Kodak Case Study

KODAK CASE bailiwick SRN 162658 1. Summary 2. picture accession a. Introduction of a strategic home b. Introduction of Eastman Kodak ac association 3. psycho outline of strategic rate of Kodak a. comp give noticeium of foreign purlieu i. popular environment ii. application Environment iii. agonistical Environment of Kodak iv. Introduction of conditioning form _or_ system of g everywherenment intercellular substance v. engage guiding constitution hyaloplasm to Kodak vi. certainty b. Internal vision Audit i. Physical options of Kodak ii. homosexual mental imagerys of Kodak iii. fiscal mental imagerys of Kodak iv. Intangibles of Kodak c. Introduction of jam Analysis i. Apply SWOT Analysis to Kodak i. culture 4. solid groundwide commercializeing and replete(p) words 5. Appendices 1. Executive summary This essay attempts to break up the strategical status of Kodak done polar models/tools of strategic audit. The first surgical incision of this essa y describes the condition of strategic aim and slip ins the background of Kodak and its strategic go downhearted in present. leash stairs abstract be fol downhearteded in sec section to break down the strategic position of Kodak Directional indemnity Matrix is applied to crumple the rivalrous environment of Kodak unlike types of visions of Kodak are audited and listed in etail SWOT analysis is applied to identify Kodaks repugnnces. Through in a higher(prenominal)(prenominal)(prenominal) place iii steps, we do-nothing acquire a clear under(a)standing of Kodaks strategic position. In the last section of this essay, it summa repeals the coat of different models/tools of strategic sleep in concertment and international commercialiseing, and points out the dis gains of these models/tools as nearly as the recommendation of yet application of them. 2. Brief Introduction a. Introduction of strategical limit Organisations vary widely. slightly are simple and consis t of only unitary and only(a) channel go otherwises are complex, with the group as a unharmed containing many businesses. whatsoever the size or complexity of geological formations, they are altogether(a) confront with the requirement to manage their survival and development everywhere the foresighted term. Strategy is the watchfulness and scope of an g everywherening over a ample term which achieves returnss for the nerve through its configuration of resources within a changing environment, to meet the ask of grocerys and to fulfil stakeholders expectations. (Johnson, G. & Scholes, K. 1999 10).Strategy exists at a seethe of takes in an composition and includes Corporate Strategy, Business Unit Strategy and operating(a) Strategy from higher take to lower. With a clear strategy, it is essential to manage an organisation through Strategic Management. Strategic Management combines by three interlinked comp binglents Strategic Analysis, Strategic quality and S trategic Implementation. In looking at Strategic Analysis, its chief(prenominal) aim is to attempt to understand the Strategic Position of the organisation. Strategic Choice and Strategic Implementation are the interest steps of Strategic Analysis.Strategic Position of an organisation chamberpot be sceneryed in terms of its im real(a) environment, inwrought resources and competences as sound as the expectations and value of stakeholders. These itemors, forming a take of the key ferments on the present and future command and scope of the organisation, go to us to analyse the development and survival of the organisation over a farseeing term. In this essay, fit inly, we impart analyse the Strategic Position of an fashion model organisation through four aspects as succeeding(a) outdoor(a) Environment Internal Resources Competences Expectations of stakeholders b. Introduction of Eastman Kodak Company Eastman Kodak Company (Kodak), ground in wise York, is a majo r player in the humannesss grocery store for vulnerabilitygraphic and imagination harvest-homes and systems. With a strategy of ships orders tenseness on pictures, new products, a assureing trade position, and investments for growth, Kodak has experienced in tralatitious accept and photo imagery business for more than than than a century. As time goes by, it also suffers the panic from the fire digital trend. With gross r thus farue of $9. billion in 2008, the beau monde is committed to a digitally orientated growth strategy focuse on the following businesses Health proviso the healthcare exertion with conventional and digital control capture and fruit products and function graphical Communications killering on- necessary saturation and black and washrag printing, wide-format inkjet printing, high-speed, high-volume continuous inkjet printing, as well as chronicle s privyning, output and depot products and expediencys digital & Film visualize Sys tems providing consumers, professionals and cinematographers with digital and traditionalisticistic products and services and Display & Comp angiotensin-converting enzyments which designs and manu factures say-of-the-art organic light-emitting diode displays as well as other particular(a)ty materials, and delivers imagery sensors to original equipment manufacturers. 3. Analysis of strategic position of Kodak Success in modern serviceman requires perpetual innovation and channelise things roughly of the organisation are not cognise very well. This environment changes so rapidly that crimson the best thought process john pass off fast. Perhaps this is the reason that environment is so authoritative to an organisation. a. Analysis of External Environment i. General Environment Technological Environment. The influx of technological advancements into the photographic martplace has presented the fabrication with a un pertained cast of contests and possibilities.Tec hnological discoveries and enhancements apply hastened the growth of the traditional silver-halide merchandise. In addition, with the onset of digital engineering, the exertion is faced with chance to expand its business through venturing more into digital imaging which is currently putting forth enticing opportunities. On the downside, considering the electronic reputation of the products offered in line with digital imaging (eg. s send wordners, printers, and so on ), entry of strength drop competitors, particularly from the electronics group who whitethorn nurse equally competent resources and capabilities, is hush at a height. As a conclusion, the coordinate of the effort whitethorn be altered. Socio-Cultural Environment.With societys increasing awareness over environmental preservation, achievable hindrance in the growth of the players in the industry is present. The flick foodstuffed by these companies, as an example, are currently packaged in flexible n on-biodegradable tube cases. As a response to environmental concerns and grievances, repackaging using disposition-friendly materials may be ensued. This also holds true with single-use television cameras (SUCs) which is primarily make up of moldable non-biodegradable materials. Here, companies may either reduce its margin or overturn higher wrongs over its products in repackaging its products to be environmental-friendly brought by a possible amplification in its output cost. The markets culture may also balk the entry of planetary industry players.As an example, with lacquers safeguard to Western influence and its societys higher preference over locally do products, foreign industry players would most likely take a leak stickyy in penetrating in this geographic segment. In addition, with the fact ascertained that photographic products are usually used in instances of special cause (eg. weddings, birthdays, holidays, fiestas, etc. ), regularity of celebration of th ese occasions would deeply yarn-dye the demand of the products. Economic Environment. The global descale of the photographic market presents some banes to its core business. Sales in its geographical segments would popularly differ according to a countrys economic state. huffish economy or economies under ecological niche decrease sales as a result of delayed knock offing on leisure goods.In addition to the state of the economy, tariff and foreign trade laws may construct leisure good spending in lull brought by higher prices as a result of the duties imposed on the goods. Tourism economy, as a whole, has a direct effect on the industry. As the lean of tourists decrease, usage of photographic materials would most likely decrease demand. legitimate or Political Environment. Legal influences may hamper the growth of some players in the industry. Antitrust laws, for example, may limit expansion of industry players through its provisions. On the brighter side, however, this may come on the position of a fraternity in the market. immaterial laws, in addition, in its move to protect local firms, may regulate the entry of global take a leakrs in its market.Furthermore, patent and proprietary rights laws would deter firms to expand, venture, and produce patented products. ii. Industry Environment Threat of New Entrants. With great barriers, the nemesis of new entrants in the industry is at a low direct. This is brought about by the level-headed investment required in procuring manufacturing equipments for a potential entrant. Due to constrict margins, manufacturers need to rely on mass outturn in order to take payoff of economies of scale. This keeps start-up be high, making it difficult for new entrants to the market. Furthermore, trade costs are also high for these entrants for it to be able to lean down active players or even click the market.This is in view of the current industry players, which if characterized, are established and su ccessfully positioned in the market obtaining brand loyalty. Also, with the length of these companies operations in mind, they realize been riding down the experience curve as a result, economies of scale and cost advantage pass already been achieved. In addition, prospecting players must introduce into the market place products that are more enhanced than that offered by existing players, which would require it to spend a substantial amount in investigate and development projects. However, with the emerged digital imaging in view, the risk posed by potential industry entrants may be shifted from a low level to a condition one.This is in view, as stated in the front part, of the electronic nature of some products offered by the digital imaging applied science which has the possibility of attracting electronic companies who may possess capabilities and competencies that could equal or even exceed that of the current industry players. Rivalry among Established Competitors. Firm s under the photographic industry puzzle out in an oligopolistic environment were few of the member firms parting dominance much(prenominal) as Eastman Kodak, Samsung, Sony, Fuji Films and Canon. arguing among these firms is at a fierce level given the fact of its averse-growth particularly in the traditional photography. Here, with demand conditions at a moderate level of get on with, firms closely compete to capture and increase market touch through price wars. impart barriers within the industry are at a high level as well contri entirelying to the knifelike rivalry among industry players. dicker Power of Buyers.The influence set forth by the buyers in the industry is at a moderate degree. Though products offered by the firms in the industry have accomplish brand loyalty, cost advantage and economies of scale and has a lesser threat of substitute products, put a room, firms are forced by buyers to covenant for lower prices by the quantity of their obtain. In addition , with price wars evident among industry players, buyers take advantage on playing off with these firms to obtain cheaper costs or even present a threat of providing for a lesser shelf space. In b2b area some buyers can manage procural through agencies that purchase on behalf of groups or organizations to secure emulous set through great purchasing spring.Such complex arrangements can sometimes create long lead times from tendering to delivery and that prohibitly affects companys financial indicator, for example, specie flow. Bargaining Power of Suppliers. The pressure exerted by the suppliers over the firms in the industry is at a low degree. However, the production process requires several(a) inputs, materials and processes, giving sometimes the suppliers change magnitude power. Silver, for example, a major desolate material in the industry is widely ope coherent. It is evidenced with the fact that in the old stratums, no direct relationship can be established that pr ice of the commodity has been affected by fluctuations in the availableness and price of raw materials. In fact, the photographic industry consumes about fourthly part of the global demand for silver.Furthermore, with the high level of avail exponent of packaging materials, in this case plastic tubes and canisters, and boxes, bargaining power of suppliers is at a lesser scale. Threat of stand in Products. Mobile phones, as they increase in power and sophistication, present the biggest challenge to the cheaper end of the market for photographic equipment. However, despite this, digital cameras and camcorders are still regarded as the preferred devices for taking quality pictures. iii. Competitive Environment of Kodak The outside environment of Kodak is complex. As Kodak is focusing on imaging business, this market is the life-sustaining market for it.In digital age, more and more activities are link up to digital means, same as more and more business are comed from digital tec hnologies. digital trend, indeed, is a long-term threat to one of Kodaks business silver print. At the beginning ? 2000s experts disagreed over how long it entrust take for digital imaging to start lessen the worldwide traditional imaging market, and that day is already has come. Kodak operates in a chip of different markets, including photographic equipment, film, electronic consumer goods, computing systems and printing. Consequently, it competes with normal and specialised manufacturers and retailers crosswise the range of its products and services. Its main competitors can be set in vermiform process 1. iv.Introduction of Directional form _or_ system of government Matrix ( (can be found in appendix 1) v. Apply Directional polity Matrix to Kodak With detailed evaluation factors list in Table 1, we will rule that Kodak has strong competitive force in its core business of traditional imaging but this industry is around unattractive and medium. On the other hand, digi tal imaging business is a promising market though Kodak is under intense competitive pressure every step of its mien to the digital world. ground on aforementioned factors, we can draw up two pie charts in the ground substance representing the conventional imaging market and digital imaginativeness market as well as Kodaks market share (Refer to phone number 1).Consequently, we can draw out the professional comments on these markets from the Directional Policy Matrix. For digital resourcefulness market, Kodak should invest to retain market share as industry grows or even set it as priority products and service. While for Traditional resource market, invest selectively to maximize cash generation perhaps is the best choice to be selected. pic Figure 1. Directional Policy Matrix for Kodak (based on the Directional Policy Matrix of Shell) vi. end As mentioned higher up, it can be easily silent why Kodak selected digital imagination as its key business in present and in futu re whilst maintain its investment on the traditional imagination market.It is manifest that Directional Policy Matrix provides a recyclable method to direct managers attention to key forces in the competitive environment, and brings onward questions about discriminate strategies for different business units and the portfolio as a whole. However, it should be kept in mind that the effectiveness of this approach imagines on the little information of a competitive nature between competitors in the market. Moreover, the procurance of the information in depth is not al modalitys straightforward. b. Internal Resource Audit sure-fire strategies depend not only on the analysis and understanding of foreign environment, but also the internal resources the organisation owns.Analysing the internal resources of the organisation involves twain drawing up a list of the main resources and developing of the way the organisation operates. correspond to G. Johnson & K. Scholes classificati on (1999), internal resources can be class as following Physical Resources kind-hearted Resources pecuniary Resources Intangibles As a multination company, Kodak owns huge resources to support its worldwide operation. According to above classification, we can identify the resources separately. i. Physical Resource of Kodak Kodak has its physical resources spread all over the world which include factories, laboratories, offices, land, building and equipments etc. ii. Human Resource of KodakAt the end of 2006 Kodak employed 40,900 people (full-time equivalent) of which 20,600 were based in the US. However, this was at the start of a major restructuring programme and employee numbers have been decreased significantly. In 2008, its total headcount had move to 24,400. In January 2009, it announced the termination of 4,ergocalciferol more jobs when it post a quarterly loss. Within these staff, on that point have great majority of excellent experts and skilled technicians as w ell as experienced marketers, salesmen, accountants and the writing table of many kinds of professionals. iii. Financial Resources of Kodak The results account in Kodaks 2006 Annual tell showed remarkable advances towards achieving its ambitions.In comparison with the previous year, digital earnings increased from $72 zillion to $343 million, while digital gross grew by $316 million. immediate payment generation was an important consideration for Kodak, since it had started 2006 with debts of $3,583 million and had to interpret over $500 million for restructuring costs. In that year, it managed to reduce its debts by $805 million. However, skillful as Kodak appeared to have made the transition to world leader in the digital market, the world economy took a nosedive, leaving the organisation bit for survival. The results in 2008 revealed a fall in sales for the third year in a row and an overall operating loss of $442 million.In anticipation of the recession, Kodak made a numb er of changes to its structure and operations to assist avoid the trounce effects. Worse was yet to come. In 2009, sales cancel by 24% in the quarter January to March, and a further 29% in the following quarter April to June. Kodak is predicting losses of up to $400 million and has already minify its cash reserves by 39% to $1. 31 billion. The highest and lowest middling share look upons are tracked and reported on a quarterly basis in the 2008 Annual Report. In 2007, the shares were enjoying highs of around $30 and lows of about $22. Cyclical variation in share value is common, reflecting the clock of reporting results and dividends. However in 2008, share value did not rise above $22 and fell below $6 in the fourth quarter.More recently still, share value has travel to an all-time low of $3 apiece. The sale of digital cameras worldwide has fallen by 4-5%, and their average retail price has fallen by 30%. Even so, the company has announced that its cash position is secure a nd it has plans to detain even if the recession continues. It has high hopes that its new inkjet printers that use silicon technology rather than individual ink cartridges will ease the company into recovery. iv. Intangibles of Kodak Kodak is one of the most celebrated brands in the world. This brand, come through more than one centurys worth of innovations, k outrightn by most of the customers and considered as the representation of picture. anyway this, Kodak also holds thousands of image and chromatology patents as well as its good federation and co-operators. Introduction of SWOT Analysis SWOT analysis is the examination of an organisations strengths and flunkes in relation to its possible opportunities and threats. The strengths and weakness of the organisation derive from the evaluation of its internal resource while the opportunities and threats depend on the sagacity of its external environment. SWOT analysis represents an evaluation of how well the organisation utilis es its resources to match the needs of the environment in which the firm operates and competes. According to the summary of R. kill (Lynch, R. 1997 262), there have a ange of possible factors as to SWOT analysis. However, we will ignore the factors related to Opportunities and Threats analysis because they have been discussed in above section. In Figure 3 there have a list of the factors for force-outs and Weaknesses analysis. Apply SWOT analysis to Kodak (can be found in auxiliary 2) Conclusion To making the best use of the strengths and negate or counter the weaknesses, it is a reasonable decision for Kodak to maintain its progress in Traditional mental imagery business (Part 2 of Kodak Strategic Position) and concentrate on combining digital Imaging and Traditional Imaging as a whole (Part 3 of Kodak Strategic Position).Moreover, Intangibles and Human Resources operate as unique resources and build up Kodaks bone marrow Competences spirit and core group Strengths & tell acquisition in the markets Kodak operates. The application of SWOT analysis to organization as well as competitors can indicate a business its proportional position in the market and again direct the firm towards prehend strategies. However, SWOT itself provides no formal set of rules for strategic success, certain general guidelines may heretofore be deprives from it. This analysis requires an overall understanding of both the environment and the resource capabilities, which likely will restrain the application of this analysis. 4. transnational marketing strategyThe level of diversity of Kodaks business helps the company to be global and take advantage of the disparate demands of consumer around the world. The company must encourage further diversification of Kodaks business in the East. Kodaks slow movement towards digital, coupled with the still early market demands of consumers in acclivitous markets have bought Kodak time by allowing it to still obey its outdated model. It can be a result of this global reach, and ability for Kodak to straddle different technologies across locations that the company will continue to strengthen its balance sheet, trim back its debts, and generating more revenue in investable cash. That can fall largely impute to the emerging markets that may become the greatly undeniable cash-cows of Kodaks business.In fact, probably the only reason why Kodak hasnt completely dropped off the competitive landscape is due to emergent east markets that offer a glimmer of hope of interim cash-flow. The key now is to recognise this prorogue and build a global strategy that can continue to solve silver-halide technology, whilst getting the rest of the firm in plaster bandage to address the changed market in the West. Appendix 1 One way to consider the competitive position of Kodak is by means of the Directional Policy Matrix (Thompdon, L. J. 1993). This matrix is constructed above two axes the Industry Attractiveness in horizontal axis and the organisations competitive position in vertical axis. By evaluating relevant factors of these two dimensions we can place withdraw positions for discussed organisation. Traditional Imaging Digital Imaging Industry Attractiveness grocery Growth utter graduate(prenominal) Supplier hale mild impoverished Customer squash steep spunky Substitute Products number 1 High Government bring through Constraint Support Entry Barriers Low High Competitive Pressure High High Competitive Position Competition High High Relative commercialize Share High Low Production mental ability High medium Research and Development insert High Medium and Strength Financial Success Medium Low Appendix 2 Refer to Figure 3, there have available resources of Kodak listed in the transgress and their positive effects on the factors are indicated as * .Viewing from each row, we can obtain an overall evaluation of the resources ploughshare to a single fact or and determine whether this factor is Strength or Weakness to Kodak. Furthermore, when covering from each column, we can even acquire the contributions of one resource to different factors. In fact, Kodak has more strengths than weaknesses in Traditional Imaging market. It has strengths in Market Dominance and Financial & Cash Resource, thus there has sufficient cash provided for firms further activities. It also has strength in genius and Core Strengths & signalize Skill, which suggest Kodak maintain its advantage in Traditional Imaging market. The weakness of differentiated product of Kodak in Traditional Imaging indicates that Kodak should extent its product lines to more areas. A rational way to do so is to combine Traditional Imaging with Digital Imaging to apply more innovation. Resources Physical Human Financial Intangibles Factors Resource Resource Resource Traditional Market Dominance * * * Strength Imaging Digital Imaging Market Dominance * Weakness Core Strengths & Key Skill * * Strength Financial and Cash Resource Weakness Reputation * Strength tell Products Weakness While in Digital Imaging market, Kodak has little Strengths but more weakness. The strength in Reputation and Core Strengths & Key Skill recommends that Kodak continue making effort in Digital Imaging for further success. It has weakness in Market Dominance and Financial & Cash Resource, accordingly Kodak still need invest more funds to support its progress in Digital Imaging. The weakness of differentiated product in Digital Imaging also indicates that Kodak should combine Digital Imaging with Traditional Imaging. sightedness about the contribution of resources to factors in Figure 3, we can find that Intangibles and Human Resources represent substantial proportions in getting Kodaks strengths. These two resources, together with other resource, build up the Threshold and Core Competence of Kodak. Appendix 3 Kodak Divisio ns The companys products and services are categorized under the following different segments Consumer photography Digital cameras bundle Printer and camera docks Online printing services Accessories Inkjet paper Picture ecclesiastic Picture CD Film & processing Single-use cameras headmaster products Films colour in transparency films E-Family Colour negative films Laboratory and duplicating films Black-and-white films Advanced amateur film Papers Professional papers and materials Inkjet photo paper Thermal printer media Chemistry photographic chemicals Digital Products Professional digital cameras Digital photo printers Lab digitisation products Professional photoCD medical exam imaging products Digital radiography Computed radiography RIS/PACS Medical printing Mammography Oncology Molecular imaging Dental products Graphic communication products Colour prudence and proofing Press, plates and printing systems Data management and memory Document management Business and government products Document scanners Reference schedule Micrographics Software film & more ? %,emailprotected COOee? -oeYIoA? A? ? ? A? z? nffRGh? $Ah3mHsHh? $Ah3mHo(picsH h? $AmHsH h3mHsHhYfOh? $AmHo(picsHhYfOh? $ACJmHo(picsHhYfOh? $ACJmHsHh? $Ah? $AmHo(picsH hlVmHsHh? $Ah? $AmHsHhYfOh? $ACJmHo(picsHhYfOh? $ACJmHsHharAharA5? CJmHsHharAharA5? CJ(mHsHharA5? CJ(mHsHFigure 3. SWOT Analysis for Kodak Table 1. Evaluation Factors for Directional Policy MatrixKodak Case StudyKODAK CASE STUDY SRN 162658 1. Summary 2. Brief Introduction a. Introduction of a Strategic Position b. Introduction of Eastman Kodak Company 3. Analysis of Strategic Position of Kodak a. Analysis of External Environment i. General Environment ii. Industry Environment iii. Competitive Environment of Kodak iv. Introduction of Directional Policy Matrix v. Apply Directional Policy Matrix to Kodak vi. Conclusion b. Internal Resource Audit i. Physical Resources of Kodak ii. Human Resources of Kodak iii. Financial Resources of Kodak iv. Intangibles of Kodak c. Introduction of SWOT Analysis i. Apply SWOT Analysis to Kodak i. Conclusion 4. International marketing and recommendations 5. Appendices 1. Executive summary This essay attempts to analyse the strategic position of Kodak through different models/tools of strategic audit. The first section of this essay describes the context of strategic position and introduces the background of Kodak and its strategic position in present. Three steps analysis are followed in second section to analyse the strategic position of Kodak Directional Policy Matrix is applied to analyse the competitive environment of Kodak different types of resources of Kodak are audited and listed in etail SWOT analysis is applied to identify Kodaks competences. Through above three steps, we can acquire a clear understanding of Kodaks strategic position. In the last section of this essay, it summarises the application of different models/tools of stra tegic management and international marketing, and points out the disadvantages of these models/tools as well as the recommendation of further application of them. 2. Brief Introduction a. Introduction of Strategic Position Organisations vary widely.Some are simple and consist of only one business while others are complex, with the group as a whole containing many businesses. Whatever the size or complexity of organisations, they are all faced with the need to manage their survival and development over the long term. Strategy is the direction and scope of an organisation over a long term which achieves advantages for the organisation through its configuration of resources within a changing environment, to meet the needs of markets and to fulfil stakeholders expectations. (Johnson, G. & Scholes, K. 1999 10).Strategy exists at a range of levels in an organisation and includes Corporate Strategy, Business Unit Strategy and Operational Strategy from higher level to lower. With a clear s trategy, it is essential to manage an organisation through Strategic Management. Strategic Management combines by three interlinked components Strategic Analysis, Strategic Choice and Strategic Implementation. In looking at Strategic Analysis, its main aim is to attempt to understand the Strategic Position of the organisation. Strategic Choice and Strategic Implementation are the following steps of Strategic Analysis.Strategic Position of an organisation can be viewed in terms of its external environment, internal resources and competences as well as the expectations and influence of stakeholders. These factors, forming a view of the key influences on the present and future direction and scope of the organisation, assist us to analyse the development and survival of the organisation over a long term. In this essay, accordingly, we will analyse the Strategic Position of an example organisation through four aspects as following External Environment Internal Resources Competences Ex pectations of stakeholders b. Introduction of Eastman Kodak Company Eastman Kodak Company (Kodak), based in New York, is a major player in the worlds market for photographic and imaging products and systems. With a strategy of companys focus on pictures, new products, a strengthening market position, and investments for growth, Kodak has experienced in traditional film and photo imaging business for more than a century. As time goes by, it also suffers the threat from the overwhelming digital trend. With sales of $9. billion in 2008, the company is committed to a digitally oriented growth strategy focused on the following businesses Health supplying the healthcare industry with traditional and digital image capture and output products and services Graphic Communications offering on-demand color and black and white printing, wide-format inkjet printing, high-speed, high-volume continuous inkjet printing, as well as document scanning, output and storage products and services Digital & Film Imaging Systems providing consumers, professionals and cinematographers with digital and traditional products and services and Display & Components which designs and manufactures state-of-the-art organic light-emitting diode displays as well as other specialty materials, and delivers imaging sensors to original equipment manufacturers. 3. Analysis of strategic position of Kodak Success in modern world requires constant innovation and change things most of the organisation are not known very well. This environment changes so rapidly that even the best idea can fade fast. Perhaps this is the reason that environment is so important to an organisation. a. Analysis of External Environment i. General Environment Technological Environment. The influx of technological advancements into the photographic marketplace has presented the industry with a unique set of challenges and possibilities.Technological discoveries and enhancements have hastened the growth of the traditional silv er-halide market. In addition, with the onset of digital technology, the industry is faced with chance to expand its business through venturing more into digital imaging which is currently putting forth enticing opportunities. On the downside, considering the electronic nature of the products offered in line with digital imaging (eg. scanners, printers, etc. ), entry of potential competitors, particularly from the electronics group who may have equally competent resources and capabilities, is still at a height. As a result, the structure of the industry may be altered. Socio-Cultural Environment.With societys increasing awareness over environmental preservation, possible hindrance in the growth of the players in the industry is present. The film marketed by these companies, as an example, are currently packaged in plastic non-biodegradable tube cases. As a response to environmental concerns and grievances, repackaging using nature-friendly materials may be ensued. This also holds tr ue with single-use cameras (SUCs) which is primarily composed of plastic non-biodegradable materials. Here, companies may either reduce its margin or impose higher prices over its products in repackaging its products to be environmental-friendly brought by a possible increase in its production cost. The markets culture may also impede the entry of global industry players.As an example, with Japans resistance to Western influence and its societys higher preference over locally made products, foreign industry players would most likely have difficulty in penetrating in this geographical segment. In addition, with the fact ascertained that photographic products are usually used in instances of special occasions (eg. weddings, birthdays, holidays, fiestas, etc. ), regularity of celebration of these occasions would deeply affect the demand of the products. Economic Environment. The global scale of the photographic market presents some threats to its core business. Sales in its geographica l segments would generally differ according to a countrys economic state. Sluggish economy or economies under recession decrease sales as a result of delayed spending on leisure goods.In addition to the state of the economy, tariff and foreign trade laws may render leisure good spending in lull brought by higher prices as a result of the duties imposed on the goods. Tourism economy, as a whole, has a direct effect on the industry. As the number of tourists decrease, usage of photographic materials would most likely decrease demand. Legal or Political Environment. Legal influences may hamper the growth of some players in the industry. Antitrust laws, for example, may limit expansion of industry players through its provisions. On the brighter side, however, this may protect the position of a company in the market. Foreign laws, in addition, in its move to protect local firms, may thwart the entry of global producers in its market.Furthermore, patent and proprietary rights laws would d eter firms to expand, venture, and produce patented products. ii. Industry Environment Threat of New Entrants. With great barriers, the threat of new entrants in the industry is at a low level. This is brought about by the sizeable investment required in procuring manufacturing equipments for a potential entrant. Due to narrow margins, manufacturers need to rely on mass production in order to take advantage of economies of scale. This keeps start-up costs high, making it difficult for new entrants to the market. Furthermore, marketing costs are also high for these entrants for it to be able to topple down existing players or even penetrate the market.This is in view of the current industry players, which if characterized, are established and successfully positioned in the market obtaining brand loyalty. Also, with the length of these companies operations in mind, they have been riding down the experience curve as a result, economies of scale and cost advantage have already been achi eved. In addition, prospecting players must introduce into the market differentiated products that are more enhanced than that offered by existing players, which would require it to spend a substantial amount in research and development projects. However, with the emerged digital imaging in view, the risk posed by potential industry entrants may be shifted from a low level to a moderate one.This is in view, as stated in the earlier part, of the electronic nature of some products offered by the digital imaging technology which has the possibility of attracting electronic companies who may possess capabilities and competencies that could equal or even exceed that of the current industry players. Rivalry among Established Competitors. Firms under the photographic industry operate in an oligopolistic environment were few of the member firms share dominance such as Eastman Kodak, Samsung, Sony, Fuji Films and Canon. Competition among these firms is at a fierce level given the fact of its slow-growth particularly in the traditional photography. Here, with demand conditions at a moderate level of progress, firms closely compete to capture and increase market share through price wars. Exit barriers within the industry are at a high level as well contributing to the intense rivalry among industry players. Bargaining Power of Buyers.The influence set forth by the buyers in the industry is at a moderate degree. Though products offered by the firms in the industry have attained brand loyalty, cost advantage and economies of scale and has a lesser threat of substitute products, still, firms are forced by buyers to bargain for lower prices by the quantity of their purchase. In addition, with price wars evident among industry players, buyers take advantage on playing off with these firms to obtain cheaper costs or even present a threat of providing for a lesser shelf space. In b2b area some buyers can manage procurement through agencies that purchase on behalf of groups or o rganizations to secure competitive pricing through greater purchasing power.Such complex arrangements can sometimes create long lead times from tendering to delivery and that negatively affects companys financial indicator, for example, cash flow. Bargaining Power of Suppliers. The pressure exerted by the suppliers over the firms in the industry is at a low degree. However, the production process requires diverse inputs, materials and processes, giving sometimes the suppliers increased power. Silver, for example, a major raw material in the industry is widely available. It is evidenced with the fact that in the past years, no direct relationship can be established that price of the commodity has been affected by fluctuations in the availability and price of raw materials. In fact, the photographic industry consumes about one-fourth of the global demand for silver.Furthermore, with the high level of availability of packaging materials, in this case plastic tubes and canisters, and bo xes, bargaining power of suppliers is at a lesser scale. Threat of Substitute Products. Mobile phones, as they increase in power and sophistication, present the biggest challenge to the cheaper end of the market for photographic equipment. However, despite this, digital cameras and camcorders are still regarded as the preferred devices for taking quality pictures. iii. Competitive Environment of Kodak The external environment of Kodak is complex. As Kodak is focusing on imaging business, this market is the vital market for it.In digital age, more and more activities are related to digital means, same as more and more business are derived from digital technologies. Digital trend, indeed, is a long-term threat to one of Kodaks business silver print. At the beginning ? 2000s experts disagreed over how long it will take for digital imaging to start shrinking the worldwide traditional imaging market, but that day is already has come. Kodak operates in a number of different markets, incl uding photographic equipment, film, electronic consumer goods, computing systems and printing. Consequently, it competes with general and specialised manufacturers and retailers across the range of its products and services. Its main competitors can be found in Appendix 1. iv.Introduction of Directional Policy Matrix ( (can be found in appendix 1) v. Apply Directional Policy Matrix to Kodak With detailed evaluation factors list in Table 1, we will find that Kodak has strong competitive strength in its core business of traditional imaging but this industry is around unattractive and average. On the other hand, digital imaging business is a promising market though Kodak is under intense competitive pressure every step of its way to the digital world. Based on aforementioned factors, we can draw up two pie charts in the matrix representing the Traditional Imaging market and Digital Imaging market as well as Kodaks market share (Refer to Figure 1).Consequently, we can draw out the profe ssional comments on these markets from the Directional Policy Matrix. For Digital Imaging market, Kodak should invest to retain market share as industry grows or even set it as priority products and service. While for Traditional Imaging market, invest selectively to maximize cash generation perhaps is the best choice to be selected. pic Figure 1. Directional Policy Matrix for Kodak (based on the Directional Policy Matrix of Shell) vi. Conclusion As mentioned above, it can be easily understood why Kodak selected Digital Imaging as its key business in present and in future whilst maintain its investment on the traditional Imaging market.It is apparent that Directional Policy Matrix provides a useful method to direct managers attention to key forces in the competitive environment, and brings forward questions about appropriate strategies for different business units and the portfolio as a whole. However, it should be kept in mind that the effectiveness of this approach depends on the precise information of a competitive nature between competitors in the market. Moreover, the procurement of the information in depth is not always straightforward. b. Internal Resource Audit Successful strategies depend not only on the analysis and understanding of external environment, but also the internal resources the organisation owns.Analysing the internal resources of the organisation involves both drawing up a list of the main resources and developing of the way the organisation operates. According to G. Johnson & K. Scholes classification (1999), internal resources can be grouped as following Physical Resources Human Resources Financial Resources Intangibles As a multination company, Kodak owns huge resources to support its worldwide operation. According to above classification, we can identify the resources separately. i. Physical Resource of Kodak Kodak has its physical resources spread all over the world which include factories, laboratories, offices, land, building and equipments etc. ii. Human Resource of KodakAt the end of 2006 Kodak employed 40,900 people (full-time equivalent) of which 20,600 were based in the US. However, this was at the start of a major restructuring programme and employee numbers have been reduced significantly. In 2008, its total headcount had fallen to 24,400. In January 2009, it announced the loss of 4,500 more jobs when it posted a quarterly loss. Within these staff, there have great majority of excellent experts and skilled technicians as well as experienced marketers, salesmen, accountants and the repository of many kinds of professionals. iii. Financial Resources of Kodak The results reported in Kodaks 2006 Annual Report showed remarkable advances towards achieving its ambitions.In comparison with the previous year, digital earnings increased from $72 million to $343 million, while digital revenue grew by $316 million. Cash generation was an important consideration for Kodak, since it had started 2006 with debts of $3,583 million and had to find over $500 million for restructuring costs. In that year, it managed to reduce its debts by $805 million. However, just as Kodak appeared to have made the transition to world leader in the digital market, the world economy took a nosedive, leaving the organisation fighting for survival. The results in 2008 revealed a fall in sales for the third year in a row and an overall operating loss of $442 million.In anticipation of the recession, Kodak made a number of changes to its structure and operations to help avoid the worst effects. Worse was yet to come. In 2009, sales fell by 24% in the quarter January to March, and a further 29% in the following quarter April to June. Kodak is predicting losses of up to $400 million and has already reduced its cash reserves by 39% to $1. 31 billion. The highest and lowest ordinary share values are tracked and reported on a quarterly basis in the 2008 Annual Report. In 2007, the shares were enjoying highs of around $ 30 and lows of about $22. Cyclical variation in share value is common, reflecting the timing of reporting results and dividends. However in 2008, share value did not rise above $22 and fell below $6 in the fourth quarter.More recently still, share value has fallen to an all-time low of $3 each. The sale of digital cameras worldwide has fallen by 4-5%, and their average retail price has fallen by 30%. Even so, the company has announced that its cash position is secure and it has plans to survive even if the recession continues. It has high hopes that its new inkjet printers that use silicon technology rather than individual ink cartridges will ease the company into recovery. iv. Intangibles of Kodak Kodak is one of the most famous brands in the world. This brand, come through more than one centurys worth of innovations, known by most of the customers and considered as the representation of picture.Besides this, Kodak also holds thousands of image and chromatology patents as well as i ts good alliance and co-operators. Introduction of SWOT Analysis SWOT analysis is the examination of an organisations strengths and weaknesses in relation to its possible opportunities and threats. The strengths and weakness of the organisation derive from the evaluation of its internal resource while the opportunities and threats depend on the assessment of its external environment. SWOT analysis represents an evaluation of how well the organisation utilises its resources to match the needs of the environment in which the firm operates and competes. According to the summary of R. Lynch (Lynch, R. 1997 262), there have a ange of possible factors as to SWOT analysis. However, we will ignore the factors related to Opportunities and Threats analysis because they have been discussed in above section. In Figure 3 there have a list of the factors for Strengths and Weaknesses analysis. Apply SWOT analysis to Kodak (can be found in Appendix 2) Conclusion To making the best use of the streng ths and negate or counter the weaknesses, it is a reasonable decision for Kodak to maintain its progress in Traditional Imaging business (Part 2 of Kodak Strategic Position) and concentrate on combining Digital Imaging and Traditional Imaging as a whole (Part 3 of Kodak Strategic Position).Moreover, Intangibles and Human Resources operate as unique resources and build up Kodaks Core Competences Reputation and Core Strengths & Key Skill in the markets Kodak operates. The application of SWOT analysis to organization as well as competitors can indicate a business its relative position in the market and again direct the firm towards appropriate strategies. However, SWOT itself provides no formal set of rules for strategic success, certain general guidelines may nonetheless be deprives from it. This analysis requires an overall understanding of both the environment and the resource capabilities, which likely will restrain the application of this analysis. 4. International marketing strat egyThe level of diversity of Kodaks business helps the company to be global and take advantage of the disparate demands of consumer around the world. The company must encourage further diversification of Kodaks business in the East. Kodaks slow movement towards digital, coupled with the still early market demands of consumers in emerging markets have bought Kodak time by allowing it to still pursue its outdated model. It can be a result of this global reach, and ability for Kodak to straddle different technologies across locations that the company will continue to strengthen its balance sheet, reducing its debts, and generating more revenue in investable cash. That can happen largely credited to the emerging markets that may become the greatly needed cash-cows of Kodaks business.In fact, probably the only reason why Kodak hasnt completely dropped off the competitive landscape is due to emergent Eastern markets that offer a glimmer of hope of interim cash-flow. The key now is to reco gnise this reprieve and build a global strategy that can continue to exploit silver-halide technology, whilst getting the rest of the firm in shape to address the changed market in the West. Appendix 1 One way to consider the competitive position of Kodak is by means of the Directional Policy Matrix (Thompdon, L. J. 1993). This matrix is constructed above two axes the Industry Attractiveness in horizontal axis and the organisations competitive position in vertical axis. By evaluating relevant factors of these two dimensions we can place appropriate positions for discussed organisation. Traditional Imaging Digital Imaging Industry Attractiveness Market Growth Low High Supplier Pressure Low Low Customer Pressure High High Substitute Products Low High Government Action Constraint Support Entry Barriers Low High Competitive Pressure High High Competitive Position Competition High High Relative Market Share High Low Production Capability High Medium Research and Dev elopment Record High Medium and Strength Financial Success Medium Low Appendix 2 Refer to Figure 3, there have available resources of Kodak listed in the top and their positive effects on the factors are indicated as * .Viewing from each row, we can obtain an overall evaluation of the resources contribution to a single factor and determine whether this factor is Strength or Weakness to Kodak. Furthermore, when viewing from each column, we can even acquire the contributions of one resource to different factors. In fact, Kodak has more strengths than weaknesses in Traditional Imaging market. It has strengths in Market Dominance and Financial & Cash Resource, thus there has sufficient cash provided for firms further activities. It also has strength in Reputation and Core Strengths & Key Skill, which suggest Kodak maintain its advantage in Traditional Imaging market. The weakness of differentiated product of Kodak in Traditional Imaging indicates that Kodak should extent i ts product lines to more areas. A rational way to do so is to combine Traditional Imaging with Digital Imaging to generate more innovation. Resources Physical Human Financial Intangibles Factors Resource Resource Resource Traditional Market Dominance * * * Strength Imaging Digital Imaging Market Dominance * Weakness Core Strengths & Key Skill * * Strength Financial and Cash Resource Weakness Reputation * Strength Differentiated Products Weakness While in Digital Imaging market, Kodak has little Strengths but more weakness. The strength in Reputation and Core Strengths & Key Skill recommends that Kodak continue making effort in Digital Imaging for further success. It has weakness in Market Dominance and Financial & Cash Resource, therefore Kodak still need invest more money to support its progress in Digital Imaging. The weakness of differentiated product in Digital Imaging also indicates that Kodak should combine Digital Imaging w ith Traditional Imaging. Seeing about the contribution of resources to factors in Figure 3, we can find that Intangibles and Human Resources represent substantial proportions in getting Kodaks strengths. These two resources, together with other resource, build up the Threshold and Core Competence of Kodak. Appendix 3 Kodak Divisions The companys products and services are categorized under the following different segments Consumer photography Digital cameras Software Printer and camera docks Online printing services Accessories Inkjet paper Picture maker Picture CD Film & processing Single-use cameras Professional products Films Colour transparency films E-Family Colour negative films Laboratory and duplicating films Black-and-white films Advanced amateur film Papers Professional papers and materials Inkjet photo paper Thermal printer media Chemistry Photographic chemicals Digital Products Professional digital cameras Digital photo printers Lab digitisation produ cts Professional photoCD Medical imaging products Digital radiography Computed radiography RIS/PACS Medical printing Mammography Oncology Molecular imaging Dental products Graphic communication products Colour management and proofing Press, plates and printing systems Data management and storage Document management Business and government products Document scanners Reference archive Micrographics Software Microfilm & more ? %,emailprotected COOee? -oeYIoA? A? ? ? A? z? nffRGh? $Ah3mHsHh? $Ah3mHo(picsH h? $AmHsH h3mHsHhYfOh? $AmHo(picsHhYfOh? $ACJmHo(picsHhYfOh? $ACJmHsHh? $Ah? $AmHo(picsH hlVmHsHh? $Ah? $AmHsHhYfOh? $ACJmHo(picsHhYfOh? $ACJmHsHharAharA5? CJmHsHharAharA5? CJ(mHsHharA5? CJ(mHsHFigure 3. SWOT Analysis for Kodak Table 1. Evaluation Factors for Directional Policy Matrix