The Eastman Kodak company was founded in 1888 by George Eastman in the United
States. They held the majority share of the U.S. market for many years. The key to the early
success of Kodak was that it offered cameras that were affordable for most consumers in
comparison to the more expensive professional cameras, but made sure to make up their money
in the products that consumers would need to purchase to work the camera, such as film. This
company was also the first to develop a digital camera back in 1975, but because it did not fit
into their business model of being able to sell those extra accessories, such as film, it was not
developed any further. Failing to keep up with their competitors during the switch to digital
cameras, Kodak had to file bankruptcy. Although down, Kodak is not out of the camera business
yet as they are continuing to fight for a market share.
The Fuji Photo Film Company, Ltd was founded in Japan years later than Kodak as it
was in 1934. Similar to Kodak, Fujifilm was extremely popular in their home country and held
the majority share of the market. After becoming one of the most popular film companies in
Japan, the company moved to a global business model. Fujifilm did not enter the United States
until later on, but was able to really rival Kodak by offering a cheaper film product. Fujifilm
rather than Kodak became the film sponsor of the 1984 Olympics in Los Angeles, which helped
to get the brand known among American consumers. Rather than fearing the upcoming age of
digital cameras, Fujifilm diversified their product line and began the process of switching their
film camera line over to a digital camera line. Unlike Kodak, Fujifilm really was able to make
the right changes to their company and ride out the changes to their industry while still being
very profitable.
Culturally, Japan is known as being traditionally resistant to change and usually slow
moving on making these types of big changes in the way that a company embraces innovation
while America is more known as a culture that is willing to change easily for innovation. Kodak
however, did not change quick enough to keep their profitability up and made poor strategic
decisions on how to deal with all the changes in technology that made their traditional model of
making most of their money on film and other accessories outdated. One of the problems that
Kodak had was that they had been in the top position for so long they expect that any decisions
that they made would be supported by their loyal consumer base, but they did not move quickly
enough with technology to keep up with consumer demand. They were too slow to act in
diversifying the products that they were involved with to keep up their profit margins.
Management did not become aware of any criticisms brought against their company’s products,
which had always done well in the past as all of the upper management resided in their
hometown of Rochester.
Fujifilm reacted in a manner that certainly went against their traditional culture in quickly
starting to change their approach rather than rest on their laurels as it seemed Kodak was doing.
According to “The Last Kodak Moment?” (2012):
Fujifilm, too, saw omens of digital doom as early as the 1980s. It developed a threepronged strategy: to squeeze as much money out of the film business as possible, to
prepare for the switch to digital and to develop new business lines. (para. 10)
Acting in this quick manner to find all of the ways that they were able to profit out of their old
business, move into the digital age successfully, and find other product lines that the company
could offer was the key difference that management made for Fujifilm’s success over Kodak’s
decline.
According to Kotter (2012), “Historically, Kodak was built on a culture of innovation and
change. It’s the type of culture that’s full of passionate innovators, already naturally in tune to
the urgency surrounding changes in the market and technology” (para. 5). Kotter (2012)
explains that although this had historically been their culture, it had changed to complacency
about their position in the market which caused them to not move quickly enough with the
changes that were occurring in the market that they had dominated for so long. Even with
bringing in a brilliant CEO in the 1990s, they were unable to make the right strategic decisions to
turn around their fortunes as digital cameras were taking off. Then, smartphones also started
entering the camera market further throwing open the camera market with more technological
innovations. The changes that were made to Kodak eventually were not made quickly enough to
stop them from having to file bankruptcy. They do see the light at the end of the tunnel by
getting into other products, like home printers that can use special film paper to print digital
pictures.
According to Inagaki and Osawa (2012), “What set Fujifilm apart from Kodak, he said,
was the Japanese company's effort to branch out by employing technologies originally developed
for photography” (para. 8). The key to their success lead in the fact that they were able to take
what they already knew about chemicals and technology and apply it to other fields that
normally would not even be considered remotely similar to the camera market that they were a
part of in the past. They were able to work with making screens for LCD-panels that are used for
televisions, computers, smartphones and other devices that are the future of innovation based on
their prior work with film and chemicals. Another field where they are entering is cosmetics
using their knowledge on how to keep photographs from fading in time. Another surprising area
that Fujifilm has entered is medicine which is again using their chemical knowledge in a vastly
different way. They were not afraid of innovation, but used what they had perfected over the
years to find other ways to continue keeping their brand relevant to the times.
Both Kodak and Fujifilm take measures to ensure that their companies are acting in an
ethical method towards their employees, consumers and the planet as whole. For instance,
“Eastman Kodak Company ranks among the "100 Best Corporate Citizens" for 2004, according
to Business Ethics magazine” (“Business Ethics Names Kodak Among ‘Best Corporate Citizens’
in Annual List., 2004, para. 1). Social responsibility is also something that large corporations
must take part in as consumers are becoming socially aware of companies. Kodak and Fujifilm
are involved with social responsibility efforts at their respective companies. “… [The] Fujifilm
Group, in its corporate activities in Japan and abroad, respects human rights, … and, acting in a
socially responsible manner, works independently toward the sustainable development of society
and the Fujifilm Group companies …” (“Fujifilm Group Charter for Corporate Behavior, n.d.,
para. 1).
Taking ethics and social responsibility seriously can have several impacts on each
company’s profitability. First, holding ethics in high regard can make a company more attractive
to employees. Part of the reason why Kodak was added to the list was because they have
workplace policies in effect that minimizes discrimination and promotes minorities and women.
Employees that are looking for a future employer will usually evaluate not only the salary
offered, but the benefits involved. This corporate culture of ethical treatment of employees is a
valuable benefit for many employees meaning that they will have the potential to select their
employees from the best and the brightest. Having great employees may not seem to offer an
impact on profit, but not dealing with large amounts of turnover can save a company a great deal
of money.
Social responsibility may be something that can be seen as a drain on a company’s
finances, but really it is creating great public relations opportunities for the company.
Consumers are becoming more interested in how the companies that they use are interacting with
the world. Consumers are attracted to companies that are involved with causes beyond just
making a profit. Social responsibility policies at a company can bring in new consumers that
may stay loyal with the brand.
Kodak’s management was very slow to adapt to the changing market conditions.
Overall, they seemed to feel as though they would always be relevant to the camera industry and
any other industry that they decided that they would eventually enter. The strategic decisions
that were made by the new CEO and upper echelons of their management did not happen quickly
enough to stave off how irrelevant they had become to their industry. This caused the company
to take a large fall where they were forced to file for bankruptcy which can be extremely hard for
some companies to bounce back from entirely. It is very possible that these events will act as
Kodak’s wake-up call that no matter how large and successful a company is they not only must
be aware of the changing market conditions, but need to start adapting to them as they happen
rather than long after their competitors.
Fujifilm’s management was quick to adapt to the changing market conditions. They
created a strategic plan that allowed them to continue what they were doing in the film camera
industry for as long as possible, start moving over to the digital camera industry to keep their
innovations moving forward and looking outside of their normal box for other ways to stay
relevant. Probably one of the most important moves that they made was staying with what they
know they were good at and learning how to adapt it to other markets. This will allow them to
stay fresh, and when one market may be unstable, the company will be able to brace themselves
with the other markets until the company is able to adapt to those market changes.
The first way that a company should build in flexibility to back up its decision-making
process in order to adapt to changing market conditions is by continually analyzing the market
that the company is in to identify any trends that could have an impact on the company. Then,
any reports that are created off of this analysis should be brought to the attention of upper
management in the company to review these upcoming trends and make changes as necessary
down line. It may even be beneficial for a company to install a system that allows for any
employee to point out a change that could be beneficial that they see while working in their
particular position.
The next way that a company should build in flexibility is by finding ways to improve the
company’s agility to handle upcoming changes and trends. Having an analysis process in place
to recognize the visibility of these changes can be important, but only if the company is agile
enough to handle these changes quickly and in a scalable fashion. Changes in the way that the
company makes decisions may be necessary to cut down the time it takes to respond to
challenges that a company may face in their market.
The last way that a company should build in flexibility is by changing the corporate
culture to one that does not allow past successes to blind the company to future failures. This
means that the leadership of the company should not let themselves get into the mindset that
because their company dominates their competitors in the past and present they will always do so
in their market. A leader that is responsive to change will be better able to make their
corporation flexible.
In conclusion, Kodak is a prime example of how a company should not handle change.
Their denial of reality caused them to have a deep fall from grace that could eventually spell the
end of their brand if they do not make the necessary course corrections. The bankruptcy may be
the thing to save their company if they use it wisely. Fujifilm is the complete opposite in that
they realized what the reality of their market was becoming and embraced a strategic decision
that would allow them to capitalize on their strengths overall. They are a great example for how
a company should be continuing looking ahead to the future.
References
Business Ethics Names Kodak Among "Best Corporate Citizens" in Annual List. (2004).
Workforce Diversity Network. Retrieved July 14, 2013, from
http://www.workforcediversitynetwork.com/news_grdc_0406kodak.aspx
Fujifilm Group Charter for Corporate Behavior. (n.d.). FUJIFILM Holdings. Retrieved July 14,
2013, from http://www.fujifilmholdings.com/en/about/philosophy/conduct/index.html
Inagaki, K., & Osawa, J. (2012, January 20). How Fujifilm Charted Different Course Than
Kodak. The Wall Street Journal. Retrieved July 14, 2013, from
http://online.wsj.com/article/SB10001424052970203750404577170481473958516.html
Kotter, J. (2012, May 2). Barriers to Change: The Real Reason Behind the Kodak Downfall.
Forbes.com. Retrieved July 14, 2013, from
http://www.forbes.com/sites/johnkotter/2012/05/02/barriers-to-change-the-real-reasonbehind-the-kodak-downfall/
The last Kodak moment? (2012, January 14). The Economist. Retrieved July 14, 2013, from
http://www.economist.com/node/21542796