EASTMAN KODAK'S QUEST FOR A DIGITAL FUTURE

A Case Study
Presented to the

Faculty of the Graduate School of Business Management

Philippine Christian University

In Partial Fulfillment

of the Requirements for the Degree

Master of Business Administration

Strategic Management II

Jenine S. Gata
Emylou M. Guterres
Filipe A. Guterres
Kimberly L. Mejia
Jennifer B. Pangsiw
Bong Zaraspe
 Eastman Kodak's Quest for a Digital Future

CASE STUDY BACKGROUND

The case study "Eastman Kodak’s Quest for a Digital Future" provides a detailed examination of one of the most iconic companies in the history of photography and its struggle to adapt to the
digital age. Eastman Kodak Company, founded by George Eastman in 1888, was synonymous with photography for over a century. Kodak revolutionized the industry by introducing the first
flexible roll film, making photography more accessible to the public with its slogan, "You Press the Button, We Do the Rest."
In 1901, the Eastman Kodak Company was established in Rochester, New York, offering a comprehensive range of products and services for amateur photographers. Their famous slogan, "You
push the button, we do the rest," epitomized their commitment to simplicity and accessibility in photography. By the time of Eastman's death in 1932, Eastman Kodak had become one of the
world's leading multinational corporations, with a global presence in production, distribution, and processing facilities, and boasting one of the most recognizable brand names in the world.
Following World War II, Kodak entered a new phase of growth, expanding its core business and diversifying into new sectors. Its subsidiary, Eastman Chemical, capitalized on polymer
technology, while Eastman Pharmaceutical was established in 1986, marking Kodak's entry into the healthcare industry. However, despite its successes, Kodak also faced significant competitive
challenges.
For decades, Kodak enjoyed unrivaled success, dominating the market for photographic film, cameras, and related services. However, the advent of digital photography in the late 20th century
brought about a seismic shift in the industry landscape. Digital cameras offered instant viewing, editing capabilities, and the ability to store images electronically, posing a significant threat to
Kodak's traditional film-based business model.
Despite being an early pioneer in digital imaging technologies, Kodak faced numerous challenges in fully embracing the digital revolution. The company encountered internal resistance to
change, as many within Kodak's ranks were deeply entrenched in the culture and practices of traditional photography. Moreover, Kodak initially underestimated the speed at which digital
photography would disrupt its core business.
In the camera market, Kodak's leadership was challenged by the rapid rise of the Japanese camera industry, which introduced innovative products and captured market share. Additionally, Fuji
Photo Film Company emerged as a formidable competitor in the film industry, pursuing aggressive international expansion strategies.
As digital photography gained traction, Kodak found itself facing intense competition from both traditional rivals like Canon and Nikon, as well as new entrants such as Sony. Additionally, the
rapid proliferation of smartphones equipped with increasingly sophisticated built-in cameras presented a formidable challenge to Kodak's camera sales and photo printing services.
In response to these challenges, Kodak embarked on a series of strategic initiatives aimed at transitioning its business model to focus on digital imaging and printing. These efforts included
investments in digital cameras, inkjet printers, and online photo-sharing platforms. Kodak also sought to leverage its extensive patent portfolio in digital imaging technologies to generate
revenue.
Despite some successes, including the introduction of the Kodak EasyShare system and advancements in digital printing technology, Kodak struggled to maintain its market position and
profitability. The company faced mounting financial pressures, driven by high operating costs, pricing pressures, and difficulty in monetizing its digital assets.
Ultimately, Kodak's inability to adapt effectively to the digital revolution proved to be its downfall. In 2012, after years of declining fortunes, Kodak filed for bankruptcy protection, marking a
significant turning point in its storied history.
The case study "Eastman Kodak’s Quest for a Digital Future" serves as a cautionary tale for companies facing disruptive technological change. It underscores the importance of agility,
innovation, and strategic foresight in navigating the challenges of digital transformation. By examining Kodak's struggles and missteps, the case study offers valuable insights into the broader
implications of technological disruption and the imperative for businesses to evolve to survive and thrive in a rapidly changing world.

1. ENVIRONMENT ANALYSIS

A. GENERAL ENVIRONMENT
A.1 OPPORTUNITIES
A.1.1. SOCIO-CULTURAL-DEMOGRAPHIC FORCES- Stable social trends ensure consistent consumer preferences.
A.1.2. TECHNOLOGICAL FORCES- A stable rate of technological change allows for efficient planning of R&D investments.
A.1.3. ECONOMIC FORCES- Stable exchange rates are vital for Kodak’s international operations, affecting pricing and profitability.
A.1.4. ENVIRONMENTAL FORCES – Consistent availability of raw materials ensures smooth manufacturing operations. Stability in regulations related to intellectual property,
data privacy, and environmental standards ensures smooth operations
A.1.5. POLITICO-LEGAL FORCES- Consistent government policies on trade, taxation, and innovation help create a predictable environment

A.2 THREATS
A.2.1. SOCIO-CULTURAL-DEMOGRAPHIC FORCES-
A.2.2. TECHNOLOGICAL FORCES-
A.2.3. ECONOMIC FORCES - Economic ups and downs affect how much people spend on photography
A.2.4. ENVIRONMENTAL FORCES
A.2.5. POLITICO-LEGAL FORCES- Unfair competition practices or monopolistic behavior could lead to legal repercussions.

B. OPERATING ENVIRONMENT
B.1 OPPORTUNITIES
B.1.1. RIVALRY AMONG COMPETING FIRMS-

B.1.2. POTENTIAL ENTRANTS

 B.1.3. SUBSTITUTE PRODUCTS-

B.1.4. BARGAINING POWER OF SUPPLIERS-

B.1.5. BARGAINING POWER OF BUYERS
B.1.6. INDUSTRY GROWTH -
B.1.7. SHAREHOLDERS’ ACTIONS
B.1.8. CREDITORS’ ACTIONS
B.1.9. COMMUNITY PERCEPTIONS-

B.2 THREATS
B.2.1. RIVALRY AMONG COMPETING FIRMS- Competing firms also have a diverse product line

B.2.2. POTENTIAL ENTRANTS- Companies are offering products and services in the international market

B.2.3. SUBSTITUTE PRODUCTS-

B.2.4. BARGAINING POWER OF SUPPLIERS
B.2.5. BARGAINING POWER OF BUYERS
B.2.6. INDUSTRY GROWTH
B.2.7. SHAREHOLDERS’ ACTIONS
B.2.8. CREDITORS’ ACTIONS
B.2.9. COMMUNITY PERCEPTIONS- Rapid changes in consumer preferences

C. INTERNAL ENVIRONMENT
C.1 STRENGTHS
C.1.1. MARKETING- Kodak's diversified marketing strategies cater to both consumer and professional markets, leveraging its brand recognition.
C.1.2. PRODUCTION/OPERATIONS- Kodak's history of innovation, including pioneering silver halide roll film and digital imaging technologies, underscores its technological
prowess.
C.1.3. FINANCE- Despite financial challenges, Kodak maintains strong balance-sheet strength and remains one of the financially strongest firms in the industry.

C.1.4. ORGANIZATION & MANAGEMENT- Leadership's focus on strategic transformation and divestment of non-core businesses reflects commitment to streamlining
operations and enhancing competitiveness. Strategic alliances and joint ventures with industry leaders signify efforts to leverage external expertise and resources.

C.1.5. HUMAN RESOURCES- Kodak's investment in hiring and external knowledge sourcing demonstrates commitment to talent acquisition and innovation.
C.1.6. RESEARCH & DEVELOPMENT - Robust R&D capabilities enable Kodak to innovate and introduce new products, such as online image transfer systems and digital cameras.
 C.1.7. INFORMATION SYSTEMS - Development and maintenance of online systems for customer’s easy access to online prints

C.2 WEAKNESSES
C.2.1. MARKETING- Declining sales and weakened brand perception amidst rapid technological changes and shifting consumer preferences pose significant challenges. Inability
to adapt swiftly to digital photography trends led to market share erosion and loss of competitive edge.
C.2.2. PRODUCTION/OPERATIONS- Struggles to translate R&D investments into viable digital imaging business models highlight inefficiencies in product development and
market alignment.
C.2.3. FINANCE- Bankruptcy filing and limited financing options constrain Kodak's ability to pursue strategic initiatives and invest in future growth.
C.2.4. ORGANIZATION & MANAGEMENT- Significant operating losses and failed acquisitions highlight management's challenges in navigating industry changes and capitalizing
on growth opportunities.
C.2.5. HUMAN RESOURCES- Downsizing and retrenchment amidst restructuring efforts have led to talent drain and organizational instability.
C.2.6. RESEARCH & DEVELOPMENT- Despite significant R&D efforts, failures to commercialize innovations and capitalize on digital imaging trends have limited growth
opportunities.
C.2.7. INFORMATION SYSTEMS

Additional analysis:
EXTERNAL ENVIRONMENT - Uncontrollable forces outside the organization
GENERAL ENVIRONMENT - affect ALL industries. INDUSTRY ENVIRONMENT - affect companies under a CERTAIN
FACTORS (Ex: Inflation) FACTORS industry (Ex: Bird flu)
(PESTLE TRENDS) (PORTER’S 5 FORCES)
OPPORTUNITIES THREATS OPPORTUNITIES THREATS
 It was a technological leader in  Most observers saw little
megapixel image sensors. likelihood that Kodak would
 It was global leader in retail emerge as a significant player
printing kiosks and digital in the imaging sector.
minilabs.  The new digital value chain
 Eastman Kodak was one of the makes redundant most of
COMPETITIVE world’s leading multinational Kodak’s core competitive
POLITICAL  (CHECK LEGAL FACTORS)  (CHECK LEGAL FACTORS) RIVALRY corporations with production, advantages (its silver halide
distribution, and processing technology and its global
facilities throughout the world network of retail outlets and
and with one of the world’s most processing facilities): most of
recognizable brand names. this digital value chain was
 Kodak launched its Picture already in the hands of
Maker, a self-service kiosk computer hardware and
located in retail stores where software companies.
 customers could edit and print  Kodak was subject to intense
digital images from a variety of competition: as with most
digital inputs, or from digital forms of digital hardware, the
scans of conventional photo dominant forces were many
prints. Picture Maker allowed players, low entry barriers,
customers to edit their images. falling real prices, and
 Kodak would offer an array of commoditization.
services that would allow  In digital cameras, Kodak was
consumers to digitize US market leader for most of
conventional photographs, edit 2004–2010; globally, it ranked
digitized images, and obtain third after Canon and Sony.
printed photographs in a variety
of formats.
 Kodak became the leader in
online photofinishing and online
image storage.
 Kodak was present across the
entire digital value chain.
 Kodak’s distribution presence
was still unrivalled in the
industry.
 In cameras, Kodak’s leadership
was undermined by the rise of
the Japanese camera industry;
in film, Fuji Photo Film
Company embarked on a
strategy of aggressive
international expansion.
 There is a burst of stock-  Adobe Systems dominated
market bubble in technology image-formatting software;
 Kodak is still a market leader as
stocks THREATS OF Hewlett-Packard, Epson, and
compared to existing competition
 Globalization: Access to Canon were leaders in inkjet
ECONOMIC international markets allows
 SUBSTITUTES and new market players due to
printers for home use; and
the brand loyalty it maintained to
businesses to reach a Microsoft dominated PC
its customers.
broader customer base and operating systems.
diversify revenue streams.  Kodak’s Gallery was the market
leader, but it competed with a
host of other online
competitors, including:
Shutterfly, Snapfish,
Walmart.com’s Photo Center,
Fujifilmnet.com, Yahoo Photos,
and Sears.com.
  There are competing
companies such as Nikon,
Canon, Olympus, and Pentax
 Polaroid pioneered instant
photography
 Xerox led the new field of
THREATS OF NEW electrostatic plain-paper
 Rapid changes in consumer  Expensive capital in venturing
SOCIAL 
preferences ENTRANTS into digital imaging business
copying
 digital imaging offered
immediate potential for image
manipulation and
transmission.
 Improvement of service and
product offerings thru
technological advancements
 fast-cycle world of
electronics. BARGAINING POWER  Most consumers as of the late
 Kodak held a significant  Most business can’t cope up with  The case did not mention
TECHNOLOGICAL number of patents related to rapid technological change OF SUPPLIERS anything about the suppliers
2000s still preferred traditional
film rather than digital cameras
photography and imaging. It
could have capitalized on
these assets by licensing or
strategically using them in
the digital imaging market.
 Consumers seek digitization for
editing and emailing their
pictures
 Intellectual Property:
 Despite growing ownership of
innovations through patents,
inkjet printers, a very large
trademarks, and copyrights.
proportion of consumers
 Licensing technology to BARGAINING POWER
 Unfair competition practices or continued to use photo-print
other companies or entering
LEGAL strategic partnerships.
monopolistic behavior could lead to OF CONSUMERS facilities in retail stores. 
legal repercussions.  Kodak developed the QuickTake
Licensing agreements could
camera for Apple: at $75 it was
have generated additional
the cheapest digital camera
revenue and expanded
available in 1994
imarket reach.
 Consumers has diverse
preferences in the use of digital
and traditional photography
 Sustainable Practices:  Resource Scarcity: The
Kodak had the opportunity environmental impact of resource-
ENVIRONMENT to adopt environmentally intensive processes (such as film
 
friendly practices in its development and chemical usage)
 manufacturing processes, posed a threat. As resources
waste management, and became scarcer, Kodak needed to
product design. Embracing adapt to more sustainable
sustainability could have alternatives.
enhanced its brand image  Carbon Footprint: The energy
and attracted consumption associated with digital
environmentally conscious imaging and manufacturing
consumers. processes contributed to Kodak’s
carbon footprint. Failing to address
this could have negative
consequences.

INTERNAL ENVIRONMENT - within the control of the organization

FUNCTIONAL AREAS OF THE INTERNAL ENVIRONMENT
ORGANIZATION STRENGTHS WEAKNESSES
 Kodak to adapt different strategies for the consumer market and for the
professional and commercial markets
 Kodak was the clear leader in self-service digital printing kiosks, with 24,000
installed Kodak Picture Makers in the US and over 55,000 worldwide.
 Kodak offers high-priced digital single reflex lens cameras for professional use
 In 1991, Eastman Kodak was America’s 18th-biggest company by
 Kodak’s incremental strategy was most evident in the consumer market, providing
revenues; by 2011, it had fallen to 334th
an easy pathway for customers to transition to digital photography while exploiting
 the decline that began in 2000 accelerated during the first decade
Kodak’s core brand and distribution strengths.
of the 21st century. By 2004, sales had halved to under 400 million.
 Kodak envisages itself as the mass-market leader in digital imaging, providing
By 2011, sales had fallen to below 100,000.
MARKETING/ SALES security, reliability, and simplicity for customers
 Two decades of decline and wrenching technological changes had
 Kodak’s range of EasyShare digital cameras had carved out a strong position in a
weakened Kodak’s brand
crowded market (by 2005 some 40 companies were offering digital
 demand for printed photographs declined, so this too was a
 cameras).
depreciating asset
 Kodak became the leader in online photofinishing and online image storage.

 Extended product line in Professional, Commercial, and Healthcare Markets
 Through the 1990s, film sales continued to grow in the US, reaching a peak of 800
million rolls in 1999.
 Kodak’s traditional resource strengths had been its brand and its global
distribution presence
 Kodak to adapt to external sourcing of knowledge through hiring, alliances, and
acquisitions
 over the same period its employment had shrunk from 133,200 to
 Kodak launched a major hiring campaign to put in place the executives and
HUMAN RESOURCE technical specialists it needed for its new digital strategy.
17,100
 Retrenchment was accompanied by accelerated job cutting
 During 2000–2005, its research labs in the US, the UK, France, Japan, China, and
Australia had employed more than 5000 engineers and scientists, including more
 than 600 PhDs.

 Eastmans’ key innovations were silver halide roll film and the first fully portable
camera.
 Kodak entered a new growth phase with an expanding core business and
diversification into chemicals (its subsidiary, Eastman Chemical, exploited its
polymer technology) and healthcare (Eastman Pharmaceutical was established in
1986).
 The world’s first megapixel electronic image sensor (1986), followed by a number
of new products for scanning and electronic image capture.
 Computer-assisted image storage and retrieval systems for storing, retrieving, and
editing graphical and microfilm images.
 Data storage products included floppy disks (Verbatim was acquired in 1985) and
14-inch optical disks (1986).
 Plain-paper office copiers (Kodak acquired IBM’s copier business in 1988).
 The Photo CD system (1990) allowed digitized photographic images to be stored
on a compact disk, which could then be viewed and manipulated on a personal
computer.  after billions of dollars of investment in new technologies and new
 Kodak’s first digital camera, the 1.3 megapixel DCS-100, priced at $13,000 launched products, Kodak had failed to build a viable digital imaging
in 1991. business.
PRODUCTIONS  Kodak to adapt an incremental approach to managing the transition to digital  the company had struggled to move away from its traditional long
imaging; and meticulous product development process to embrace the fast-
 Kodak to transform Analogue technology to Digital Technology cycle world of electronics.
 Kodak to transform long design cycle to Rapid prototyping
 Kodak to transform Industrial manufacturing processes to Flexible manufacturing
processes
 Kodak to transform Value based of physical product to value based on solutions
 Kodak to transform mass produced, large-inventories to Just-in-time, just-in-place,
customized
 Kodak to transform high margins, heavy infrastructure to lower margin, lean
organization
 the Kodak I.Lab system offered a digital infrastructure to photofinishers that
digitized every film negative and offered better pictures by fixing common problems
in consumer photographs.
 the first printer which incorporated a camera dock allowing the “one touch simple”
thermal-dye printing direct from a camera.
 Kodak had been issued 16,760 patents.


 R&D has a strong position in innovating and developing new product offerings
 Development of a system that transfers images online; allowed the downloading,
RESEARCH AND DEVELOPMENT organization, editing, and emailing of images and the ordering of online prints.

 Kodak had maintained one of the world’s biggest research efforts in imaging.
 
 Although Kodak’s profits were under pressure for most of the period, its size and
balance-sheet strength meant that it was still one of the financially strongest firms  it had entered bankruptcy in January 2012, Kodak was clearly in a
in the industry. weakened state
 By the end of the first quarter of 2012, Kodak’s financial position was showing some  Kodak would not be able to seek new sources of financing and
FINANCE/ ACCOUNTING improvements: with selling, general and administrative expenses down by $84 would be tightly constrained as to any strategic initiatives that
million and investment in unprofitable businesses cut, Kodak’s cash balance was required significant capital expenditure.
$1.4 billion, up $500 million from the end of 2011 

 During 2000–2011 its operating losses totaled $5.2 billion.
 Fisher has a strong background in R&D and strategic transformation
 Kodak’s acquisitions of Chinese photographic film producers were
 divest Eastman Chemical Company and most of Kodak’s healthcare businesses
based on the assumption that sales of roll film would continue to
(other than medical imaging) and to create a single digital imaging division
ORGANIZATION/ MANAGEMENT  Kodak forged a web of joint ventures and strategic alliances with industry leaders
increase into the 21st century
 During 2011–2012, it sought to sell its patents in order to raise
in software and hardware development
capital.


 Development and maintenance of online systems for customer’s easy access to
IT/ INFORMATION SYSTEMS online prints

D. EXTERNAL FACTOR EVALUATION MATRIX
E. INTERNAL FACTOR EVALUATION MATRIX
F. COMPETITIVE PROFILE MATRIX
G. ASSUMPTIONS
G.1. GENERAL ENVIRONMENT STABILITY
G.2. INDUSTRY GROWTH PROSPECTS
G.3. COMPANY’S COMPETITIVE POSITION
D. EXTERNAL FACTOR EVALUATION MATRIX
WEIGHTED
KEY EXTERNAL FACTORS WEIGHT RATING RATING VALUES
SCORE
OPPORTUNITIES (GENERAL AND INDUSTRY ENVIRONMENT)
1 There is a burst of stock-market bubble in technology stocks 0.09 2 0.18
2 Consumers seek digitization for editing and emailing their pictures 0.2 4 0.8 4 SUPERIOR RESPONSE
3 ABOVE AVE RESPONSE
Improvement of service and product offerings thru technological advancements fast-cycle 0.2 4 0.8
3 2 AVE RESPONSE
world of electronics 1 POOR RESPONSE
4 Consumers has diverse preferences in the use of digital and traditional products/ services 0.09 2 0.18
0
THREATS (GENERAL AND INDUSTRY ENVIRONMENT)
1 Rapid changes in consumer preferences 0.09 4 0.36 OVERALL RATING:
2 Obsolete Technology 0.1 4 0.4 >2.5 HIGH RESPONSE
3 Most of its competition is offering products and services in the international market 0.09 2 0.18 2.5 MEDIUM RESPONSE
4 Competing firms also have a diverse product line 0.09 1 0.09 <2.5 LOW RESPONSE
0
TOTAL WEIGHTED SCORE 1.0 3.0 HIGH RESPONSE
CONCLUSION:

The company’s overall rating is 3.00 which

should be
is above average or high response.
equal to
1.0 only It indicates that Kodak is responding in a
remarkable way in confronting
opportunities and threats in the industry.
E. INTERNAL FACTOR EVALUATION MATRIX
WEIGHTED
KEY INTERNAL FACTORS WEIGHT RATING RATING VALUES
SCORE
STRENGTHS
1 kodak to adapt different strategies for the consumer market and for the professional and commercial markets 0.1 4 0.4

Kodak envisages itself as the mass-market leader in digital imaging, providing security, reliability, and simplicity for 0.05 4 0.2 4 MAJOR STRENGTH
2 3 MINOR STRENGTH
customers
2 MINOR WEAKNESS
3 Kodak has a strong pool of employee with diversed expertise, skills, and professional profiles 0.1 3 0.3
1 MAJOR WEAKNESS
Kodak has a has a strong position in innovating and developing new product offerings because it has maintained to be 0.2 4 0.8
4 one of the world’s biggest research efforts in imaging.

WEAKNESSES
1 Two decades of decline and wrenching technological changes had weakened Kodak’s brand 0.1 2 0.2
OVERALL RATING:
2 There is a decline in the demand of printed photographs 0.15 1 0.15
>2.5 HIGH INTERNAL POSITION
2.5 AVERAGE INTERNAL
Kodak would not be able to seek new sources of financing and would be tightly constrained as to any strategic 0.1 POSITION
3 0.1 1 <2.5 WEAK INTERNAL
initiatives that required significant capital expenditure
POSITION
The company had struggled to move away from its traditional long and meticulous product development process to 0.45
4 0.15 3
embrace the fast-cycle world of electronics.
TOTAL WEIGHTED SCORE 1.0 2.6 HIGH INTERNAL POSITION

CONCLUSION:
should With the company's overall
be equal rating of 2.60, it can be
to 1.0 inferred that Kodak has a
only strong internal position and
capabilities.
F. COMPETITIVE PROFILE MATRIX

KODAK CANON SONY NIKON

CRITICAL SUCCESS FACTORS WEIGHT
RATING WEIGHTED SCORE RATING WEIGHTED SCORE RATING WEIGHTED SCORE RATING WEIGHTED SCORE

1 Innovation 0.25 3 0.75 4 1.00 4 1.00 4 1.00

2 Market Share 0.2 2 0.40 4 0.80 4 0.80 4 0.80
3 Technological Capability 0.2 3 0.60 4 0.80 4 0.80 4 0.80
4 Adaptability to Market Trends 0.15 2 0.30 4 0.60 4 0.60 3 0.45
5 Brand Strength 0.2 4 0.80 4 0.80 4 0.80 3 0.60
TOTAL WEIGHTED SCORE 1.0 2.85 4.00 4.00 3.65

Rating Values: 4 = major strength, 3 = minor strength 2 = minor weakness, 1 = major weakness

Analysis:
1. Innovation: Kodak scores well due to its historical contributions to photography, but it is outpaced by Canon, Sony, and Nikon, which continuously push the
boundaries of digital imaging.
2. Market Share: Kodak's market share has eroded due to its slower transition to digital, while Canon, Sony, and Nikon have strengthened their positions.
3. Technological Capability: Kodak has a robust portfolio of patents and technological achievements but lags in implementing cutting-edge digital technologies
compared to its competitors.
4. Adaptability to Market Trends: Kodak struggled to adapt to the rapid shift from analog to digital, impacting its competitiveness. Canon, Sony, and Nikon have been
more agile and responsive to market changes.
5. Brand Strength: Kodak maintains a strong brand recognition and legacy, comparable to Canon, Sony, and Nikon, which helps in sustaining customer loyalty and brand
value.

Conclusion:
Kodak's CPM score of 2.85 reflects its competitive challenges compared to Canon and Sony, both scoring 4.00, and Nikon at 3.85. The analysis highlights the need for
Kodak to enhance its innovation, technological capabilities, and market adaptability to regain a strong competitive position. While Kodak's brand strength remains an
asset, the company must focus on leveraging this strength to drive growth and innovation in the digital era.
 G. ASSUMPTIONS
In analyzing Eastman Kodak's competitive position using a Competitive Profile Matrix (CPM), we make several key assumptions. Firstly, we assume that Kodak still holds a significant
share in the digital imaging industry despite facing increased competition. Secondly, we believe that Kodak's brand is still recognized and trusted by consumers. Financially, we
assume Kodak has stabilized after past difficulties and can invest in its future. Kodak's commitment to innovation is also assumed to continue, helping it stay relevant in a fast-
changing market.

Kodak's marketing efforts are presumed to be effective in communicating its value to consumers, while its production processes are assumed to be efficient, ensuring timely
delivery of quality products. Supply chain management is assumed to be well-handled, securing necessary materials for manufacturing. Kodak is also assumed to attract and retain
top talent, driving innovation. Strategic partnerships are seen as crucial for Kodak's expansion, and regulatory compliance is presumed to be a priority. These assumptions guide
our evaluation of Kodak's competitive position and help shape strategic decisions moving forward.

G.1. GENERAL ENVIRONMENT STABILITY

General Environment Stability for Eastman Kodak When analyzing the stability of the general environment for Kodak, we need to consider broader factors that impact the industry.
This involves looking at Socio-Cultural-Demographic, Technological, Economic, Environmental, Politico-Legal “STEEP” forces. Stability in these areas provides a supportive
environment for Kodak's operations, while instability can create challenges.

Socio-Cultural-Demographic Factors:

 Stable social trends ensure consistent consumer preferences, aiding Kodak in aligning its product offerings with market demand.
 Kodak benefits from demographic stability, enabling targeted marketing strategies and product development tailored to specific consumer segments.

Technological Stability:

 Rate of Change: A stable rate of technological change allows for efficient planning of R&D investments.
 A stable technological environment allows Kodak to plan its research and development initiatives effectively, ensuring alignment with industry advancements.
 Infrastructure: consistency in digital infrastructure development supports Kodak's online platforms and digital services, enhancing its competitive edge in the market.
Economic Stability:

 Economic Growth: Stable economic growth ensures consumer spending power, critical for demand in the imaging industry.
 Inflation and Interest Rates: Low and stable inflation and interest rates help maintain operational costs and investment plans.
 Currency Stability: Stable exchange rates are vital for Kodak’s international operations, affecting pricing and profitability.

Environmental Stability:

 Sustainability Trends: Stability in environmental policies allows Kodak to develop long-term strategies for eco-friendly products.
 Resource Availability: Consistent availability of raw materials ensures smooth manufacturing operations.

Politico-Legal Factors:

 Stable Policies: Consistent government policies on trade, taxation, and innovation help create a predictable environment.
 Trade Agreements: International stability and trade agreements facilitate Kodak's global market presence, supporting its expansion efforts and revenue diversification.
 In conclusion, stability across these STEEP factors is integral to Eastman Kodak's operational resilience and strategic planning. By navigating a stable operating environment,
Kodak can effectively capitalize on market opportunities, mitigate risks, and sustain its competitive position in the digital imaging industry.
 Government Support: Subsidies and support for innovation can boost Kodak’s R&D efforts.
 Regulatory Environment: Stability in regulations related to intellectual property, data privacy, and environmental standards ensures smooth operations.
 Compliance: Consistent compliance requirements help maintain operational processes without legal disruptions.

Conclusion

In conclusion, stability across these STEEP factors is integral to Eastman Kodak's operational resilience and strategic planning. By navigating a stable operating environment, Kodak
can effectively capitalize on market opportunities, mitigate risks, and sustain its competitive position in the digital imaging industry.
 G.2. INDUSTRY GROWTH PROSPECTS

To understand Kodak's growth potential, let's look at the industry and competition using Porter's Five Forces and other important factors:

Porter's Five Forces Analysis

 Competition: There's tough competition in digital imaging. Kodak needs to stand out with unique products and a strong brand.
 New Entrants: It's relatively easy for new companies to enter the market. Kodak's brand helps, but it must keep innovating.
 Substitutes: Smartphone cameras are a big threat. Kodak needs to offer something smartphones can't match.
 Supplier Power: Kodak has some power over suppliers, but it needs good relationships to keep costs down.
 Buyer Power: Consumers have lots of choices and want value for money. Kodak must meet their expectations.

Additional Factors

 Technology: Kodak must keep up with new tech to stay competitive.

 Economy: Economic ups and downs affect how much people spend on photography. Kodak should target growing markets.
 Consumer Preferences: People want personalized and digital products. Kodak should adapt its offerings.
 Legal and Environmental: Kodak must protect its patents and follow environmental regulations.
 Strategy Recommendations: Invest in innovation, expand into new markets, improve customer experiences, partner strategically, and prioritize sustainability.

Conclusion

Kodak can grow by staying ahead in technology, targeting emerging markets, meeting customer needs, protecting its patents, and being environmentally responsible.

G.3. COMPANY’S COMPETITIVE POSITION

Eastman Kodak has distinct strengths and weaknesses across various functional areas of the organization, which determine its competitive position in the market.

Marketing/Sales

Strengths:
 Kodak's diversified marketing strategies cater to both consumer and professional markets, leveraging its brand recognition.
 Leadership in self-service digital printing kiosks and online photofinishing services establishes Kodak as an industry frontrunner.
  Extensive product line spanning consumer, professional, commercial, and healthcare markets enhance market penetration and revenue streams.

Weaknesses:
 Declining sales and weakened brand perception amidst rapid technological changes and shifting consumer preferences pose significant challenges.
 Inability to adapt swiftly to digital photography trends led to market share erosion and loss of competitive edge.

Human Resource

Strengths:
 Kodak's investment in hiring and external knowledge sourcing demonstrates commitment to talent acquisition and innovation.
 Strong research team with a global presence and diverse expertise facilitates product development and technological innovation.
Weaknesses:
 Downsizing and retrenchment amidst restructuring efforts have led to talent drain and organizational instability.

Production

Strengths:
 Kodak's history of innovation, including pioneering silver halide roll film and digital imaging technologies, underscores its technological prowess.
 Transition to digital technology and flexible manufacturing processes signifies adaptability and readiness to embrace industry shifts.
Weaknesses:
 Struggles to translate R&D investments into viable digital imaging business models highlight inefficiencies in product development and market alignment.
Research and Development

Strengths:
 Robust R&D capabilities enable Kodak to innovate and introduce new products, such as online image transfer systems and digital cameras.
 Extensive patent portfolio underscores Kodak's commitment to technological advancement and intellectual property protection.
Weaknesses:
 Despite significant R&D efforts, failures to commercialize innovations and capitalize on digital imaging trends have limited growth opportunities.

Finance/Accounting

Strengths:
 Despite financial challenges, Kodak maintains strong balance-sheet strength and remains one of the financially strongest firms in the industry.
  Strategic cost-cutting measures and improved cash balance demonstrate efforts to stabilize financial position amidst industry disruptions.
Weaknesses:
 Bankruptcy filing and limited financing options constrain Kodak's ability to pursue strategic initiatives and invest in future growth.

Organization/Management

Strengths:
 Leadership's focus on strategic transformation and divestment of non-core businesses reflects commitment to streamlining operations and enhancing competitiveness.
 Strategic alliances and joint ventures with industry leaders signify efforts to leverage external expertise and resources.
Weaknesses:
 Significant operating losses and failed acquisitions highlight management's challenges in navigating industry changes and capitalizing on growth opportunities.

In summary, Eastman Kodak faces significant challenges in navigating the evolving imaging industry landscape but retains strengths in brand recognition, diversified product
offerings, and technological capabilities. Strategic restructuring and innovation are crucial for Kodak to regain market leadership and secure its competitive position in the digital
era.
2. PROBLEM STATEMENT
The major problem of the Kodak is sustainability as the evidence of the following weaknesses.
 Two decades of decline and wrenching technological changes had weakened Kodak’s brand.
 There is a decline in the demand of printed photographs.
 Kodak would not be able to seek new sources of financing and would be tightly constrained as to any strategic initiatives that required significant
capital expenditure.
 The company had struggled to move away from its traditional long and meticulous product development process to embrace the fast-cycle world
of electronics.

3. ALTERNATIVE COURSES OF ACTION

A. TOWS MATRIX
STRENGTHS WEAKNESSES
1.Kodak to adapt different strategies for the consumer market 1. Two decades of decline and wrenching technological changes had
and for the professional and commercial markets weakened Kodak’s brand
2. Kodak envisages itself as the mass-market leader in digital 2. There is a decline in the demand of printed photographs
imaging, providing security, reliability, and simplicity for 3. Kodak would not be able to seek new sources of financing and would be
customers tightly constrained as to any strategic initiatives that required significant capital
3. Kodak has a strong pool of employee with diversed expenditure
expertise, skills, and professional profiles 4. The company had struggled to move away from its traditional long and
4.Kodak has a strong position in innovating and developing new meticulous product development process to embrace the fast-cycle world of
product offerings because it has maintained to be one of the electronics.
world’s biggest research efforts in imaging.
 OPPORTUNITIES SO Strategies (Strengths-Opportunities) WO Strategies (Weaknesses-Opportunities)
1. Consumers seek digitalization for editing 1. Leverage diverse expertise (S3) to
and emailing their pictures 1. Leverage the growing demand for digitalization (O1)
2. Consumers has diverse preference in the
develop innovative digital imaging
use of digital and traditional photography products (O1) and services tailored to to rebuild the weakened Kodak brand (W1).
3. Improvement of service and product different market segments (O2). 2. Accelerate product development processes (W4) to
offerings through technological 2. Utilize strong brand image and adapt to the fast-paced digital market(O3).
advancements fast cycle world of electronics customer loyalty (S2) to position Kodak 3. Focus on user experience design (W4) to cater to
4. There is a burst of stock-market bubble diverse customer preferences (O2).
in technology stocks
as the leading provider of secure,
reliable, and simple digital imaging
solutions. (02)
3. Capitalize on the growing demand for
digitalization (01) by offering a
comprehensive range of digital imaging
products and services(S4).
THREATS ST Strategies (Strengths-Threats) WT Strategies (Weaknesses-Threats):
1. Rapid changes in consumer preferences
2. Companies is offering products and services in the
international market 1. Embrace faster product development 1. Diversify product offerings (W4) to mitigate
3. Competing firms also have a diverse product line (S4) to counter rapid consumer changes competition (T3, T4).
4. Unfair competition practices or monopolistic
(T1). 2. Improve brand image (W1) to address intense
behaviour could lead to legal repercussions
2. Invest in R&D (S4) to compete with competition (T2).
established players (T3).
3. Leverage brand strength (S1) to counter
threats from intense competition (T2).
TOWS MATRIX- summary
STRENGTHS WEAKNESSES
1.Kodak to adapt different strategies for the consumer market 1. Two decades of decline and wrenching technological changes
and for the professional and commercial markets had weakened Kodak’s brand
2. Kodak envisages itself as the mass-market leader in digital 2. There is a decline in the demand of printed photographs
imaging, providing security, reliability, and simplicity for 3. Kodak would not be able to seek new sources of financing
customers and would be tightly constrained as to any strategic initiatives that
3. Kodak has a strong pool of employee with diversed required significant capital expenditure
expertise, skills, and professional profiles
4.Kodak has a strong position in innovating and developing new
product offerings because it has maintained to be one of the 4. The company had struggled to move away from its traditional
world’s biggest research efforts in imaging. long and meticulous product development process to embrace the
fast-cycle world of electronics.

OPPORTUNITIES
1. Consumers seek digitalization for editing and
emailing their pictures PRODUCT DEVELOPMENT
2. Consumers has diverse preference in the use
PRODUCT DEVELOPMENT
of digital and traditional photography (O1, O4, S4 ,O2) (O1,W1,W4,O3,02)
3. Improvement of service and product
offerings through technological advancements MARKET DEVELOPMENT
fast cycle world of electronics (S2, O2)
4. There is a burst of stock-market bubble in
technology stocks
THREATS
1. Rapid changes in consumer preferences
2. Companies is offering products and services in the
international market PRODUCT DEVELOPMENT PRODUCT DEVELOPMENT
3. Competing firms also have a diverse product line (S4, T1, T3, T2) (T3,T4,W1.T2)
4. Unfair competition practices or monopolistic
behaviour could lead to legal repercussions
B. INTERNAL-EXTERNAL MATRIX
EFE = 3.0 IFE TOTAL WEIGHTED SCORE
IFE= 2.6

Strong Average Weak

(3.0 – 4.0) (2.0 – 2.99) (1.0 – 1.99)

EFE High I II III

TOTAL WEIGHTED (3.0 – 4.0)
SCORE

Medium IV V VI
(2.0 – 2.99)

Low VII VIII IX

(1.0 – 1.99)
C. GRAND STRATEGY MATRIX

QUADRANT II QUADRANT I
RAPID MARKET GROWTH
1. Market development
2. Market penetration 1. Market development
3. Product development 2. Market penetration
3. Product development
4. Horizontal integration
5. Divestiture 4. Forward integration
5. Backward integration
6. Liquidation
6. Horizontal integration
7. Concentric diversification

WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION 1. Retrenchment 1. Concentric diversification POSITION
2. Concentric diversification 2. Horizontal diversification
3. Horizontal diversification 3. Conglomerate diversification
4. Conglomerate diversification 4. Joint venture
5. Divestiture
6. Liquidation

QUADRANT III QUADRANT IV

SLOW MARKET GROWTH

D. SUMMARY OF STRATEGIES
4. RECOMMENDED ALTERNATIVE AND ACTION PLAN

A. QUANTITATIVE STRATEGIC PLANNING MATRIX

MARKET MARKET PRODUCT

PENETRATION DEVELOPMENT DEVELOPMENT
KEY STRATEGIC FACTORS WEIGHT

WEIGHTED WEIGHTED WEIGHTED

RATING RATING RATING
SCORE SCORE SCORE
OPPORTUNITIES

There is a burst of stock-market bubble in technology stocks

0.09 4 0.36 4 0.36 4 0.36
Consumers seek digitization for editing and emailing their pictures
0.09 4 0.36 4 0.36 4 0.36
Improvement of service and product offerings thru technological advancements fast-cycle world of electronics
0.14 4 0.56 3 0.42 4 0.56
Consumers has diverse preferences in the use of digital and traditional products/ services
0.09 4 0.36 4 0.36 4 0.36

THREATS
Rapid changes in consumer preferences 0.15 4 0.6 4 0.6 4 0.6

Unfair competition practices or monopolistic behaviour could lead to legal repercussions

0.15 1 0.15 2 0.3 3 0.45

Most of its competition is offering products and services in the international market
0.15 3 0.45 2 0.3 2 0.3
Competing firms also have a diverse product line 0.14 4 0.56 4 0.56 4 0.56
Subtotal 1 3.04 2.9 3.19
STRENGTHS

Kodak to adapt different strategies for the consumer market and for the professional and commercial markets
0.1 3 0.3 2 0.2 4 0.4

Kodak envisages itself as the mass-market leader in digital imaging, providing security, reliability, and simplicity for customers
0.12 2 0.24 3 0.2 3 0.4
Kodak has a strong pool of employee with diversed expertise, skills, and professional profiles
0.1 2 0.2 1 0.2 3 0.4
Kodak has a has a strong position in innovating and developing new product offerings because it has maintained to be one of the
world’s biggest research efforts in imaging.

0.15 4 0.6 2 0.2 3 0.4

WEAKNESS

Two decades of decline and wrenching technological changes had weakened Kodak’s brand
0.1 4 0.4 4 0.2 4 0.4
There is a decline in the demand of printed photographs 0.15 3 0.45 2 0.2 3 0.4

Kodak would not be able to seek new sources of financing and would be tightly constrained as to any strategic initiatives that required
significant capital expenditure
0.15 4 0.6 4 0.2 4 0.4

The company had struggled to move away from its traditional long and meticulous product development process to embrace the fast-
cycle world of electronics.
0.13 4 0.52 4 0.2 3 0.4
Subtotal 1 3.31 1.6 3.2

OVERALL SCORE 6.35 4.5 7.18

RECOMMENDATION
WITH THE HIGHEST SCORE OF 7.18, IT IS RECOMMENDED TO
PRIORITIZE PRODUCT DEVELOPMENT TO FURTHER ACHIEVE THE
TARGET GOALS OF KODAK IN THE INDUSTRY
 B. ACTION PLAN MATRIX

TIME
FUNCTIONAL AREA OBJECTIVE STRATEGIES BUDGET for 5 years
FRAME
Embracing marketing
To adapt different localization to better
strategies for the understand and adapt
consumer, professional different marketing
Marketing and commercials strategies for its 5 years $ (5,000,000.00)
markets competitors,
(Targets for 10% consumers,
increase) commercials, and the
professionals
To create and produce
Purchase machineries
the new
and materials for the
product/services based
production of the new
on the results from the
product or services
R&D Department
To embrace on faster
Production/Operation 5 years $ (300,000,000.00)
product development
Purchase machineries
to be able to counter
that provide faster
rapid consumer
development of
changes
product
(Targets for 10%
increase)
To seek new sources of Will sell its patent to be
funds for the able to fund new
Finance 5 years $ 500,000,000.00
development and projects and
innovation of new machineries
 products Grab the benefits of
(Targets for 15% the Chapter 11 (U.S.
increase) Bankruptcy Code); that
allows a company to
reorganize its financial
affairs under the
supervision of a
bankruptcy court. The
primary goal is to
restructure the
company's debts and
operations, allowing it
to continue operating
as a going concern
rather than liquidating
its assets. (Chapter 11
shielded Kodak from
creditors, allowing it to
cut costs and improve
cash flow. This is
evident in the $84
million reduction in
selling, general, and
administrative
expenses and the $500
million increase in cash
balance by Q1 2012.)
Conduct a
To create a plan that
comprehensive
will focus on recovery
assessment/reasearch
of Kodak and leverage
Organization and about the digital
from its brand 5 years $ (2,500,000.00)
Management imaging
leadership
Inform R&D with plans
(Targets for 10%
to develop innovative
increase)
digital products
 Conduct a
comprehensive
assessment about the
brand and its
advantage to its
competitor
Leverage existing brand
credibility through
marketing
Revisit and study the
employee's skills and
To allocate staff based performance records
on their expertise Reposition the staff
Human Resources 5 years $ (3,500,000.00)
(Targets for 10% based on their
increase) expertise and the
needs of the new
products or services
Conduct Market
Kodak will utilize its
Research that focuses
strong research
on the digital imaging
capabilities to develop
as well as the digital
innovative digital
industry
products and as well as
Brainstorm for new
to diversifies its
digital products or
products and services
services base on the
Research & offering that fits the
conducted Market 5 years $ (50,000,000.00)
Development current need of the
Research
target market and the
Determine which idea
industry, such as digital
have the most
printing, graphics as
potential to do well in
well as the film
the market or which
industry.
product/sercvices wll
(Targets for 19%
set you apart from your
increase)
competitors
 To develop and
maintain the online
systems for Customer's Enhance the online
Information Systems easy access to online systems thru opening 5 years $ (4,000,000.00)
prints and services more services online
(Targets for 10%
increase)

Total Funds Available $ 500,000,000.00

Less: Utilized funds $ (110,000,000.00)

Remaining Budget $ 390,000,000.00

RnD $ (50,000,000.00)

Other
Expenses $ (15,000,000.00)
C. SALES FORECAST
D. INCOME STATEMENT FORECAST
E. BALANCE SHEET FORECAST
F. CASH FLOWFORECAST AND FINANCIAL RATIOS