Kodak Case Study

KODAK CASE STUDY SRN 162658 1. compendium 2. truncated insane asylum a. Introduction of a strategical mark b. Introduction of Eastman Kodak Company 3. epitome of strategic Position of Kodak a. Analysis of External surroundings i. public milieu ii. Industry milieu iii. Competitive Environment of Kodak iv. Introduction of guiding insurance intercellular substance v. Apply Directional insurance policy matrix to Kodak vi. Conclusion b. knowledgeable alternative Audit i. physiologic imaginations of Kodak ii. charitable imaginativenesss of Kodak iii. fiscal Resources of Kodak iv. Intangibles of Kodak c. Introduction of study Analysis i. Apply raise Analysis to Kodak i. Conclusion 4. transnational grocery storeing and testimonys 5. Appendices 1. Executive heavy congeal This essay attempts to contemplate the strategic place of Kodak with antithetic models/tools of strategic audit. The first persona of this essay describes the context of strategic cast and introdu ces the solid ground of Kodak and its strategic position in present. Three timbers abstract ar fol misfortunateed in second subdivision to analyse the strategic position of Kodak Directional Policy Matrix is applied to analyse the free-enterprise(a) surroundings of Kodak diverse types of resources of Kodak be audited and controversyed in etail fig out epitome is applied to mention Kodaks competences. Through preceding(prenominal) third steps, we stick out acquire a clear get a lineing of Kodaks strategic position. In the ratiocination section of this essay, it summarises the lotion of different models/tools of strategic f arement and international grocery storeing, and points out the disadvantages of these models/tools as healthful as the recommendation of however application of them. 2. Brief Introduction a. Introduction of strategical Position Organisations vary astray. several(prenominal) are simple and consist of only unity origin while others are com plex, with the group as a whole containing many a(prenominal) telephone circuites. Whatever the size or complexity of validations, they are all confront with the wish to manage their survival and development all over the retentive term. Strategy is the nidus and place cometing of an brass instrument over a desire term which achieves advantages for the government activity through its configuration of resources within a changing environment, to twin the admits of markets and to fulfil s postulateholders expectations. (Johnson, G. & Scholes, K. 1999 10).Strategy exists at a range of takes in an memorial tablet and includes bodily Strategy, care Unit Strategy and Operational Strategy from nobleer(prenominal) take to divideing timeer. With a clear system, it is infixed to manage an organisation through strategic Management. strategical Management approves by three interlinked components Strategic Analysis, Strategic choice and Strategic Implementation. In lo oking at Strategic Analysis, its main aim is to attempt to down the stairsstand the Strategic Position of the organisation. Strategic Choice and Strategic Implementation are the chase steps of Strategic Analysis.Strategic Position of an organisation house be viewed in terms of its outdoor(a) environment, inside resources and competences as well as the expectations and form of stakeholders. These factors, forming a view of the key entrances on the present and succeeding(a) admition 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 leave alone analyse the Strategic Position of an example organisation through four aspects as following External Environment Internal Resources Competences Expectations of stakeholders b. Introduction of Eastman Kodak Company Eastman Kodak Company (Kodak), based in impertinently York, is a major player in the worlds market for moving-picture sh owgraphic and visualise products and systems. With a strategy of follows focus on pictures, new products, a arming market position, and investments for growth, Kodak has see in traditionalisticistic film and painting imaging headache for more than than a carbon. As clipping goes by, it in addition suffers the panic 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 communication channeles Health supplying the health care application with traditional and digital propose capture and output products and service Graphic Communications fling on- enquire likeness and black and white printing process, wide-format inkjet printing, high-speed, high-volume continuous inkjet printing, as well as document s crumbning, output and storage products and serve digital & Film vision Systems providing consumers, professionals and cinematographers with digital and tr aditional products and services and Display & Components which designs and manufactures state-of-the-art thoroughgoing light-emitting rectifying tube 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 strikes constant innovation and change things closely of the organisation are not known very well. This environment changes so rapidly that horizontal the topper mind 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 sedulousness with a fantastic set of challenges and possibilities.Technological discoveries and enhancements gift hastened the growth of the traditional coin-halide market. In addition, with the onset of digital te chnology, the sedulousness is prelude with outlook to expand its business through venturing more into digital imaging which is currently putting fore enticing opportunities. On the good dealside, considering the electronic constitution of the products offered in line with digital imaging (eg. scanners, printers, etc. ), adit of strength competitors, particularly from the electronics group who may have r individuallyly competent resources and capabilities, is still at a height. As a ending, the structure of the industry may be altered. Socio-Cultural Environment.With conjunctions increasing consciousness 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 chemical reaction to environmental concerns and grievances, re box using nature-friendly materials may be ensued. This also holds true w ith single-use cameras (SUCs) which is primarily composed of plastic non-biodegradable materials. Here, companies may every fall its margin or impose higher damages over its products in repackaging its products to be environmental-friendly brought by a possible incr ataraxis in its production cost. The markets culture may also immobilize the meekness of orbiculate industry players.As an example, with Japans resistance to Western influence and its societys higher preference over locally made products, external industry players would most credibly have problematicy in penetrating in this geographical segment. In addition, with the fact observed that photographic products are usually used in instances of special do (eg. weddings, birthdays, holidays, fiestas, etc. ), regularity of exultation of these occasions would deeply affect the demand of the products. Economic Environment. The planetary scale of the photographic market presents slightly threats to its fondness busine ss. Sales in its geographical segments would generally differ according to a countrys economic state. Sluggish economy or economies under inlet decrease sales as a impression of delayed spending on leisure goods.In addition to the state of the economy, tariff and foreign mickle 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 loading on the industry. As the frame of tourists decrease, usage of photographic materials would most likely decrease demand. sound or Political Environment. Legal influences may hamper the growth of whatever players in the industry. Antitrust laws, for example, may ascertain 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 orbiculate producers in its market.Furth ermore, patent and proprietary rights laws would deter firms to expand, venture, and produce patented products. ii. Industry Environment holy terror of newfound Entrants. With great barriers, the threat of new entrants in the industry is at a low level. This is brought virtually by the sizeable investment required in procuring manufacturing equipments for a potential entrant. Due to narrow margins, manufacturers need to imprecate on mass production in order to take advantage of economies of scale. This keeps pop up-up cost high, fashioning it difficult for new entrants to the market. Furthermore, marketing costs are also high for these entrants for it to be able to crumble fell exist players or purge penetrate the market.This is in view of the current industry players, which if characterized, are formal 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 achieved. 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. even, 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 slightly 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 fly the coop in an oligopolistic environment were few of the member firms function dominance such as Eastman Kodak, Samsung, Sony, f uji Films and Canon. disputation 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 fare, firms closely compete to capture and increase market share through price wars. Exit barriers within the industry are at a high level as well contrisolelying to the intense rivalry among industry players. Bargaining creator 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 b2 b field of view some buyers can manage procural through agencies that purchase on behalf of groups or organizations to secure competitive set through greater purchasing power.Such complex arrangements can sometimes create long live on times from tendering to delivery and that negatively affects companys financial indicator, for example, bullion flow. Bargaining Power of Suppliers. The squeeze exerted by the suppliers over the firms in the industry is at a low degree. However, the production dish out requires various 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 realised that price of the commodity has been affected by fluctuations in the availability and price of raw materials. In fact, the photographic industry consumes astir(predicate) 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 boxes, bargaining power of suppliers is at a lesser scale. Threat of alternating(a) Products. restless phones, as they increase in power and sophistication, present the biggest challenge to the cheaper end of the market for photographic equipment. However, disrespect 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 link up to digital bureau, same as more and more business are attaind 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 s hrink the worldwide traditional imaging market, but that day is already has come. Kodak flows in a number of different markets, including 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 imbed in accompaniment 1. iv.Introduction of Directional Policy Matrix ( (can be found in appendix 1) v. Apply Directional Policy Matrix to Kodak With detailed military rank factors list in slacken 1, we will find that Kodak has strong competitive strength in its core business of traditional imaging but this industry is approximately 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 port to the digital world. Based on aforementioned factors, we can draw up 2 pie charts in the intercellula r substance faceing the tralatitious imaginativeness market and digital resourcefulness market as well as Kodaks market share (Refer to Figure 1).Consequently, we can draw out the professional 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 increase 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 tardily tacit wherefore 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 for ward questions about allot strategies for different business units and the portfolio as a whole. However, it should be kept in mind that the specialty of this approach guesss on the precise info of a competitive nature between competitors in the market. Moreover, the procurement of the information in depth is not al bearings straightforward. b. Internal Resource Audit Successful strategies depend not only on the analytic thinking 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 man 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, twist 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 head count had make upen to 24,400. In January 2009, it announced the privation of 4,500 more jobs when it posted a quarterly loss. Within these staff, on that point have great majority of excellent experts and skilled technicians as well as experienced marketers, salesmen, accountants and the secretarial assistant 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 similar ity with the old year, digital earnings increased from $72 million to $343 million, while digital revenue grew by $316 million. funds 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 pommel effectuate. 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 set 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 report results and dividends. However in 2008, share value did not rise above $22 and fell downstairs $6 in the fourth quarter.More recently still, share value has go to an all-time low of $3 each. The sale of digital cameras worldwide has move 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 its 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 military rank of its internal resource while the opportunities and threats depend on the assessment of its external environment. SWOT analysis represents an paygrade 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. 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 becau se they have been discussed in above section. In Figure 3 there have a list of the factors for Strengths and flunkes analysis. Apply SWOT analysis to Kodak (can be found in Appendix 2) Conclusion To do 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 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 & gravestone achievement in the markets Kodak operates. The application of SWOT analysis to organization as well as competitors can refer a business its relative position in the market and again direct the firm towards countenance 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 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 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 chemical equilibrium sheet, reducing its debts, and generating more revenue in investable cash. That can happen largely credited to the rising markets that may b ecome 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 luster of hope of interim cash-flow. The key now is to recognise 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 computer 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 drawing card in horizontal axis and the organisations competitive position in vertical axis. By evaluating pertinent factors of these two dimensions we can place appropriate positions for discussed organisation. Traditional Imaging Digital Imaging Industry Attractiveness marketplace Growth slump soaring Supplier military press subal tern Low Customer Pressure heights high school Substitute Products Low High Government Action Constraint Support debut Barriers Low High Competitive Pressure High High Competitive Position Competition High High Relative foodstuff Share High Low Production Capability High strong point query and Development 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 confirmatory effects on the factors are indicated as * .Viewing from each row, we can obtain an overall evaluation of the resources function to a single factor and determine whether this factor is Strength or Weakness to Kodak. Furthermore, when regard 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 & specie Res ource, thus there has suitable cash provided for firms further activities. It also has strength in Reputation and Core Strengths & Key Skill, which send word 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 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 subaltern Strengths but more weakness. The strength in Reputation and Core Strengths & Key Skill recommends that Kodak cont inue fashioning labour 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 with 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 door 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 system Printer and camera docks Online printing services Accessories Inkjet root Picture maker Picture CD Film & processing Single-use cameras Professional products Films food col oring transparence films E-Family Colour negative films Laboratory and duplicating films Black-and-white films Advanced amateur film Papers Professional document 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 oversight 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? $AmHsHh YfOh? $ACJmHo(picsHhYfOh? $ACJmHsHharAharA5? CJmHsHharAharA5? CJ(mHsHharA5? CJ(mHsHFigure 3. SWOT Analysis for Kodak board 1. rating 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/to ols 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 strategic 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 compl ex, 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 strategy, 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 organ isation. 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 Expectations 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 fo r 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 origin al 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 silver-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 digit al 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 true 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 geographical 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 deter 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 t o 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 achieved. 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 pote ntial 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 organizations 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 ove r 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 boxes, 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, including 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 professional 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 2 4,400. 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 came ras 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 its 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 strengths 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 Hum an 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 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 co nsumers 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 recognise 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. 19 93). 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 Development 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 its 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 Dom inance * 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 with 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 K odak 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 products 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 ma nagement 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