Every firm has been hit by the recession and for most, it’s been bad news. However, the latest firm to file for bankruptcy is an interesting case, as the causes extend well beyond a weak economy. The company in question? Eastman Kodak. Renowned for inventing the hand-held camera and being the market leader, selling 90% of photographic film and 85% of all cameras in the USA in 1976, the company has since seen a large change in its fortunes.
Massive competition has emerged from all over the globe and the company has seemed to lag behind the digital revolution. Arguably, unwilling to take risks and making some strategic errors, Kodak saw its stock tumble from $94 in 1997 to under $1 per share in 2012. Since 2004, Kodak has only seen one profitable year. With massive competitors in the world of digital photography, the market has become a highly competitive one. As Rupert Goodwins, the editor of technology website ZDNet said:Kodak made all its money from selling film, then the digital camera came along and now no-one’s buying film. It’s not like they didn’t see it coming. Kodak hesitated because they didn’t want to eviscerate their business.
By filing for bankruptcy, Kodak is protected and its operations will continue for the time being, perhaps giving the company time to have a rethink and a reorganization. Eastman Kodak has previously tried to take a new direction and has been moving away from film and towards its printer, software and packing businesses. The problem is that these markets already have some very strong competitors: Hewlett Packard, Canon and Epson. It’s a difficult job to break into this market and gain market share.
The future of the company is very much in the balance and as reorganization of its operations looks inevitable, so does a loss of jobs. Thank goodness it only employs some 19,000 workers and not the 145,000 it did back in its day. Bankruptcy will certainly keep the creditors at bay for the time being, but it is by no means a long term solution to the company’s ailing profits. The following articles consider this ‘Kodak moment’.
Eastman Kodak files for bankruptcy protection BBC News (19/1/12)
Eastman Kodak files for bankruptcy The Christian Science Monitor, Ben Dobbin (19/1/12)
Kodak: From Brownie and roll film to digital disaster BBC News, James Cowling (19/1/12)
Kodak files for bankruptcy CNN Money, Aaron Smith and Hibah Yousuf (19/1/12)
Photography pioneer Kodak files for bankruptcy Reuters, Jonathan Stempel (19/1/12)
Kodak: 30 fascinating facts The Telegraph, Matthew Sparkes (19/1/12)
Kodak: why the moment has oassed Guardian, Simon Waldman (19/1/12)
Questions
- Using the product life cycle, explain where Kodak currently lies.
- To what extent are Kodak’s current problems related to the obsolescence of their products and not the recession?
- What strategic errors have Kodak made?
- What has caused Kodak’s collapse in share prices and profitability?
- Why is Eastman Kodak finding it difficult to gain market share in other markets, such as printing?
- What options are open to Kodak for the future if it is to become profitable once more?