KODAK COMPETITIVE ANALYSIS
Kodak also referred to as Eastman Kodak Company is a technology company based in the United States that manufactures camera-related products with a basis that is historic on photography. The company is in the Photography Industry. It provides services in graphic communications, functional printing, packaging and professional services for companies worldwide. The main business segments include Packaging, Micro 3D Printing, Print systems and Enterprise Inkjet Systems, Consumer and Film, and Software and Solutions. As of 2015, the company’s revenue was US$1.798 billion, operating income of US$2 million, total assets of US$2.138 billion, total equity of US$103 million and lastly, in 2016 it had a net income of US$16 million.
The company’s gross margin was 17.76% as of September 2018 while in the industry, the company was at 30.83% (Ycharts, 2018). The current assets ratio is at 1.08 (Ycharts, 2018). In 2017, the company reduced its debt to $407 million from $685 million, hence no clear calculation of cash to debt ratio (Simply, 2018). Findings in profit to sale ratio are not clear. The firm is definitely in a weak position financially. In 2012, the company filed for bankruptcy. The main reason as to why Kodak is failing is because of the missed digital photography opportunities.
The industry that Kodak is operating in as stated above is photography. The photography industry includes commercial photography and photography studios that generate revenue of US$10 billion annually. According to IBISWorld, it comprises of 185,000 businesses in America. Just like in every other industry, competition is a must. When a business starts up, it is bound to get competition from other businesses regarding a service being provided. Top competitors in the photography industry are Sony Corp, Nikon Corp, PENTAX, Panasonic Corp, Samsung Electronics Co. Ltd, Leica, Olympus, Fujifilm Holdings Corp, Canon Inc., Toshiba Corporation and lastly Kodak Co.
However, the industry is exposed to some threats and opportunities. The threat is that smartphones have inbuilt high-quality cameras with features that enable users to professionally capture photographs. Hence, contributing to the users’ reasoning of why to buy a camera and yet they have a good smartphone with a good camera. This is a potential threat to the above companies in the photography industry. An opportunity present in the photography industry is disposable income growth which will affect the industry positively.
The market of global digital photography perceived praise worldwide due to social media networking through sites such as Instagram, Facebook, and Tumblr. Due to the sharing of images through these platforms, there was an evolution in photography industry market. Market growth in this industry grew especially when fanatics focused on niche markets like events and sports (Moore, 2016). The market in the photography industry comprises of various service providers. They include industrial photography, commercial photography, portraiture, and special events photography. So as to have quality work that is marketable, photographers must invest in quality equipment which must be available (IBISWorld, 2018).
As mentioned earlier, one of the major issues that led to the failure of Kodak was digital photography opportunities. Technology has been embraced all over the world. The world is basically a digital global village. Every day, there is something new in the technological industry. Systems have to be updated, companies need to keep abreast of the technological opportunities and updates as it contributes greatly to making profits. With the fact that the social media sites have brought about the sharing of images and moments taken at certain times with friends, the photography industry has had to keep up in as much as there is a threat from the smartphone companies regarding quality inbuilt cameras. Digital photography has also depleted the use of films which were termed as ‘safety films’ which were replaced by digital cameras (Djudjic, 2018). Companies operating in the digital world understand that they cannot operate without a strategy that is digital. Companies that actually do not compete in the technological world directly, find it hard to maintain their status quo as patterns in consumer behavior are driven by innovations in technology.
Through the application of the above concept on what went wrong in Kodak, it clearly shows that the company failed to keep abreast with the change in the digital photography industry. Kodak was the industry leader in photography for a century until it filed for bankruptcy. The company mostly thrived or made a profit from the manufacture of films as they made film processing easier until 2005 when they had a significant decline in their net income (Djudjic, 2018). The company simply did not focus on digital cameras which replaced the films. The company simply became oblivious on what was happening in the world at the time, when technology was taking over and growing fast. It is strange that such a big company never had a clue or prediction of the future in the industry. The company should have invested in the production of digital cameras in order to compete with other giants in the industry as well as make money. They should have done intense research in order to get to understand the market and future trends. What is evident is, the company thought that they would still be afloat in the industry because it was the first company in the photography industry.
References
Djudjic, D. (2018, June 15). Photography. Retrieved from industry giant to bankruptcy: what happened to Kodak: https://www.diyphotography.net/from-photo-industry-giant-to-bankruptcy-what-happened-to-kodak/
IBISWorld. (2018, December). Photography industry in the US. Retrieved from Industry market research report: https://www.ibisworld.com/industry-trends/market-research-reports/professional-scientific-technical-services/professional-scientific-technical-services/photography.html
Moore, B. (2016). Grand View Research. Retrieved from Digital photography market analysis, market size, application analysis, regional outlook, competitive strategies, and segment forecasts, 2015 to 2022: https://www.grandviewresearch,com/industry-analysis/digital-photography-market
St, S. W. (2018, January 11). News+ Analysis from a Fundamentals perspective. Retrieved from How financially strong is Easman Kodak Company (NYSE: KODK)?: https://simplywall.st/stocks/us/tech/nyse-kodk/eastman-kodak/news/how-financially-strong-is-eastman-kodak-company-nysekodk
Ycharts. (2018, Septemeber 30). YCHARTS. Retrieved from Eastman Kodak Co(KODK): https://ycharts.com/companies/KODK/gross_profit_margin