Fujifilm Reborn May 13, 2014

INTERNATIONAL STRATEGY

International strategy are strategies through which the firms sell its goods and services
outside its domestic market. Since the last century through reduction of barriers of entry
and better trade agreements between countries, companies have implemented
international strategies as they view the international market having potential for new
opportunities to increase market size, provide better economies of scales and increased
competitive advantage.
international strategy began in the mid 1960 when Fujifilm first established an
overseas sales base and by the Fujifilm was increasing and expanding their
production and their base into the global market. This success into the global market
allowed Fujifilm to be the title sponsors of the 1984 Olympic Games and establish their base
in the United States. To this day Fujifilm maintains their ongoing commitment to developing
its business into the global market with Fujifilm offices and products being sold around the
world. In 2012, Komori launched a medium plan management plan which coincided with
the 80th anniversary of Fujifilm. Komori states that the VISION80 mission was
promote globalisation on the basis of robust corporate constitution and aim for new growth
in the global (Fujifilm, 2013). The VISION80 identified new emerging countries such
as BRICS (Brazil, Russia, India and China), Turkey, Middle East and South East Asia with
future resources allocated to these countries.
By utilising the international strategy diamond, we will be able to analyse
international strategy and why they decided to go global. How Fujifilm was able to go
international and where Fujifilm expanded globally.

WHY FUJIFILM WENT INTERNATIONAL

Fujifilm was initially a little known Japanese company that was well known for its camera
and photographic films. The company was established in 1934 as part of a government plan
to establish a domestic photographic manufacturing industry (Fujifilm 2013). Fujifilm first
broke the went global in the USA in 1965 starting initially as a private brand supplier then in
1972 established Fujifilm USA Inc. with a reputation of being leaders in imaging and

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photography and competing with Kodak with competitive prices and better quality and
innovative products.
Fujifilm could have continued to remain as the dominant players in Japan and continue to
create R&D and Innovative products but Fujifilm would have wanted to diversify themselves
in times of uncertainty and risk in the economy. This allowed Fujifilm to avoid putting
everything one in terms of economy and hence if the economy in Japan
crashed their company were still protected due to their diversification into other
economies who might have been heavily impacted due to economic crisis.
Another reason for going global was to increase and gain new customers for their products.
Prior to Fujifilm entering the USA market, Kodak was the leader of photography and imaging
and when Fujifilm entered the US market, Kodak continued to remain the majority of
market share in photography but Fujifilm strategy was initially to start slowly and quietly
progress in the US market and it until the company was given the opportunity to
sponsor the 1984 Olympic, Fujifilm created innovative products such as the introduction of a
one time use camera and continued to always maintain the competitive edge over Kodak.
long term strategy was to always locally and compete (Finnery,
2000). Over time, as Fujifilm continued to expand globally, their customer and market share
also expands with 55% of their revenue being generated outside of Japan. This showed that
Fujifilm strategy of globalisation is working in their favour and as the world gets smaller
through better email networks and air travels, this provides the possibility of managing a
business from a remote location.
Fujifilm also favoured to go international due to low cost of production. This includes
opening up manufacturing companies in emerging countries such as BRICS, Turkey, Middle
East and South East Asia as part of their VISION80 project (Fujifilm 2013). The advantage of
using emerging countries for manufacturing products and services is the reduction in budget
in order to increase profit, but cutting down overhead costs in these emerging countries
which has a lower currency rate and lower cost of living. The cost of labour will be cheaper
than maintaining production in Japan but the lower cost of production can also be trickled
down to their customers. For example, a product made in Japan may be charged more than
the same product being made in Vietnam.
Fujifilm also expanded internationally to overcome the barriers to entry into foreign market
(Bruce, 2014). Fujifilm strategy of to avoid barriers of entry allowed Fujifilm to strategically

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of leverage through joint ventures with existing companies or establishing new factories and
manufacturing plants in emerging countries like Vietnam, Philippines, Indonesia and
Malaysia who are part of the ASEAN and therefore benefiting from the enlarged market size
and enhancement of the trade especially between the emerging countries and china. These
establishments in emerging ASEAN countries provide removal of trade barriers which will
lower the cost trade transaction and cost of transportation.
Fujifilm enticement to go international means that the company did not have to rely solely
on the local market Japan. Fujifilm understood that in times of downturns in consumer
demands in Japan are often offset by increase in demand in the international market
(Finnery, 2000). Fujifilm identified the need to increase the market share also provided
potential for higher profits and opportunities for expansion of new products and services.
Also with Komori showing leadership capabilities through vision and mission, Fujifilm
understood that change was required for future business development.

WHERE DID FUJIFILM EXPAND INTO?

Fujifilm maintained a commitment to develop each of their businesses globally.
VISION80 indicated that Fujifilm identified emerging countries and regions such as BRIC
(Brail, Russian, India and China), Middle East, South East Asia and Turkey as markets of
particular priority and interest (Fujifilm, 2013).

PESTEL FRAMEWORK
Fujifilm decision to expand into the emerging countries and region in particular South East
Asia, PESTEL was used to analysis how Fujifilm decided on where to expand into using
political, Economic, Social and Legal.
Political
Fujifilm started in 1934 and was based on the Japanese plan to
establish a domestic photographic film manufacturing industry. Fujifilm had the
support of the Japanese government and hence inherited the Dainippon Celluloid
Company Limited (Fujifilm, 2013).
Fujifilm establish acquisitions and joint ventures in countries which has low political
risk. The decision to enter the emerging countries is a strategic move for Fujifilm as

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those in the south East Asia are part of ASEAN allowing benefits from low tariffs and
low transportation for exporting and importing supplies and products
Economic
Fujifilm creating factories for production in the emerging market such as Vietnam
and Philippines have reduced labour cost and with transportation connection
network to china therefore reducing transportation cost. The low cost of labour may
also be lower due to the impact of the foreign exchange rates being weaker
Social
Fujifilm strategic decision to move into India to expand their inkjet business was
determined based on the growing size of the population in India and the competitive
advantage to establish the document solution for the Indian population with high
speed and high quality printing for 1.2 billion people. Fujifilm identified that there
was a demand for package printing across a variety of materials e.g. media printing
Legal
Fujifilm decision when acquiring companies or establishing a joint venture may be
decided on the strategic plan to avoid government restriction into enter the local
market or to avoid heavy tax as a foreign company. For example, the joint venture
between Fuji and Xerox was due to the Japanese government prohibiting the Xerox a
foreign company to establish in Japan and enter the Japanese market. Through this
joint venture with Xerox, Fuji Xerox is able to make, adjust the specification and
development of machines to cater to the Asian market.

CAGE FRAMEWORK
cosmetic brand Astalift an anti aging creams made from the same anti oxidation
technology used to prevent photos from fading was developed in 2007. The first launch of
Astalift outside of Japan was in China resulting in sales of Astalift reaching ¥10billion.
Yamazumi (2013) states that Asian trends in cosmetics and particularly skincare
whitening and anti ageing start in Japan, and it looks like it will continue that way with
Singapore, Malaysia, Vietnam, Indonesia, Taiwan, Korea and Bangladesh have all followed
Following on the success of Astalift in Asia and understanding the demand for anti aging
products in Europe, Fujifilm launched their Astalift products in France in 2011 Fujifilm
invested in the marketing and advertising but due to the competitiveness of the skincare

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industry in Europe, Fujifilm developed a strategy to allow the Fujifilm office in Dusseldorf to
take a country by country approach and catering to the European consumer preference and
marketing styles. The below CAGE FRAMEWORK evaluates where Fujifilm should cater its
cosmetic product in France.
Region Cultural Administrative Geographical Economic
France Difference in Possible lack of Lack of common Similar cost of
language between support from local geographical living.
French and government due border between
Japanese forming a to Fujifilm being a France and Japan. Similar technology
barrier of Japan company. and infrastructure
communication but
due to Fujifilm Lack of support Similar standard of
allowing Europe from customers living and age
office to maintain with Astalift not groups among
its marketing for being common male and females
Europe, this cultural household names
difference will not such as Lancôme
pose to be an issue. or

Similarity in the Marketing catered

culture of for Europe market
importance of and consumer
cosmetic and preference.
beauty

Different culture of
understanding
beauty products
catered for the
market. E.g.
Europeans not
worrying about
whitening agents
whereas Asians
prone to be a high
factor when
choosing cosmetic

In review of the above CAGE framework this indicate that although there may be some
issues with the launch of their cosmetic product into Europe, there are also similarities
between Japan and France and ultimately, Europe especially France being the heart of
cosmetic and fashion, if Fujifilm is able to break into France with this innovative product
which it already has done in Asian, then Fujifilm should also be able to maintain the same
level of success in Europe.

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HOW DID FUJIFILM GO INTERNATIONAL?

Companies enter into an international market is by two different modes, non equity and
equity. Non equity mode of entry consists of exporting and importing or licensing and
equity mode is through Joint ventures and foreign direct investments. mode of
entry into the international market uses both mode of entry but predominantly tend to be
more equity mode through joint ventures and acquisition and foreign direct investments.

Export and Imports

Exporting is suitable when the products are easily transportable from country to country.
Fujifilm utilise this mode of entry for Fujifilm products where the production is assembled in
one country and then exported around the work for retail. By exporting to foreign countries,
Fujifilm does not require an operational facility in the individual countries. However, there is
an exposure to the trade barrier which is a disadvantage to the company and other costs
such as transportation and tariffs may also be imposed. However, due to Fujifilm targeting
to establish themselves in the emerging countries and with the links with ASEAN in these
South East Asian countries such as Vietnam, Malaysia and Philippines, the cost of
transportation for export is low due to the transport connection network and also low tariffs
may be imposed due to productions and exporting from these emerging countries.

Licensing
A licensing agreement is an arrangement whereby a licensor grants the rights to intangible
property to another entity (the licensee) for a specified period, and in return, the licensor
receives a royalty fee from the licensee. Intangible property includes patents, inventions,
formulas, processes, designs, copyrights, and trademarks. When Xerox, the inventor of the
photocopier, wanted to enter the Japanese market but was unable to due to government
barriers, Fujifilm and Xerox established a joint venture creating Fuji Xerox. Xerox then
licensed its xerographic know how to Fuji Xerox and in return, Fuji Xerox paid Xerox a
royalty fee for a percentage of the net sales revenue that Fuji Xerox earned from the sales
of photocopiers based on Xerox's patented know how. In the Fuji Xerox case, the license
was originally granted for 10 years and it has been renegotiated and extended several times
since. The licensing agreement between Xerox and Fuji Xerox also limited Fuji Xerox's direct
sales only to the Asian Pacific region (although Fuji Xerox does supply Xerox with
photocopiers that are sold in North America under the Xerox label)

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Joint Ventures
Joint ventures are deemed very similar to licensing but through joint ventures the company
is able to have equal position in management and also sharing of investment risks.
Sometimes these joint ventures results in the creation of a separate firm trading under a
different name such as Fuji Xerox.
Fujifilm entering the international market through joint ventures provided them to access
into markets where it was deemed difficult due to government or other barriers of entry
and have the advantage of gaining knowledge and resources for Fujifilm to create and be
innovative with existing products. joint ventures with pharmaceutical companies
allowed Fujifilm to create unique materials which can be used in drug recovery,
regenerative medicine and preventative medicine. The joint ventures between Fujifilm and
Xerox, they were able to share the stability in the production relation and also adjust the
quantity, specification and development of the machines to suit the market for Fujifilm to
sell.
Fujifilm strategically used joint ventures as a mode of entry to give itself control over the
operations, gain knowledge of the local market from the partnering company and reduce
risk and problems arising from governments and other barriers of entry such as cultural and
language issues.

Foreign direct investment

When companies enter an international market through foreign direct investment, they
enter the market by owning the company it acquires 100%. Companies would either acquire
a company directly to take full control or they establish and develop their own facility from
the ground up, also known as Greenfield Investment.
strategy of foreign investment in the international market have been achieved
through both acquisition of an existing company and establishing the own facilities and
plants.
Fujifilm first acquisition occurred in 1997 with the purchase of a German based Eurocolour
Photofinishing Company. Since then, the next 17 years resulted in Fujifilm making further
acquisition into companies across all countries and different manufacturing plants opening
doors for Fujifilm to enter the international market quickly and also rapidly create new
products for Fujifilm to enter into different sectors of the market such as cosmetics with the
development of face creams Astalift. In the last 4 years, Fujifilm invested in Greenfield
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investments with development of manufacturing plants and laboratories in emerging and

developed countries as part of their VISION80 projects. These acquisition and direct
investments have allowed Fujifilm to gain full access and control to these facilities which
means that Fujifilm was able to coordinate and implement same strategies, visions and
missions from head office in Japan to a facility in Germany.

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