Business Strategy Analysis: Kodak's Internal and External Environment

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This report provides a comprehensive analysis of Eastman Kodak's business strategy, examining its internal and external environments, strategic choices, and implementation. The analysis begins with an overview of Kodak's history, including its early dominance in the film industry and its subsequent struggles in the digital age. The internal environment is assessed through the analysis of Kodak's strategic business units (SBUs), value chain, strengths, weaknesses, and the VRIO framework. The external environment is evaluated using PESTLE and Porter's Five Forces analyses. The report then delves into corporate-level strategy, including the BCG matrix and corporate parenting style, followed by strategic choices derived from the TOWS matrix and traditional analysis. The strategy implementation section covers setting objectives, specifying plans, resource allocation, and measurement. Part B of the report focuses on learnings from Kodak's case, proposes a revised strategy, and reflects on personal learnings about strategy development. The report concludes with a summary of key findings and recommendations.
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Vignesh Chidambaram Shanmuganathan
MSc Business and management (MBM)

( 202094774)

MG931-Business Strategy

No of words for Part A - 2857

No of words for Part B - 1190

Total -4047
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Table of Contents
INTRODUCTION
............................................................................................................3
ANALYSIS OF INTERNAL ENVIRONMENT
.................................................................3
Kodak Strategic Business Units (SBUs)
.................................................................................. 3
Value chain analysis:
.............................................................................................................. 5
Strengths/Weaknesses of Kodak:
............................................................................................ 7
VRIO frame work:
................................................................................................................. 8
ANALYSIS OF EXTERNAL ENVIRONMENT
................................................................9
PESTLE Analysis:
.................................................................................................................. 9
Porter’s 5 forces: .................................................................................................................. 11

CORPORATE LEVEL STRATEGY
................................................................................13
BCG MATRIX: .................................................................................................................... 13

Corporate Parenting Style: ................................................................................................... 13

STRATEGIC CHOICES
.................................................................................................14
Strategic Choice from TOWS Matrix:
.................................................................................. 14
Strategic choice from “TRADITIONAL ANALYSIS” .......................................................... 15

STRATEGY IMPLEMENTATION
.................................................................................17
Strategy implementation- Setting Objective.......................................................................... 17

Strategy implementation
-Specify Plans................................................................................ 17
Strategy Implementation - Resource Allocation/Budget
........................................................ 18
Internal Resource
.......................................................................................................................................18
External Resource
......................................................................................................................................18
Strategy Implementation -Measurement/Management
......................................................... 18
Strategy Justification
............................................................................................................ 18
PART-B .........................................................................................................................19

Learnings from kodak .......................................................................................................... 19

Strategy for Kodak: .............................................................................................................. 20

Personal learnings about Strategy development.................................................................... 21

CONCLUSION : ............................................................................................................22
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INTRODUCTION
Eastman Kodak Company, under the name of Kodak, American manufacturer of film and
photography materials, and supplier of facilities and goods for digital imaging. They have their
head office in Rochester, New York. Kodak adopted the business model of razor and blades of
selling cameras at the lower price and Large margins were created from film, chemicals, and
paper consumables. Kodak managed 90% of film sales and 85% of camera sales in the U.S. as
late as 1976.The first hand held digital camera was invented and patented in 1975 by kodak.
Kodak placed a new focus on digital products at the beginning of the 21st century, suffering
substantial declines in the total cameras and other video photography products market. The
company has been a Prime producers for experienced photographer of films, chemicals and
papers. By 2005, Kodak’s key innovation was the printer dock and also film business and the
film market, where Kodak was having a strong profits, decreased 18 percent(kodak,2010).
With a 9.6 percent stake in 2007, Kodak was No. 4 in U.S. digital camera sales, and by 2010,
it held 7 percent in seventh place behind Canon, Sony, Nikon, and others. Kodak filed for
bankruptcy in January 2012 and announced soon thereafter that digital cameras and some other
digital products would no longer be sold. Kodak filed for bankruptcy protection under Chapter
11 and Kodak showed the first Micro Four Thirds camera to be created in April 2013 by JK
Imaging
(Anon., 2020). In 2013, Kodak announced that as a media corporation focusing on
company photography, it emerged from bankruptcy. Digital Printing & Industry and Graphics,
Television & Advertising Films are its core market divisions.

ANALYSIS OF INTERNAL ENVIRONMENT

Kodak Strategic Business Units (SBUs)

Consumer - Sale of consumer products such as cameras, apparel, domestic film.
Kodak used the idea of Razor and Blade to boost consumer product sales, delivered
cameras at a reduced price, and marketed domestic films at a very high profit. One of
their finest items is domestic video. Kodak is now well known for Apparels.

Film In the past four years, Eastman Kodak's still-film output has more than doubled.
Due to the massive demand growth, Eastman Kodak more than doubled its output of
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still films between 2015 and 2019. Kodak is now stable on the film industry, with kodak
film products several films are made.

Advanced materials & chemicals Kodak has been offering a platform for
creativity for more than 100 years by generating new designs, and bringing them to life.
By taking advantage of the experience of basic engineering, pursue chemical synthesis
technologies, exploit thin-film coating technologies, they focus on validated material,
and do it all in custom-made. Kodak has dedicated a separate division for the research
of new technologies in film, materials and other areas

Printing Systems Kodak focuses on the selling of a range of printing systems in
the industry. In today's multimedia world, Kodak allows commercial printers,
newspapers, advertisers, labelling firms and those in the printing industry improve the
quality of the printed page. This service and support offered in more than 150 countries
support the differentiated technology and solutions. Sale of a variety of industry
printing systems.

FIGURE 1: Kodak SBU’S

FIGURE 1: Kodak’s Strategic business unit

Kodak

Strategic

Business

units

Consumer

ADVANCE

MATERIAL AND

CHEMICAL

Film

Printing System
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Value chain analysis:
Secondary value chain activities

Firm infrastructure : The function of a company's infrastructure is central to its
success. In addition to its management, human skills, financial policies, legal and
community relations, regulatory enforcement, Kodak has maintained a large
infrastructure.

Human Resource management : This is also a very wide area of Kodak's value
chain. Kodak is focused on hiring and developing talent and establishing an
environment for learning and growth. Kodak emphasises on the inspiration and
determination of employees. Furthermore the focus is on enhancing success in order to
provide staff with career growth by providing attractive rewards.

Technology Development : Kodak mainly also focuses on creativity and R&D.
They also invested in technology advancements. Kodak has more innovative aspects of
a product of patented technologies and also fast development of new products.

Procurement : To make the entire process simpler and more effective, it integrates
technology. It has maintained strong relations with its suppliers and has provided
instructions that the suppliers are required to comply with. Kodak offers secure
transport to ensure fast delivery and also ensures quality procurement of raw materials
and spare parts.

Primary value chain activities:

Inbound logistics: It is important to build strong relationships with suppliers as their
support is needed to obtain, store and distribute the product. In product production
methods, Eastman Kodak Company will face numerous difficulties without evaluating
the in-bound logistics. In-bound logistics analysis helps an organisation to focus on
every part of the change from raw materials to finished products.
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Operations: The importance of evaluating operational processes increases as raw
material comes in and Kodak is ready to process the raw material into the final product
and release it on the market. Such examples of operating processes are machining,
processing, assembling and testing. Fixing and maintenance equipment also comes into
this heading.

Outbound logistics: Outbound logistics was used in the practises that deliver the
goods to the client by passing through several intermediaries. Such outbound logistics
activities are inventory handling, warehousing, preparation, order selection, transport
and delivery to the destination. Kodak is able to analyse and optimise outbound
logistics in order to find strategic edge sources and achieve its market development
objectives. ( kodak,2013)..

Marketing and Sales: The marketing and distribution practises of Kodak are sales
power, product promotion, pricing, channel selection, quoting and forming relations
with channel members. The organisation should use the marketing funnel approach to
manage marketing and sales processes.

Service: The pre-sale and post-sale services offered by the Kodak would play an
important role in building customer loyalty. Modern consumers consider post-sale
services to be as important as marketing and advertising activities. The company must
review its support activities in order to avoid negative brand awareness and instead use
them as a means to distribute positive perceptions linked to quick, reliable and effective
support services.
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FIGURE 2:Value Chain analysis
Strengths/Weaknesses of Kodak:

Strengths

Brand Power: Well renowned brand, name easily recognizable.
Wide Product range: Consumer SBU has a product range that includes cameras, film,
apparel, computer accessories and a host of other products

Strong Research & development Has a dedicated R&D unit looking at a number of
technologies that directly relate to its SBUs (researching into new film technology as
an example)

Socially responsible company: Kodak is environmentally and socially conscious. In
addition, Kodak contributes to numerous communities and social organizations

Weaknesses

Bankruptcy damage in kodak brand
Lack in differentiation in consumer products not much to differentiate its products
in some of its consumer ranges such as cameras than other products on the market.
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VRIO frame work:
FIGURE 3: VRIO Frame work

Valuable :

Kodak's VRIO Research shows that the company's employees are a valuable resource for the
company. A large percentage of the workforce is well trained and this contributes to the more
efficient success of the company. Its patents are a valuable advantage because they enable the
business to sell its products without contact with competition. For Kodak , this results in greater
profit.

Rare:

Kodak Company's patents are a precious opportunity, as described by this Analysis of Eastman
Kodak Company. These patents are not freely available and rivals do not own them. This helps
Eastman Kodak Company to use them without competitive intervention.

Imitable:

It is also not costly to substitute the staff of the Kodaks. This is such that other firms can also
prepare their employees to improve their skills. These firms may also attract Kodak's workers
by providing improved pay packages, working environments, incentives, growth opportunities,
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etc. This gives Kodak's workers a tool that offers a temporary competitive edge. In future,
competition can acquire these.

Organised:

Kodak has not organised their patents to well. To their full extent, these patents are not regularly
used by the company. There is an unused competitive edge that can be transformed into a
reliable competitive advantage if the Kodak manages to sell proprietary products until the
patents expire.( kodak,2015). The Kodak market network is coordinated and aims to reach out
to its consumers by ensuring that products are available in all its outlets. Thus these instruments
are a source of sustained competitive advantage for Kodak

ANALYSIS OF EXTERNAL ENVIRONMENT

PESTLE Analysis:

FIGURE 4:PESTLE Analysis

Political:

Hazardous waste regulation 2005(UK law)

UK foreign trade bill 2017
US foreign trade policy 2020
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No current trade sanctions
Economic:

Disposable income in UK up 2.3% from 2019 (£0,800), US $45824 2019
Interest rate 0.1% Q3 2020, down 0.6% from 2019, Us 0.25% 2020, down from 2.25%
from 2019

VAT 20% UK (2020), US variable between 0-9.98%
UK economy down 19.8% from 2019
Social:

Forming its own generation of people who used to stack the physical version of paper
photograph.

Big gap has been created between these two different worlds of photography that is
difficult to be crossed and forms communications issues.

Rise of old style photography leads to rise in sales of paper and chemicals and decline
in digital technology.

Technological:

First to develop digital camera in 1975
Could not handle the competition
Management’s inability to see digital photography as an upcoming technology
Implementation of innovation was not up to the standards
High pace market
Legal:

Manufactured in Rochester NY, US.
Medicare (1945)
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Fair Labor Standards act (1938) US
‘Lanham Act’ prohibiting false advertising
Consumer Protection act
Environmental:

Disposable and single use camera was a selling point for a whole line of cameras but it
was the opposite of sustainable in every way

From mid 1980’s to 2000, the company has released more harmful environmental
emissions than any other company in the state of New York.

In 1989, it was tested with ground water and soil included methyl chloride, acetone
and methanol. Methylene chloride is used in making film stock

Porter’s 5 forces:

Threats of new entrants:

The growing demand for digital cameras has been attracting many entrants, both
domestically and globally, in recent years. When engaging with emerging technologies,
challenges from new competitors are often a challenge. Sometimes, a person searching
for a simpler way to do things discovers new technologies.
With their technologies, size
of operations and brand strength, these firms are supposed to transform the structure of
the Kodak Business significantly. With Xerox, Lexmark, Sony, Cannon and other big
firms already established in the industry, it would be convenient for new enterprises to
reach the market and have a huge impact.

Bargaining power of customers:

The negotiating power of clients is comparatively small in the photographic industry.
Eastman Kodak is entering the market for consumer printers, which is full of rivals that
manufacture goods that allow the consumer to have considerable purchase power.
Many manufacturers rely on their profit margins as a result of the selling of replacement
cartridges. Buyers have a great deal of control, with businesses delivering high-quality
printers at very affordable values and also giving large discounts.
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Bargaining power of suppliers:
Kodak's suppliers negotiating power is more critical than its competitors, who expand
to produce their own components. Kodak can improve its printers in order to bring its
printers on the market faster by using projection components. The Kodak Eastman
could collaborate with industry partners such as SigmaTel, Inc. (Ukessay, 2018) a chip
design expert, rather than having to organize anything from scratch.
This strategy would
allow Kodak to grow the expansion costs faster and lower.

Threat of substitutes:

Kodak could not neglect the production and launch of their commercial printers. On the
other side, business rivals such as H-P, Nikon, Cannon, Sony focus is not on the printer
and cameras but they draw attention on profit on replacing the cartridges. Eastman
Kodak markets a high-quality printer, inexpensive cartridges and a mix of high-quality
paper to create the best quality.

FIGURE 5:Porter’s five force model
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