Kodak and Fujifilm

Abstract

Management within and company plays a crucial role toward sustainability of the business operations. Managerial decision embraced by the top management influences the direction the business takes and eventual competitiveness. Therefore, it is essential for the company’s to conduct period market analysis in order to make informed choices. The modern business environment requires astute review and analysis before key decision are made due to constantly changing consumer needs and technological advancement. In this paper, the managerial approach between Kodak and Fujifilm has been compared. Both companies realized significant success during the early years, when the market was less competitive. However, ability to adjust to the changing needs within the market defined the future success of the company. Kodak inability to adjust its product and services to digital photography lead the loss of significant market share and eventual filed for bankruptcy. On the other hand, Fujifilm management adequately planned for the digital transition, an aspect that made the company diversify its product and services to survive the market competition. Though both companies used different approach in pursuit of innovation, Kodak failed to embrace innovation in a timely manner, and ignored the insuperable wave of technology witnessed through the industry. Although Kodak is still in the business, it largely focuses on operation defined fields rather than photography. Consequently, Fujifilm structured its organizational goals and objectives in the line with dynamic changes. In the advent of digitization, the company ventured in order products and services in order to strengthen its competitive ability. Therefore, it is apparent its essential for Companies to make a decision that are based on the current market needs and dynamics.

History and Core Business of Each Company

Kodak entered the photography business world in 1881 as Eastman Dry Company. The company was located in Rochester, New York. George Eastman was the first to exhibit the gelatin dry and the wet plate technology used in the imaging photography. Nonetheless, the company changed its name to Kodak in 1888, and a camera with the new brand name was availed to the public (Kodak.com, 2014). The company success was attributed to its market entry strategy that led to launching of a revolutionary camera that significantly simplified the photography. The company focused on imaging and photography. Hence, its product mainly ranged from color chemicals to photography equipment. In 1980, the company’s market share reached a peak of 90 percent due to its penetrative marketing strategy (Kodak.com, 2014).

Although the company advanced the fundamental technology for digital cameras in 1975, the development was dropped due to its perceived threat to the company’s film business. Kodak company executives could not virtualize a world without traditional film. However, the management failed to conceptualize how fast digital camera would become common in the market (Kodak.com, 2014). The slow transition to digital technology, declining film usage and stiff competition eventually made the company lose market share both in US and worldwide. In 2012, Kodak entered chapter 11 bankruptcy due to increasing competition, debt and digital photography (Kodak.com, 2014). As a downsizing strategy, it sold most of its product lines and graphic patented prints to other company’s such as Apple.

Furthermore, the company underwent several internal transformations that included the elimination of the cameras and film portion of the company and started focusing more on the commercial market. Although the transformation converted the company from the market that it originally became famous for, the transition permitted Kodak to leave bankruptcy in September 2012 and remained an operating business (Kodak.com, 2014).

Fujifilm entered the market in 1934 as the first Japanese manufacturer of photographic products. The firm was initially based on the government idea. Fujifilm focused on imaging and photography and soon ruled the Japanese market which ranked second after USA in film usage (Fujifilm.com, 2014). However, the turning point of the company success was marked in 1984 during the Los Angeles Olympic, where the company was the official film of the event. As a result, the company was entrenched deeper in the film market. The company’s popularity enabled it to attract a market share controlled by Kodak. As Fujifilm prepared for dynamic market changes, it expanded its scope of business to include digital cameras, photocopiers, printers and optical devices (Fujifilm.com, 2014). Moreover, it also tapped into the health sector through production of medical equipment such as X-ray imaging systems and chemicals. The company just celebrated its 80th anniversary and prides itself as the world largest film and imaging company.

Comparison of the Management Approach Pursued to Embrace Innovation

Each company’s approach to management and how they adopt innovation shows minimal similarities. Both companies use different approaches in pursuits of innovation. For instance, Kodak has eliminated most of the product the company was initially recognized for, but Fujifilm has upheld its innovative products and even stretched its interest beyond film market. Consequently, Kodak can be perceived to have failed to embrace innovation in a timely manner. Its management approach ignored the insuperable wave of technology and customer’s need that was witnessed throughout the industry (Kodak.com, 2014). The firm failure to revolutionize the technology they created, an aspect that formed the fundamental reasons behind its decline.

Although the company created the first digital camera in 1975, the top-level management rejected the idea of losing its core business in film. Moreover, the predicted changes to digital technology two decades later were perceived as being far in the future. Hence, the company enjoyed the success, but the leadership failed to plan effectively for the digital transformation (Kodak.com, 2014).

In the recent years, Kodak has strived to change its management strategy to embrace modernization. The company’s interest and concentration presently reside more in the fields of material sciences, digital imaging and deposition sciences. However, through Chapter 11 insolvency, Kodak has managed to reduce costs, employees and businesses (Kodak.com, 2014). Moreover, it has sold its online photo services to shutter fly and closed the camera business for consumers. Thus, with such changes, Kodak’s adaptation to innovation changed significantly from expanding to downsizing. The company reduced its size and products to enable its focus on a more defined field, hence making it possible to cope up with changing technological advances.

The Fujifilm approach to business was different from that of its competitor, Kodak. The initial success of the firm enabled the company to structure its goals and objectives towards the digital technology switch along with new business lines (Fujifilm.com, 2014). Though the company resolved to eliminate the motion pictures film from its product line, the company has a number of other resources for embracing new innovations. Consequently, the company ventured into development of biotechnology, heath care diagnostic product, skin care products and tough sensitive screens for the smart devices.

After years of success and dominance within the Japanese market, the company realized the need to venture into the global market. In 1984, Fujifilm was selected as Los Angeles Olympic official film of the event. The selection provided the company with an opportunity to grow its market share within its competitor’s market (Fujifilm.com, 2014). Furthermore, a joint venture with the UK based Xerox enabled the company to expand its global operations and sales further. The consolidated funds of the two companies equipped the companies with the ability to research, innovate, develop and invest.

Management Differences and Their Effect on Kodak and Fujifilm Success

Though Kodak Company initiated the rationalization process that lead to reduction in operations, it is gradually adjusting to the market through its new business product and services portfolio (Kodak.com, 2014). The company has further reiterated that it is now financially stable and ready to expand. Moreover, it is apparent that the company retained more than 7,500 commercial patents during downsizing process. Such patents will enable the company to initiate new partnership and explore new markets. Currently, the company main consumers base rest on the vendors and suppliers, and its correlation with small business, universities and US government (Kodak.com, 2014).

However, it is evident that resistance to change by the company’s management was the major cause of business failure. The company perceived that their initial plans and strategies were perfect in execution of business operations. The top management team developed false sense of security and failed to recognize and counteract the threat posed Fujifilm (Haig, 2011). Apparently, despite the company’s great innovation ideas in digital photography, the management team failed to actualize the plans in favor of status quo.

Unlike Kodak, Fujifilm selected a different route of conducting business. The company instituted goals and ideas that enabled the firm to adjust to evolving market faster than its competitor. The impending shift to digital photography in 1980’s triggered the company to diversify its operations and business lines (Fujifilm.com, 2014). As a result, the firm was able to replace the declining profits from sales with new revenues resulting from reinvested profits in research and development. The company developed a strategy aimed to promote growth for business and accelerate its global expansion by concentrating in providing management resources in healthcare, functional materials and document solutions. Fujifilm developed a plan to create and market products that were designed to match the growing needs of emerging markets, boosting the sales and reducing the costs. At the end of 2013, the company performance records indicated that the plan had worked in accordance to the initial plan. The firm reported a growth in earnings by approximately 0.9 percent and a significant increase in consolidated operation by 1 percent (Fujifilm.com, 2014).

Approach to Ethics and Social Responsibility

Kodak has been committed to environmental, socially and ethical, responsible operations that include maintaining safe business facilities and providing quality services while minimizing the impacts on the environment. The company’s single-use recycling program has enabled the company to reduce the amount of waste, save resources and reduce the costs (Kodak.com, 2014). In 2004, the company was recognized for its anti-discriminative policies that protected employee’s sexuality and ensured fair treatment of minorities and women by the Business Ethics Magazine. Such efforts have resulted in promoting Kodak’s Image as a trustworthy and conscientious company (Kodak.com, 2014). As a result, the firm has attracted a huge loyal and strong customer base.

Furthermore, the company has been participating in the Electronic Industry Citizenship Coalition (EICC) to assist in addressing manufacturers and suppliers working environment. EICC focuses on issues that relate to the employee’s safety, and verify that workers are treated with respect and dignity (Kodak.com, 2014). Besides, it evaluates manufacturers and contractors on their processes to make sure that they are ecologically accountable. Kodak has also established a set of contractor principles that wholesalers and supplier need to fulfill before procurement approval. Such standards are outlined for the suppliers, and Kodak only certifies the supplier that meets the set qualifications. Nonetheless, there have been adverse aspects of the company’s social and corporate obligation (Kodak.com, 2014). The company once noted that all corporate contribution had been suspended. This implied that the company was not considering request for charitable support and sponsorship opportunities. Although the statement held no significance on the business from the supply standards, it affected its social images. It is apparent that the public insight on a particular company is highly related to its contribution to the charitable organizations serving diverse communities.

Although Fujifilm’s approach to social and corporate responsibility is different from Kodak’s, it also obligated to ethics and social responsibility. The firm establishes high standards for all staffs to observe and conform. Such measures and values are integrated with all company procedures to enhance efficiency and profitability (Fujifilm.com, 2014). The company core values are founded on transparency policy that keeps the consumers and government aware of its business activities. In accordance to set environmental standards, the company conducts supplier screening and institutes transportation standards to enhance its compliance to environmental standards. Moreover, the company conducts periodic research on market trends to plan accordingly for any changes in supply, distribution and fulfillment of consumer’s needs. In order to meet its social responsibility, the company remains active in support of research, culture, education, arts, health, sports and environmental conservation (Fujifilm.com, 2014).

Kodak and Fujifilm Management Adaptation to Changing Market Condition

In the inception of the digital era, both companies were aware of the need to keep up with the new demand and competition. Though the company conducted environmental scanning to monitor changes in business operations, it opted to follow its tradition way of business with overreliance on its brand and marketing. In an effort to reclaim the company’s glory, the management made efforts to diversify and rejoined the digital photography market, but without much success due to the emerging smartphone cameras (Haig, 2011). As a result, Kodak was unable to respond to the technological revolution, an aspect that made the company file for chapter 11 bankruptcies in 2012. This ultimately eliminated direct consumer sales and altered its operations to remain in business (Kodak.com, 2014). Currently, the company is striving to reconstruct its strategies with a major focus being on commercial printing.

In contrast, Fujifilm expanded its expertise towards broader application of technology to tap into other markets such as health care and electronic operations using digital photography. This has permitted the company to transform its market focus, thus expanding its market share through provision of new products and services. In the advent of digitization, the company ventured into new business alongside its tradition photography products (Fujifilm.com, 2014). As a result of its capabilities to overcome and adjust through diversification, the company was able to post positive financial reports on a regular basis.

Three Key Recommendations

Since the modern digital photography and consumer preferences are constantly evolving, companies such as Fujifilm and Kodak need to build flexibility to back up their decision-making process in order to adapt to changing market conditions.

• Fujifilm and Kodak need to plan effectively to match continuously changing technology and market needs. They both need to introduce products that are appealing to the public and maintain a positive cost value that attract large consumer base. This implies embracing the modern technology that has revolutionized the digital photography;
• Fujifilm and Kodak need to promote its products extensively by advertising in different platforms such as internet with a major focus on social sites, TV, popular sports and commercials;
• Both companies’ need to include pertinent information concerning the affordability and quality of printing the pictures to its consumers. Such effort will enable the company’s to maintain profits and heighten their market share because such information persuade the consumer to print their pictures rather than storing them on hard disk.

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