Kodak and Fujifilm Companies (Essay Sample)

BUSINESS MANAGEMENT AND MARKETING: KODAK AND FUJIFILM COMPANIES
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Kodak and Fujifilm companies have responded to challenges they have faced from transformation and the evolution of new technology which has threatened their traditional management styles for them to be successful. The digital photography is the new technology in photography industry that has seen Kodak go through a transition phase in 1980s. Given that it was Kodak company that developed many components of digital technology, t he company did not embrace its invention seriously and this paved the way for its rival in the industry Fujifilm to penetrate the market rapidly hence affecting Kodak business greatly. This paper will examine the business model that these companies have embraced to continue operating in the photography industry.
Eastman Kodak Company was fully established in 1888 that saw it becoming a household name in photography industry after it replaced the glass photographic plates with a roll of film that became successful. After Kodak invented its film, the company adopted its guiding principle of mass production at low cost, in addition to international distribution that focused on customers through its continued research. The success of Kodak company was increasingly enhanced by the advent of color technology that made Kodak t he industry standard in 1963. There were increased revenues for the company emanating from increased product lines and introduction of new products in the market (Finnerty, 2000). Kodak Company was able to capture majority of the US film and camera market because the company had the knowledge and processes for success. The company had a distinctive competency over its competitors given that its scale and operation of its business enable it to attain considerable growth for over 90 year back then.
Eastman Kodak experienced problems with respect to its market share, revenue and explosion of technology during the period of 1980s that threatened its survival in the industry. Kodak experienced decline in sales attributed to the fierce competition from Fujifilm as Kodak had reluctantly developed the digital technology that saw its demise in the industry. Fujifilm competed head to head with Kodak becoming its main rival worldwide. Kodak Company held the largest market share in the US while Fujifilm held the largest market in Japan. It was not possible for Kodak to penetrate the Japanese market as it argued there were strict government regulations to do business making the company unable to imp rove its stock value that would make sufficient returns to shareholders. Kodak share pr ices thus began to plummet while Fujifilm share started to grow sustainably thereby gaining a market share of 17% in the US market and Kodak market fell by 10%. Kodak underestimated Fujifilm in the US market that cost it greatly on its market share. Through the persistent battle of the two companies, Kodak suffered dearly from digital technology because the company failled to develop a workable succession plan paralyzing its future success.
Fujifilm was founde in 1934 in japan and gained entrance to the US market in 1964 as a supplioer of lebel film forming a subsidiary in 1965. From the beging of fujifilm inception, its focus was aimed at offering quality and innovative products to US consumers. Fujifilm had developed a new home movie system , but kodak on the other hand introduced a system that could not use fujifilm format. This is what made fujifilm to shelve plans of introducing new products to the US maket and made a strategic approach of following kodak lead to avoid attracting attention to kodak for retaliation(Yuzawa, 2012). The focus of fujifilm was to adapt strategies that gaine shares of the weak US market rather than competing with kodak for new product development. Fujifilm was underestimated by kodak in the US market during its initial years of entry that ended up making fujifilm as the main rival in the film market. Fujifilm was able to build a 10% market share that hit 17% over the next period of five years. Fujifilm Company intensified its efforts to gain the US market share by establishing a plant that significantly brought down prices. Fujifilm became the second largest in photographic film and paper after Kodak in the 1990s, challenging Kodak dominance in the industry.
Kodak company had overcome many pressure during its long history for its business to survive, as it was able to convert it as one of the most recognizable brand in the film industry in the US, but entrance of its main rival Fujifilm led to the firm struggling to maintain its market share. Fujifilm attained a significant market share on entry to the US market given that it was able to offer quality products at a lower price to consumers than Kodak Company. This was a big problem since Kodak was not able to edge its competition and get part of its market share because the rising competition on photographic products made Kodak to cut in revenue so as to lower prices and remain competitive.
While Kodak Company was suffering, its rival Fujifilm was thriving despite the fact that they had more in common. The two companies benefit from near monopoly in their parent countries markets. The determination of Kodak was to keep Fujifilm’s products off the US market, but nevertheless, Kodak traditional business rendered it obsolete. Kodak was unsuccessful to adapt adequately, while Fujifilm was transforming itself towards a successful business (Finnerty, 2000). Kodak culture, which was a complacent monopolist based on traditional management led to its failure (Gavetti, Henderson, & Giorgi, 2005). Kodak adapted slow decision making because it perceived its products were perfect, and its policy was focused on outsourcing, which did not add value on its products. The management was not able to interpret on the current market situations and emerging markets thereby concentrating the company’s operations in the US due to inconsistency among leaders regarding the firm’s strategy.
Fujifilm conversely, succeeded due to diversification of its products, and development and adaption of new technology. Fujifilm offered equity to its managers in new venture they entered that made it a success for the company to manage new ventures and acquisitions. Fujifilm focused on developing products that conformed to consumers since the products were consumer oriented. Employees Compensation was based on time unlike Kodak that had to change its compensation from time when the level of the company’s performance was completed. The performance evaluation enhanced Fujifilm to gain substantial market share in the US while maintaining its Japan market, thereby impacting adversely the operation of Kodak Company ( The Economist, 2012). Kodak developed products that were targeted on the high priced products in its effort to change its organizational structure for improvements. These products were only used in professional markets, but Fujifilm concentrated on the consumer market and accordingly, while Kodak was losing cash Fujifilm was making cash in the market.
Kodak realization of how Fujifilm was providing low priced products, the former charged the later with dumping in the US market in an effort to see Fujifilm practices sanctioned, but the domination of the market by the two firms did not make the US government sanction Fujifilm. Kodak wanted to obtain significant power in the US market and was ethically using the government to restrain its competitor in the US market. Fujifilm prevailed in the market due to its increased penetration as a result of its low priced products, and hence, Fujifilm increased social welfare led to Kodak monopoly power decrease.
Fujifilm continued to advertise its products as well as developing new products that conformed to consumer preferences. This made Fujifilm products to be perceived as perfect by consumers as they appealed to potential consumers. Conversely, Kodak did not have the ability to design appealing products, and their failure of continued promotion of their products that resulted to their demise in the market. Lack of promotion made Kodak long history brand diminish f...