and services.products and services.

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KodakKodak’s Performance from the ’s Performance from the recent yearsrecent years

Kodak is in trouble: For the 9 months ended Kodak is in trouble: For the 9 months ended September 30, 2005, revenues increased by September 30, 2005, revenues increased by only 3% to US$10bn while the net-loss from only 3% to US$10bn while the net-loss from continuing operations totaled US$1.32bn continuing operations totaled US$1.32bn versus an income of US$139M.versus an income of US$139M.

In March 2005, Kodak had to restate its In March 2005, Kodak had to restate its profits for the past 2 years lower by $93 profits for the past 2 years lower by $93 million and $12 million due to overstating million and $12 million due to overstating market forecasts. market forecasts.

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KodakKodak’s Performance from the ’s Performance from the recent yearsrecent years

The final setback occurred when Kodak The final setback occurred when Kodak posted a quarterly loss of $142 million and posted a quarterly loss of $142 million and its bond ratings were cut to junk.its bond ratings were cut to junk.

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What went wrong to Kodak?What went wrong to Kodak?

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Failure 1: How Kodak Failure 1: How Kodak Missed the Information AgeMissed the Information Age

Kodak became heavily dependent on the highly profitable margin from film, and progressively paid attention to equipment.

Kodak’s lack of strategic creativity led it to misinterpret the very line of work and type of industry that it was operating in which later devastated with a fundamental shift to digital age.

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Failure 1: How Kodak Failure 1: How Kodak Missed the Information AgeMissed the Information Age

Kodak virtually committed a corporate suicide by sticking to a business model that was to be no longer valid to the post digital age.

When change came, it was a matter of too little too late after ‘sudden epiphany strategic plan’ came in 2003 wherein digital technology is already in full swing.

Failure 1: How Kodak Missed Failure 1: How Kodak Missed the Information Agethe Information Age

Kodak lacked the frame-breaking Kodak lacked the frame-breaking behavior that have otherwise allowed behavior that have otherwise allowed the company to keep track on the the company to keep track on the market, and even help develop market, and even help develop relevant scenarios of the future of relevant scenarios of the future of imaging photography.imaging photography.

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Failure 2: A Paradox Between Failure 2: A Paradox Between Revolution and Evolution in StrategyRevolution and Evolution in Strategy

KodakKodak’’s market signal came as early as s market signal came as early as 1981, when the Sony Corporation 1981, when the Sony Corporation announced it would launch Mavica, a announced it would launch Mavica, a filmless digital camera that would display filmless digital camera that would display pictures on a television screen, and pictures on a television screen, and pictures could be printed onto paper. pictures could be printed onto paper. However, kodak found it hard to believe in However, kodak found it hard to believe in something that is not as profitable as something that is not as profitable as traditional film.traditional film.

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Failure 2: A Paradox Between Failure 2: A Paradox Between Revolution and Evolution in StrategyRevolution and Evolution in Strategy

After 35 years, Kodak conceded the obvious, however, it was not only a delayed action, Kodak’s executive staff were simply not prepared to take necessary risks required for the shift.• The difference between kodak’s traditonal

business and digital was so great.• The tempo is different.• The skills needed are different.

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Failure 2: A Paradox Between Failure 2: A Paradox Between Revolution and EvolutionRevolution and Evolution

Kodak could have addressed this change by evolutionary means by slowly adapting the business strategy incrementally since beginnings of digital age. The business lacked the forceful nature of revolutionary execution that would have allowed Kodak to break free from the past.

The digital age had shaken the imaging industry, and now Kodak needed to apply the same revolutionary change internally – or else the market would.