I.

Abstract
Eastman Kodak, 133-year-old firm, has stunned the world, announcing in January 2012 that it
has put to its camera business. Kodak was founded by inventor, George Eastman, and its little yellow
film packages became one of the world’s most popular brands. It, indeed, was an American industrial
icon. However, the company has struggled to keep up with the competitors who were quicker to
adapt to digital era and filed for Chapter 11 protection bankruptcy in mid January 2012. This research
paper includes the company background, SWOT analysis, reasons why it failed and lessons learned
from its failure.

II. A History of Innovation

The story of the Kodak began with the manufacture of dry plates in 1879. George Eastman,
Kodak’s founder and one of the greatest entrepreneurs, received a patent of his plate-coating
machine in London. In 1880, Eastman began the commercial manufacture of dry plates. His
successful venture in manufacturing dry plates caught the eye of Henry A. Strong and a partnership
company, the Eastman Dry Plate, was formed in 1881. In 1883, the company unveiled film in rolls
with a universal roll holder that would be suitable for nearly every plate camera available at that
time. In a year later, the company was renamed as the Eastman Dry Plate and Film Company and in
1889, the name of company became the Eastman Company. “You press the button, we do the rest”
was its motto in 1888, which opened the door to mass market consumer photography. The company
has been called as Eastman Kodak Company since 1892 and was well-known for its pioneering
technology and innovative marketing. In 1969, the film that was manufactured by Kodak was used
on the Apollo 11 missions. Kodak has become a pioneer in the development of digital cameras in
1975. An Eastman Kodak engineer created a 3.6kg device with a cassette tape as the equivalent of
today’s memory card and took 23 seconds to expose each image. In 1976, Kodak accounted for 90
per cent market share for photographic film and 85 per cent camera sales in America. It proved that
Kodak was a recognized brand that was both profitable and achieved high levels of sentiment from
customers. Until the 1990s, it was rated as one of the world’s five most valuable brands.

III. The Rise and Fall of Kodak

Since the formation of Kodak, the company has remained the world’s leading film provider. Its
revenue peaked at nearly $16 billion in 1996 and its profits reached at $2.5 billion in 1999. However,
since the turn of the century, the fortunes of the once world’s leading photographic firm has
plummeted. Kodak reacted the digital revolution slowly, hence, it experienced revenues plummet
from $ 15 billion to $9.4 billion in 2009. According to the Economist, the revenue was down to $6.2
billion in 2011. According to MarketResearch.com, the recorded revenues were $4,114 million in
 December, 2012, a drop by 20.1% compared to 2011.The firm which employed over 145,000
workers worldwide, also announced cuts of thousands of jobs and by early 2012, its shares were just
trading at around 40 cents dropped from $40-45.

IV. SWOT Analysis

This section includes the analysis of the strengths, weaknesses, opportunities and threats that Kodak had
faced. The analysis will provide key insights into what went wrong and what forced Kodak almost out of
the market in 2012.
(i) Strengths
Brand recognition
Kodak was one of the pioneers in the photography and filming. With a century of global
leadership in the photographic industry has brought about not only the benefit and also the
strength of the Kodak brand name.
Worldwide distribution network
Kodak brand reputation was supported by its massive worldwide manufacturing
distribution network which helped to maintain and increase the sales volume, market coverage
and accessibility mainly through a significant network of retailers, distributors and online
platforms. Its powerful network established diversified sources of revenue deriving 40.5%
revenues from the US, 31.0% from the Europe, Middle East and Africa, 17.1% from the Asia-
Pacific and 11.4% from the Canada and Latin American regions during FY2009.
Many product lines and a powerful set of complementary technologies
Prior to 1990s, Kodak had put the huge investment in R&D and it achieved a deep
understanding of recording and processing images through its century of innovation and
development of photographic images. Kodak also possessed a powerful set of technologies in
sensing, color management and thermal printing.
Additional channel for revenue earnings by cross licensing agreements
Kodak had entered into cross licensing agreements portfolios of patents over the years.
It made cross-licensing agreement with LG display and Nokia in 2009 and again in 2010, the
company signed an agreement with Samsung Electronics which allowed both companies access
to each other’s patent portfolio. Moreover, it also signed agreements with other leading
technology companies including Nokia, Motorola, Sony Corp, and Panasonic Corp. For FY2009,
these licensing agreements accounted for approximately 5.7% of the overall revenues, as
against 2.4% in 2008.
(ii) Weaknesses
 Stagnant financial performance throughout the years
Despite the core competency in innovative digital imaging, the financial performance was
poor. It failed to prove the competency to fit the emerging demand. Hence, the market share
and revenues of Kodak declined gradually whereas the competitors were providing the market
needs.
Growth without direction
Due to chaning leadership very often, Kodak has growth without specific direction.
During CEO Whitmore’s leadership, Kodak entered into the market that did not fit in with its
image.

(iii) Opportunities
Expand core business
Kodak, indeed, was an American industrial icon enjoying similar status as Apple does
today for much of the twentieth century. The market of photography has been chaning
constantly. With the world-famous brand in camera, Kodak could expand their core business
with their core competencies.
Widen product range
While focusing on sustaining their brand in camera market, Kodak can also widen their
product range by producing more attractive devices and services with the integration of
innovative technology.
(iv) Threats
Intense Competition in the market
Although Kodak was a pioneer in the camera business by bringing handheld cameras to
consumers over a century ago and a leader in imaging technology, competitors like canon,
Nikon, joined the fray in the digital camera market and offered dramatically more-appealing
devices. In addition, smartphones like the iPhone, Samsung, has become a preferred way for
consumers to take a snapshot and demand for a Kodak device plummeted.

V. Reasons for failure

Failure to adapt the new technology
Kodak and its rival, Fujifilm, saw their traditional business would become obsolete. But
Kodak failed to adapt new technology adequately. Kodak’s unwillingness to change its efficient
ability to make and sell film in developing digital technologies lost the chance that could have
maintained the leading position in digital image processing.
Distruptive innovation
 George Fisher, who was a CEO of Kodak from 1993 until 1999, decided to produce
digital cameras and offered customers the ability to post and share the pictures online.
Although Kodak made a large amount of business out of digital cameras with revenue
reaching $5.7 billions in 2005, it lasted only for few years before camera phones entered the
market.
Lack of integration external and internal knowledge
Kodak made efforts to outsource its camera manufacturing to fill the gaps in expertise,
and the outsourcing management failed to achieve the integration of external knowledge
with its own internal knowledge which is essential to further innovation. As a result, Kodak
cannot compete with its rivals in digital market.
Complacency
Complacency also played a part in Kodak’s failure. Despite a hefty investment in R&D
and good relations with customers, Kodak overflowed with complacency. Although Kodak
knew that rapid changes in the market and technology would come, they failed to adapt the
changes promptly and adequately.
Inconsistent Leadership and losing focus
The strategy of the company changed with each of several CEOs. Kodak went through
numerous restructuring whenever there was a change in the leader in the organization.
Every new CEOs brought new priorites and the pursuit of the company goal was also easily
changed. The latest CEO, Antonio Perez, had started focusing more on printing business,
which was already dominated by Hewlett Packard, rather than manufacturing camera
capibility.
VI. Conclusion
Kodak case study was an eye-opener that provides me a great deal of insights into
running the business with technology. In order to maintain the company success, the company
should have moved into the digital world well enough and fast enough. The rapid and
continuous changes in its technologies should encourage an attitude of preparedness. Kodak
case cleary shows that no matter how good the products are, it cannot be a future-proof.
Therefore, to become successful in any industry, it must have the ability to adapt to its
consumer tastes. If a company fails to offer the products and services that consumers demand,
there is a high probability that they will alter their allegiance to a better product. Consumer
buying habits, new products and services are things that must be constantly be reviewed,
analyzed and modified as needed. Since the world has been dramatically changed by
technology, the company needs to constantly innovate, develop the ideas and avoid
complacency. In addition, Kodak case proved that entering into unrelated industries will not
 only result in failure but also lose the focus on core products and services. So, it is obvious that
focusing on continuous improvement matters for long term success.

VII. References
http://www.forbes.com/sites/marketshare/2012/02/13/no-more-kodak-moments/
http://www.reuters.com/article/2012/02/09/us-kodak-idUSTRE81816Z20120209
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9024539/Kodak-130-years-of-
history.html
http://www.marketresearch.com/MarketLine-v3883/Eastman-Kodak-Company-SWOT-Strategy-7876792/
http://www.telegraph.co.uk/finance/newsbysector/industry/9024382/Kodak-files-for-Chapter-11-
bankruptcy-protection.html
Eastman Kodak files for bankruptcy protection, Jan 19th 2012, Retrieved from
http://www.bbc.co.uk/news/business-16625725
http://blogs.birminghampost.co.uk/business/2012/01/the-rise-and-fall-of-kodak---w.html
The Last Kodak Moment, Jan 14th 2013, Retrieved from http://www.economist.com/node/21542796
Eastman Kodak Company, © datamonitor.com