The History and Core Business of Kodak and Fujifilm - Research Paper Example

? Kodak and Fujifilm KODAK AND FUJIFILM Describing the history and core business of each company Since George Eastman founded Kodak in 1989, selling inexpensive cameras while making profits on the consumables like paper, chemicals, and film. Kodak commanded approximately 90% of sales in film and 85% of US camera sales (Elkins, 2011). This unassailable position is what would apparently cause the company to become complacent in the future. In 1955, Kodak was ranked 43rd in the top 500 companies by Fortune Magazine. Kodak, however, would retreat into 327th in the year 2011, filing for chapter 11 bankruptcy protections in 2012. Kodak’s failure to adapt to the digital age was cited as a major cause for this. However, Kodak had invented the first digital camera in 1975 and aggressively immersed itself into this new business, promoting M&A, but was unable to use the strategies for profit. Kodak began struggling with numerous problems from the late 70s; this included the challenge brought by the instant camera and increased competition in the Polaroid camera with Fujifilm. While a succession of CEOs attempted to deal with these problems in order to improve the company’s business, they were largely unsuccessful (Elkins, 2011). This can be explained by Clayton Christensen’s “innovator’s dilemma”. Fujifilm Co. Ltd. began, on the other hand, as a producer of cinematic film and grew into a manufacturer and marketer of information and imaging products. It grew into the largest photographic filmmaker for the Japanese market and competed with Eastman Kodak for market share on the global stage. Fujifilm, on top of pushing a variety of still camera film, color paper, photo-finishing equipment, motion picture film, and color paper chemicals, also entered the digital sphere, making flat panel display materials, medical imaging products, media for digital recording, office printers and copiers, as well as digital cameras (Elkins, 2011). They derived approximately a half of their revenues from Japan with 20% in North America, 14% in the rest of the Asia-Pacific region and another 14% in Africa (Elkins, 2011). However, the company’s focus diversified greatly from negatives, with its imaging solutions unit being the smallest. Its photographic paper chemicals, photofinishing equipment, digital cameras, as well as photographic papers and films, are its biggest investment in the last 20 years. The main business in Fujifilm that accounts for over 40% of sales includes; information related services and products as well as document operations. Its document business involves a joint venture with Xerox to offer printers, copy machines, and production services. Its information unit handles flat panel and optical display components, recording media, large scale printing, and medical imaging (Elkins, 2011). Comparing and contrasting the approach to management that each company has pursued in order to embrace innovation. Kodak faced criticism for its slow response to the digital age because of a conservative culture, coupled to a complacent monopolist nature that affected its ability to embrace its own innovations, like the digital camera that it invented in the mid-70s (Baron, 2010). Clay Chandler, the CEO at that time promoted a culture of innovative diversification. However, CEOs that came after him denied the policy and did away with many promising ventures for the future by taking to resource selection and concentration. By sticking to film, they ignored the innovation of digital printers and cameras, categorizing itself as an imaging company. The main reason that Kodak faced bankruptcy had to do with its concentration on narrow business field that prevented it from developing on innovations (Baron, 2010). Fujifilm, in many aspects, had a common business trajectory to Kodak on its founding. However, the major changes that came with the digital age and the dangers portended by this innovation to the film industry saw Fujifilm attempt to find new businesses, especially as it was vertically oriented, different from Kodak that had horizontal orientation, and could incubate these innovations (Baron, 2010). Their consolidation with Fuji Xerox in 2001 was an inspired innovative move that supported the financial position of the company. Its information solutions business involves several businesses that have many possibilities for success. By embracing the digital age, different from Kodak, Fujifilm has succeeded in maintaining its market share and improving on it. Determining what other management differences have impacted the relative success of Kodak and Fujifilm and providing specific examples to support my response. While Kodak suffered bankruptcy, Fujifilm is doing relatively well. The two companies have a lot in common with both enjoying a monopoly of their markets. A good amount of friction in trade between Japan and the US in the 90s sprang from attempts by Kodak to keep Japanese film, which was cheaper, away from the American market (eM Publications, 2010). The two companies saw their initial businesses become obsolete while Kodak failed to adapt adequately, Fujifilm transformed into a profitable business that possessed a market capitalization of $12.6 billion in comparison to Kodak’s $220 million. Kodak possessed a long tradition that involved slow decision-making driven by a perfect product mentality. Its business outsourcing policy for businesses that were unprofitable at the time but would later become critical for its diversification capabilities also hurt the company. Their failure to analyze correctly China and other emerging markets where the population went immediately to digital camera rather than first buying film also impacted negatively on the company’s bottom line (eM Publications, 2010). Eastman Kodak also suffered because of an inconsistency among its successive leaders, with some taking to embracing innovation while others came and did away with it, leading to loss of revenue and a staggered strategy (eM Publications, 2010). Fujifilm, however, succeeded where Eastman Kodak failed to incubate diversification and new technologies in the company. Fujifilm CEO, Shigetaka Komori spent over $9 billion since 2000 on forty companies, slashing costs and jobs. He booked in excess of $3.3 billion in an 18-month stretch that was meant to restructure costs, being lucky that the company, different from Kodak, had no shareholder pressure for performance in the short term (eM Publications, 2010). In short, Fujifilm exhibited flexibility to change typical to an American company while Kodak acted like a Japanese company by resisting change. Evaluating each company’s approach to ethics and social responsibility and the impact those approaches have had on each company’s profitability. Kodak is committed to operating in a socially, environmentally, and ethically responsible manner. This involves the maintenance safe operations and facilities while providing safe products that minimize environmental burdens to society throughout their life cycle (Garcia, 2011). They ensure that their suppliers also adhere to this commitment. The suppliers have set expectations that they have to adhere to including ethical, labor, environmental, safety, and health performance. Kodak, as a member of the EICC, aligns itself with best practices in the industry via a code of conduct that ensures working conditions are safe in the electronics industry while treating workers with dignity and respect. Kodak and EICC strive to build capability and awareness throughout the chain to achieve high social and environmental standards (Garcia, 2011). This appeals to its customers who are environmentally and socially conscious and prefer to buy products from entities that are committed to protection of the environment and workers’ rights, helping Kodak tap into another market. They also create value via their integration of leading edge and distinctive technologies to cultivate customer satisfaction and trust. Fujifilm’s corporate philosophy recognizes that its mission, via sustained corporate activities, contributes significantly to realizing a society where all people can live abundantly in material wealth with satisfaction and fulfillment (Garcia, 2011). Anchored by a clear, fair, and open corporate culture that uses proprietary and cutting edge technologies, the company seeks to remain a company that boldly takes up the development of new products and creates new value. The company’s clear and fair workplace allows Fujifilm to discern its facts in a straightforward and sincere manner, take on challenges courageously, and make rational decisions. With this ethical and socially responsible corporate culture, Fujifilm gains customer trust and consistently creates new value and pioneer leadership (Garcia, 2011). Discussing the extent to which management of both, companies have adapted to changing market conditions. Eastman Kodak’s integrated program implementation came about with Marketing Intelligence understanding the five tracks sequence. They took in the planned change process with sufficient commitment from Kodak’s management, amidst major reorganization and pressure for profits (Hill, 2011). The ongoing adaptability keeps the change program relevant and vibrant to all shareholders that, essentially, is what the company needs to maintain and create organizational success. The company has placed a special burden on consultants for holistic improvement. Naturally, these consultants need to work hard in order to become unnecessary, eventually, to the company so that the company can own the process fully. This is important since most organizations are unable to view their own culture and need an objective and independent view by a trained observer. The organizational consultants have a professional responsibility of introducing holistic improvements and implement programs that are totally integrated, requiring efforts aimed at continuously developing integrated skills, methodologies, and theories for planned change (Hill, 2011). However, the consultants did not work towards becoming unnecessary to the company, which ended up hurting the company since they did not implement their recommendations to the letter. Technological change at Fujifilm sparked an internal power struggle, just as it did at Kodak. However, Shigetaka Komori prevailed on them in preparing for the digital onslaught. Unlike Kodak, consultants were not at the center of the planned change plans and Komori set about overhauling the company between 2000 and 20003. He spent over $9 billion on buying 40 firms and cut jobs and costs by shedding researchers, managers, labs, and superfluous distributors (Hill, 2011). Unlike Kodak, Komori undid his predecessor’s work, which was made easier by Japan’s general long-term culture that involved little pressure for short-term performance, as well as tolerating huge holdings of cash. Recommending three (3) ways any company should build in flexibility to back up its decision-making process in order to adapt to changing market conditions. Companies should develop more agility to respond quickly to markets that are changing. Agile companies possess scalability, speed, visibility, as well as flexibility (Hill, 2011). Speed is essential in the development and delivery of innovation; visibility allows them to anticipate change while scalability enables the company to align its capacity, resources, and people with an environment that is ever changing. This allows the company to be flexible and make rapid adjustments to changes demand. A company should also be adept at analyzing to modify strategy based on insight into its market (Hill, 2011). They need to monitor market changes that may affect them with analyst forecasts and reports providing a starting point. The research information is then combined with company data, as well as a customer and sales service reports on changes in client requirements. Finally, the workforce should be flexible as market changes may require people with varying skills. Contractors can be hired using a resourcing service or on fixed terms to meet medium to short-term needs on a basis that is more flexible (Hill, 2011). References Baron, David. (2010). The Kodak-Fuji film trade dispute. Stanford: Stanford Junior University . Elkins, David. (2012). The Camera Assistant's Manual. Boca Raton: CRC Press. eM Publications. (2011). Kodak: The Rise and Fall of a Historic Company. Gresham: eM Publications. Garcia, Javier. (2011). International Marketing Management and Exporting of Fujifilm. Munich: GRIN Verlag. Hill, Charles. & Jones, Gareth. (2011). Strategic management : an integrated approach. 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