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Kodak-Versus-Fuji Case Study

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1. How can Kodak protect its strategic advantage from competitors, especially Fuji?

Kodak needs to look at the business fundamentals that made them the undisputable leader in the photography industry for many years, and refocus their energies to improve the systems, processes and technologies that allow them to bring to the masses inexpensive cameras and easy to use film. Both Domestically and Globally they need to capitalize on branding, Kodak is a household name when it comes to photographic products; they need to use this competitive and strategic advantage every time by marketing its value.

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Domestically, the need to reinforce their relationships with retailers and key strategic allies, by providing them high quality innovate products at a reasonable price. They need to develop more strategic agreements such as the one negotiated with Costco to exclusively carry Kodak products in their stores, as well as maintain agreements with most of American Amusement parks, to guarantee that only Kodak film is sold on their premises and retail stores.

In addition they need to protect local market share at all cost, putting in the customer’s mind value over price and rewarding customer loyalty with cross promotion and special offers for other products from the Kodak family line. They need to constantly target Fuji’s US market share, with innovative products and try to lure them to come back to Kodak.

In the Global Arena they need to create region centric plans for mature and emerging markets. In mature markets such as Japan, the second biggest global market for photography and Europe, they need to extent their footprint by introducing innovate ways of distribution as well as fresh and reinvented products. In Japan for example they should look for nontraditional ways of distribution that can leverage their disadvantage over Fuji’s local distribution. One way is to push their products, including disposable cameras, film and other accessories thru vending machines strategically located through amusement parks, historical sites, stadiums, etc. A strategy that can be very successful in the other mature markets as well. In emerging markets, such as China, Brazil and India, where a camera can be a novelty, they should have a value proposition that includes the whole taking picture experience: from offering short classes that takes the consumer thru the whole process, from using the camera to finish product or photography. This can be a very rewarding and long lasting experience for the consumer (picture planet experience, www.kodak.com/go/pictureplanet).

In the competitive front, they need to become a transnational company, by using global resources/labor to produce their products. This will give them greater flexibility, especially to deal with price sensitive markets, economic crisis, trade issues and tariffs. They also need to incorporate to their own business model, some of the operational practices that makes Fuji such as strong competitor: heavy expenditure in R& D, listening to the customer, and high employee efficiency while maintaining profitability. In the technology forefront they need to stay ahead of the game, producing state of the art digital products and in this case joining forces with Fuji to defend their position in the market. Also, they should concentrate on the low end of digital cameras and by products, which gave them very good sales results in the first quarter of 99, and work towards the continues improvement of this particular niche, which can be a great differentiator and give them a nice position over the newcomers in the space, HP, Sony, etc.

Finally, if Kodak builds well-sounded strategy around their concept “that the future of photography, in addition to advancing technology, is in getting more people to take pictures”, and communicates the message well along with a compelling value proposition, the gains specially in emerging markets could be very rewarding.

Kodak’s is the leader brand in the photographic industry, is one of the 400 most profitable companies in the world and with revenues above $13 billions.

In the last decade the retail market in the Unites States has changed dramatically. Retailers are looking for high quality products at competitive prices in order to attract more consumers.

This gave Fuji the opportunity to enter the American photographic market in the mid eighties. Fuji is a very strong competitor who at the moment is number 251 most profitable in the world based in revenue of $19,203 millions.

In order to protect its strategic advantage from competitors such as Fuji, Kodak must:

* Increase the investment in research and development. (new technologies in the advanced photo system, digital cameras and internet services.)

* Penetrate digital camera market. A recent study on digital camera market concludes that the shift in photography from film to digital is now in full force.

* Maintain leadership in existing markets, such as the medical imaging.

* Develop new technology that allows having high quality products at reasonable prices.

* Sponsorship and co-sponsorship of high impact events. Endorse sport celebrities.

* Publish environmental policies and goals such as the “Fujifilm Group Green Policy”.

2. How can Kodak anticipate market changes faster and react accordingly?

By staying at the cutting edge of technology and by studying the moves of the competition and trends of the market. Kodak learned a hard but valuable lesson with Fuji and experienced the change in consumer attitude, where value and convenience can easily shift consumer loyalty. In today’s new economy, there are other treats such as competitive technologies that can further erode market share and profits. Under the new management, Kodak is aware of this factor and it has surrounded itself with talented individuals that can feel the pulse of the market. In the area of technology they are staying close to Silicon Valley in order to keep up with the latest advances and developments in software and new technologies impacting their market and industry, and to intensify the R&D on reinventing and creating new products. Additionally, on R&D they should emulate the spending habits of Fuji and allocate at least 7% of their revenue towards that function, decentralizing it along with production, to be more competitive and adapt to changes in the global environment. In Marketing, the new management changes show they are aware that thru effective marketing they can be drivers of new technologies, products and be first to market. They need to take it a step further and make Marketing a top priority at the region-centric level, crafting the marketing plan according to the conditions of the markets and the needs and wants of the consumers.

Finally, Kodak should get ongoing feedback from customers, lost customers, competitors’ customers, and non-customers and thru this collaboration build the best strategy possible, always being flexible enough to asses alternatives that can help them to cope with changes that can directly impact their business.

* Through research and development, Kodak can explore the possibility of new products and markets globally and domestically.

* Analyzing market trends/customer satisfaction.

* Staying current with technological trends..

* Researching competitors.

* Keep up with current with environmental, legal, socio-cultural, and political trends in order to predict changes in the market.

3. What are Fuji’s chances for future growth?

Fujifilm wants to become a leading global corporation, “Globalization through localization”. Trusted by the communities it forms part of and the customers it serves, by providing total solutions using digital and networking technologies in the imaging, information, and document business.

Currently Fuji film group has offices in more than 20 countries and its production outside Japan is almost 50% of the total production worldwide.

Fuji is making company wide efforts to address the following essential tasks under its medium and long term management strategies:

* Maximize the use of proprietary technologies and aggressively introduce unique new products, systems, services, and solutions to establish a leading position in all arenas of the imaging, information, and document business. In October 2002, they announced the development of an optical discs using an exclusive new organic dye coating technology. Back in the 70’s they introduced faster film with brighter color and back in the 90’s they introduced the one time use cameras (OTUC).

* Build a strong, future oriented network for research and development (R&D), production, sales, and services while pursuing business activities with a global perspective in close harmony with host countries in which they operate, such as China. Put emphasis on the digital era.

* Improve the consolidated operations with the aim of strengthening competitiveness and achieving growth across the entire Fujifilm group, including Fuji Xerox Co.(recent acquisition), and other domestic and overseas subsidiaries and affiliated companies, as a single unit and with emphasis on cash flow. Fuji is a very efficient organization, its revenue by employee is almost twice as much as Kodak.

* Continually reform the corporate structure, so as to respond more rapidly to the spread of IT and Internet use from a global perspective, and intensify efforts to reduce all costs in our drive to build a strong corporate organization.

* Fulfill the responsibilities to society by strengthening and upgrading our measures for corporate ethics and environmental and product safety concerns.

* Increasing the distribution/processing channels and making the products more accessible to costumers (website, vending machines, convenient stores, drugstores, supermarkets, gas stations, concert halls, amusement parks, sport events, direct distribution). Fuji is known for its strong relation with distributors.

* Gain additional market share from big and mature markets such as United States and Europe. Also, U.S. consumers are willing to buy non U.S. brands if they are high quality and low price.

* Maintain its strong market share in Japan through its excisting distribution chanels.

* Focus on big emerging markets such as Brazil, India & China.

* Continue with sponsorships of big events in order to increase brand recognition. A success sponsorship was the 1984 Olympic Games, before those games Fuji film was almost unknown.

4. What are some disadvantages that Fuji has to overcome?

Fuji’s main disadvantage comes from its main competitor Kodak and its aggressive approach to dominate the market.

* Last 2000 Kodak reaffirmed its commitment to diversity by naming its first Chief Diversity Officer. The C.D.O. said “our commitment to diversity means shaping our culture so that all stakeholders contribute fully to our success as a global leader in imaging.”

* Worldwide brand name recognition of Kodak, especially in the United States which is the biggest photography and imaging market.

* Brand loyalty to Kodak by consumers if prices are equal. In order to gain market share, Fuji has to sacrifice profitability. I

Other disadvantages are:

* Weak world-economy and political instability around the globe.

* Although a very well run company they need to improve its profitability in order to assures sustained mid and long term growth.

* Not leaders of medical imaging despite of being technologically more advanced than Kodak.

* New emerging technologies that are shifting consumer behaviors. Digital cameras are bringing new competitors such as Hp and Sony.

5. Should both Kodak and Fuji be concerned over digital integration into the silver halide industry?

The digital imaging integration into the silver halide industry will cause concerns in the corporate offices of both Kodak and Fuji. Although both of these firms currently dominate the world wide silver halide industry, their future global presence in the photography business will be determined on their ability to embrace digital imaging technology as part of their core business system. The 1 billion dollar worth of digital imaging technology sold in 1997 clearly demonstrate that consumer demand for these products exist. Both Kodak and Fuji can also rest-assure that the global sale of digital equipment will increase due to the drop in price, popularity and demand among consumers for these new hi-tech gadgets. If for some reason, any of these two firms decide not to devote the sufficient financial capital for research and development of new digital technology in order to stay competitive, then they might as well close shop. In addition to devoting the appropriate funds to develop new digital imaging technology, Kodak and Fuji now have major competitors to fight off.

Silver halide photo processing, film sales, and conventional cameras accounted for 10.3 billion dollars worth of sales across the world in 1997. Digital imaging equipment such as cameras and printer accounted for nearly 1 billion dollars in sales in the same period. As the price for digital equipment continues to drop, consumer demand for silver halide products and services will decrease. The potential market sale of digital equipment can achieve the same or relatively similar levels to that held by the silver halide industry. This means that at one point or another in the future, the 10.3 billion dollar market sales held by the silver halide industry will belong to the digital imaging industry. Since both Kodak and Fuji dominate the silver halide industry, not adapting or penetrating into the digital industry will result in lost of market sales of silver halide goods and services as consumers switch to digital equipment.

In the past, nontraditional companies such as Sony, Casio and Hewlett-Packard were not considered competitors to either Kodak or Fuji in the silver halide industry. In today’s digital era, all three of these companies have become major competitors to Kodak and Fuji. Like Kodak and Fuji, all three of these competitors have the technology and knowledge on how to develop and manufacturer digital imaging equipment such as cameras and printers. In order to maintain their dominant position in the photography business, both Kodak and Fuji to be concern on how to manage its competition.

Cite this Kodak-Versus-Fuji Case Study

Kodak-Versus-Fuji Case Study. (2018, Jan 11). Retrieved from https://graduateway.com/kodak-versus-fuji-case-study/

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