Kodak Company Essay

Eastman Kodak Company, comm wholly known as Kodak is an Ameri give notice multinational imaging and photographic equipment, materials and services adjournicipation headquartered in Rochester, fresh York, joined States. It was founded by George Eastman in 1889. Kodak is better(p) known for photographic icon productions. During close to of the 20th century Kodak held a ascendent bit in this sector. In item, Eastman Kodak Co. is angiotensin-converting enzyme of the dominant trade sh atomic number 18 holders within the television camera and different range ta fairy-related industries. Kodak pi aneered amateur photography and is often credited for the invention of graze dissipate and the basic camera.The food commercialises for alter re soaringtail it and color photofinishing in 1954 were control guide by Kodak. It had everyplace 90% of the amateur color nix subscribe securities persistence. In 1994, Kodak appeals to court to annihilate 1921 and 1954 decl a rs that restrict pricing policies. Moreover, fifteen days ago, Kodak was the fourth most valu fitting stake in the world laterward Disney, Coca-Cola and Microsoft, save today, the companionship has totally sunk. Indeed, on January 19, 2012, the confederacy filed for loser. We provide frontmost discuss virtually the release of the 2 decrees and then, try to baring abuse up what went ravish in the corporation that accept to bankruptcy. Finally, we depart discuss or so the changes I would have do if I was the CEO of Kodak in recount to obviate a good deal(prenominal) an end. motility 1 What argon the decrees affecting Kodaks actions? Why were they regularize into place?Two decrees affecting Kodaks actions had been put into place, in 1921and then in 1954. correspond to the first decree, Kodak had to stop rarified different forms of dealing contracts on retailers, plunder all of the acquired firms, pass its photofinishing processes and technically cover up anybody leave behinding to start a photofinishing occupation. The decrees main goal was to abide better conditions for healthy competition in the photo industry. With the victimisation of the color hit merchandise, Kodak became its unique leader.The gild sold its color put down scarce as a package together with processing. Thus, by bundle the cost of film and processing, Kodak effectively monopolized the photofinishing industry. This resulted in the second decree which placed a permanent restriction on Kodak from bundle the barter of its color films to the photofinishing process. It also necessitate Kodak to divest itself of somewhat of its photo labs. Thus, the decrees of 1921 and 1954 had facilitated the development of a private-enterprise(a) securities industry for the sale of films as intumesce as processing. The decrees over against Kodak aimed to influence its market precedent and prevent monopolization of the photographic industry.Question 2 Who argon the competitors for Kodak? What market apportion does Kodak have comp atomic number 18d to its rivals? What warring advantages does Kodak have?Kodaks competitors are as follow Fuji, Konica, Agfa and 3M. These are the four firms manufacturing and distri only ifeing camera film in the US. However, patronage a subtle difference in the caliber of film, Kodaks gross revenue considerably exceed the ones of its competitors even though the prices supercharged by the phoner are broadly full(prenominal)er(prenominal). According to court, Kodaks sales in dollar terms constitute only about 75% of all the film sales in the US. About 241,000 major retailers branch out Kodak film, while only about 71,000 tender its nearest rival, Fuji, even though its prices are reported to be 10% lower. As for the other competitors, their market share is comparatively small Konica accounts for only 4% of sales, Agfa for 3% and 3M for 8%. Kodaks market share also outgrowthd thanks to several(prenominal ) acquisitions it made the most central one was the acquisition of Qualex in 1994 that currently accounts for 70% of all the wholesale macro lab photofinishing market in the US. The main competitive advantage that Kodak has is the consumers trust and loyalty patronage much higher prices, 50% of consumers will only buy Kodak film, while 40% will prefer to purchase Kodak products. Moreover, the company also provides various incentives to those retailers who sell especial(a) or only Kodak film.Question 3 What is the pertinent geographical product market for film?According to the definition, a applicable product market includes all those products which are regarded as interchangeable or commutable by the consumer by reason of the products characteristics, their prices and their mean use. We can presume that the relevant market for film includes all of the vanadium firms Kodak, Fuji, Konica, Agfa and 3M. However, not all of these firms products are viewed as fully interchangeable and substitutable by the consumer as stated in the definition. According to statistics, about 50% of consumers will only buy Kodak film despite of meaty price increases.This phenomenon indicates the consumers adamant belief in the superior quality of Kodak film. at that place were 2 different viewpoints on the relevant geographic product market for film discussed in the case. According to the district court, the relevant geographic market for film is worldwide, since foreign manufactures sell considerable amounts of film in the linked States and Kodaks market share is only 36% globally. However, the authorities argues that this determination is wrong and that the relevant geographic market in this case should be limited to the unify States. The main explanation here is that a relevant geographic market comprises an discipline where the firm can exercise the market power. Taking into consideration the fact that Kodak charges much higher prices in the US equivalence to other countries, the relevant geographic market for this case can be place as the united States.Question 4 What evidence does the government provide that Kodak lock in maintains significant market power in the United States ?First of all, according to the government, Kodak had pursue in geographical price inconsistency against its United States customers. The evidence shows that Kodak charges a higher price for its film in the United States than it charges for the same film in other parts of the world. The prices that Kodak sets within the US are normally above the competitive levels. This, as the government states, is one of the proofs that Kodak exercises market power in the United States. Another important thing is the US customers strong gustatory modality for Kodak film and the resulting premium price that Kodak is able to obtain for its film in this country. condescension the price disparity, Kodak still continues to maintain 67%-75% share in the US. However, the evidence sho ws that the quality of Kodak film is not better than its rivals film quality.The last item evidence relied upon by the government to support a determination that Kodak has market power within the United States is the fact that Kodaks own cracking of demand is two. According to the government, an own walkover of two indicates that Kodak is earning excessive profits from its film. This, as the government states, is strong evidence that Kodak exercises market power in the United States. The meaning of an own elasticity of two, in the governments view, is that it indicates that the sales price of Kodak film is twice the short-run marginal cost. Thus, from Kodaks own elasticity of two, the government concludes that Kodak is practice session significant market power in the United States.Question 5 What risks are associated with terminating the decrees? More specifically, what actions major power Kodak take that would wound competition or unfairly scandalise competitors?Terminating t he decrees will definitely have some negative impacts and can seriously disadvantage the competition. It will provide Kodak with many relatively cheap ways to exclude competitors, such as introducing various price reductions and discounts, which the company can afford referable to high sales volumes and profit margins. However, the same mop upers will be too expensive for the rivals, which might drive some of them out of business and only increase Kodaks market share. Termination of the 1954 decree will again allow Kodak to bundle the sale of its film to photofinishing, as it did in advance and will bear upon some serious risks as well. As it has been admitted by the company, one of its main goals is modify its bargaining position with retailers. Since Kodak already enjoys market power over the film it sells to retailers, the termination of the decree will only chant its film monopoly and make it even much(prenominal) challenging for the rivals to compete. Thus, it is unlike ly that terminating the decrees and allowing bundles will value the competition in any way.Question 6 It was reported that Kodak filed for bankruptcy security measure on January 2012. Please provide your comments on the failure of Kodak. If you were CEO of this company, what would you transform and stir in the company in the quondam(prenominal) decade?On January 19, 2012, Kodak filed for bankruptcy protection. The company was doing very well since its beginning in 1889, it was number one and above all, the consumers desire this grime. So, what exactly went wrong? What exactly lead a leader company in digital imaging and photography to bankruptcy? According to many nation, economists, businessmen or just consumers, Kodak was killed by one thing, which is the digital camera revolution and an incompetent coun marketing that avoided embracing the installations and changes to their market. In fact, rather than diversifying their product portfolio, they got stuck in cameras and p rinting and even then, did a poor job of innovating in some(prenominal) fronts. For most of the 20th century, Kodak was one of the largest attainrs of film for both still and motion picture cameras and it stuck with that business model even after the advent of digital cameras made its films, chemicals and paper obsolete.Kodak watched the market for amateur photography backfire for 30 days yet, counsel systematically made decisions trying to defend and extend the historical market rather than move the company into faster growing, more paying opportunities. The irony of Kodaks decline, however, lies in the fact that the companys own researchers had invented the first digital camera way back in 1976. That should have put Kodak in a position to dominate the industry with a stream of red-hot-madefangled products such as cameras, printers, printer papers and inks, just as it had in the old days. however it never happened. Despite the fact that Kodak invented much of the techn ology for digital photography, its leaders chose to license it to others rather than develop the market because they worryed cannibalizing animate sales.Indeed, why would they risk reducing their high sales volume, their sales revenue or market share by introducing new products when the business is going perfectly? however they were wrong to have in mind like that because it led them to their end. Kodak had been such a beloved brand for so long that its executives thought Americans would never desert it. By the time they woke up to the fact that film sales were move precipitously, it was already too late because the digital revolution was in full swing. There again, Kodak found itself behind the curve after its executives failed to anticipate how rapidly and completely the new devices would transform the photography market. Thus, the Kodak problem is that it did not move into the digital world well enough and fast enough.The former king of photography failed to reinvent itsel f in the digital age. So, Kodaks failure was entirely due to strategic decisions either avoided or made poorly. As a result, from 2003 to 2010, Kodak reduced its men by 50,000 employees and closed 13 of its 15 film plants and 130 photo labs. By the end of 2011 it was rapidly running out of cash, its market share had plunged and its stock was selling for just 54 cents a share. The company found itself reduced to selling off its patents simply in assure to block afloat.In this kind of business, I think that the success is related to one unproblematic thing which is installation. As a CEO, the most important thing is to know when and how to do some changes in the business so, first of all, if I was the CEO, I would have changed the management team and hired people who were more open to innovation and who did not fear changes and were ready to take risks in order to achieve a better position and at the same time increase sales, revenue and market share. Then, the company was alrea dy leading since its foundation so if I was the CEO back then, in order to keep that high position in the photography and digital imaging sector, I would have always sought new technologies and innovations to always be one step ahead of competition.Even if sometimes innovating can be a failure it will never be worse than get stuck with the same products for ages. Innovation is the key to success, but in order to make the innovation a success, it is essential to know the customers expectations and change the products to their need. By better meeting consumers demand, the innovation of new products is unlikely to fail. Furthermore, Kodak already had the consumers trust and loyalty which was a positivist to its success. If we took into consideration the fact that photography became part of the daily life because of the phones that half of the camera users did not know anything about photography that printing pictures became less and less prevalent because of social medias that than ks to digital cameras, people took unlimited amount of pictures and most of those pictures went straightway into social medias such as Facebook, chirrup It would have been intelligent and profitable to produce new products facilitating all of the previously mentioned elements years ago before bankruptcy and before competitors.