Kodak and Fujifilm

Kodak And Fujifilm Laura Renee Baxter Management 302 Milton Lawler, Ph. D. Strayer University January 23,2013 Abstract Both Kodak and Fujifilm are companies that focused on photography and imaging as their core businesses. Despite Kodak having an upper hand of starting earlier than Fujifilm, 1888 compared to 1934, Fujifilm adapted more to market changes and currently still has a force to reckon. Kodak is currently in bankruptcy protection since January 2012 under Chapter 11 with a bid to try and reconfigure its business strategies.

The difference in management strategies plays a key role in the way the two companies embraced innovation. Complacency and slow adaptation dominated in Kodak Company while Fujifilm embraced innovation spirit and diversified in all aspects to ensure market relevance. Each of the company’s approach to ethics and social responsibility clearly reflects in both company’s profitability. With an aim to give back to the community and exercise ethical practices, production standards were maintained that satisfied consumers on both ends.

A possible change of decision-making process that could embrace flexibility would be the best way to ensure diversity and innovation in any organization. History and core business of each company Kodak Kodak, formerly known as Eastman Kodak Company, was started back in 1888 by George Eastman. The company’s advent could be defined by the launch of the pioneer camera that George Eastman first put into the market. The ease of photography brought by the devise with only a simple click, simplifying the whole sophisticated procedures in the background, formed a strong foundation for Kodak (Kodak, n. ). Headquartered in Rochester, New York, Kodak’s main focus in its early days was photography and imaging. Its wide range of products spread from photography equipment and photography consumables that included paper, color chemicals and its giant product, film. The huge market share Kodak commanded in film products; over 90% since its start of business to the late 1980s, is justification enough to validate its core business (Kodak, n. d).

The transition of photography technology to digital prompted a must change of business strategy for Kodak. The earlier management of Kodak was a bit reluctant with the change and this caused profit dwindles from the late 1980s. The final decade of the 20th century was a major turning point in Kodak’s core businesses. The company diversified from the fast fading limelight of its previous profitable product, film, to the design and development of digital photography equipment.

The slow transition to digital technology, denial of the decline film usage, and steady competition from other technology giants that decided to diversify in the imaging industry eventually grabbed a huge market share from Kodak, both from its home turf, the US, and worldwide, to place Kodak at a lowly 7th position as per statistical study in 2010. Currently, Kodak is under protection from bankruptcy after filing Chapter 11 protection. This was after clear indication that the company would soon fall into bankruptcy, a situation that could eventually lead to its patents being sold.

A deadline of February 13th was set to have the company form a plan to reorganize it to normal operations (Sparkes, 2012). Fujifilm In a bid to mirror the success that Kodak had in the US, Fujifilm, formerly registered as Fujifilm Photo Film Co. , Ltd. was started in 1934. Its core business much or less reflected the businesses that made Kodak prosper in the US: photography and imaging. The company monopolized the Japanese market, ranked second placed in photography film usage after the US. Its ambitious management ventured overseas in the mid-90s without a fear of the already established Kodak.

Despite its slow growth in the overseas markets, Fujifilm developed production bases outside its hub. A joint venture with Rank Xerox, a U. K based Limited company, strengthened Fujifilm’s position in the global market. A breakthrough was imminent in 1984’s Olympics held in Los Angeles in Kodak’s home turf. Gradually, Fujifilm started eating into Kodak’s shares in the US due to near-equal products that were cheaper and actively marketed (Fujifilm, n. d). Fujifilm’s core businesses diversified faster with realization of looming transition by the management.

Its imaging domain not only focused on personal, family and media moments but also diversified in the health sector. Its main businesses include film, photographic color paper, photographic equipment, medical equipment that included X-rays, and chemicals. More recently, Fujifilm’s early preparation to satisfy the fast-changing needs in the digital world ensured it widened its business scope to digital cameras, panel displays, printers, photocopiers and a variety of optical devices (Fujifilm, n. d).

Comparison and contrast of the approach to management that each company has pursued in order to embrace innovation Kodak Kodak’s transitioning to embrace innovation could be blamed on its previous autocratic management body. The complacency by the management to revolutionize the technology it originally created is the sole reason why Kodak is currently in shambles and suffering bankruptcy (Williams, 2013). Numerous researches done by its R&D section had repeatedly foreseen the fall of silver-halide consumer products and prophesied the rise of the digital camera.

Despite having pioneered in the development of the first ever digital camera in 1975 by Engineer Steve Sasson, its rejection by the top-leveled management as a result of the fear of dwindling markets for its core business then, film, seemed to have been the turn-around fortune for the company (Mui, 2012). The foreseen change to digital technology close to 20 years later was seen as a far-off date that the company could lag in its then success. In the recent years, however, Kodak tried to realign its management strategy in embracing innovation.

First was its approach to move from the one-company-one-town scenario to the realistic competitive world. The previous model in which the company got feedback was insufficient to acknowledge the preferences of global consumers. The shift to delocalize research and collect data helped Kodak gather more consumer preferences in order to keep at par with innovation. Acquiring a more diversified top-level management and having a more democratic management style helped it to assign variously qualified staff in their areas of expertise.

This ensured best skill input in each field and ensured the implementation of staff suggestion and ideas that would foster business (Williams, 2013). Kodak’s management finally had to accept the decline of their core business area of focus, film, and diversify into various other fields to keep it afloat business. Over the years, the company has interchangeably dropped and picked other businesses that included digital cameras, printing, and imaging. The area current area of focus under the latest chief executive, Antonio Perez, is digital printing.

The last move in the past one year to file for Chapter 11 of the US to protect the company against bankruptcy was aimed at helping the company restructure back to operations. The move was undertaken after an imminent bankruptcy and the threat to let go of their numerous intellectual property. The current management is doing a lot in generating money from the many patent infringements it claims against many companies, including the multibillion Apple. Adaptation of the Lean manufacturing model by the company will help it maintain high standards in its production plan.

This will ensure value addition as the company adapts to improved innovations. The core aspects that Lean manufacturing model focus on are specification of value, identification of value stream, reduction of waste through a predefined flow, focus on fulfilling the customers’ needs and always aiming at perfection in the processes. Fujifilm Management at Fujifilm ensured the company was kept afloat the game all through years despite the technological changes and the market shift of preferences. This assisted in keeping it at pace to embrace the rapid technological innovation.

Initially starting off as photography and imaging company, the company diversified into various other products such as medical equipment, digital cameras and other devices previously mentioned in this paper. With each level of products, Fujifilm was able to achieve groundbreaking profits depending on the preferences of the consumer base at each time (Williams, 2013). The move to decentralize its production bases and venture into the global market, including US that was dominated by Kodak was a bold move by the management.

Fujifilm did not lay complacent after its successful dominance in the Japanese market, rather, that was seen as an eye-opener to the potential market that lay awaiting globally. A breakthrough was in 1984 at the Olympics hosted in Los Angeles, an opportunity the management utilized to grab a portion of market share from Kodak (Schum, 2012). A joint venture with Rank Xerox, currently known as Xerox Limited, a UK based Limited Company, was a wise management strategy that boosted Fujifilm’s expansion vision. This venture ensured further establishment of production and sales bases globally.

The financial ability brought about by the consolidation of funds from both sides ensured equipped capability for any future innovation, R&D and investment like they did back in 2006 when jointly, they established Fujifilm Holdings Corporation, a holding company. Other management differences that have impacted the relative success of Kodak and Fujifilm with specific examples to support the response. Kodak Initially, way before the declining profits, Kodak’s management thrived on the grounds of innovation.

The upper hand in intellectual property owned, monopoly enjoyed and popularity gained mad the company own over 90% of the globe’s film photography since the early 1900’s to the early 1980s. The company focused on the main domain of film photography and strategized their business around it so much to ensure that the consumables that came along analog photography like film, ink and paper achieved maximum profit. Resistance to change by the management team was a major cause of failure in Kodak’s downfall in success.

Despite having an upper hand to further the development of the digital camera that it first developed in 1975, Kodak viewed the same as a threat to its core business of film and other consumables associated with film photography like paper and ink (Sparkes, 2012). Complacency among the management team was a big barrier to Kodak’s success ever since its dwindling profits in the 1980s. In 1993 after bringing in George Fisher as the CEO, many regarded the management as a success recipe. However, the tides did not go as expected given the lack of activity by the management led by George Fisher.

It was said that the management team had great ideas that they never bothered to implement. A reason given for the company’s complacency was drawn from the past success (Mui, 2012). Failure to bar competition in imitation of its products and strategies and carefully utilizing opportunities was a key point that Kodak’s management flopped. Both of these were entrepreneurial tasks that the management was supposed to seize and use them to their advantage. An example is the failure to build on the digital camera technology they developed in 1975 and the failure to pin down competition on the intellectual property infringed (Mui, 2012).

Fujifilm Quick acceptance and adaptation to change was a major management advantage Fujifilm had in ensuring its business still flourished. After finding out that photography would shift to digital technology in the early ‘80s, the company ensured that it attained maximum profit in its dominating business, film, and reinvested the same to digital technology R&D while anticipating for change (Schum, 2012). Fujifilm management ensured it developed in-house skills to prepare for the transitioning times.

This would avoid the company to be in a scenario where it would have to outsource some of its activities to external companies, an aspect that would force sharing of revenue collected. Currently, this wise decision has ensured that Fujifilm controls close to 40% of all market in photofinishing in the US against Kodak’s minimal 15%. The management’s ability to foresee a potential drop in earnings ensured that it invested its profits into an alternate business entity, Fuji Xerox, a venture entered back in 1962. By doing this, the company was assured of continuous earnings that it consolidated in both its businesses.

Diversity was a key management strategy that was utilized by Fujifilm. The company invested in numerous alternate products apart from its core business. These included medical equipment and digital technology. Apart from these, it also carried out further research that ensured it applied its technologies in other areas such as cosmetics. The medical venture currently has a huge stake in Fujifilm’s business activities, and this could be supported by the recent acquisition of SonoSite, an ultrasound equipment producer located in the US.

Each company’s approach to ethics and social responsibility and the impact those approaches have had on each company’s profitability. Kodak For years, Kodak played a key role of social responsibility in Rochester, New York, where it is headquartered. Charitable donations were for years made to the symphony hall and the orchestra club hosted at the same venue. This act paid off as the company maintained its customer and got even more customer for the way it gave back to the community.

Further, tax abatements were considered for the company in its role of contributing huge sums to a community project (Kodak, n. d). The philanthropic show displayed in its hometown proved the ethical values Kodak had given the drive of the donations were in favor of the shareholders’ interests. Acting otherwise rather than in the best interest of the company’s shareholders to increase their wealth and create good faith with the population would be deemed unethical by all measures. Quality products produced by the company were a result of an honest recruitment process.

The company ensured it only recruited the best talent to ensure maintenance of quality assurance. The process involved was undeniably ethical and in a big part contributed to the profitability of the company. Kodak’s single-use recycling program ensured that over 70 million pounds of waste was avoided. This promoted Kodak’s image as an environmental friendly company, as well as ensured that it saved resources from having to acquire new raw material for manufacturing. The resources were rather diverted to other R&D areas that ensured profitability for the company. Fujifilm

Fujifilm holds in high esteem the ethical and social responsibilities it is obligated to provide. In 2004, the company formed action standards of ethical and social responsibility values the company had to comply. This was inclusive of all affiliates of the company, especially the double venture of Fuji Xerox. The guidelines have since been observed by every employee, uplifting the work standards and thus providing efficiency that translates to profitability. The company has formed an Ethics and Compliance hierarchy that is aimed at promoting ethical and corporate social responsibilities.

Comprising of major heads of departments chaired by the legal affairs corporate vice president, there is no doubt that the company has the sky as the limit in observing ethical and social responsibility obligations. The inclusion of heads in the structure ensures that standard measures are integrated in company procedures to ensure efficiency, a protocol that always results to company profitability. Fuji Xerox employees are protected under an Ethics management team that was initially implemented in 1997.

The code of conduct for the team was updated in 2007 to ensure UN global compliance in ensuring that employees worked in the most hospitable environments. Employees working under such serene environments no doubt work better to ensure high productivity levels and thus profitability (Fujifilm, n. d. ). Discussion of the extent to which management of both companies adapted to changing market conditions Kodak Despite the global perspective that Kodak was quite complacent in adapting to changing market conditions, the management tried to make strategies to counter the changing markets.

In the early 1990s, Kodak rapidly changed its management teams in a bid to come up with ideas that would turn the tides of the company’s profitability. The revolution that started with George Fisher between 1993 and 1999 did not materialize as the change of business focus was always too late (Mui, 2012). The management of Kodak tried to diversify its business products in a bid to catch up with the changing markets. In the 1980s, it tried to utilize its chemicals for medical use but failed, ending up selling the chemicals in the early 1990s.

After finally making a breakthrough in the digital photography market, the industry was quickly cannibalized by smartphone camera revolution. Currently under protection with from bankruptcy, the company is trying to reconstruct its strategies with a focus on commercial printing. Creating ventures was another strategy that Kodak tried to use to adapt to the changing markets. It did make some acquisitions that were not so successful or rather short-lived such as with printing and imaging equipment manufacturer Lexmark between 1999 and 2007.

Fujifilm Fujifilm management discovered the power of joint venture in 1962 when partnering with Xerox Limited. Over the years, the company has acquired diverse ventures such as SonaSite, a medical ultrasound equipment manufacturer and many others in order to maintain high profits in the face of the changing market due to a foreseeing of potential decline in its initial core business, film photography (Schum, 2012). Fujifilm’s R&D long realized the change of photography technology.

The management put up strategies in the 1980s that ensured capitalizing of the last glory years in film photography and investing the revenues collected in digital technology. This went a long way in ensuring the photography segment still went strong in the changing market. The management in Fujifilm saw the potential in global leadership and ensured it established international production bases and markets. This succeeded as the company took a portion of Kodak’s US market, eventually overpowering it with current 25% margin separating the companies in photofinishing businesses.

Development of diverse in-house expertise and diversity of products ensured that Fujifilm had a smooth transition in the changing markets. There was no need to share profits with other corporate entities while diversifying in the chemical and medical equipment industries. Three (3) ways any company should build in flexibility to back up its decision-making process in order to adapt to changing market conditions Openness: A company with a management open to the democratic perspectives of other employees and customers is one of the best ways to adapt flexibility in the decision-making process.

Openness will allow free flow and exchange of ideas, information, tasks and new perceptions of various processes (Sharfman & Dean, 1997). Recursiveness: This is a term used to define the repetitive process of formulation and implementation. Feedback is a significant part of this model as the decision-making team will always rely on the feedback, negative or positive to refine their decisions. This method goes against the perfect decision making hierarchy of problem definition, followed by search, analysis and eventually choice and implementation (Sharfman & Dean, 1997).

Globalizing R&D: This is a model that would delocalize the centrality of research and development. This would eventually increase the scope of decision makers’ perception. Limiting research to an area reduces the chance to get global feedback especially if a brand aims at conquering global markets. Effectiveness of the recommendation above in making an organization more competitive Openness will ensure the company gets better ideas in decision making that would prompt production of better products and provide better market strategies.

This will certainly give such an organization an edge over other autocratic management teams that limit decision-making to the management board (Sharfman & Dean, 1997). Recursiveness would be effective in ensuring periodic refining of products and strategies. Acknowledging feedback, especially from consumers would have a tremendous effect on improving products and services that would be better appreciated by the customers thus putting the organization in a better place market-wise over the competition (Sharfman & Dean, 1997).

Globalizing R&D would ensure appreciation of diversity of the consumer base. This will ensure organizations produce globally-acknowledged products that contain preferences of most consumers, ensuring loyalty and even gain of new consumers. This would give an organization a market edge over competitors. References (n. d). Fuji Xerox: Knowledge Management Ideas to be Copied: How Concurrent Development Techniques can Maximize Both Computer and Human Networks in the Digital Age .

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