Performance on a Competitive Market: Kodak and Fujifilm - Case Study Example

Kodak and Fujifilm Executive Summary The report deals with the performance of organizations such as Kodak and Fujifilm in the wake of rapid changes in the environment. The project seeks to deal with the performance of these two companies with respect to each other. The report also shows how these companies managed to cope with the factors that have a huge bearing on the performance of the organization. PEST analysis and SWOT analysis are used in this regard to facilitate understanding in a better way of how these companies have fared with respect to each other. Contents Introduction 4 Discussion 4 a. PEST Analysis and its Advantages 4 b. PEST Analysis of Kodak 4 c. Adoption of Ansoff Strategies by Fujifilm 5 d. SWOT Analysis and its Business Benefits 6 e. Swot Analysis of Fujifilm 7 Conclusion 7 References 9 Introduction Eastman Kodak is an organization dealing in materials, services, imaging equipment, and photographic equipment. The organization has its headquarters in New York, US. George Eastman established the company in the year 1889. The organization is known for its photographic film products. The adoption of blades and razor strategy by the company led to its selling cheaper cameras in the market. The company also made huge amount of margins from its production of consumables such as films and chemicals. The company flourished during the later part of the year 1976. At that point in time, a major portion of the film sales and camera sales were commanded by the company in the US market. Fujifilm is considered as a multinational organization dealing in services such as photography and imaging services. The company is officially known as Fujifilm Holdings Corporation and has its headquarters in the Tokyo city of Japan. The company is engaged in the business of colour paper, colour photographic film, sale of digital cameras, and photofinishing equipment, etc. The approach of the company with regard to management has made the organization a strong consumer brand which is considered to have a sound technology base. The strategy of the management of the company is considered as different with regard to managing and undertaking innovation. Discussion a. PEST Analysis and its Advantages PEST analysis is considered as an important tool to analyze the macro environment of an organization. It seeks to identify those factors that have a considerable bearing on an organization’s demand and supply levels and also on its cost structure. There are numerous advantages of PEST analysis as follows: I) It seeks to provide an understanding of the business environment which is considered as wider. II) It encourages organizations to develop its strategic thinking capabilities. III) It seeks to identify the potential threats for an organization and thus helps the company in taking measures to avoid such threats. b. PEST Analysis of Kodak Political: it is required by the copyright law of US that any print and subsequent release of digital images taken by photographers considered as professional cannot be released without having a copyright of release. The company has its operations in various countries and so it is of utmost importance for the company to comply with the regulations of such countries such as employment laws and taxation policy (Henry, 2008, p. 53). The company must consider the government stability in such countries in an attempt to minimize the political risks such as corruption. In this regard, it can be said that photos clicked by amateur photographers may find considerable difficulty in getting their images printed due to the regulations of copyright release thereby affecting significantly the business of photo printing sales of the organization Kodak. Economical: the long term debt of the company is increasing over the years. This will result in the company’s paying a high level of interest with regard to its long term debt (Handy, 2006, p. 63). The existence of high level of inflation in certain countries where the company has operations may result in more trouble for the company. The high level of unemployment and recession has led to reduced disposable income for consumers and as such they will be inclined to purchase cameras that are considered as cheaper. Kodak should also be prepared to pay a high level of interest on its borrowing in the future as there is a huge possibility of the rate only going up (Kodak, 2010). The diversification process of the company was also very slow and it did not make any significant achievements in this regard. Moreover the company thought that its manufacturing of chemicals for film use can be turned into drugs. But the pharmaceutical operations of the company fizzled and consequently were sold in the 1990s. Socio-cultural: it is considered that film cameras have become old fashioned as there are numerous people who are seen to move toward digital cameras. Traditional cameras are considered as old fashioned because nowadays people tend to store pictures in their digital albums or computers. In this regard, people have become more educated to take pictures, print those and store them digitally. The retail network of the firm started to depreciate as there is an increase in home based computers, email, and also printing capabilities of consumers (Hill and Jones, 2007, p. 64). The need for sending pictures through post has decreased to a significant extent because sending digital pictures is considered as quicker. Technological: the imaging industry has witnessed significant changes with regard to technology. This has led to the established companies and also new entrants to adapt and response in a very quick manner. The development of digital technologies has provided considerable threat to the business of core chemical processing at Kodak (Porter, 2008, p. 59). The company in this regard is considered to be very slow to adapt to changes. The company basically sells cheaper cameras and relied on consumers buying expensive films. This type of model did not work with digital cameras. c. Adoption of Ansoff Strategies by Fujifilm Fujifilm realized the omens of digital doom in the 1980s. It developed a three pronged strategy in this regard such as squeezing more money from film business as much as possible, develop new lines for business, and be ready to switch to digital technologies. The marketing strategies of Ansoff in this regard are market penetration, product development, market development, and diversification. Market penetration refers to selling of more products in the existing markets through price reductions, increased promotions, and also selling products through the platform of internet. Product development refers to the development of new products and services by an organization and selling them in the existing markets (Porter, 2008, p. 81). Market development refers to selling of existing products of an organization in new markets. The strategy of diversification refers to development of new products and services by an organization and placing them in altogether new markets at the same time. The diversification strategies of Fujifilm are considered to be quite efficient. Film is considered to be a bit like skin. Film and skin are both considered to contain collagen (Bowhill, 2008, p. 71). The fading of photos is majorly due to oxidation and as such cosmetic firms tend to advertise that preservation of skin can be done through the use of antioxidants. The library of Fujifilm comprises of 200000 chemical compounds of which 4000 can be considered as related to antioxidants. In this regard, the company launched a cosmetic line known as Astalift. The products of such cosmetic line are mostly sold in Europe and Asia. The company also developed new outlets for its expertise in the field of films. For instance, it developed optical films with regard to LCD flat panel screens (Avlonitis, 2001, p. 51). The company has made a huge investment in this regard. It has invested $ 4 billion since the year 2000 in this field. The company also enjoys 100% market share with regard to those films that are used to expand the viewing angle of LCD. The company has consistently mastered new tactics as a means for its survival. The first penetration of overseas market by the organization Fujifilm is done primarily through its entry into Imaging Solution business. The establishment of a German Subsidiary is basically done to manage in a comprehensive manner the business operations of the company in Europe (Roy, 2011, p. 53). The company also established a manufacturing company in Netherlands which primarily focuses on the production of colour films and colour paper. The organization Fujifilm currently operates in more than 50 group companies in the country Europe and also employs more number of people who are engaged in manufacturing, R&D, service support, and sales. The company serves numerous industries throughout Europe such as chemicals, electronic materials, photographic technologies, motion picture, and graphic arts. d. SWOT Analysis and its Business Benefits SWOT analysis by any organization is considered to provide key information with regard to issues that have the potential to affect the performance of any business entity. The main benefit of conducting SWOT analysis is that it costs very less for an organization to conduct such analysis. It identifies the opportunities, threats, strengths, and weaknesses of an organization which is very important for the performance of such organization. The main advantages are as follows: I) It addresses the weaknesses of a business organization. II) It can also deter threats. III) It helps an organization to capitalize on its opportunities. IV) It also helps organizations to develop their business goals. e. Swot Analysis of Fujifilm SWOT analysis of the organization Fujifilm has the potential of revealing numerous strengths, weaknesses, threats, and opportunities of the company. There are numerous strengths of the company such as its ability to adapt adequately to an ever changing environment, reduced cost of labour, existence of experienced business units, and strong sales and distribution network among others. The company is considered to be very efficient with regard to adapting to new business opportunities and demands (Ashford and Beamish, 2005, p. 37). When the traditional business of the company was rendered obsolete, the company found different ways as a means to increase its performance. The company Kodak found it difficult to adapt adequately when its traditional business was rendered obsolete. It found to get going very tough. Whereas the organization Fujifilm transformed itself into a profitable business with a market capitalization of $ 12.6 billion even after a tough year in which the going was considered as really tough. The organization Fujifilm is considered as very flexible with regard to taking opportunities that are available in the ever changing environment. The company also employs a huge number of people which leads to lower cost of labour as most of its employees are considered as very efficient (Fujifilm, 2010). A lower cost of labour is usually considered as strength for an organization because it leads to higher productivity. When the organization realized that the switch to digital technology is inevitable, it prepared itself in the said direction in a more efficient manner. The ability to diversify in a successful manner is also considered as strength for the organization Fujifilm. The successful diversification of the company into the business of cosmetics is really a great achievement for the company (Maylor and Blackmon, 2005, p. 46). The weaknesses of the company could be such factors as possibility of high loan rates, competitive market, future competition, future profitability, and the unknown. There are also numerous opportunities for the company such as growth rates, profitability, growing demand, growing economy, and its suitable use of venture capital funds to increase the performance of the company. The threats that are there with regard to the organization Fujifilm can be factors such as increasing costs, global economy, price changes, rising costs of raw materials, external business risks, and rising rates of interest. Conclusion Fujifilm is considered as much more efficient with regard to its competitor Kodak. The approach of the management is considered as very innovative which has made the organization a strong consumer brand. The organization is also considered to have a sound technology base. The company is very flexible with regard to utilizing the opportunities that are available in the external environment. The recognition of the dominance of digital technology at a very early stage by the company is considered to be of utmost importance which allowed the company to prepare for such a change for a considerable period of time. Kodak in this regard is considered as not that much efficient with regard to Fujifilm. Kodak found it really difficult to adapt to changes in the ever changing business environment which had a considerable impact on the performance of its business. The ability of the company with regard to diversification is also considered as very slow. The company’s ability to adapt to digital technology is not considered as adequate. The company basically sells cheaper cameras and relied on consumers buying expensive films. This type of model did not work with digital cameras. 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