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Behavior Professor PHD. 3/11/2012
there are just 19. New York. is now on the verge of dissolution. and invented digital photography. an almost-130year-old photographic company based in Rochester. As they entered the 21st century.000 employees. the company that created mass-market amateur photography.000 people around the world and turned a healthy profit — today. hundreds of millions of dollars are being lost every year.Overview: The last few years have been particularly tough for Eastman Kodak. Kodak employed some 50. What a fall from grace! Kodak. . and it is speculated that Kodak might soon file for bankruptcy. enabled Hollywood movies and home videos.
TABLE OF CONTENTS Opening Company Overview 1 .
and we do the rest” (Kodak). We must make quality our fighting argument. As a collective company. they failed to react to the ever changing environment. The question remains to the consumers as well as stockholders. their core business has been disrupted by globalization. international distribution. and growth through continuous research. can this company reposition themselves quickly enough to bounce back from this downward spiral path the company is currently victim of. Eastman later identified Kodak’s guiding principles as. after inventing and patenting a dry –plate formula and machine for preparing large number of plates. he also articulated Kodak’s competitive philosophy. Furthermore. the success story continued as the company invested heavily in research and development and by 1963 Kodak had become . George Eastman founded the Eastman Kodak Company. “Nothing is more important the value of our name and the quality it stands for. emphasized by the first marketing campaign that used the slogan. mass production at low cost. “You press the button. extensive advertising. The company offers imaging technology products and services to the photographic and graphic communication markets.Eastman Kodak Company is one of the leading imaging solutions providers worldwide.” (Kodak) With the advertisement of color technology. customer focus. Company History: In 1880. For Kodak. technology shifts. and new competitors. now they must rebuild and reinvent the entire business. By 1884 Kodak had become a household name after he replaced glass photographic plates with a roll of film that Eastman believed was successful because it was a user-friendly product that would be “as convenient as a pencil” (Kodak).
chemicals and processing equipment. Eastman Kodak’s principal activities center on the development. a $20 billion annual business. Kodak’s Lenses Out of Focus In the early 1980s. Kodak underwent a successful entrepreneurial transformation from traditional film business to digital photography. by the late 1980s. the consulting industry came up with the idea to “re-engineering” the restructuring of the company’s process rather than by tasks. photofinishing services and supplies. the board of directors.” Level of . However. The Graphic Communications segment proves inkjet printers. Kodak’s blurry vision was blindsided by the untested ideas promoted by the consulting industry. in the early 1990s. and digital cameras. professional. at the advice of outside consultants. manufacturing and marketing of consumer. health and other imaging products and services. Sales topped $1 billion USD by launching into new product lines such as cameras and medical imaging and graphical arts and quickly rose to $10 billion USD by 1981. and services and digital products including PACs.the industry standard. The company operates through three segments: The Digital & Film imaging segment provides consumer oriented traditional and digital products and photographic services such as film. The Health Group segment provides analogue products that include medical films. digital imaging systems and products aimed at the commercial print department. dismantled the digital business division. so as to improve operational effectiveness of their “core business. For instance. digital x-ray & output hardware supplies. high-speed production document scanners. RIS. Today. which was ultimately enriching its own bottom line rather than the bottom line of Kodak’s future. switching resources back to the company’s “core” film business.
corporate hierarchies. including the digital camera business of their competitors. and . claimed to be focusing on. organize corporate teams. Samsung. the consulting company. held no value to the core business that they. disconnect from the core business of cameras and film. Blackberry. by substitute consumption from devices manufactured by HTC. the consulting company advised Kodak to purchase a wide range of other companies and innovations that were financially strong. Kodak might have demonstrated the first digital SLR. however. they were far behind their Japanese competitors. Kodak tried to make the leap back into to digital business. Kodak’s focus was always on its massively profitable analog film business. His efforts since joining Kodak have been clear. In addition. however. at this point. Apple. and numerous others making increasingly sophisticated smartphones that are subsidized at the point of sale by wireless carriers. and rotate employees to different departments and division. in essence introducing the principles of the Japanese management system into Kodak were just a few of the changes made within the organization. Currently the point and shoot where Kodak participates has been destroyed and commoditized by integrated camera phones. In 2003. In several press releases the company acknowledges they were striving to become competitive in the digital age of photography once again at the start of the millennium. but the board of directors made a poor business decision when they eliminated funding the research and development of their digital photography business in the 1980’s and continued to steer clear of it until forced to refocus due to consumers’ demands in technology. Kodak hired CEO Antonio Perez in hopes that his technological background would jumpstart the company’s future innovation. and then as it became apparent that film was on the way out.
this area of the business cannot sustain the company into the future. They must reinvent the company. many CEOs. the de-listing of Eastman Kodak from the Dow Jones and S&P 500 indexes. Kodak’s strategy for printers is to sell the hardware machines at a higher price. have discovered that product innovation alone isn't enough to save sick companies or turbocharge healthy ones. Even at healthy companies. Much of Perez’s career has revolved around the printing business. For many. as he was formerly the CEO of Hewlett Packard up until he was released from his contract. but it hasn’t been enough. and for many years Kodak has plaintively pleaded with interesting and quirky gadgets at CES — but the last few years have seen almost a cessation of exciting products. Kodak now draws its last few breaths and tries to find a way out of the labyrinth. Kodak has had mediocre success and a healthy serving of critical acclaim for its user-friendly EasyShare cameras and printers. Many speculators state that regardless of his efforts. and a major decrease of staff and assets. It has even tried leveraging its patent portfolio by suing the Apple and BlackBerry. and new competitors. In an era where innovation is all the rage.horizontally begin funding research for inkjet printers. SWOT Analysis Eastman Kodak SWOT Analysis . With the analog industry all but dead. like Perez. technology shifts. almost two-thirds cheaper than competitors like Hewlett Packard and Lexmark. and the components such as ink at a much lower affordable price to consumers. business model innovations are essential to retaining their competitive positions. their core businesses are being disrupted by globalization.
Strengths: Brand Name Intellectual property portfolio Market Position Emphasis on Research & Development Comprehensive Offerings Trade In and Recycle Program Weaknesses: Declining Liquidity Declining Operational efficiency Weak management Business restructuring Photograph film business Cash flow The binding on the contract with does not allow Kodak to produce private brands Opportunities: Strategic growth initiatives Restructuring initiatives New technology New products Emerging markets New markets People trying to take more pictures.. Social Networking Threats: Seasonality of business Competitive pressures Rapid technological changes Substitute products .. capture more memories may be linked to the lack of time being spent..
In an industry that is changing ever so rapidly. In addition they support fellowship grants for select promising students doing research in an area of general interest to Kodak. This is necessary due to the continuous technology change and development as well as their competitors and the changing preferences of consumers. investors still question whether Kodak can adapt quickly enough to even survive. in an area that complements Kodak's research portfolio. Kodak External Alliances has negotiated Master Sponsored Research Agreements with a number of key universities in the United States and United Kingdom to streamline project execution by pre-negotiating project terms and conditions. typically in direct support of Kodak's research portfolio.A New Lens for Focus Eastman Kodak’s current forecast for the future is severely struggling. Kodak uses unrestricted grants to support research in an area of general interest. Kodak Fellowships are initiated by research scientists in the Kodak Research Laboratories in alignment with future research and hiring priorities. They provide access to know-how and an understanding of research approaches through collaboration with a university researcher. . Kodak must continually revise their design and range of products. Despite being responsible for countless technological innovations in the film and digital photography arena. Kodak has strategically aligned themselves with top tier Universities across the world to assist with research and development of new innovative strategies and products. New product design and development is more often than not a crucial factor in the survival of a company. They also support sponsored research projects for collaboration in areas of specific interest. These projects will have specific objectives and deliverables defined in a statement of work in collaboration with a university researcher.
it would be wise of Kodak to capitalize on this generation to further increase their bottom line. The core analog film business can still serve as a means to generate funding if marketed correctly to their consumers. and other social media networks accounts. they need to find their niche. Europe and Asia. as it establishes what is needed in the current environment. therefore. therefore. This truly is an untapped area for the company. There is several mail-in film processing companies throughout the United States. market research is one of the most important fundamental segments regarding the planning process for most companies. this business remains very much seasonal and does not generate enough profit. In regards to the kiosks that are located in many retail stores across the world. however. Kodak needs to take the business back to the basics and do a thorough market research of their current operating environments as well as their operation. They have implemented software that connects with users Facebook. As the Baby boomer generation ages. many are fearful of change and technology. as history often repeats itself.In addition to technological research. Twitter. the company should invest financial resources in tapping into the younger generation and exposing this . building an alliance with the top performers in the industry and licensing out Kodak’s patents would generate an additional profit for the company. then it is a matter of selling what is possible to make. Kodak has recognized the important role that social media now plays in the lives of most Americans as well as other races around the world. If the development is technology driven. Kodak has implemented many kiosks throughout retailers that have eliminated processing film. that allows for easy connection and printing from these kiosk. one must question if they fully understand the effects of social media. Kodak has never been a company that limited their financial expenditures when revolved around advertisement marketing.
This is made possible by designing the printers with built-in print head. Kodak adds that you need not throw away those print heads every time users buy a new ink cartridge.generation to the printing capabilities from their social media account that Kodak offers which will ultimately increase their cash flow.78 cents per share. can print twice the number of photos or documents compared to using the competitors’ printers and ink cartridges. These high quality printers are directed towards everyday consumers as these printers. Although CEO Antonio Perez told employees he had no intention of filing for bankruptcy. the key here is to target consumers to purchase their printers over the competition. They are now focusing on selling patents. after a disclosure from Kodak. Kodak has already transitioned into the market of at home printers which offer the company high marginal returns. in terms of cost. are designed to cut down on ink replacement costs. A recent news article in the Wall Street Journal shared the imaging company's decision to hire law firm Jones Day to advise on restructuring efforts to resurrect the current financial outlook of the company. Kodak's stock tumbled down to just $. and Epson have been doing. so consumers will only buy ink in its tank without the print head that makes them very expensive. Canon. . An increase in marketing these printers and exposing them in high marketable areas would further generate more sales to their bottom line. These competitors have been selling printers at a lower cost as they intend to make money consistently on ink cartridge replacements. that they extracted $160 million from a credit line. specifically the ink cartridges. The future of Kodak is currently indefinite. Kodak offers high quality printers. This is exactly the opposite of what PC printer giants like HewlettPackard. his announcement does not seem to ease the doubts of shareholders and Wall Street.
as much of their liquidity is currently overseas.089 billion. continued investment in certain growth businesses. In order to solve this dilemma. Packaging Solutions. Digital revenue was $1. otherwise. fueled by a 48% revenue growth in Consumer Inkjet printers and ink. Revenue from the company’s Consumer Digital Imaging Group decreased 8%. reflecting planned lower sales of digital cameras. increased raw material costs. the Board of Directors are persistent that the monies from this sale should be reinvested in the company. whereas. and Workflow Software & Services – increased 22%. the company needs to show vast improvements and forecast for innovative products to their stockholders. consistent with the year-ago quarter.recently to IMAX. there remains a dilemma between the Board of Directors and stockholders. the stockholders are demanding a payout of dividends. they too will back out of supporting the company. While short-term this may be a wise move for the company. as an attempt to raise the cash critically needed to reinvent themselves. Revenue from the company’s core digital growth businesses – Consumer and Commercial Inkjet. Financial Earning Statements Eastman Kodak Company second quarter reportings for fiscal year 2011 results that reflect continued momentum of the company’s core digital growth businesses.485 billion. Second-quarter revenue from the company’s Film. and cash performance which reflects the company’s seasonal pattern. . as the company implements its previously announced strategy in this business to trade top-line growth for improved full-year profitability. Photofinishing and Entertainment Group declined by 14%. Second-quarter sales were $1. a 5% decrease from the year-ago quarter. and to bring the funding back to the United States would result in a financial loss with the fluctuating exchange rates and taxes.
In a statement released by Chairman and Chief Executive Officer. We are also on track this year to once again double ink gross profit dollars in our Consumer Inkjet business. Antonio Perez said. “We are enjoying success in our new growth businesses. Revenue growth in these businesses is accelerating. “We have ambitious goals for our growth businesses. Eastman Kodak Company. with second-quarter 2011 growth more than double the year-ago period. and we’re enjoying strong customer demand for KODAK PROSPER Presses. as well as the challenges typical in the creation of new businesses based on revolutionary new technologies.” ( ) . and thus far have achieved impressive results against the industry.
Total Gross Profit 5.0 7.0 0.0 115.0 10.0 -206.0 1.0 0.187. Net Income Before Tax 0.0 0.0 478.S.446.0 0.0 10.0 596.0 2.0 -561.0 0.0 -804.0 16.0 -6.0 5.0 -485.0 Total Extraordinary Items -12.0 -821. Items 0.0 Income Tax .0 1.606.0 -438.0 790.0 7.169.0 -2.0 Cost of Revenue.0 2.416.0 4.0 366.0 115.0 1.0 0.0 9.0 0.301.0 6.0 0.301.0 0.0 -874.0 -117.0 23.0 0.0 1.0 -230.0 0.0 0.0 -147.0 1.0 10.0 0.0 -804.0 441.2010 Period End Date Period Length Stmt Source Stmt Source Date Stmt Update Type 12/31/2010 12 Months 10-K 02/25/2011 Updated 2009 12/31/2009 12 Months 10-K 02/22/2010 Updated 2008 12/31/2008 12 Months 10-K 02/22/2010 Reclassified 2007 12/31/2007 12 Months 10-K 02/22/2010 Reclassified 2006 12/31/2006 12 Months 10-K 02/27/2009 Reclassified Revenue Total Revenue 7.0 Minority Interest Equity In Affiliates U.544.0 -675.0 221.0 1.0 -257.0 321.757.0 203. Net Operating Unusual Expense (Income) Other Operating Expenses. Total Operating Income 1.606.416.0 8. GAAP Adjustment Net Income Before Extra.0 Interest Income (Expense).969.0 -233.0 -727.0 285.0 0.0 0.0 -675. Net NonOperating Gain (Loss) on Sale of Assets Other.0 0.0 -232.0 0.0 0.0 0.0 0.0 0.0 904.0 0.0 -19.951.0 Selling/General/Administrative Expenses Research & Development Depreciation/Amortization Interest Expense (Income).0 .0 7.0 0.568.Total Income After Tax 114.568.0 -727.0 -51.0 884.0 2.0 1.247.0 -208.0 -583.187.0 0.0 525.606.0 0.0 0.0 7.236.0 0.0 0.0 -9.0 356.0 0.0 -1.0 2.0 10.802.0 0.0 0.838.122.0 0.0 10.0 9.277.0 7.768.302.0 1.
0 676. . they must become an innovative leading company again. producing the latest and greatest gadgets for consumers. however. will future generations recognize the brand as an archaic trademark. Everything has to be changed in order for Kodak to succeed in the future and most importantly. It includes everything the company does.Discontinued Operations Extraordinary Item Net Income -687.0 Conclusion Kodak is a household name known across the world for capturing memories. business models are not different than products and services. This reinvention stuff can be a tough slog. and the scope is larger and much more complex. all innovation gets commoditized. At one time they were the dominating force in the technological field. In this regard.0 -210. or will they too be a supporter of the brand.0 -442. the question remains.0 -601. It's harder to visualize. So business model innovation must be a perpetual quest for renewal. Their business has drastically changed over the years and they were unable to successfully complete. Over time. there is still hope for this iconic company. Business model innovation is harder than product innovation.
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