Kodak developed digital camera technology as early as 1976 and used digital imaging technology in aerospace; in 1991 Kodak had a 1.3 megapixel digital camera. But by 2000, Kodak's digital products sold only $3 billion, only 22% of its total revenue; Kodak's product digitization rate in 2002 was also only about 25% of the 2000-2003 Kodak divisions sales profit report, although Kodak's divisions from 2000-2003 sales performance from 2000-2003 is only a small fluctuation, but the decline in sales profits But it is very obvious, especially the imaging department showed a sharp decline. Specifically manifested in: Kodak's traditional imaging division of the sales profit from the 2000 14.3 billion U.S. dollars, fell sharply to 4.18 billion U.S. dollars in 2003, a decline of 71%! In the photo from the "film era" into the "digital era", the former glory of the image kingdom also seems to be out of favor with the film, and no longer exist. Kodak crisis caused by various reasons: first, Kodak's long-term reliance on the relatively backward traditional film sector, and for the impact of digital technology to the traditional imaging sector, the response is slow. Secondly, the management style is conservative, satisfied with the traditional film products market share and monopoly, lack of forward-looking analysis of the market, did not adjust the company's strategic focus and departmental structure, decision-making hesitation, missed opportunities.
Investment in a single direction, the ship is too big to turn around
The transition and switching timing between the existing technology to bring real profits and new technology to bring future profits is not properly grasped, resulting in a large amount of Kodak's capital for the traditional film factory production lines and printing store equipment for low-level simple duplication of investment, crowding out the investment in digital technology and the market, and increasing the cost of exit/renewal, so the company is stuck in a "know your mistakes" situation. The company is trapped in the "know that it is difficult to correct", "the ship is too big to turn around" dilemma. According to statistics, by the end of 2002, the number of Kodak color stores in China reached more than 8,000, which is 10 times as many as KFC and 18 times as many as McDonald's. These shops were not able to provide sufficient profitability! These stores are becoming an albatross in Kodak's strategic transformation when they do not provide enough profit.
Decision-Makers Obsessed with Established Strengths
In the past, Kodak's management has come from traditional backgrounds: Charles Barrentine, the current vice president of operations, studied chemistry, and Cohen, the general manager of the U.S. region for digital imaging systems, studied civil engineering. Seven of the 49 current top executives came from chemistry, while only three majored in electronics. Particularly in terms of market adoption and maintaining leadership, traditional industry leaders have neglected the continued development of alternative technologies, thereby losing their rightful share of leadership in the market for new products.
From the comparison of the market share of traditional film and digital imaging products, we can see that Kodak's attachment to traditional film technology and products, as well as the slow response to the impact of digital technology and digital imaging products, which to a large extent determines the inevitability of Kodak into a growth crisis.
Short-sighted strategic alliance
From the perspective of market competition, the relationship between technological competition and cooperation in Kodak's business strategy has been swayed by short-term market behavior, and the strategic positioning and strategic roles of competitors and cooperators have been blurred.
The technological market is highly competitive, the leading cycle of electronic technology is shortened, the increase in the entry into niche market areas, the increase in international competitors, in the field of digital cameras, camera phones, digital printing, digital printers encountered in the field of such as: Fuji, Sony, Hewlett-Packard, Canon, Epson and other large companies in the fierce competition. Although Kodak has also established a large number of strategic alliances with its rivals, but the formation of strategic alliances on the core technology is very little, most of the service program of the alliance. The country's most powerful weapon, can not be ceded to others. Management in fact should be sober enough to realize: Kodak in the past when the boss is relying on film, and cooperation with others is also relying on this diamond, people will also dip your light. Digital era, no core technology, business operations will always be in a dangerous state, the past everything will be devalued in an instant. Cooperation is never wishful thinking. Despite the struggle, Kodak has come to this point - January 19, 2012 in New York under the United States Bankruptcy Code, Chapter 11 filed for bankruptcy protection. The world's largest producer and supplier of imaging products and related services, founded in 1880, had to face a brutal end because it could not keep pace with the tide of the digital age.
This comes after Kodak's average closing price has been below $1 for 30 consecutive trading days, failing to meet the New York Stock Exchange's listing requirements. Rochester, N.Y.-based Eastman Kodak Co. announced in early January that it had received a warning from the New York Stock Exchange that it could be delisted if its stock price failed to rise in the next six months.
Kodak was the subject of several bankruptcy rumors in 2011, and its shares fell more than 80 percent that year, most recently to $0.66. It's the latest blow to Kodak, which is selling off assets to survive. Kodak said there was no guarantee that it would be able to meet the New York Stock Exchange's listing standards within the next six-month period because of the company's liquidity challenges.
And in its filing, Kodak's current assets stand at $5.1 billion, but its debt has reached $6.8 billion, putting it in a serious insolvency position, according to its filing.
"The members of the board of directors and the entire management are unanimous in their belief that this is a step that has to be taken and is the right step for Kodak's future." Chairman and CEO Antonio M. Perez said in a statement. He also said the Chapter 11 filing would allow Kodak to maximize the value of the assets it owns, including licensing patents such as digital imaging to cellphone and other device makers.
Kodak said the company and its U.S. subsidiaries have filed for reorganization of their operations in a U.S. bankruptcy court under Chapter 11 of the bankruptcy code. Subsidiaries outside the U.S. are not included in the filing. Kodak said the move will strengthen the liquidity of its U.S. and overseas assets, commercialize non-strategic intellectual property, properly address legacy liabilities and focus on its most valuable businesses.
In addition, Kodak has secured a $950 million line of credit from Citigroup for Chapter 11 companies for an 18-month period to improve liquidity as well as working capital. The loan line is also subject to court approval and a number of prerequisites. The company believes it has sufficient liquidity to maintain operations during the bankruptcy and that it will continue to provide products and services to consumers.
Kodak expects to continue to pay employee salaries and benefits and maintain consumer service programs. Kodak's foreign subsidiaries are not subject to the terms of Chapter 11 bankruptcy protection and are obligated to pay all outstanding debts to suppliers. Kodak and its subsidiaries in the U.S. are committed to be obligated to pay all debts owed to suppliers post-bankruptcy. In response to these issues and the reaction of the capital markets, Kodak announced on September 26, 2003 that it was implementing a major strategic shift: abandoning its traditional film business and shifting its focus to emerging digital products.
1. "Responding to change" by increasing investment in non-imaging business areas.
2. No longer make any significant long-term investments in the traditional film business.
3. The company was reorganized to reorganize the former Film Imaging, Medical Imaging, and Commercial Imaging divisions into five digital technology divisions: Commercial Imaging, Commercial Printing, Medical Imaging, Digital and Film Imaging Systems, and Graphic Imaging and Components.
4. Launched a series of models of digital cameras and inkjet printers to consumers to compete head-to-head with Fuji, Hewlett-Packard, Xerox, Canon and Epson in the digital business.
5. Stick with its film licensing business and aggressively pursue private-label film operations, e.g., film will be able to be sold abroad under non-Kodak-branded trademarks.
6. Through cross-industry alliances to form a comprehensive solution for consumers without leaving their homes, that is, the following industrial chain, including: digital cameras (Kodak or non-Kodak brand) - FedEx delivery - a chain of printing stores output; MMS (photography) cell phone - network transmission -Output from chain of print stores -FedEx delivery -Customers.
7. In the Chinese market, the traditional business and digital business both, the construction of a Kodak global production center, the main business for the assembly of core models of digital cameras, while starting the local production of parts and components of the local production work and digital printing; Kodak's traditional civilian imaging business sector to continue to expand in the mid-west and the secondary cities of the market share, and to achieve the "Image "Kodak's traditional residential imaging business unit continued to expand its market share in the Midwest and secondary cities, realizing the strategic transformation from "Imaging" to "Imaging+Retail". 8. Realize the strategic plan of "Double T" (Total Solution and Total Satisfaction) and "Double E" (Extension and Expansion), and strengthen terminal output. Following the introduction of the transformation strategy in September, held in western New York investors meeting, Kodak CFO Brewster announced the main points of Kodak's new strategy, which includes:
1. Overhaul of the traditional business management in order to expand cash income;
2. Accelerating the development of the company's already existing digital imaging products and services;
3. Strictly focused on acquisitions to fill the already existing business and accelerating entry into closely related imaging markets;
4. exploring long-term growth opportunities in areas such as electronic displays and inkjet printing. In the year following the transition, Kodak launched a series of activities: the acquisition of Algotec Systems, SCITEX Digital Printing, and VERIZON WIRELESS to establish a strategic partnership, the completion of the acquisition of NEXPRESS and HEIDELBERG, the purchase of the image sensor business from National Semiconductor, the purchase of OREX, the sale of the AUNTMINNIE business, purchased CREO Corporation, etc.
A Kodak spokesman said, "This is what Kodak has to do in the face of reality -- in the transition from the traditional imaging business to the digital business." Meanwhile, Kodak is tightening up on management arrangements to make staff changes. And Kodak's board of directors expects him to "continue his legacy of developing digital products and organizational management." Kodak hopes that this new strategic shift will lead to a more diversified business and expects that this new strategy will allow the company to grow at a rate of 5% to 6% per year. It could reach $16 billion in annual revenues by 2006 and $20 billion by 2010. In fact, Kodak developed successful digital photographic technology as early as 1976, but has been stumbling in digital imaging. First, Kodak's huge investment and global presence in the traditional film market turned into a huge burden for the company to move to the digital market. Not only that, but Kodak's management in the mid-to-late 1990s never advanced the transition as a core strategy for the company. George Fisher, the company's former chief executive, had claimed that Kodak would achieve parity in sales between its traditional and digital businesses by 1997. But the truth is that the company's management more immersed in the traditional film market on the established advantages and profit generation, and even believe that the promotion of digital cameras and other products will hurt its traditional business. After Kodak finalized its strategy to move into the digital market, some shareholders still criticized then-CEO Daniel Carp for betting against Kodak's digital strategy.
In the battle for the traditional film market, Kodak's competitive advantage is more on the market strategy and business model, and the development of related alternative technologies is often put on the back burner. But in the IT context of the digital imaging market, the competition for key technologies has become more intense. Kodak's focus on the traditional film market in the mid to late 1990s resulted in the loss of its technological leadership in digital imaging. The transformation of Kodak's traditional marketing channels, such as the print stores that dot the streets, is also still a process. In this way, Kodak's brand will undoubtedly become the entry point and engine of its strategic integration. When Kodak entered digital imaging in 1997, it was faced with the problem of brand advancement - Kodak needs to use a strong brand of film and photo processing in the digital camera and digital imaging market to promote its products. According to Mike Lotti, Kodak's director of business research, "Kodak wanted to maximize its existing marketing investment and brand recognition to advance sales of its new products. Kodak knew from past experience that marketing investments in certain types of products would positively impact other products." Consumer trust and satisfaction with Kodak's existing products and services will enhance consumer identification with Kodak's new products and services. For Kodak in the past, advertising investments in cameras also had a boosting effect on sales of its traditional film. For Kodak today, all it needs to do is translate its past marketing efforts and investments into a boost in sales of its digital products.
"The pressure is on to maximize the 'productivity' of marketing. Kodak needs something to make our marketing 'productive,'" added Tim Ambler, a senior fellow at the London Business School, "Is marketing just advertising, promotion and a little bit of market research? Is marketing just advertising, promotion and a bit of market research? Reaping the benefits of past successful marketing investments is also an integral part of marketing."
Kodak's past branding investments have made it a household name. Kodak's own research proves this, and surveys by many agencies confirm the value of Kodak's brand. What will Kodak's brand value bring to the table in an era when it is starting to promote brand new products? The transition is not only compelling for Kodak, but also shows that it was left behind by its competitors in time at the beginning. In this environment, branding may be one of the few competitive advantages Kodak has over other manufacturers. Of course, Kodak needs to do more with its marketing to shift consumer identification with the Kodak brand from film to digital products.
The aging of the brand is one of the most immediate problems Kodak faces in its marketing. A brand is fundamentally a concentration of consumer demand and awareness in a marketed product. When consumer demand gradually shifted from traditional film images to digital images, the Kodak brand's market carrier became weaker and weaker, and the brand began to age. To demonstrate management's commitment to redefining the Kodak brand, Kodak changed its 36-year-old logo at the beginning of the year. In the new Kodak logo, the letters Kodak jump out of the traditional yellow box. Kodak's new brand identity showcases a streamlined design and prominent, eye-catching letters that symbolize a new, cross-industry, digital imaging-focused leader.
The logo change is just one step in a series of strategic brand realignments for Kodak. Brian Collins of Ogilvy, the company's marketing partner, confirmed that Ogilvy's BIG team (Brand Integration Group) has already begun helping Kodak reposition its brand's consumer identity strategy and visuals, and that Kodak's new corporate identity is just a small part of the Ogilvy team's work. The new Kodak corporate identity is just a small part of the Ogilvy team's work. Carl Gustin, Kodak's director of marketing, has publicly called out Kodak's need to move faster on the brand strategy transformation path: "We are fully committed to updating our guidelines, policies, and practices, but there is still more work to be done to transform our brand strategy. By launching our new corporate identity at this time, we are signaling that the time to act is now."
Carl Gustin's call is in line with most of the marketplace -- the logo change is just the beginning of Kodak's strategic brand makeover. To change the traditional image of Kodak in the minds of consumers, to re-invent a new digital Kodak brand, the Kodak brand must be transformed through the transformation of consumer demand and consumer awareness once again to meet the consumer's needs, and this fulfillment must be based on the Kodak digital products as a market vehicle. Kodak Moment (Kodak Moment), in line with the concept of "digital Kodak", Kodak in the marketing strategy to change the previous claims. In the new commercials and other promotional tools, Kodak used the "color card" as its main line, which was clearly different from the "affection card" used in the past to promote film. Kodak LOTUS is Kodak's only authorized all-around imaging service store in China.