Kodak\'s Digital Strategy it Is Very Notable

Kodak's Digital Strategy

It is very notable to mention how Kodak experienced a downfall with the emergence of digital imaging. Kodak's stock fell from about 80 USD to 3 USD within a period of less than ten years. The number of employees also declined. In 1988, the company employed about 140,000 employees but currently it has employees of not more than 20,000. This was as an unavoidable challenge and Kodak used all its efforts it had to overcome the challenge of digital imaging just like any other film company. Eastman Kodak had a vision of selling many cameras at lower prices to draw massive profits to the papers, inks and chemical used in printmaking. This strategy saw its downfall with the digital revolution and the foreign competitors negatively affected Kodak's venerable command in the photography business (Grant 22).

Discussion

Kodak slowly responded to this emerging digital revolution. From the time of the introduction of digital imaging, Kodak has witnessed its revenue declining from around $15 billion to about $9.4 Billion. During the previous five years, Kodak has made layoffs of 40,000 jobs and is still about to do away with another 3,500 to 4,500 in the year 2009. From the beginning of 2003, Kodak has been on the verge of implementing a number of restructuring programs to overcome this challenge. An estimated 80% of the revenue that Kodak receives comes from the sale of new products and provision new services established in the previous five years. The employees who work at Kodak, 60% of them were recently employed in the previous four years (Grant 53).

Nevertheless, during some time, the situation of Kodak started to change as it has always underrated the market changes. There has occurred an important transformation from traditional film to digital imaging products and photographing tools flooding the market. This saw the emergence of an era fully saturated with digital technologies. The film business, which is the main function for Kodak's existence, began to fall; some field in the industry started to bring in less revenue than usual. The competitors also increased in number and offered cheap products and services especially from the Asian region. The cost of producing digital cameras was reduced. Kodak tried to restore their once position in the photography industry by introducing digital cameras that are easy to use; they were received with much success. To some extent, Kodak has restructured the connection between film and cameras. This was regarding an analyst Buckman who lists rates the stock of Kodak as a buy. Kodak does not gain much from taking photos, but they still have the mission of selling products and services. Kodak is still in a limited position. Shares of Kodak, which circulate around $60 at the start of the decade, have risen up and down-with more emphasis on the downside (Grant 60).

Disaggregation on capital employed

Operating Profit Margin of Kodak: The financial ratio of Kodak indicates that the business is becoming more efficient. While the company has been experiencing a decrease in results, this could be a signal of a looming financial crisis. Kodak has been operating on a downward trend until the turn of the 21st century when it picked up. Nevertheless, this was temporary.

Net return on sales: A close diagnosis of Kodak's earnings reveals that the company has good earnings. However, this is not an indication that the company's profit margins are improving. Instead, it indicates that the company must establish better measures to control costs. Recently, Kodak had a low NPM, which has increased over time reaching its highest in 2008. However, since then, it has taken a downward direction again. This means that Kodak the GPM of the company has been declining at an alarming rate (Grant 75).

Photography consumers have continued to reserve digital images in popular ways. On the other hand, Kodak has more than 50,000 self-service kiosks that do quick business in retail imaging stores. This strategy is beyond its competitors like Sony and Fuji. Printing docks of Kodak and other gadgets that simplify printmaking at the comfort of one's home has proven to be great in terms of sales. Kodak is accountable for fifty-seven percent of the snapshots in the market-those of the 4 by 6 print makes-almost assuring a great deal for the thermal ribbons and coated papers in the market. Kodak follows Hewlett-Packard in selling inkjet papers even though it has not ventured into making consumer inkjet Printer (Grant 89).

Photography consumers feel at ease and comfortable with digital photography, and Kodak has emerged to be a leader in digital photography. This was according to the words of Muscolino Vincent as the managing director David Babson & Co. The Cambridge-based company deals with money management business with shares in Kodak. The chairperson of Kodak, Carp Daniel had been yearning for such remarks since setting up the digital strategy of Kodak in September 2003 when the stock was at a low point. The company has not only obtained revenue from photography, but also health and printing. Kodak has grown from investing all the possible digital ideas to a point where it can select the best digital area to focus. At least they have now stopped their usual promotion of "you've Got Pictures" which was its major project and America online whose main intention was assisting consumers to drop their films at retailers easily. They later received these films in electronic versions of the images by e-mail (Grant 106).

Porter's Five Forces Analysis

For us to have a clear understanding of the pressures facing Kodak's business, I have considered the five forces of Michael Porter. The following segment has presented the impacts of the various forces on the company:

Stiff competition among rival firms: various competitors are active in all the market segments of the photography and imaging industry. This includes digital photography, digital printing, traditional printing, traditional photography and rolled film.

High Threat arising from the increase of substitutes: the advent of modern cell phones has enabled users to take videos and photographs thus reducing the need of cameras. In addition, the industry has been highly commoditized, which implies that devices such as televisions, cellphones, laptops and tablets have the capability to capture digital images. Such issues have made it problematic for Kodak to survive.