Jennifer Davis

BUSN601
December 9, 2012
A Look at Kodak Worldwide
Before the digital era Kodak was one of the largest, most successful
photography businesses in the industry. Since its inception in 1892, the Eastman
Kodak Company has enjoyed many successes, from mass-producing
photographic dry plates to health imaging units. Through all of the years, Kodak
has maintained the values that were set by George Eastman and even attempted
to move towards new goals that were needed by changing markets and times.
Kodak has managed to become a worldwide company with operations on all
continents and manufacturing facilities in nine countries (Clemen & Kwit, 2001, P.
76).
Make good goods has been part of Eastman Kodak Companys values
since it began operations (Pezzano, 1989, p. 39). Eastman Kodak Company
was formed in 1892 in New York. It was built on four basic principles: mass
production at low cost, international distribution, extensive advertising, and a
focus on the customer (Building the Foundation). After the basic principles, three
policies were added. These were to foster growth and development through
continued research, fairly and respectfully treating employees, and reinvesting
profits in order to build and extend the business (Building the Foundation).
Eastman was a firm believer in employees being important to the
companys success. He began planning for dividends on wages early in the
company (George Eastman). In 1899, he distributed a substantial sum of his
own money to each person who worked for him (George Eastman). Eastman
later set up a Wage Dividend where employees benefited above his or her
Jennifer Davis
BUSN601
December 9, 2012
wages in proportion to the yearly dividend on the company stock (George
Eastman). Eastman believed that the success of a company was not due just to
profits and patents, but also to employee loyalty and goodwill.
One of the principles, mass production at low cost, was something
Eastman was devoted to. He was obsessed with the idea of supplying the tools
of photography at the lowest possible price to the greatest number of people
(Building the Foundation). Thanks to the rapid growth of the company, rapid
production became absolutely necessary in order to supply the demand. The
company and Eastman created ingenious tools and processes for manufacturing
film that enabled the new company to turn out high-quality merchandise at
selling prices (Building the Foundation).
George Eastman, who founded the Eastman Kodak Company, placed
great faith in marketing in order to grow his company. He first started by drawing
his advertisements in newspapers and periodicals of the time (George Eastman).
With the use of advertising agencies and marketing strategies, Kodak and its
trademark symbol have become recognizable around the world. The goal of
Kodak was to create one set of business processes that are recognizable
regardless of location (Stevens, 1997, p. 130).
One way that Kodak attempted to achieve a worldwide brand identity was
to launch an advertising campaign in Japan and carried over to other parts of the
world (Strong, 1987, p. 34). As it has moved into a new decade, it has started
moving more of its marketing focus towards the business, government, health
Jennifer Davis
BUSN601
December 9, 2012
care, and industrial markets (Strong, 1987, p. 35) as opposed to personal
photography.
About 40 percent of Kodak sales are made to customers outside of the
United States (Murphy, 1985, p. 32). Due to this, developing worldwide
strategies and markets are vitally important to Kodak for current sales and future
growth potentials (Murphy, 1985, p. 32). Kodak has realized that because of
intense competition in various markets, it must be more responsive to customers,
open to change, and must make the most effective use of their resources in order
to maintain their current market position and in order to expand worldwide
(Murphy, 1985, p. 32). Also, Kodak is working to become a world leader in other
major markets that are not traditionally associated with Kodak brands (Strong,
1987, p. 30).
Kodak has been operating worldwide for a number of years. At the time of
Cornelius J. Murphys article (1985), Kodak had major operations in Canada,
Mexico, Brazil, Australia, Germany, France, and the United Kingdom (p. 32).
One of its key assets has been its universal franchise (Strong, 1987, p. 30). In
1982, Kodak established a global marketing unit and global manufacturing unit
(Murphy, 1985, p. 32). This approach was taken in order for Kodak to emerge as
the world leader in imaging (Przybylowicz & Faulkner, 1993, p. 32). Their
global marketing is planned for by one of Kodaks strategic planning units
(Przybylowicz & Faulkner, 1993, p. 33). Their plan is to use their core strengths
to gain competitive advantage in the various markets that might be chosen to
enter in the future (Przybylowicz & Faulkner, 1993, p. 33). Kodaks international
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December 9, 2012
business was run with an importance on local sales and earnings (Murphy, 1985,
p. 33) prior to the 1982 transition. Now, however, the marketing and
manufacturing units work together on a global basis (Murphy, 1985, p 33). This
helps to create input from various plants around the world (Murphy, 1985, p. 33).
Communication is obviously critical to any worldwide operation, and
Kodak is no exception. Starting from the top, input is critical during each step of
the process (Murphy, 1985, p. 33). According to Murphy (1985), not only is
information exchanged at regular intervals throughout the organization, but the
senior manufacturing managers of all the principal units worldwide meet together
twice a year (p. 33).
One country that Kodak is heavily invested in is China. Prior to 1993,
Kodak had a modest involvement in Chinas market, with its market share
coming in dead last (Alon, 2001, p. 740). A new chairman of Kodak was
appointed in 1993 and that chairman has since turned around Kodaks market
share in China. Under the chairmans leadership, Kodak has created a Greater
China Region division; developed relationships with distributors, wholesalers,
and government agencies; expanded retail presence for Kodaks products; and
opened eleven representative offices (Alon, 2001, p. 740). Kodak has also
invested heavily into Chinas market. The decision to invest was based on four
operating principles, including making products where they are sold and
accepting short-term risk and unpredictability for long-term growth (Alon, 2001, p.
741).
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BUSN601
December 9, 2012
Another way Kodak has made its presence known in China has been by
franchising. Kodak uses the term Quality Monitoring Network for this system I
order to circumvent the Chinese franchising regulations (Alon, 2001, p. 741).
These operations are called Kodaks Express outlets are managed as franchise
in that (1) they utilize independently owned outlets, (2) they are obligated under
contract (3) to buy and display 100% Kodak products and services, and (4) they
utilize Kodaks store specifications including display of the Kodak brand, logo,
and signage (Alon, 2001, p. 741). This method has proven to be very
successful for Kodak and has rapidly grown since it was implemented in 1993.
When Kodak re-entered the Russian market in 1990, it focused on
promoting the sales of the companys consumer imaging product lines (Anders
& Usachev, 2003, p. 172). One of the critical elements that helped Kodak
achieve success in Russia was its direct communication with the people. Kodak
implemented many strategies to attempt to achieve success in Russia. One of
these strategies was an educational program for Russians. This helped to
popularize photography. It also helped create a positive brand image (Anders &
Usachev, 2003, p. 172). Kodak also created strong personal relationships with
regional leaders, which helped convey to the public that Kodaks intention was
not just to earn a profit, but also to improve the communities that it operated in
(Anders & Usachev, 2003, p. 173). A few ways that Kodak shows these
intentions are to sponsor Christmas parties for children at childrens homes and
hospitals and host an annual year-end banquet for its customers (Anders &
Usachev, 2003, p. 173).
Jennifer Davis
BUSN601
December 9, 2012
Another key to Kodaks successful Russian expansion was that it built
plants in Russia. They did this in order to produce the products locally. This
served many purposes. First, it served to overcome the thinking of Russian
people who prefer domestic products by producing their product locally. This
helped their market acceptance. It also helped their image by proving to the
Russian population that they were attempting to help the community by bringing
in jobs to a tough economy. Finally, it helped Kodak circumvent some complex
trade barriers and other import restrictions (Anders & Usachev, 2003, p 174).
One reason that Kodak was so assertive in its expansion into Russia was
for defense. There were not many other photography suppliers in Russia after
the fall of the Soviet Union and if any of Kodaks competitors, such as Fuji,
entered the market first it could eventually jeopardize Kodaks market share in
Eastern Europe (Anders & Usachev, 2003, p. 173).
When Kodak expanded into Russia, it also maintained already established
relationships with its global business partners (Anders & Usachev, 2003, P. 173).
Kodak even encouraged these companies to expand into Russia themselves.
This helped not only to maintain these relationships, but also helped the Russian
economy. These firms saw the success that Kodak had with its communication
strategy, and over time worked to develop their own relationships.
While Kodak was able to establish itself in the Chinese and Russian
markets with relative ease, it was not so lucky in the Japanese market. Fujifim
was already an established company in Japan and created significant resistance
to Kodaks arrival. In order to try and compete in this market, Kodak
Jennifer Davis
BUSN601
December 9, 2012
implemented a different strategy. It was not able to use the marketing
approaches that had worked in the past, such as exclusive supply arrangements
with large retailers, as well as shelf space and location due to the customers
preferring Fujifilm and because of the small amount of retail chains (Baron, 1997,
p. 153). As a result of the global competiveness and lack of access to Japans
market, Kodak initiated an international trade dispute with Fuji Photo Film.
In Europe, Kodak has implemented a Euroclass program. This was
created to build a goal for other units through benchmarking, as well as to
stimulate greater collaboration, support, and teamwork throughout the region
(Kodak's picture is changing, 1996). This style was implemented to create more
open communication. George Fisher, the chief executive officer of Kodak, has
created worldwide surveys, known as snapshots (Kodaks picture is changing,
1996). These snapshots help the company measure goals and targets against
the satisfaction of customers, shareholders and employees (Kodaks picture is
changing, 1996).
Kodak focused on its existing business models and did not pursue the
sales of products such as digital cameras and photo printers until much later
(Koen, Bertels, & Elsum, 2011). Unfortunately for Kodak, items such as these
ended up being the items that made the most money in the digital market and the
fact that they waited so long to try and join this market was part of their downfall.
Kodak focused on being the best in cameras, film, and chemicals. This
business strategy was successful for them for almost 100 years. When the
market turned more towards digital cameras and picture printers, they did not
Jennifer Davis
BUSN601
December 9, 2012
want to join the market and instead kept focusing on what had worked for them in
the past. Kodak had previously used a strategy of relying on its own resources
for each product (Strong, 1987, p. 34). Kodak insisted on preserving its self-
reliance instead of following the lead of other companies who found success
forming corporate partnerships and close relationships with suppliers (Santoli,
1998, p. 25). However, that could not continue to be their success when people
were turning away from that. In 2001, Kodak moved away from their commercial
products and into the digital era with the launch of their Easyshare system (2000-
2009). In 2002, Kodak introduced the Kodak8500 Digital Photo Printer (2000-
2009). While these were both moves in the right direction and put them on the
map digitally, it was too little too late. Brands like Canon and Nikon had already
made their mark on the digital photography market and Kodak was not able to
keep up. In January 2012, Kodak filed for bankruptcy protection. While the
concentration of work, research, development, and money was on chemicals and
better ways to improve the companys films, a lost opportunity presented itself.
Yes the concentration of effort on film alone made the company thrive, but the
lack of diversity also made the company weak, which led to the current situation
that Kodak finds itself in today.
They were too arrogant for their own good. Add to that mismanagement
and the results are grim. Kodak has undergone a number of reorganizations
over the years to be able to keep up in changing markets.
The first major one was in the 1980s and created separate business units
within the company that focused on specific customers and markets (Strong,
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December 9, 2012
1987, p. 30). As part of the reorganization in 1982, Kodak developed a more
effective manufacturing strategy. Kodak decided to treat all of the various plants
worldwide as a single global manufacturing plant rather than the separate sales
and earnings units (Murphy, 1985, 33). The benefit of this plan is that each
individual plant worldwide is now looking at results on a single company scale
(Murphy, 1985, p 34).
The second was in approximately 1986 and created five major business
groups with its own operating research labs. Each of these groups was held
accountable for their own performance and growth. Basically, Kodak was now a
series of independent companies within a company (Strong, 1987, p. 30).
The most recent change was due to the failure in the market and the
mismanagement that held the company back. Kodak brought in its first outsider
to run the company in 1993. George Fisher, the new chairman, made many
changes to the companys management system and implemented new policies to
try and turn the company around and make it more agile.
While Kodak has certainly had many ups and downs over its long life, they
always seem to find a way to enter a market that may seem unattainable. They
will always find a way to respond to competition and make their past experiences
work for them. Even though they have recently filed for bankruptcy protection,
they are not out yet and their products are still being sold in every available
market, from film and chemicals, to healthcare imaging units, to digital cameras
and photo printers.

Jennifer Davis
BUSN601
December 9, 2012
Works Cited

2000-2009. (n.d.). Retrieved December 6, 2012, from Kodak: www.kodak.com

Alon, I. (2001). Interview: International Franchising in China with Kodak.
Thunderbird International Business Review , 43 (6), 737-754.

Anders, G. C., & Usachev, D. A. (2003). Strategic Elements of Eastman Kodak's
Successful Market Entry in Russia. Thunderbird International Business
Review , 45 (2), 171-183.

Baron, D. P. (1997). Integrated Strategy, Trade Policy, and Global Competition.
California Management Review , 39 (2), 145-169.

Building the Foundation. (n.d.). Retrieved December 6, 2012, from Kodak:
www.kodak.com

Clemen, R. T., & Kwit, R. C. (2001). The Value of Decision Analysis at Eastman
Kodak Company, 1990-1999. Interfaces , 31 (5), 74-92.

George Eastman. (n.d.). Retrieved December 6, 2012, from Kodak:
www.kodak.com

Kodak's picture is changing. (1996). Work Study , 45 (4), 3-4.

Koen, P. A., Bertels, H. M., & Elsum, I. R. (2011). The Three Faces of Business
Model Innovation: Challenges for Established Firms. Research
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Murphy, C. J. (1985). Kodak's "Global Factory". Planning Review , 13 (3), 32-34.

Pezzano, W. J. (1989, May). Kodak Sharpens Its Focus on Qualtiy. Management
Review , 39-41.

Przybylowicz, E. P., & Faulkner, T. W. (1993). Kodak Applies Strategic Intent to
the Management of Technology. Research Technology Management , 36
(1), 31-38.

Santoli, M. (1998). Kodak's New Colors. Barron's , 78 (34), 25-29.

Stevens, T. (1997). Kodak Focuses on ERP. Industry Week , 246 (15), 130-134.

Strong, F. P. (1987). A Company Study Kodak: Beyond 1990. The Journal of
Business & Industrial Marketing , 2 (4), 29-36.