Introduction to the Case
Kodak s revenues were down from $15.97 bn in 1996 to $14.36 bn in 1997 and net earnings fell from $1.29 bn to just $5 mn More than 5 percent points decline in the US marketshare (from 80.1% to 74.7%) Analysts felt that Kodak had underestimated its competitors especially Fuji Photo Film Fuji entered the market in the mid- 1990s with 10% marketshare and increased it to 17% in 1990s Aggressive marketing by Fuji brought down prices significantly

In the late 1990s, the rivalry between Kodak and Fuji further intensified Analysts felt that Kodak should not take its home market for granted as Fuji had become the world s second largest manufacturer of photographic film and paper after Kodak Fuji was not just winning over cost-conscious consumers but also steadily eroding Kodak s lead in the professional photography market

George Eastman founded Eastman Kodak Company in Waterville, New York Existing photography methods were cumbersome Photographic images were made on heavy, fragile glass plates that had to be coated with a wet emulsion just before picture was taken Pioneered and patented the dry plate process


About FUJI Founded in 1934. world s second largest market for photography products . with its headquarter at Tokyo. Japan Entered the US market in 1964 as a supplier of private label films Focused on providing quality and innovative products at cheap price Was the market leader in Japan.

Fuji s offensive strategy .1 Reasons for Success Built a reputation for quality and innovative products Gained market share by offering products at prices lower than that of Kodak s Consumers viewed the company as Customer-oriented Regular introduction of new products.Q. promotions and slashing of prices Kodak s defensive strategy vs.

1 FUJI STRATEGY Fuji appears to price its product much higher in the domestic market † Gives Fuji cash flows † Allows them to price low in the export market .Q.

Fuji·s Strategy ‡ Established a Production plant in US  Cost Efficiency Reactive Follower Customer & Quality were the prime focus  CLV & CRM Distribution Strategies Compatibility with Kodak Cameras & Films Aggressive Marketing ‡ ‡ ‡ ‡ ‡ .

Fuji looks to be more in line with customer needs and have a great distributor network. Fuji will do well to concentrate on this.FUJI·S PROS Fuji s chances for future growth‡ ‡ ‡ ‡ Fuji is attacking market leader by out innovating Kodak in almost every sphere. The high spending on R&D has reaped results in the past and might do the same in future. Digital technology seems to be the future of photography. .

FUJI·S CONS Fuji has to overcome following disadvantages ‡ ‡ ‡ ‡ They have concentrated on long term strategy and their profits are low as of now. . Their market share might stagnate because of counter offense by Kodak with much higher profits. Might result in low performance in the eyes of stakeholders It is still not seen at par with Kodak in US market.


KODAK 1884.Roll of film 1887.Manufacturing cameras and started operations in London Mid 1890-Company owned distribution outlets 1900-Entered Japan and set up its first distribution outlet in 1905 1924-Eastmen retired and became the Chairman of the Board of Directors .

Q. 2 Decreased Brand Loyalty in the early 1970s. Growth rate slowed by 2%-4% for Kodak 1981-Sony Launched Mavica. . a filmless electronic camera which would display pictures on a TV screen Kodak reduced the price of its films In 1980s. Japanese players developed 35 mm autofocus cameras. which used film disks instead of film rolls. In response Kodak launched small disk cameras.

2 Kodak in Japan Kodak entered Japan in 1905 † Never took market seriously 1977 † Strengthened distribution and marketing system † Joint venture (Kodak Nagase) † Created Subsidiary (Kodak Japan) † Increase employee from 12 to 4500 Access to camera stores went up 30k to 60k .Q.

Kodak in Japan Large no of Fuji Exclusive stores Late 1970s † Joint venture Bandai (Toy Mfg) single use camera † Setup own R&D and support center † Kodak Symposium Improved Kodak image .

Kodak in Japan 1980 s † Concept of Minilabs  Got advantage over Fuji † Introduced Panoramic Disposable Camera † Increase control on S & D system † Bought Kusuda Business Machines Controlled 150 labs against 250 by Fuji .

Kodak in Japan Late 80 s † Advertised heavily † Introduced waterproof disposable camera † Introduced Print film Ektar In all company spent around $500 million Despite. Company failed to attract consumer .

Kodak in Japan 1994 † Introduced single use Camera Falcon † Advertised this product unconventionally Became one of the best photographic product of the year in Japan .

9% -6.0% 36.9% Chemicals 18.9% 15.KODAK DIVERSIFICATION Kodak is more diversified than Fuji Revenue% and ROS per segments Revenue ROS 87-89 90-92 87-90 90-92 Imaging 40.9% 16.7% 19.8% 24.3% Information 23.2% 17.5% 16.3% 1.8% 1.5% Health 17.6% 14.5% 20.5% Has Diversification been a good thing for Kodak? .

co .DISTRIBUTION NETWORK JAPAN In 1977 KODAK tied up with the distributor Nagase & co in Japan Increased its workforce from 12 to 4500 Neglected the Japanese market earlier JV with Bandai a leading Japanese branding agreement toy manufacturer .

customers & its partners This was done to project itself as a technology intensive company In 1980 introduced the concept of minilabs at certain retail outlets where the film can be processed much faster than other labs .Conducted annual Kodak symposiumps in which the audience included university professors & researchers.

Fuji owned a controlling interest in 3 of the 5 major wholesalers In response kodak distrubutor there bought Ksuda Business Machines a local .Fuji products were sold through 216000 retail outlets 15% of them gave 75% of the total sales.


Kashimura and Ohmiya Whereas Kodak had only 1 distributor Nagase Kodak claimed that the tie up of fuji with major distributors prevented other brands entry . Misuzu.Q.3 DIFFERENCE IN DISTRIBUTION In US manufacturers sold directly to retailers & photofinishers In Japan distributors acted as intermediaries Fuji had strong ties 4 main distributors Asanuma.

Japanese government was supporting such monopolistic distribution set up Fuji gave high commission to the distributors .





if one manufacture can t perform then rises the another .As the retail community shrinks they put pressure upon the suppliers to provide quality products at competitive prices.

   .Price fixing. association with photo labs.THE DISPUTE  Higher market share of Fuji in US but lower market share of Kodak in Japan Kodak alleged Japanese government of favoring Fuji Kodak filed a petition under Sec 301 referring to unfair trade practices Allegations were † . bribing retailers and wholesalers (Huge rebates).

FUJI·S STAND  Kodak was unsuccessful majorly because of its .Short term vision and priorities It talked of not being involved in any kind of unfair trade practices  .Negligence .Bad management .Poor marketing .

ROLE OF WORLD TRADE ORGANISATION  US favored Kodak in WTO by saying that punitive action should be taken against Japan and stated Its not just Kodak but it can crate problems for any foreign player and the ultimate losers would be Japanese consumers In 1997 WTO ruled out all allegations by Kodak in absence of substantial proof.  .

 Challenge faced by historical business model due to transformational change in the technology. i. a tumbling stock price. Theory of Disruptive technology. loss of market share. and significant internal turmoil as a result of its failure to take advantage of this new technology. involving market competition and international trade policy where governments serve as bargaining agents for firms. Integration of market and nonmarket strategies in a setting.   . Kodak has experienced a nearly 80% decline in its workforce.e.

Found a bona fide competitor in fuji . HP.Especially Non Traditional competitor like Sony. Casio Global Market share Battles US Market share Battles    .CHANGING TRENDS  Changing customer .More accepting towards foreign brands .Changing landscape for retail The New Players .

the Event Sponsor while Kodak.Fuji.Had to go ahead because of weak Trade & Investment Ombudsman (Japan)   . the Broadcast Sponsor (80 s) Court Battles . Price wars . but no after effects from Kodak Sponsorship Battles .Initiated by Fuji.

demand & supply Enforcement of International Trade Agreement. Common Agency     .g.VARIOUS MODELS OR STEPS Market Model incorporates structure of the market. i. Sustainable Concessions Preference based bargaining Non Market Model e.e.

Kodak can anticipate market changes faster Steps Kodak can take to protect its strategic advantage are † Full line strategy Kodak should devote resources for digital cameras and film processing. . It can try flank defense where it can use revenues from high end products to attack low end products. † It is currently following counteroffensive defense. Kodak might do well concentrating on this segment besides high growth OTUCs. † Since photo processing forms the largest chunk of revenues. † Mobile defense Kodak can look for new emerging markets.


Sign up to vote on this title
UsefulNot useful