Kodak fall VS Fujifilm Success Essay

A Research Paper On Kodak Fall VS Fujifilm Success:

Introduction

Photography can be defined as the art of producing images of objects on special sensitized surfaces by chemical action of light or any other any energy processes. The term photography was coined in the year 1839.

History of Kodak Film Company

Eastman Kodak Company, which was formerly known as Eastman Company was founded in the year 1888, by George Eastman. The company’s core businesses was photographic services such as functional printing, graphic communication, packaging and professional services on the aspects of photography. The company is divided in two main divisions, which are Digital Printing & Enterprise and graphics, and the other division which deals with Entertainment and Commercial Films. The company started making broad steps in the market, and from the years 1888 to the year 1929, it was all inventions in the Kodak Company, thanks to the innovative employees they had. They had the daylight-loading camera to begin and the pocket Kodak camera. They also invented put color in most of their motion pictures. The company was growing rapidly and created numerous employment opportunities beyond opening new branches in France and Canada. From 1930s to late 1980s, Kodak was a force to reckon with in the photography industry, and this was due to its inventions, and aggressive marketing strategy. Their dominance was short-lived with entrance of a new company, from Japan, Fujifilm. Though Kodak saw this threat coming in 1970s, they did little to attain competitive advantage over Fujifilm. Kodak became bankrupt and the climax of its woes was when it filed for bankruptcy protection in the 2012 (Munir, 2012).

History of Fujifilm

Fujifilm which rivaled and overtook Kodak in early 1990s has its origins in Japan. Fujifilm was founded in 1934, and was the pioneer photographic film in Japan. The company is applauded for its diversification strategies which made it penetrate foreign markets and with ease. The company entered into foreign markets in US and UK through joint ventures. For instance in UK, the company formed a joint venture with Rank Xerox. In 1980s, Fujifilm was determined to dominate the world market through utilizing weaknesses with Kodak, which was the dominant photographic industry then. The company developed digital technologies in 1980s and sponsored 1984 Olympics. In 1990s, Fujifilm was a clear market leader, and this prompted Kodak to sue it for its woes in Japan. Fujifilm was accused by its rival of adopting unfair businesses practices in Japan.

The core business activities of Fujifilm are production, development, and sale of color films. The company sells digital cameras, photofinishing equipment, optical devices, printers and photocopiers (Boutellier & Heinzen, 2014).

Management Approach and Innovation

Both companies have adopted different management approaches which lead to innovation. Most companies realize that innovation is vital to attaining competitive advantage over other firms in the market. Kodak`s Management approach has been criticized by most management as being complacent and not one which could not pursue goals of innovation. In the early years of its operation, Kodak management approach was aggressive on innovation, and there was no doubt that it was a world leader in innovations which lead to technological advances in the photography industry. The management approach changed rapidly in the 1970s and 1980s, and they were conservative, and not open to change. The founder of the company was a manager open to change and he implemented disruptive technology. In the 1980s, the film was going digital. The management relaxed and did nothing to adapt to this new technology and this lead to their downfall. The management approach in technology based industries should encourage innovation and not discourage it. Kodak management failed to recognize that technology was changing rapidly in 1970s and 1980s.

On the part of Fujifilm, the management approach is focused on new technologies. Looking at their core business, one can’t help to notice that the company is diversifying its business activities. The company management approach is one open to change and realizes that photographic technology is evolving, and it’s now focusing on other product, for instance their provision of printers and photocopiers to the market. Fujifilm management encourages invention and this was the reason why they overtook Kodak in 1970s and 1980s when they adopted digital technology. In1980s, Fujifilm had a numerous innovations in technology such as motion picture film, digital technology, minilab, floppy disks and digital still cameras. At this time, Kodak was sitting on their success instead of diversifying in other areas. They knew that digital photography was the trend but they did not adopt it (Boutellier & Heinzen, 2014).

Management Differences in the two firms and impact to their performance

Differences in management actions lead to differences in performance of Kodak and Fujifilm. Though both firms had the same strategy and the same market predictions, the implementation of these strategies is what brought about the fall in Kodak and the success in Fujifilm.

In 1980s, Kodak and Fujifilm were both informed that photography was changing to digital. Fujifilm is the only firm which took the initiative of implementing change for better. It diversified into new areas, and invested in digital technologies. On the part of Kodak management, they were enjoying super normal profits and before they realized that Fujifilm had overtaken them in digital photography, it was too late.

There was also difference in development and training of staff at both firms. Fujifilm conducted in-house training to develop experts in its efforts to acquire necessary skills needed in its diversification activities. On the other hand, Kodak did not believe in developing skills in-house. It thought that through acquisition of companies all was well. Kodak faced a problem as it lacked expertise knowledge in management and integration of the firms they had acquired. They also negotiated poorly in partnerships as they lacked skilled personnel to analyze the deals well.

Kodak`s management also failed when they rejected the idea of sponsoring US Olympic Games in the year 1984. The Kodak managers and the Olympics organizers failed to agree on the sponsorship price. Fujifilm was approached and was more than willing to sponsor the games. Kodak failed to grasp this chance, and left this golden chance to Fujifilm. Fujifilm maximized this opportunity and it did benefit greatly from the sponsorship. Currently, Fujifilm is more diversified than its former rival, Kodak. Kodak has suffered since the early 1990s after it failed to adopt the changing technology. Kodak was founded on principles of customer focus, and mass production at very low cost. The founder, George Eastman managed that his company could grow on aspect of growth and development through innovation, treatment of employees with dignity, and reinvest gains realized back to business. These principles were forgotten by managers from 1970s onwards. On January, 2012 the company was on its deathbed when it filed for bankruptcy. It was sad to have a large company collapse due to poor management approach to innovation, and deciding to sit back on gains realized from years of innovation.

Fujifilm management approach was one of the best to innovation. The company has realized success from the decisions made in 1980s, i.e. adopting digital technologies and accepting to be sponsors of the 1984 US Olympics (Munir, 2012).

How Ethics and Social Responsibility affect Kodak’s performance

Kodak is company which is photographic company has had the best and the worst when it comes to acting ethically, and being socially responsible. The company has been donating its artifacts to institutions of higher learning. For instance, in 2005, Ryerson University received historic archives belonging to Kodak. Through this, the company has shown that it supports education, and preservation of artifacts and it will partner with institutions for the noble cause. However, Kodak has failed to maintain a clean and safe environment, and it has received awards taunting it for pollution of the environment. The negative publicity Kodak has received in environmental pollution lead to decline in its profits. If consumers view a company as involved in environment pollution, they judge that it acts unethically and stop using its products. Decrease in usage of Kodak products lead to decrease in their revenues, and thus decline in profits (Dobbin, 2011).

How Ethics and social responsibility affect Fujifilm’s performance

Though Fujifilm faced accusations of environmental pollution, they were not severe like in the case of Kodak. Fujifilm in 2011 had priority targets in achieving sustainable and safe environment. The company targets 30% reduction of Carbon (IV) oxide emissions through the life cycle of products. This measure is taken to reduce the effects of global warming in the universe. They also set to improve their chemical substance control through positive response to regulations in every region. The company move in supporting the Olympics games in 1980s was also an important step in corporate social responsibility. This lead to positive publicity among consumers and they purchased more of the company products. Fujifilm has benefitted massively from its actions. Profits have increased from as there has been rise in sales revenues. Companies know that being socially responsible is costly in the short run, but very beneficial in the long run. Most companies should realize that image is everything in business growth.

Adoption to changing market conditions by the two firms

Fujifilm noted that the market was changing adopted to the markets conditions. Fujifilm realized that technology was changing and in short period, everything else would change. This pushed Fujifilm to invent more photography technologies. Consumers will always want the easiest technology, which delivers quality. In 1970s, consumers were in need of digital photography; Fujifilm noted this and satisfied the consumer need. The photography changes every time and it is important as company dealing in this industry to develop more convenient high technology products which satisfied the user need. Furthermore, Fujifilm realized that the film industry would be competitive. This prompted the company to diversify its activities. Failing to adapt to changing market conditions would definitely have pushed Fujifilm out of the market, and its products would be obsolete, but the actions the firm took opened doors for its success and outdid its rival, Kodak.

Kodak being the monopoly firm in the photography industry did little to adapt to the changing market conditions. If a consumer need changes, you do not push the product he does not want in his throat, as they would seek that product they need and not the one you are imposing on them. A product is development after identifying a need, and not developing a product and convincing the consumer he wants it, and this is what Kodak did. Kodak thought that they could convince the consumer through changing their marketing procedures. They failed to realize that the market was changing and the consumer needed the recent technology of the time. By the time they realized market conditions had changed, the consumers were flocking to buy Fujifilm products (Gillespie, N. I. C. K., & Welch, 2012)

Recommendations to Change in Market Conditions

Kodak was overtaken by Fujifilm because it had become a “complacent monopoly” and could not make flexible back up decisions. There are several ways through which a firm can build that flexibility, and be able to tackle challenges posed by changing market conditions.

Developing business agility: there is need to develop agile organizations, and agile organizations have characteristics such as flexibility, speed, visibility and scalability. Flexibility in organization is indicated whereby the firm is able to make adjustments to its processes. Through agility, a business is open to any new ideas and anticipates. An agile organization will also undertake changes with speed and it will also ensure that resources are aligned to the change in market environment.

Setting a process to monitor changes in the market: I would recommend the organization to build flexibility through change monitoring process. There should experts whose work is to respond to changes in the market place. They do these by carrying out research, analyzing data from markets and predicting the future using the current and the past data.

Creating a flexible workforce: In most cases, change in market conditions calls for change of skills or diversification in the skills held by the company. To be able to adapt to market conditions, a company may have the option of outsourcing for that skill, or train in-house. Most companies prefer in-house training as they are less costly, whereas some may outsource the skill as they require an expert. Companies should thus expect changes in the market, and to build flexibility in decision making, it is important to have flexible workforce.

References

Boutellier, R., & Heinzen, M. (2014). Core Capabilities. In Growth Through Innovation (pp. 201-211). Springer International Publishing.

Dobbin, B. (2011). In Kodak’s troubles, a snapshot of an icon’s fall. Media release, Last accessed, 5.

Gillespie, N. I. C. K., & Welch, M. (2011). Death of the Duopoly. Wall Street Journal.

Munir, K. (2012). Kodak: The Rise and Fall of an icon.

 


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