Corporate Strategy Analysis: Fujifilm's Strategic Market Adaptation

This report provides a comprehensive analysis of Fujifilm's corporate-level strategy, focusing on its remarkable transformation from a photographic film company to a diversified organization with significant ventures in healthcare, electronics, and cosmetics. The report examines Fujifilm's response to the digital revolution and the decline of the traditional film market, highlighting its strategic adaptation and innovation in research and development. It explores how Fujifilm leveraged its existing resources and competencies to identify and capitalize on emerging business opportunities, particularly in healthcare and cosmetics, and contrasts its approach with Kodak's failure to adapt. The report assesses Fujifilm's portfolio diversification, organizational restructuring, and strategic choices, offering insights into its ability to maintain market leadership while expanding into new and seemingly unrelated industries. The analysis includes a review of Fujifilm's cosmetic and healthcare ventures, emphasizing the application of its core technologies and expertise in these new domains. The report concludes with recommendations based on the analysis and a review of the references and bibliography.

Running head: CORPORATE LEVEL STRATEGY
Corporate Level Strategy
Name of the Student
Name of the University
Author note

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Executive summary
This assignment focused on the analysis of Fujifilm’s approach inside the changing market and
the way they have formulated their stratagem. Most importantly, Fujifilm has been able to
implement a successful strategy that has assisted them in maintaining their leadership in film
photography, all the while establishing supremacy in apparently unusual business areas for a
photo film company. The focus has been on how they have managed innovation and expanded
their research and development to broader applications for creating emerging business
opportunities in industries like healthcare, electronics and cosmetics. The focus has been on the
analysis of the way they have adapted their portfolio, leveraged their resources and
competencies, and have structured the organization through this change.

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Table of Contents
Introduction......................................................................................................................................3
The Initial Situation.........................................................................................................................4
Kodak’s failure................................................................................................................................4
Fujifilm’s portfolio..........................................................................................................................6
Cosmetics focus...............................................................................................................................6
Healthcare focus..............................................................................................................................7
Fujifilm’s approach..........................................................................................................................8
Recommendations............................................................................................................................9
Conclusion.......................................................................................................................................9
References and bibliography.........................................................................................................10
Appendix........................................................................................................................................12

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Introduction
Fujifilm was founded in the year 1934 as the first Japanese producer of photographic
film, headquartered in Tokyo, Japan. The organization was first based as a form of government
plan and with time as it grew so did its technology. All across the years, the company has
branched into both commercial and consumer products that is inclusive of printing, photography,
data storage devices and life science, all the while having a strong hold on their product line that
they are most famous for. In the 1960s, the company was just a regional presence, starting to
broaden its focus internationally and playing a distant catch-up to photographic film leader
Eastman Kodak Co. However, Kodak went on to become bankrupt and Fujifilm overcame the
industry crisis accredited from digitization and is still continuing their growing streak by means
of shifting the attention of the management resources from their traditional business to new
areas. Fujifilm has been able to transform themselves from being a narrow photographic film
supplier to a diversified organization with significant health care and electronic operations
(Fujifilm Global 2017). This assignment would be focusing on the analysis of Fujifilm’s
approach inside the changing market and the way they have formulated their stratagem. Most
importantly, Fujifilm has been able to implement a successful strategy that has assisted them in
maintaining their leadership in film photography, all the while establishing supremacy in
apparently unusual business areas for a photo film company. The focus would be on how they
have managed innovation and expanded their research and development to broader applications
for creating emerging business opportunities in industries like healthcare, electronics and
cosmetics. The focus would also be on the analysis of the way they have adapted their portfolio,
leveraged their resources and competencies, and have structured the organization through this
change.

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The Initial Situation
In the year 2000, the conventional photographic film-related business accounted for
approximately 60% of the operational profit in the whole business of Fujifilm. However, after
that the demand of camera films saw a drop of 90% in the next 10 years as the digital revolution
went on sweeping the world off their feet and ultimately the sales of the photographic film
business fell to 1% of the whole sales of Fujifilm in 2011. All of these happened only just in one
decade. The first digital moment came in 1975 in the photographic film industry when Kodak
found the world’s first digital camera. Incongruously, the technology they presented was the
initial cause of the large market shrink inside the photographic film business beginning from
2000 that eventually led Kodak to bankruptcy (Reuters.com 2017).
The business segments of Fujifilm include information solutions, imaging solutions and
document solutions. In 2000, when the photographic film business was at its peak time, 54% of
their whole sales came from their photographic imaging solutions business (that is inclusive of
analogue film associated business) and the remaining 46% came from information solutions
business, which is inclusive of medical equipment or electronic materials. In the year 2015, the
structure of the business in sales with their three core businesses has seen a large change to
38.3% for information solutions segment, 14.5% inside the imaging solutions category, and
47.3% for document solutions that are majorly operated by the allied company Fuji Xerox
(Inagaki and Osawa 2012).
Kodak’s failure
The main reason behind the failure of Kodak is that the organization acted like a
conventional change resistant Japanese firm at a time when Fujifilm acted like a flexible
American one (Estrin 2015). On closer examination of the transition made by Fujifilm away

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from film brought upon understanding as to how they did it, especially after a lawsuit was filed
by Kodak against the Japanese firm with allegations regarding patent infringement. In this
context, Kodak has been attempting to monetize their R&D in their one core business, which is
photography, as their digital imaging sector is accountable for around one-fifth of Fujifilm’s
revenue, across half a decade ago. The success of Fujifilm can act as a warning for American
firms regarding the danger of attempting to take the easy way out – it should be competition
across one’s marketing instead of just taking the difficult way of new product development and
new businesses. Simultaneously, it also acted as a reminder for the Japanese executive that their
consistent moroseness and defeatism is inappropriate – the organizations of the country are all
properly placed for succeeding provided they are willing to reform their businesses. In the 1980s
itself Fujifilm had a realization that photography would be going digital. Similar to Kodak, there
was a continuation of milking benefits from the films sales, investments in digital technologies
and attempts at diversifying into new areas. As late in the 2000s, Fujifilm was counting on a
smooth 15 or 20-year decline of film – not the simple and sudden free fall that was happening.
Inside one decade itself, the film went from 60% of Fujifilm's profits to actually nothing (Munir
2012).
The realization came to Fujifilm that they required developing in-house expertise in their
new business. In comparison, Kodak was into believing that their core strength lies in branding
and marketing and that they have the option of simply partnering or buying their way inside new
industries like chemicals and drugs. At the time when sales from the film developing segment
and printing was acquired with the help of installation of kiosks for printing digital photos. When
Fujifilm had their own system, but Kodak required needing someone for partnering with their
firms - and therefore sharing the income. Additionally, Fujifilm got the option of applying the

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kiosk technology inside their other business in their digital imaging division, which Kodak could
not as their technology was not owned by them. Fujifilm was able to strike a deal like where to
position their kiosks in Walmart stores, which has given the scale. At present, Fujifilm has
control over more than 49% of the photo finish market in America, even though Kodak has a
share of juts 15$ in accordance with IBISWorld, a research firm (Economist.com 2012).
Fujifilm’s portfolio
Fujifilm has also concentrated on the application of their technologies in different new
areas. Fujifilm has been one of the market leaders in the industry till the early millennium due to
the emergence of the technologies like digital camera and mobile phones. However, the
organization was able to restructure their products and organization which has facilitated the
organization in gaining market share. They had diversified their product portfolio so that they
can compete with Kodak and the other companies in the market (AM Vermeulen et al. 2016).
The new Market segment includes medical diagnosis imaging system and cosmetics, information
solution segment has been one of the market industries which growing at a rapid rate. Fujifilm
was able to capitalize on this market growth an expand their business in this market segment.
The information solution segment consists of products which are used in pharmaceuticals,
medical systems, life sciences, regenerative medicine, industrial products, flat panel display
materials, medical systems, graphic systems and recording media.
Cosmetics focus
The cosmetics category commenced in the year of 2006 which can be considered as the
initiation of the structural reform of the organization. Astalift series belongs to the skin care
product segment and was launched by Fujifilm in the year of 2007 which facilitated the
organization in entering the cosmetic industry. The organization has extended their product line

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to include base makeup along with the skin care series. Astalift has grown to be a global brand
and is still growing in international market segments such as in china, European countries, south-
east Asia, and japan (Hill, Jones and Schilling 2014).
However, it may seem that there is nothing in common between the photographic and the
cosmetic industry. Therefore, the critical evaluation of the process of the industry suggests that
the organization has been looking for similarity in production methods and the components. The
manufacturing of the analog film is quite similar to that of the cosmetics. The thickness of the
photographic films is 0.2mm which is similar to the thickness of hair. The photographic films
require long term stability, functionalities and retention of moisture which shows that the
products are quite similar to the hair products sold in the market (Strong et al. 2014). This unique
way of developing the photographic films and collagen is one of the basic necessity of the
cosmetic industry. Collagen is one of the key constituents of the cosmetic industry and thus the
organization was able to enter the market of the cosmetic industry with their expertise in this
field. Fujifilm launched the medical diagnostic imaging system which of the technology of a
digital camera and is one of the key requirements for the healthcare industry. This was the
industry which Fujifilm could capitalize on as the process of image technology provided them
with competitive advantage in the market. Fujifilm was able to maintain their sustainability in
the market because of their flexibility and adaptability with the change in the market conditions
(Malatesta and Smith 2014).
Healthcare focus
Their expertise in nanotechnology for the placement of chemicals into films was
continued over to the application of cosmetics to facial skin. Prior knowledge regarding
photosensitive materials has assisted with fine chemicals and industrial materials. At present,

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Fujifilm’s medical imaging equipment business is fast expanding and has procured several firms
in this sector, that included the paying of $1 billion for SonoSite, which is an American
ultrasound equipment maker. Due to all these Fujifilm has become a much more diversified
organization than Kodak. Possessing a long-term vision, the company has invested a lot. This has
disruptive for the organizations; short term profitability, but the risk paid off
(Fujifilmholdings.com 2017).
Fujifilm’s approach
There are mainly two type of approach which are being followed by the organizations,
one is the strategic choice and the other is the deterministic approach. The strategic choice states
that the organization will have equal amount of control on the market environment and the
consumers and the deterministic approach states that the organization does not have any control
over the market environment. This is a classic example of two organizations who were rivals but
one was unable to maintain the sustainability in the market (Pisano 2017). Fujifilm was
following the strategic choice approach which helped them to identify the future trends in the
market and at the same time they were flexible enough to adapt to the changes in the market
situations. They were able to convert their weaknesses in to their strengths through the use of
innovation in their business model. However, Kodak believed in the deterministic approach
which means that the organization was not flexible enough and they were too over confident
(Fujifilm Global. 2017). They chose the easy way out but the end resulted in bankruptcy of the
organization, they believed that they had the monopoly on the market and this had led to their
downfall in the market. Fujifilm did the hard work which paid off for the, but in case of Kodak,
they were to find shortcuts in the market to gain competitive advantage in the market. Leadership
has also played an important role in this context as the efficient leadership of the company has

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guided them to reach a platform of sustainability and competitive advantage in the market.
However, the leaders of Kodak were short sighted and arrogant which has led to the downfall of
the organization (Estrin 2015).
Recommendations
As Fujifilm did back at the time of Ebola outbreak in West Africa, they need to help the
world with their expertise in chemicals and machinery for helping with disease treatments.
Similar to the anti-influenza drug that they created, they require to produce mass amounts of
drugs that can used for curing life-threatening diseases. They need to make full use of their
corporate makeover and use the diversification for lowly restructuring their organizational
structure.
Conclusion
Thus, the report provides a contrast of the two rival organizations Fujifilm and Kodak
who were competing in the market for the majority of the market share. However, innovation
and hard work is a major factor for the development of the organization. Fujifilm was able to
make the changes to their organizational structure and make use of their weaknesses to not only
maintain their sustainability but gain competitive advantage in the market. Kodak lost their
market place due to the easy way they took and were unable to use innovation in their business
model which suggests that organization will have to keep on doing the hard work and be far
sighted so that they can make use of the innovation in order to develop new products with the
help of research. Thus, the report will conclude with by saying that Fujifilm has shown various
organizations that it is possible to completely transform their business if they are willing to do
the hard work. The contrasting practices in both the rival organization has provided an apt

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example of showing how flexibility in an organization is important and can provide the
organization with competitive advantage and sustainability in due time.

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References and bibliography
AM Vermeulen, P., Zietsma, C., Greenwood, R. and Langley, A., 2016. Strategic responses to
institutional complexity. Strategic Organization, 14(4), pp.277-286.
Economist.com. 2012. Sharper focus. [online] Available at:
https://www.economist.com/blogs/schumpeter/2012/01/how-fujifilm-survived [Accessed 16 Oct.
2017].
Estrin, J. 2015. Kodak's First Digital Moment. [online] Lens Blog. Available at:
https://lens.blogs.nytimes.com/2015/08/12/kodaks-first-digital-moment/?_r=0 [Accessed 16 Oct.
2017].
Fujifilm Global. 2017. Fujifilm - Value for Innovation. [online] Available at:
http://www.fujifilm.com/ [Accessed 16 Oct. 2017].
Fujifilmholdings.com. 2017. FUJIFILM Holdings | Segment Information. [online] Available at:
http://www.fujifilmholdings.com/en/investors/performance_and_finance/segment_information/
[Accessed 16 Oct. 2017].
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Inagaki, K. and Osawa, J. 2012. Fujifilm Thrived by Changing Focus. [online] WSJ. Available
at: https://www.wsj.com/articles/SB10001424052970203750404577170481473958516
[Accessed 16 Oct. 2017].
Malatesta, D. and Smith, C.R., 2014. Lessons from resource dependence theory for
contemporary public and nonprofit management. Public Administration Review, 74(1), pp.14-25.

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Munir, K. 2012. The Demise of Kodak: Five Reasons. [online] WSJ. Available at:
https://blogs.wsj.com/source/2012/02/26/the-demise-of-kodak-five-reasons/ [Accessed 16 Oct.
2017].
Pisano, G.P., 2017. Toward a prescriptive theory of dynamic capabilities: connecting strategic
choice, learning, and competition. Industrial and Corporate Change, 26(5), pp.747-762.
Reuters.com. 2017. Fujifilm Holdings Corp. [online] Available at:
http://www.reuters.com/finance/stocks/companyProfile/4901.T [Accessed 16 Oct. 2017].
Strong, D.M., Johnson, S.A., Tulu, B., Trudel, J., Volkoff, O., Pelletier, L.R., Bar-On, I. and
Garber, L., 2014. A theory of organization-EHR affordance actualization. Journal of the
Association for Information Systems, 15(2), p.53.

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Appendix
Appendix 1

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Appendix 2
Appendix 3

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Appendix 4
Appendix 5: Porter’s 5 Forces

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Appendix 6: Value chain