Photographic Industry Changes - Assignment Example

1. Examine how the business environment in the photographic industry has changed. Photographic industry has played vital roles in the well being of everything. Starting from TV, newspapers, magazines, vocational trips, official meetings, wedding ceremonies, movies and so on. This is the kind of industry, which would remain forever. Writing of text may differ but eliminating of photographs from stuff never would. The only thing that has affected the photographic industry is the introduction of technology and digital revolution. Photography has been in our lives since the 16th century. But it has gone through a number of technological advancements, which have been affecting the industry on the whole. Previously a photograph taken in a camera could not be viewed unless developed through a process, but now in this world of digitization things have changed a lot. Now the screen within the digital cameras allows you to delete, edit and perform different operations on the spot. The result is that they need not be printed. They could easily be shown via camera, or uploaded through computer or sent through camera phones. The result is decline in prints. Prints was one of the major component in the success of photographic industry and hence its affecting the business. Though overall there has been increase in the number of overall pictures being taken but on the same side decrease in the printouts being taken out as there exist cheaper ways of showing those pictures to concerned people. Joh Larish (2006) in his article " The Analysts Speak Out: Is There a Future for the Photo Industry" states that PMA has been the largest photographic convention and trade show in the United States. This year's PMA was considerably smaller than last year because of the demise of major exhibitors such as Agfa, Konica Minolta, Bronica and others. In addition, many other companies greatly downsized their exhibits or didn't attend at all. The Kodak exhibit was less than half its normal size. There was vacant exhibit space all over the trade show floor. Nowadays people prefer carrying their mobile phones rather then the weight of camera to catch their important moments. A person owning a PDA can simply take the picture and send it to his friends over the Internet. What else he does not even need to meet his friends in person to show them. These advancements have surely made things easier but what about the photographic industry What measures do they take for their survival Most of the topped ranked companies have stopped producing the older versions of cameras, which required reels to catch the moments of life. Starting from Kodak, it is stated in Wikipedia Encyclopedia (2006), that on January 13, 2004, Kodak announced that they would stop producing traditional film cameras in the United States, Canada and Western Europe. By the end of 2004, Kodak ceased manufacturing cameras that used the Advanced Photo System and 35mm films. Production of film continued. These changes reflect Kodak's new focus on growth in digital markets. The Economist (2002) in one of its articles "Prints and the Revolution" states that 80% of digital camera owners still use film cameras more than half the time and fewer than 20% of the 30 billion digital photos taken each year are ever printed out. The industry is now trying to solve this problem since prints are what make money. From music and newspapers to travel and advertising, industries are trying desperately to forge a clear vision for themselves in a digital age that is still opaque. Amy Yee (2006) states in her article "Banishing the negative: how Kodak is developing its blueprint for a digital transformation" about Konica Minolta, which trails in third behind Fuji Photo in the film-making market, gave up the struggle, announcing that it was pulling out of its traditional camera and photo businesses to stem growing losses. This shows some companies just don't know what to do. Things were expected to improve, not change completely. She further writes that Nikon is also discontinuing single lens reflex cameras to focus on digital models. It is all digital as these companies know the customers want convenience. It does not mean that digital cameras have all the advantages. There are disadvantages as well which would be discussed once we move further. Hiroshi Moriyama, analyst at JPMorgan in Tokyo, said given that the traditional photo film market was shrinking by 30per cent a year, "there is no reason to continue the business". Maybe along with the companies the photographic industry also need a major diversification. After seeing the updates of camera manufacturing companies lets see what camera phones have to their sides. We know that photography is one of the means of communicating visually. It was at a slower pace previously but the advent of camera phones has drastically shifted the visual communication process. It is not easy for individuals to carry their camera everytime where ever they go. Even professional camera men at times have to leave their homes without their cameras, but phone is something no one would leave behind. Being fortunate enough to have camera in phone, why would one want to carry another one. Professional photographers say they are overwhelmed with the tools of their trade which need to be totted around like; a laptop, PDA, 2-4 camera bodies, lenses, flashes, film, batteries, smart cards, power cords, adaptors, satellite phones, back up hard drives, but carrying a combined cellular phone and camera is a totally different mindset than meandering around making pictures with a typical camera. Many industry analysts are forecasting that camera phones will outsell "standalone" digital cameras in the next couple of years. These all facts are very eye opening when we think in terms of the business being changed in photography industry. But these all things are happening already. The industry itself does not know how would it change further. We all will have to wait and see what has to come next. 2. In terms of its capabilities, to what extent is Kodak equipped to meet the new competitive challenge When we talk of Kodak's capabilities, we need to do a SWOT analysis. This would give us a better idea of what Kodak has, what it does not have, what it can do and what would stop Kodak or be threatening to Kodak from the arising circumstances. The primary processes include: Operations Footprints of Kodak operations have been reduced. Kodak's newly acquired companies and technologies are being integrated into their allied businesses, expanding the profile of Kodak, the products and services they offer and the skills they possess. Digital & Film Imaging Systems Segment derives revenues from consumer film , sales of origination and print film to the entertainment industry, sales of professional film products, thermal, traditional and inkjet photo paper, chemicals, traditional and digital cameras, digital printers, photo processing equipment and services, and digitization services, including online services. Health Segment derives revenues from the sale of digital products, including laser imagers, media, computed and direct radiography equipment and healthcare information systems, as well as traditional medical products, including analog film, equipment, chemistry, services and specialty products for the mammography, oncology, and dental fields. Marketing Kodak is currently positioned to be a market leader. Service Kodak has exited some businesses. Their Remote Sensing Systems unit, which primarily served the government, aerospace and defense industries, was sold for $725 million. It also exited the APS camera business, although they continue to serve consumers with APS films. Kodak's market-leading Ofoto Internet service, now rebranded as Kodak EasyShare gallery, is experiencing strong monthly growth for online picture processing and services. It now has more than 20 million members. Kodak has also launched the Kodak mobile service for wireless phone-cam users who want to store and share images. Increasingly, the group is also providing solutions for specific healthcare segments like diagnostic imaging centers, orthopedic practices, women's healthcare providers and dental practices. Kodak has the largest online photo-imaging site. Today, half of the revenue of Kodak's commercial division and a third of its consumer revenue come from digital products and services. Kodak is trying to do its best in competing to maximize its market share by implementing new ideas. The support processes include: Organisational Infrastructure, Kodak is uniquely positioned to be a market leader. Kodak is a trusted and respected brand. Kodak EasyShare digital cameras captured the No. 1 U.S. market share position for the full year, according to the market research firm, IDC. The Company also ended 2004 with No. 1 digital camera market share in Australia, Argentina, Peru and Chile, and top three share positions in Germany, the United Kingdom, Mexico and Brazil. Also, the new Kodak EasyShare-one zoom digital camera, which allows wireless transmission of images, earned "Best of Show" awards at the 2005 International Consumer Electronics Show (CES). Kodak EasyShare printer docks were the best-selling line of snapshot photo printers in the U.S. in 2004, according to another research firm, NPD Group. Kodak also holds the top snapshot printer share in the U.K. and Australia. For those who prefer to print at retail, Kodak's picture maker kiosks with an installed base of more than 60,000 units worldwide-are market leaders. Increasingly, these units include capability to receive images wirelessly from phone cams. The Academy Award for "Best Picture" went to a movie captured on Kodak film. Revenue for entertainment films, including origination and print films, increased 12% in 2004. Long the leader in dental imaging film, Kodak now is also the No. 1 provider of dental digital radiography systems and dental practice management software. continues as the leader in organic light emitting diode (OLED) display technology, filing over 150 patent applications in the field in 2004. OLED is widely considered to be the next generation display technology based on advantages of increased brightness, thinness, reduced power and simplicity of design. Kodak remains committed to develop the OLED market by making its technology available through license fees and know-how packages. HRM In an effort to reduce costs, Kodak accompanied its shift toward digital products with a series of layoffs and facility closures, cutting 12,000-15,000 jobs around the world, a 20-25 percent reduction in its workforce. They eliminated jobs that they thought of as irrelevant to their plan of getting back on track. The company accounts for giving stock based compensation plans to its employees. Technology Development Kodak has successfully acquired and is integrating companies and technologies, in graphic communications and health, that will help boost their revenue and earnings and fuel their long-term growth by rounding out their portfolio and expanding their distribution to new markets. Integration of these key acquisitions continues on, and in some cases Kodak is ahead of, plans. Kodak is preparing for the future by expanding their presence in digital systems and services for motion picture theaters. They now have contracts to supply digital pre-show entertainment systems for more than 1,300 theater screens. Kodak's Health Group has expanded beyond its worldwide success in radiology to offer a growing range of digital systems, technology and services that enable healthcare personnel to capture, share and manage medical images and related information. Increasingly, the group is also providing solutions for specific healthcare segments like diagnostic imaging centers, orthopedic practices, women's healthcare providers and dental practices. Kodak is now expanding thermal media capacity at their Colorado plant and will invest $45 million in new thermal capacity in Rochester. In 2004, the Company acquired National Semiconductor Corporation's imaging business, which develops and manufactures complementary metal oxide semiconductor (CMOS) image sensor devices. Kodak has also introduced new technology for the future that enables creation of thin, flexible, lightweight displays. Made of coated plastic, the displays are shatterproof and ultra low-cost, appealing features for retail and consumer signage that must be easy-to-read, portable and changeable. While many new technologies are being developed for these applications, Kodak's differentiation will be in developing a low-cost, roll-to-roll manufacturing process built on our expertise in thin film coating. Procurement, Kodak has successfully acquired and is integrating companies and technologies, notably in graphic communications and health, that will help boost their revenue and earnings and fuel their long-term growth by rounding out their portfolio and expanding their distribution to new markets. In 2004, the Company acquired National Semiconductor Corporation's imaging business, which develops and manufactures complementary metal oxide semiconductor (CMOS) image sensor devices. In March 2005, Kodak acquired OREX Ltd., a leading supplier of compact computed radiography systems. This will further strengthen the Health Group's ability to serve women's healthcare providers and other target market segments. Kodak became sole owner of Kodak Polychrome Graphics, formerly a joint venture, and the world leader in digital printing plates and proofing systems. Kodak also announced an agreement to acquire Creo, Inc., the world's No. 1 provider of workflow software used by printers, and a leading provider of plate setters worldwide. Ansoff matrix The Ansoff matrix will help us consider ways to grow the business via existing and/or new products, in existing and/or new markets - there are four possible product/market combinations that we have. This matrix will help Kodak decide what course of action should be taken given current performance. The matrix consists of four strategies, lets review the most suitable strategy and why not the remaining three strategies. The most suitable strategy after reviewing Kodak's scenario seems market penetration and market development. Diversification Kodak has diversified into different fields of health, commercial and consumer products already. They have also succeeded in growing their market share in US, Japan and Europe. The Company also ended 2004 with No. 1 digital camera market share in Australia, Argentina, Peru and Chile, and top three share positions in Germany, the United Kingdom, Mexico and Brazil. Now its time for other countries. Market Penetration Market penetration is now required as it turns useful when there is a demand of products and there exists untapped market. When the sales of products is at a rise and there is a decline in the market shares of competitors. Kodak now needs to enter markets of Asia specifically China, India, Singapore and so on where digital revolution has been adopted quite quickly. Product Development Kodak should not go for product development at the moment as the organization has just diversified into different product lines. Though the idea of new products according to the rapid technological developments is excellent. They should first cater the untapped markets with their diversified products and can plan out ways of product development so that when its competitors try gaining market shares, the company should be prepared to attack. Market Development Market development also sounds well as it is used to promote company's existing products. Kodak has been successful at what it is doing. There are unsaturated and untapped market existing and when an organization's basic industry is becoming rapidly global in scope it is good to develop your market. Conclusion Kodak as we know has really gripped its ropes once again after a shock of digital revolution. Its management is already working hard to excel in its diversified products to maximize its market share globally. The company is doing well at a steady pace. It needs to remain focused and apply new strategies like market penetration and development to cater the global markets. Kodak has been a known brand for years. The organization has its own identity. Clear focus and objectives would help them achieve their goals in no time. References 1. Fred R David. (2003). Strategic Management : Concepts and Cases. Prentice Hall: Pearson Education International. 2. R Wayne Mandy, Robert M. Noe, Shane R. Premeaux c 2002, Human Resource Management 8/e, Prentice Hall. 3. Armstrong, Kotler. Principles of Marketing, 10th edition, Pearson Education, 2004 4. Helen C. Barrett (2004). Digital Storytelling. Digital Storytelling. Retrieved November 18th , 2006 from http://electronicportfolios.com/digistory/ 5. John Larish (2006). Photo Reporter. The Analysts Speak Out: Is There a Future for the Photo Industry Retrieved November 18th , 2006 from http://www.photoreporter.com/article.aspissueID=&num=9&vol=14&articleType=n&articleID=744 6. Evan Nisselson (2003). The Digital Journalist. Why will wireless camera phones revolutionize the photography industry. Retrieved November 18th , 2006 from http://digitaljournalist.org/issue0305/cameracorner.html 7. (2004). Quick MBA. Ansoff Matrix. Retrieved November 18th , 2006 from http://www.quickmba.com/strategy/matrix/ansoff/ Read More