DB : Week 4-6

Eastman Kodak (Case Study)

Subject : Advanced Strategic Management

Professor : Dr.Abdul Jumaat Bin Mahajar
Presenter : Sameer Sawant (SS17036)
Date : 24th Feb 2020

“In many cases, the problem isn’t about having or noticing insights; it is about acting
on them. The organization lacks the willpower to make changes.”
― Gary Klein,
Book : Seeing what others don't: the remarkable ways we gain insights
Eastman Kodak :
Business Case
Looking Back…..
 “Business is full of mysteries, but
none greater than this: What really
works?”

 “There will always be a temptation

to tell a neat story that makes
everything sensible and logical
and that suggests why the
deserving succeeded while the
wicked or arrogant failed.”

Philip M. Rosenzweig,
The Halo Effect: and the eight other
Business Delusions that deceive
Managers
The intent was right
"If a man has wealth, he has to make a choice, because there is the money heaping up.
He can keep it together in a bunch, and then leave it for others to administer after he is
dead. Or he can get it into action and have fun, while he is still alive. I prefer getting it into
action and adapting it to human needs and making the plan work."

- George Eastman

 With the slogan "you press the button,

we do the rest," George Eastman put
the first simple camera into the hands
of a world of consumers in 1888. In so
doing, he made a cumbersome and
complicated process easy to use and
accessible to nearly everyone.
 Just as Eastman had a goal to make
photography "as convenient as the
pencil,"
Eastman built his business on four basic principles:
 a focus on the customer
 mass production at low cost
 worldwide distribution
 extensive advertising
Added New Principles
 foster growth and development through
continuing research
 reinvest profits to build and extend the business,
and
 treat employees in a fair, self-respecting way
1.Discuss the impact of Kodak’s strategy to its business industry?

2000, just before the digital

transition, sales related to film
accounted for 72% of Kodak
revenue and 66% of its operating
income

2001, Kodak’s net worldwide sales

decreased by $760 million (5%).

This was caused mainly by a decline in

photography sales of $828 million (8%).

Environment :
Digitization

Customer Taste :
Known Competitors :
•Ease of operation
•Convenience Fuji Films, Nikon
•Pressure on Sales & Margins

- Pressure on technology Unknown Competition :

•Storage and retrieval IBM, Canon, HP,Sun
1.Discuss the impact of Kodak’s strategy to its business industry?

Reinventing Kodak with Strategic Initiatives. 2001

“Kodak is a technology company focused on imaging. We provide – directly and through
partnerships with other innovative companies – hardware, software, consumables and
services to customers in graphic arts, commercial print, publishing, packaging,
entertainment and commercial films, and consumer products markets.

With our world-class R&D capabilities, innovative solutions portfolio and highly trusted
brand,

Kodak is helping customers around the globe to sustainably grow their own businesses and
enjoy their lives.”

Kodak Announces Milestones in Implementing Growth Strategy; Company Plans Three-Year

Program to Enhance Competitive Position
Businesswire, January 22, 2004 03:00 AM Eastern Standard Time
 Strategic Intent : Core Competency, Operational Efficiency,

 The company took aggressive steps in 2003 to re-invent itself to be a stronger

and diversified company in the photo imaging industry by leveraging its
operations to focus on the core businesses to ensure that its customer base
had access to quality imaging and photography products/ services .

Strategic Intent : Restructuring ,Product Porfolio Enhancement, Acquisition

1.Discuss the
 Daniel A. Carp, Chairman and Chief Executive Officer “"We are at the
dawning of a new, more competitive Kodak, one that is growing profitably,
that has a more balanced earnings stream, and that will have a dramatically
lower cost structure,"

impact of  In 2008, the company experienced a significant growth as a result of a five

year restructuring program that would see its business strategy changing to
improve revenue and profit margins.

Kodak’s
 78% of Kodak's research and development dollars will be spent on digital
equipment, services and media by 2006, compared with about 66% currently.
The balance will be invested in traditional imaging products and services.

 "Make no mistake - we remain committed to film and printed output, which

strategy to
are, and will continue to be, great businesses

 The restructuring exercise saw the company investing $4 billion dollars in

research and development activities that would see an increase in its digital
businesses.

its business  The $4 billion investment was also used in acquiring several small businesses
that had been successful in the digital imaging industry to improve the
company’s market share as well as improve its technological innovations and

industry?
services.

 The decline in revenue for the traditional segment of the company’s business
was seen to be in line with the restructuring program which was meant to shift
the operations of the business from traditional to more innovative and
modern digital businesses (Kodak 2010).

 As a result of the restructuring exercise, revenues from the digital businesses

grew by double digits for four consecutive quarters between 2007 and 2008.
 Strategic Intent : Restructuring, Re-Engineering and
Operational Efficiency
 In 2014, $19 million in restructuring charges and residual
reorganization costs from the 2012-2013 reorganization.
 Strategic Intent : Reducing total facility square footage
by about one-third, building on current initiatives to
consolidate operations and dispose of surplus assets

1.Discuss the
resulting from the consolidation;
 A $16 million charge related to the markdown in the
value of assets in Venezuela resulting from currency

impact of
valuations and exchange restrictions.
 A $9 million charge related to an intangible asset
impairment.

Kodak’s  “In the fourth quarter on a comparative basis,

Operational EBITDA improved year-over-year by 40%,”
said Jeff Clarke, Kodak Chief Executive Officer. “We have

strategy to
made significant progress – ahead of our plans – in
improving productivity and reengineering our cost
structure. We remain focused on growth and improving
our operating leverage to achieve sustained profitability.”

its business Strategic Intent :Integration of newly acquired businesses;

 2014 sales were $2.10 billion, vs. $2.35 billion in 2013.

industry?
Strong overall growth of 68% was achieved in sales of key
strategic technology products, including KODAK
SONORA Process Free Plates, KODAK FLEXCEL NX Plates,
and annuity revenues for KODAK PROSPER Presses. This
growth was offset by expected significant declines in
mature businesses
 Strategic Intent : Strategic Alliance
Strategic Intent : Business Development in emerging markets like
China, India, Brazil, Mexico and Russia;
Kodak's imaging science expertise a perfect fit for 3D applications
and more with new partner Evolve Additive Solutions
Companies scale production capabilities and speed of additive
manufacturing with electrophotographic technology

1.Discuss the
Rochester, N.Y., and Minneapolis, MN, Monday, November 05,
2018 --
Today Eastman Kodak and Evolve Additive Solutions, Inc.
announced a technology partnership where Kodak will supply

impact of Evolve imaging systems, parts and consumables based on the

KODAK NEXPRESS digital electrophotographic platform. In addition,
the companies have signed Joint Development Agreements for

Kodak’s
equipment and materials with the goal of helping further develop
Evolve’s Selective Thermoplastic Electrophotographic Process (STEP)
technology in anticipation of the commercial release in 2020. STEP is
Evolve’s proprietary 3D printing technology for additive

strategy to
manufacturing. Kodak has also licensed relevant intellectual
property to Evolve in support of the development effort.
Kodak Reaches Agreement to Form Strategic Relationship with

its business
HuaGuang ROCHESTER, N.Y.--(BUSINESS WIRE) August 05, 2019 04:00
PM Eastern Daylight Time
Today Eastman Kodak Company announced it has reached an
agreement with Lucky HuaGuang Graphics Co. Ltd (“HuaGuang”)

industry? to establish a strategic relationship in the People’s Republic of

China, including Hong Kong SAR, Macau SAR and Taiwan
(“China”). By partnering with one of the largest graphics players in a
region that is seeing a growing demand for resource-efficient
solutions, Kodak seeks to significantly increase the adoption of its
SONORA plates in China.

 Strategic Intent : Generate Positive Cash Flow to be ploughed back in
business
 “I look forward to working with my team to help Kodak become
cash-flow positive and build long-term value for shareholders,” said
Jim Continenza, Kodak’s newly appointed Executive
Chairman. “Our priorities will be to increase operational efficiency
and focus on core competencies to achieve our growth objectives.”
 “We generated cash in the fourth quarter of 2018 and delivered
strong performance in our key growth areas of SONORA Process Free
Plates and in PROSPER inkjet annuities,” said David Bullwinkle,

1.Discuss the
Kodak’s CFO. “We expect to close soon on the sale of our
Flexographic Packaging Division and will use the proceeds to
significantly reduce our term debt and strengthen our balance
sheet. In addition, we plan to secure new financing for our remaining
term debt, which will allow us to focus on our operations and return

impact of
to consistent cash generation.”
 The company’s cash balance was $344 million at the end of 2017,
compared with $434 million at the end of 2016. The company used
cash to invest in strategic growth businesses, fund working capital

Kodak’s
needs, meet legacy cash obligations and service and prepay debt.
 “Our use of cash in 2017 included meaningful investments in the
ULTRASTREAM inkjet platform, FLEXCEL NX packaging, SONORA X
plates, advanced materials and brand licensing which will

strategy to contribute to growth,” said David Bullwinkle, Kodak Chief Financial

Officer. “In the fourth quarter of 2017, we reprioritized our investments
to focus on shorter payback periods and reduced costs which will
improve our ability to generate cash in 2018 and beyond

its business  “Kodak demonstrated improvement in our cash flow and overall
balance sheet in the second quarter,” said David Bullwinkle, Kodak
Chief Financial Officer. “We continue to be committed to
generating cash in 2016.”

industry?  Operating expenses (total SG&A and R&D expenses) were $212
million for the year ended December 31, 2016, a $36 million, or 15
percent, improvement compared with 2015. $15 million of this
improvement was due to increased non-cash components of
pension income.The company ended the year with a cash balance
of $433 million. Cash used in operating activities improved by $82
million compared with 2015.
 Strategic Intent : Investment in New technologies

Kodak announces the launch of their KODACOLOR

Direct to Garment (DTG) Inks, leveraging decades of
technological innovation and resulting in remarkable color
and feel Rochester, NY, Tuesday, May 14, 2019

1.Discuss the KODAK Tablets launch throughout Europe,

impact of
Rochester, NY and Paris, France, Tuesday, June 20, 2017 --
Eastman Kodak Company and ARCHOS announced new
KODAK Tablets will be available by the end of June, 2017

Kodak’s throughout Europe. Available in the most popular screen

sizes, 7” and 10.1”, the KODAK Tablets feature a full black
or a radiant yellow back casing. Underneath their elegant

strategy to
design, these devices include the latest technologies and
a set of preloaded apps for editing, sharing and printing
memories from daily life anywhere anytime at an
affordable price.
its business
“2017 was a year of investment in our strategic growth
industry? priorities which bodes well for the future,” said Jeff Clarke,
Kodak Chief Executive Officer. “We also eliminated
several business initiatives while continuing to reduce cost
and drive greater efficiency in the company. We enter
2018 with a stronger growth profile and more productive
operations.”
 Strategic Intent : Generate Cash and plough
back in Investment in New technologies
“Kodak demonstrated improvement in our cash flow
and overall balance sheet in the second quarter,”
said David Bullwinkle, Kodak Chief Financial Officer.
“We continue to be committed to generating cash
1.Discuss the in 2016.”
Operating expenses (total SG&A and R&D expenses)

impact of were $212 million for the year ended December 31,
2016, a $36 million, or 15 percent, improvement
compared with 2015. $15 million of this improvement

Kodak’s
was due to increased non-cash components of
pension income.
The company ended the year with a cash balance
strategy to of $433 million. Cash used in operating activities
improved by $82 million compared with 2015.

its business “2017 was a year of investment in our strategic

growth priorities which bodes well for the future,” said
industry? Jeff Clarke, Kodak Chief Executive Officer.
“We also eliminated several business initiatives while
continuing to reduce cost and drive greater efficiency
in the company. We enter 2018 with a stronger
growth profile and more productive operations.”
2.Discuss the Kodak’s SWOT analysis?.
Strengths
• Globally know Renowned brand
• Positioning (Technology driven)
• Broad product portfolio:
• Socially responsible company
• Core Competency : Imaging
• Cash Generating Machine.
Opportunities
• Future is digital imaging
• Online Sharing
• New markets, New geographies
• New partners with technologies
Weakness
• Brick and Mortar Store.
• Lack in focus
• Slow to adapt. “Elephants don’t Dance”
• Financials are weak, lacks margins
• Kodak though leader in imaging but follower in
innovation.
Threats
• Competition from traditional &Non Traditional
competitors
• Competitors have various businesses which
leverage their position
• Substitute products
• Digital economy, low cost
• Consumers taste changing
3.Evaluate the various types of strategy used by Kodak in expanding its market and in
your opinion what are other strategy could be used by Kodak to be more competitive
in the market?

Henry Mintzberg 5 P Strategy

Strategy Plan Ploy Position Perspective

Conscious Actions
Create Goals and
Future Oriented Short-Term Positioning Strategy
Objectives for achieving
Key Element Scheduled Customer Oriented Create position in
operational goals.
Objective Oriented Competitor Directed Industry
Execution Oriented

Generate Cash
Strategic Alliance & Innovation
Employee Oriented
Partnerships in emerging Product for various
Kodak’s Strategy Promotional Strategy Distinct distribution
markets segments
channel
Content Strategy Versatile Segments
Marketing Oriented

Cash into Innovation Sports Showcase Sensory Social Media for

Key Aspects
Company Branding Celebrity Shows Technology employee feedback

Distribution Channel
Postioning products for
New Products Presence in Major Global Product feedback
various market segments
Innovation events Internal image building
within imaging industry
Tech.driven Alliance
 1.New Market Segments (STPD)
Tap in B2B Markets which will help leverage their
advantage.
What are Niche applications, Medical, Printing, Media, etc

other strategy 2. Positioning Strategy (STPD)

Position as “Imaging Company” rather than a

could be used printing or equipment company

3. Strategic Alliance.
by Kodak to Alliances only with partners which can lead them to
innovative products, new markets,
be more New business segments.

competitive in 4. Cost Driven Strategy

Has to be cost oriented as all the traditional business
the market? activities have undergone radical change.
Low cost will help create easy adoption.

5. Brand Building :
Like Intel Inside…Kodak Image…the “Image recoded
on Kodak”
The Conclusion….
“The reason is that good management itself was the root cause. Managers played the game the
way it was supposed to be played. The very decision-making and resource-allocation processes
that are key to the success of established companies are the very processes that reject disruptive
technologies: listening carefully to customers; tracking competitors’ actions carefully; and
investing resources to design and build higher-performance, higher-quality products that will yield
greater profit. These are the reasons why great firms stumbled or failed when confronted with
disruptive technological change.”

― Clayton M. Christensen,
The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business
Support From…..
https://ivypanda.com/essays/kodak-case/

https://www.essaysauce.com/business-essays/a-case-study-of-kodak/

Eastman Kodak Company 2018 Annual Report on Form 10-K and Notice of 2019 Annual Meeting
and Proxy Statement
https://petapixel.com/2018/10/19/why-kodak-died-and-fujifilm-thrived-a-tale-of-two-film-
companies/

https://www.businesswire.com/news/home/20040122005289/en/Kodak-Announces-Milestones-
Implementing-Growth-Strategy-Company