Kodak Crisis of Eastman Kodak Company

Kodak developed digital camera technology as early as 1976, and applied digital imaging technology to the aerospace field. 199 1 year, Kodak has a digital camera with 1.3 million pixels. But by 2000, Kodak's digital products only sold for $3 billion, accounting for only 22% of its total revenue; In 2002, the digitization rate of Kodak products was only about 25%. From 2000 to 2003, the sales profit statements of Kodak's various departments all fell sharply, especially the imaging department, although the sales performance of Kodak's various departments only fluctuated slightly from 2000 to 2003. Specifically, the sales profit of Kodak's traditional imaging department dropped sharply from $65.438+0.43 billion in 2000 to $46.5438+0.8 billion in 2003, a decrease of 76.5438+0%! From the "film age" to the "digital age", the glory of the former image kingdom seems to disappear with the decline of film. There are many reasons for Kodak's crisis: First, Kodak has long relied on the relatively backward traditional film department, but it has been slow to respond to the impact of digital technology on the traditional imaging department. Secondly, the management style is conservative, satisfied with the market share and monopoly position of traditional film products, lacking forward-looking analysis of the market, failing to adjust the company's business strategic focus and departmental structure in time, making indecisive decisions and missing opportunities.

The investment direction is single, and it is difficult for the ship to turn around.

Due to the improper transition and switching timing between the actual profit brought by the existing technology and the future profit brought by the new technology, Kodak spent a lot of money on the low-level simple repeated investment in the production line and equipment of the traditional film factory, which crowded out the investment in digital technology and market, increased the exit/update cost, and made the company fall into the dilemma of "it is difficult to correct its mistakes" and "it is difficult to turn around". According to statistics, by the end of 2002, the number of Kodak color printing shops in China had reached more than 8,000, 0/0 times that of KFC and 0/8 times that of McDonald's! These stores are becoming the burden of Kodak's strategic transformation without providing enough profits.

Policymakers are obsessed with existing advantages.

In the past, Kodak's management came from traditional industries. For example, Charles Valentin, the current vice president of operation system, studied chemistry, and Cohen, the general manager of American digital imaging system, studied civil engineering. At present, among the 49 senior managers, 7 are from chemistry and only 3 are from electronics. Especially in terms of market application and leading position, traditional industry leaders have neglected the sustainable development of alternative technologies, thus losing their due leadership share in the new product market.

From the comparison of market share between traditional film and digital imaging products, it can be seen that Kodak's persistence in traditional film technology and products and its slow response to the impact of digital technology and digital imaging products largely determine the inevitability of Kodak's falling into a growth crisis.

Short-sighted strategic alliance

From the perspective of market competition, the relationship between technical competition and cooperation in Kodak's business strategy is mainly short-term market behavior, and the strategic positioning and strategic roles of competitors and partners are vague.

The competition in the technology market is fierce, the lead period of electronic technology is shortened, market segments are increased, and international competitors are increased. In the fields of digital cameras, camera phones, digital printing and digital printers, we have encountered fierce competition from big companies such as Fuji, Sony, Hewlett-Packard, Canon and Epson. Although Kodak has also established a large number of strategic alliances with its rivals, there are few strategic alliances formed in core technologies, most of which are service project alliances. The weapons of the country cannot be given to others. In fact, the management should be soberly aware that Kodak used to rely on film as the boss, and also relied on this Jin Gangzuan to cooperate with others, and others will still touch your light. In the digital age, without core technology, the operation of enterprises will be in danger at any time, and everything in the past will depreciate in an instant. Cooperation is never wishful thinking. Despite the struggle, Kodak still came to this step-2065438+20021October 9, 65438+2002, filed for bankruptcy protection in New York State according to Chapter XI of the United States Bankruptcy Law. Founded in 1880, the world's largest manufacturer and supplier of video products and related services has to face a cruel ending because it can't keep pace with the tide of the digital age.

Previously, Kodak's average closing price had been lower than 1 USD for 30 consecutive trading days, which did not meet the listing requirements of NYSE. Eastman-Kodak Company 65438+, headquartered in Rochester, new york, announced at the beginning of 10 that it had received a warning from the new york Stock Exchange that if its share price could not rise in the next six months, it might be delisted.

On 20 1 1 year, Kodak heard bankruptcy rumors several times. In that year, its share price fell more than 80%, and the latest price was 0.66 US dollars. This is the latest blow to Kodak, which is selling assets to survive. Kodak said that because the company faces liquidity challenges, there is no guarantee that it can meet the listing standards of the NYSE in the next six months.

In its application documents, Kodak's existing assets are 5 1 billion dollars, but its debts have reached 6.8 billion dollars, which is in a state of serious insolvency.

"The members of the board of directors and the entire management agree that this is a necessary step and the right step for Kodak's future." Chairman and CEO Antonio Perez said in a statement. He also said that filing for bankruptcy protection will maximize the value of Kodak's assets, including granting patents such as digital imaging to mobile phone and other equipment manufacturers.

Kodak said that the company and its American subsidiaries have applied to a bankruptcy court in the United States for business restructuring in accordance with Chapter 1 1 of the Bankruptcy Law. Subsidiaries outside the United States are not included in the application. Kodak said that this move will strengthen the liquidity of its US and overseas assets, commercialize non-strategic intellectual property rights, properly solve the problem of legacy liabilities, and focus on the most valuable business.

In addition, Kodak also received a $950 million bankruptcy protection enterprise loan from Citigroup with a loan period of 65,438+08 months to improve liquidity and working capital. The loan amount also needs the approval of the court, and there are some preconditions. The company believes that during the bankruptcy period, the company has sufficient liquidity to maintain its operations and will continue to provide products and services to consumers.

It is expected that Kodak will continue to pay employees wages and benefits and maintain customer service. Kodak's overseas subsidiaries are not bound by the bankruptcy protection clause and are obliged to pay all outstanding debts to suppliers. Kodak and its subsidiaries in the United States promised to pay all debts owed to suppliers after bankruptcy. In view of the above problems and the reflection of the capital market, Kodak announced on September 26, 2003 that it would implement a major strategic shift: abandon the traditional film business and shift its focus to emerging digital products.

1. Increase investment in non-imaging business through "adapting to change".

2. No longer make any major long-term investment in the traditional film business.

3. Reorganize the company. The original film imaging department, medical imaging department and commercial imaging department are reorganized into five digital technology departments: commercial imaging, commercial printing, medical imaging, digital and film imaging systems, and images and parts.

4. Introduce a series of digital cameras and inkjet printers to consumers, and compete with Fuji, Hewlett-Packard, Xerox, Canon and Epson in the field of digital business.

5. Adhere to its film franchise business and actively develop its own brand film business. For example, films will be sold abroad under non-Kodak brand trademarks.

6. Form a comprehensive solution for consumers to stay indoors through horizontal alliances, namely the following industrial chains, including: digital cameras (Kodak or non-Kodak brands)-FedEx delivery-chain printing shop output; MMS (photography) mobile phone-network transmission-chain print shop output-FedEx delivery-customers.

7. In the China market, we should give consideration to both traditional business and digital business, and build a Kodak global production center, whose main business is to assemble core digital cameras, and at the same time start localized production and digital printing of parts; Kodak's traditional civil imaging business department continued to expand the market share of the central and western regions and secondary cities, and realized the strategic transformation from "imaging" to "imaging+retail service". 8. Realize the "double T" (comprehensive solution and comprehensive satisfaction) and "double E" (extension and expansion) strategic planning, and strengthen the terminal output. Following the launch of the transformation strategy in September, at the West new york Investor Conference, Kodak CFO Brewster announced the main points of Kodak's new strategy, including:

1. rectify traditional enterprise management and expand cash income;

2. Accelerate the development of the company's existing digital imaging products and services;

3. Strictly focused acquisitions make up for the shortcomings of existing businesses and accelerate the entry into the closely related image market;

4. Explore long-term growth opportunities in the fields of electronic display and inkjet printing. In the year after the transformation, Kodak launched a series of activities: acquiring Algotec Systems and SCITEX Digital Printing Company, establishing a strategic partnership with VERIZON WIRELESS, completing the merger of NEXPRESS and HEIDELBERG Company, acquiring the image sensor business from American National Semiconductor Company, acquiring OREX Company, selling AUNTMINNIE business, and acquiring CREO Company.

A Kodak spokesman said: "This is what Kodak must do in the face of reality-transform from traditional imaging business to digital business." At the same time, in the arrangement of management, Kodak has been in full swing for personnel replacement. Kodak's board of directors also expects him to "continue his legend in developing digital products and organizing management". Kodak hopes that this new strategic transformation will bring more diversified businesses, and predicts that this new strategy will make the company grow at a rate of 5% ~ 6% every year. The annual income may reach $654.38+06 billion before 2006, and is expected to reach $20 billion before 2065.438+00. In fact, Kodak successfully developed digital photography technology as early as 1976, but it has been stumbling on digital images. First of all, Kodak's huge investment and global layout in the traditional film market have become a huge burden for the company to turn to the digital market. Moreover, Kodak management did not regard transformation as the company's core strategy in the middle and late 1990s. George Fisher, the former CEO of the company, once declared that Kodak would achieve the same sales volume of traditional business and digital business in 1997. But the fact is that the management of the company is more immersed in the existing advantages and profits of the traditional film market, and even thinks that promoting digital cameras and other products will hurt its traditional business. After Kodak decided to enter the digital market, some shareholders still criticized that Daniel Carp, then CEO of Kodak, was gambling with Kodak on digital strategy.

In the battle for the traditional film market, Kodak's competitive advantage is more reflected in the market strategy and business model, and the development of related alternative technologies is often placed in a secondary position. However, in the digital image market under the information background, the competition of key technologies is more intense. Kodak focused on the traditional film market in the middle and late 1990s, and its technological leading edge in the field of digital imaging was almost lost. Kodak's traditional marketing channels, such as the renovation of printing shops all over the streets, also need a process. In this way, Kodak's brand will undoubtedly become the entry point and engine of its strategic integration. 1997 Kodak was faced with the problem of brand promotion when it entered the digital image market-Kodak needed to use powerful film and photo processing brands to promote its products in the digital camera and digital image market. Mike Lotti, head of Kodak's business research department, believes that "Kodak hopes to maximize its existing marketing investment and brand awareness to promote the sales of its new products. Kodak knows from past experience that marketing investment in some products will have a positive impact on other products. " Consumers' trust and satisfaction with Kodak's existing products and services will enhance consumers' recognition of Kodak's new products and services. For Kodak in the past, the advertising investment in cameras also promoted the sales of its traditional films. For Kodak today, what it needs to do is to turn its past marketing efforts and investments into the driving force of its digital product sales.

"The pressure comes from maximizing the' productivity' of marketing. Kodak needs some measures to make our marketing more effective, "added Tim ambler, a senior researcher at London Business School. "Marketing is just advertising, promotion and a little market research? Harvesting the benefits brought by successful marketing investment in the past is also an indispensable part of marketing. "

Kodak's past brand investment has made its name a household name. Kodak's own research results have proved this point, and many intermediary agencies' surveys have also confirmed Kodak's brand value. In the era when Kodak began to promote brand-new products, what benefits will Kodak's brand value bring to it? Transformation is not only a necessity for Kodak, but also shows that it was left behind by competitors in time from the beginning. In this environment, brand may be one of Kodak's few competitive advantages compared with other manufacturers. Of course, Kodak needs to do more work in marketing to transfer consumers' recognition of Kodak brand from film to digital products.

Brand aging is one of the most direct problems Kodak faces in marketing. Brand is basically the concentrated expression of consumers' consumption demand and consciousness in a certain market product. When consumers' demand gradually shifted from traditional film images to digital images, the market carrier of Kodak brand weakened and the brand began to age. In order to show the management's determination to redefine the Kodak brand, Kodak replaced the brand logo that has been used for 36 years at the beginning of the year. In the new Kodak logo, Kodak letters jump out of the traditional yellow box. Kodak's new brand logo shows streamlined design and prominent letters, symbolizing a brand-new and cross-industry leader, focusing on digital imaging.

The change of logo is only a step of Kodak brand strategy adjustment. Brian Collins, the company's marketing partner, confirmed that Ogilvy's brand integration team has started to help Kodak reposition its brand's consumer identity strategy and visual effects, and Kodak's new company logo is only a small part of Ogilvy's team work. Carl Gustin, Marketing Director of Kodak Company, publicly called on Kodak Company to go faster on the road of brand strategy transformation: "We are doing our best to update our principles, policies and practices, but there is still more work to be done in brand strategy transformation. We launched a new company logo at this time to show that it is time to act. "

Carl Gustin's appeal is consistent with most views in the market-renaming is only the beginning of Kodak's brand strategy transformation. In order to change Kodak's traditional image in the eyes of consumers and reshape a brand-new digital Kodak brand, Kodak brand must meet consumers' consumption needs and cognition through transformation, and this satisfaction must be based on Kodak digital products, a market carrier. Kodak moment, in order to cooperate with the concept of "digital Kodak", Kodak changed its previous demands in marketing strategy. In the new advertising films and other propaganda methods, Kodak takes "color cards" as the main line, which is obviously different from the "family cards" in the past film propaganda. Kodak Le Tu Pavilion is Kodak's only authorized all-round image service store in China.