Kodak and Fujifilm

Kodak and Fujifilm

Introduction

The case presents us with the problems that Kodak is facing because they have been complacent in maintaining their market, which paved the way for Fuji to encroach on their territories. Kodak has been on top of the market for so long that they did not expect a relative newcomer in the US market to succeed that much. Fuji has the advantage of capitalizing on the support of the Japanese government, as well as an almost monopoly in Japan, which is why Fuji can afford to lower prices in the United States market. Right now Kodak is faced with two main dilemmas, one its competition with Fuji that will become more pronounced since they both plan to enter the lucrative Chinese market, and the bigger problem that is its struggle to stay relevant despite the advent of the digital cameras.

By 1998, Kodak was suffering relatively constant declining sales. The only thing that saved them financially that year so they could post a positive net income was the layoff of more than 16,000 employees. This is referenced in the financials by cutting the SG&A Expense by nearly half as compared to that of a year ago. It is mentioned in the article and unclear if the cut in SG&A also was a result of cutting marketing. If that occurred, then as mentioned in case, it was a business mistake.

Discussion

The second problem with Kodak's is that it has been the industry leader for so long that it developed a collective mindset of invincibility. They did not keep strong tabs of their competitors, and if they do notice changes in the market, they do not act swiftly on it. If a leading company looks back and finds that a company, like Fuji, which marketed innovative new products that Kodak's core market actually buys, this must mean that they do not innovate enough, and they do not satisfy their customer's needs. Kodak waited too long before it acknowledged Fuji as an actual threat to losing market share.

In line with this, Kodak suffered from a lack of innovation. This was the primary reason why Americans who pride themselves for “buying American” actually had to resort to Fuji products because the Japanese company simply came up with products that offered more value for money While Fuji was preparing for the digital revolution by setting up FUJIFILM Software (California) Incorporated in 1998, Kodak was too focused on the Fuji rivalry. Instead of looking towards new and promising markets, Kodak spent $35 million dollars in a legal battle with Fuji that served to alienate the Japanese consumers and resulted in no favorable rulings. When listing Kodak's four segments, the final segment titled "other", should have been named digital. By getting into the digital game too late, shareholders decided to invest in companies that already had strong digital inroads. Kodak failed to adapt and failed to innovate.

Kodak also focused too much on not compromising price, which is why Fuji gained an advantage in being favored by ...