Kodak and the Digital Revolution Essay Example

and bringing onboard specialists from various sectors, effecting change was tough due to existing policies favoring status quo preservation.

3. Principal Concerns:

Strategy of Razor-blade

Kodak's business heavily leaned towards the substantial profits from film, thereby neglecting equipment. In 1986, when Fuji introduced a disposable camera which became very popular in Japan, Kodak asserted that they had developed a comparable product during the '80s. However, they hadn't patented it owing to the razor-blade strategy.

Elevated production expenses

Kodak adhered to the belief that “nothing carries greater weight than the reputation of our brand and the standard it represents”. Known for its high-quality products, Kodak demonstrated that top-notch quality does not necessarily correlate with high expenses, particularly in a market stiff with rivalry. The expenses involved in product manufacture, due to both knowledge and material inputs, were considerable and fraught with risk. In 1976, when Fuji penetrated the marketplace, their photography paper and associated supplies were priced 20% lower than Kodak's offerings. Consequently, customers could purchase images at lower prices and vendors could enjoy amplified profits. Kodak's reaction to this change was a presumption that American consumers will refrain from purchasing another brand of film. This mindset resulted in a loss of market dominance and competitiveness for Kodak.

The central enterprise

Due to expensive errors in their production process while making substantial profits, Kodak steered clear of any innovational or daring ventures. Kodak's expertise lay in film and paper, chemicals, and photo processing. However, the digital age was dependent on technology. Additionally, even though Kodak's Chief Executive Officer accepted that the advent of the digital period needed quicker

actions from Kodak, he continued to believe in a future dominated by silver-halide.

Variations in management and expertise

The inconsistency in Kodak's leadership greatly affected its strategy, as it fluctuated with the introduction of each subsequent chief executive. Despite them having almost identical training, their belief in the less profitable digital world over traditional film varied. Consequently, their ingrained strategic mindset hindered all attempts to transition the company into the digital era.

4. Other Options:

Option 1 - Fresh Brand

Kodak refrained from introducing the disposable camera due to its razor-blade business model and apprehension about declining profits and image. I believe, a separate brand, unrelated to the primary one could penetrate different segments of photographic products without adversely impacting the reputation of the Kodak brand.

Option 2 – Completely subcontracting the production

In order to uphold a competitive advantage in cost, it is recommended that Kodak think about shifting its manufacturing processes to nations with less expensive workforce. This strategy could potentially alleviate the elevated production expenses which have resulted in layoffs.

5. Overview

In conclusion, Kodak's approach to strategy was always shifting and lacked clarity. It appeared as if they were uncertain about their trajectory in the evolving market scene. Initially, they launched the photographic and information management division, but later separated it from the traditional silver-halide division, only to merge them back together in 2000. Furthermore, the leadership remained fixated on traditional photographic performance, even as rivals were competing on a variety of other metrics.