The Road to Document Imaging
in South Africa
Chelsea Tucker  Marie LaRiviere  Jayana Cali  JJ Mulwanda  Benjamin Skidmore
South Africa FDI Assessment: Go
 What: Pursue a market seeking subsidiary in South Africa (RSA),
providing document imaging services to government and healthcare
entities
 Political: RSA is a democracy that is friendly to foreign investors
and looking to develop economically
 Independent Central Bank: Independent yet influenced by
ruling party. Still, sufficient degree of policy stability
 Economic: Growing economy; improving infrastructure; expanding
from summer 2010 World Cup preparations
 Currency: The Rand is free floating. This implies currency risk, but
historic valuation trends make currency risk important but not
preventative for entry
Porter’s Five Forces Analysis
Potential Entrants
 Low saturation rate will attract
entrants
 Kodak has first mover
advantage versus US entrants
 Various local players already in
the market
Potential
Entrants:
High
Supplier
Power:
Low/Moderate
Industry Competition:
Moderate/ High
Saturation low within S. Africa
Kodak competes on price,
customer service, and quality
Many technologically advanced
competitors could take market
share
Buyer Bargaining Power
 Kodak has a history of strong
relationships with clients
 Political risks with foreign
investment
 Economic risk with recession and
potentially low demand
Buyer Power:
Moderate
Supplier Bargaining Power
 Kodak has a strong brand and
global distribution network
 Kodak is susceptible to supplier
risk due to high level of outsourcing
Threat of
Substitutes:
Low
Threat of Substitutes
 Traditional document storage: filing
 Option to use a Kodak Independent
Software Vendor or Reseller
The Digital Imaging Market
Sector
Potential Customers
Local Government Offices
Passport Offices
Public
Judicial & Court Offices
Police Departments
Motor Vehicle Offices
Treasury & Tax Departments
Law Offices
Hospitals & Doctor's Offices
Private
Banks & Lending Institutions
Schools & Universities
Small Businesses
Document Imaging Possibilities
Birth certificates, death certificates,
professional/business licensing records, property
records, census records, genealogy records, fragile and
odd-shaped historical records
Passport & Visa documents, immigration records
Case files, docket sheets, marriage and divorce records,
wills & inheritance documents, arrest warrants
Criminal records, public arrest records, background
checks, case investigations
National and Regional driver cards
Tax return files, property tax records, income tax records,
audit records
Historical case files, legal filings, affidavits, subpoenas,
petitions, motions, copies of correspondence, client
records
Historical patient medical records, prescriptions,
medical examinations, MRI's, CAT scans, X-rays
Mortgage statements, lien documents, historical account
statements, credit card statements
Registrar transcripts, student files, course catalogues,
admissions applications
customer account records, receipts, tax returns, loan
agreements, accounting records, insurance policies &
claims
Strong South African
Market Potential
Overall market related risk: LOW
Current saturation level: LOW
Growth potential: HIGH
Financial Considerations/Projections
We developed a range of projections based on high and low end expectations. The following is
our conservative (low end) eight year estimate of potential performance
P&L Category
Cumulative 8 Year
Forecast
Key Assumptions
Revenue
$113.5 Million
 $0.5 Billion in total market size
 Kodak share of market beginning at 0.5%
in year 1 and growing to 4% in year 8
Gross Margin
$32.7 Million
(28.9% Margin)
 Existing Kodak Document Imaging
Business Unit Gross Margins
Selling, General &
Administrative Expenses
$20 Million
 Starting with existing Kodak Business Unit
expense composition as a % of revenue
with annual improvements
 Initially offset by additional expenses
related to set up
Earnings Before Interest
& Taxes (EBIT)
$5.6 Million
(5% Margin)
 Continued investment in R&D tied to
revenue growth (6.3% of revenue)
Net Income
$3.8 Million
(3.3% Margin)
 33% Foreign business tax rate
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Key Risks to Achieving Financial Goals
Financial
 Economic translation risk
 Intellectual property risk
 Currency exchange rate
fluctuations
 Market share growth estimations
 HIV/AIDS pandemic
Political & Technology
 Political/Corruption
 Internet
 Recurrence of Electricity Crisis
 Human Capital Flight
 Scale Economies
 Process Improvements
As in all new business ventures, an overarching risk is one of Execution:
Even the best plans can’t bring themselves to fruition - if we can’t
execute the plan, we will not be successful in this Emerging Market!
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