This past year Kodak has gone through some serious internal changes. While it built one of the first digital cameras in 1975, it seems to have augmented the very businesses worsening their plight—smartphones.
By 1976, Kodak accounted for 90% of film sales, characterizing the compay as essentially a monopoly. On the other end of the spectrum, Fujifilm, Kodak’s main competitor, has actually done surprisingly well. Both companies foresaw their potential demise in the 1980s with the advent of digital photography, a private good, but only Fujifilm responded effectively.
After spending in excess of $9 billion on 40 companies since 2000, Fujifilm has completely scratched its original business venture with diversification. For instance, the company launched a series of cosmetics utilizing the additional thousands of pounds of chemical compounds they possessed for printing. Their sudden ingenuity has now reversed roles, making Fujifilm the main monopolist.
Unfortunately for Kodak, Kodak acted like a stereotypical change resistant firm and kept its original model of film and digital photography, only to feel the strong whiplash of smartphone success in the late 2000s. Film for Fujifilm went from 60% of its profits in 2000 to basically nothing now. And because of this, Kodak’s long prosperity seems to be coming to an end.
Source: “The Last Kodak Moment?” The Economist
I was actually talking about this with someone recently. Even as an uninformed consumer, I've noticed that Kodak cameras and films are simply not as innovated as Fujifilm. I think Kodak also tried to take a lower-price approach, which as we know does not impact equilibrium, price can only change as a result of shifts.
ReplyDeleteI agree with you on Kodak's business model. They didn't adapt to a changing environment so they lost ground and stuttered. Interesting fact though, in 1975 a Kodak Engineer invented the first "digital" camera, recording images to a cassette. Kodak didn't go through with implementation of his idea because they couldn't imagine a world without film. A good example of a company that can adapt to it's environment is IBM, a centennial company.
ReplyDeleteThis article take it to a personal level for myself. My father was part owner of a photo-finishing plant that went under because of similar reasons - partner's failure to adapt to the times and have a better long-term business model. Sad how the largest developing company in Ohio goes the same was as one of their suppliers... Good analysis.
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