BA401 Strategic Management: KODAK
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Kodal's case presentation for BA401:Strategic Management class at Thammasat Business School
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BA401 Strategic Management: KODAK
- 1. Nanapat T. 5202640503 Vishal N. 5202641410 Yotsawat C. 5202641519
- 2. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS COMPANY PROFILE Eastman Kodak Company was incorporated in New Jersey in 1901. Business originally established by George Eastman in September 1880. Previous CEO, Chandler, diversified Kodak into four business groups: 1. Imaging 2. Information Systems 3. Health 4. Chemical In 1990, Kay Whitmore is the new CEO of the Eastman Kodak Company
- 3. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS SWOT STRENGTH • High brand awareness & recognition • Worldwide distribution presence • Cash rich • Strong control in photofinishing process • Expert in chemistry industry • Market leader in film business • International presence • Diversified portfolio • Strong R&D
- 4. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS SWOT WEAKNESS • Growth without clear strategic direction • Disadvantage cost structure in core business • Information System group experiencing huge loss over the year • Outsource manufacturing process to competitors • Product cannibalized each other • Technology oriented company • Lack of innovation • Failed to capture many lucrative opportunity related to core businesses
- 5. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS THREATOPPORTUNTY • Form new strategic alliance with Walt Disney • Growing in popularity of 16-ounce PET bottles and plastic related products • High profit margin in healthcare • New imaging technology e.g. digital • Exploit lithium ion battery • Competitive threat from Fuji in core business • Competition in newly acquired companies • Change in customer preferences • Emergence of new technology • Price war in film and photographic industry • Potential litigation from Polaroid SWOT
- 6. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS FINANCIAL POSITION •For the past years, the debt level of the company has significantly increased. The company is considered as highly leverage. •The company still has the ability to pay back debt very healthily because its current ratio is around 1.2. It is still liquid. > Low risk of Bankruptcy in 1992. •Asset utilization has been fluctuating a lot in recent years due to aggressive acquisitions of many companies some with unstable earnings from each segment. •The company has low net profit margin due to a very competitive industry it enters. •Company’s performance is affected by exchange rate. The financial situation of the company is still healthy.
- 7. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS MARKETING ANALYSIS Market leader in film business • Continuously losing market share to Fuji • More premium than competitor with high quality product offering Position to be expert in photography Price war No market research • Failed to deliver products that meet customer preference • False believed about what consumers want Customers are consumer market & business market Biggest threat from Fuji Highly competitive industry that requires R&D and good marketing team.
- 8. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS MARKETING ANALYSIS Information system market requires company to have technical expertise in producing equipment at low cost and good features. In health market, brand’s credibility has played crucial role in gaining customer’s trust. Chemical group has faced highly competitive products that they compete on efficiency. Well known Kodak’s brand can help consumer identify it products easily. Requires heavy R&D
- 9. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS MANAGEMENT CRITIQUE Technical mindset and lack of marketing orientation Management culture is CONSERVATIVE results in: • Slow response to market change • Risk adverse Organization culture is in transition Weak management • Unclear rationale of acquisitions results in unclear strategic direction • Unaware of the competitive threat the company’s is facing • Failed to manage new ventures and acquisitions
- 10. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS COMPETENCIES Distinctive Competency: Complete presence in the value chain of film & photographic industry Sustainable Distinctive Competency : Kodak’s Brand
- 11. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS PROBLEM STATEMENT How can the company solve its lack of marketing orientation issue in order to retain its competitive advantage? What should Kodak do to maintain its competitiveness in order to effectively compete with existing and potential competitors in its core business? How can Kodak successfully manage its acquired companies in order to become a truly conglomerate company? How can the company ensure its existence in the current business with changing industry trends How can the company solve its cost disadvantage structured in order to become more efficient?
- 12. How can Kodak successfully manage its acquired companies in order to become a truly conglomerate company? COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS SELECTED PROBLEM STATEMENT • Sales of the company’s core business operation decline at rate of approximately 22% for the past 5 years • Decline in sales is due to fierce competition from Fuji Film and missed opportunities by the management • To counter competition and lessen its dependence on the core business, Kodak began diversification strategy • Kodak is under immense threat of being taken over and dismantles, if the company fails to successfully manage the acquired companies
- 13. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS ALTERNATIVES 1. Decentralized decision making authority to each division 2. Transform executive and management teams 3. Hire expert in managing conglomerate company 4. Acquire Chinon 5. Create control mechanism to motivate executives to improve their divisions performance
- 14. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS ALTERNATIVES 10. Develop training program in order to become more market oriented 6. Introduce nutritional supplement product in order to c capture the growing opportunity in healthcare industry 7. Introduce lithium-ion battery to become a leader in growing consumer electronic industry 8. Slowly divest Information System group 9. Implement cost cutting strategy among all divisions in order to enhance company efficiency
- 15. Transform executive and management teams COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS RECOMMENDATIONS Decentralized decision making authority to each division
- 16. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS RECOMMENDATION 1 Rationale Transform executive and management teams • Management team is filled with engineers and scientists - technical orientation • Neglect the marketing aspect when coming up with new product • Lack of marketing orientation --- missed opportunity and losing competitiveness • Lack expertise and industry knowledge to manage acquired companies
- 17. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS RECOMMENDATION 1 Implementation Transform executive and management teams • Evaluate current management from each division • Slowly eliminate poorly performed executives and who don’t fit with company’s divisions acquired • Replace with people who have expertise and industry knowledge • Instill the management team with qualities of technical and marketing skills • Implement control mechanism
- 18. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS RECOMMENDATION 2 Rationale Decentralized decision making authority to each division • Conservative values rather than Entrepreneurial values • Centralized decision making process • Long functional lines – slow response to changing business trend and slow to capture new business opportunities • Lack of communication and poor interdivision relations between divisions contributed to poor operating performance
- 19. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS RECOMMENDATION 2 Implementation Decentralized decision making authority to each division • Conduct preliminary analysis to get the most efficient flow of information between divisions • Shift decision making task from centralized manager to each division manager • Evaluate its effectiveness in responding to the competitive threats and changing trends
- 20. COMPANY PROFILE SITUATION ANALYSIS PROBLEM STATEMENT ALTERNATIVES RECOMMENDATIONS Q & A
Notes de l'éditeur
- Position to be expert in photographywith products ranged from film, camera to finishing processWith diversify portfolio, current Kodak’s customers exist in both consumer market and business market
- Information system : very competitive industry and many large competitors like Canon and IBMIn health market: very high profit margins and opportunities on supplemental nutrition.Chemical group: the company is the major suppliers of chemical products, though tense competition> price war, Successful Kodak’s PET
- fear that the company will be taken over - undertaken many acquisitions that are unrelated to the company’s core business.
- Step 1:Evaluate the current management team in each of Kodak’s four business divisions – Imaging, Chemicals, Health and Information Systems. At this stage Kodak should evaluate the current management to match each division operational and cultural needs with required skills and leadership culture.Step 2:Begin the transformation process by slowly eliminating executives who have poor performance and don’t fit well with the company's division acquired and replace those executives with the people who have expertise and industry knowledge.Step 3: Instill the new executive and management team with both qualities of technical and marketing skills and implement a mechanism that will monitor and evaluate the performance of new management team in each division.
- Step 1:Conduct preliminary analysis regarding the most effective structure for the organization that will result in the most efficient flow of information between divisions and will encourage collaboration and interdivisions relations.Step 2:The task of making decisions will shift from centralized group of seniors’ managers to each division managers. However, the centralized group of managers will have power to reject any decisions that they feel is against the corporate goal.Step 3: Evaluate the new decision making process for its efficiency and effectiveness in responding to the competitive threats and changing industry trends.