Kodak In Developing Digital Photography example essay topic

Friday, 29 - Oct - 04 University of Bristol Engineering Management Groups 2: MANAGING INNOVATION Exam Paper (May- June 05 - Date to be confirmed later) Part 2: CASE STUDY (Kodak) Note: The examination will be in two parts. Part 1 will comprise a set of multiple-choice questions designed to check your understanding of all of the lectures material. Part 2 will concern this case study, with the examination paper including a set of questions about it. The case study describes a situation, which you need to research further and resolve.

In preparation for the examination, you should analyse this case study and relate it to the lectures so that you arrive at the examination with an understanding of how you might proceed. CASE STUDY Kodak, based in Rochester, New York, where it pioneered the use of photographic film 100 years ago, has been facing weak profits and job cuts as it struggles to turn round its business. Wednesday, 21 June, 2000, 11: 26 GMT 12: 26 UKKodak looks to digital salvation by BBC News Online's Steve SchifferesThe world's most famous film company is hoping that the digital film revolution will come to its rescue. Dan Carp, Kodak's chief executive, told BBC News Online that he was 'very frustrated' by the low share price for his company which is trading at around 10 times earnings despite five quarters of record profits.

' There is no question that digital imaging is going to expand the use of photography and make it more user friendly,' he explained to News Online during a whirlwind tour of Europe. ' What's holding us back is some scepticism that the digital revolution is yet to be finalized,' he said. Fresh investment Mr Carp told the BBC that the company would invest two-thirds of its $900 m research and development budget in digital technologies. It was also spending over $1 bn in buying back its own shares in order to boost their price. Analysts say the share buybacks are needed to boost the company's earnings per share which have been diluted by employees cashing in some 20 m stock options last year. Mr Carp said he was not worried by the threat of a takeover.

However, he admitted that the marketplace for digital imaging technology was likely to be more crowded than traditional photography, with companies like Sony vying with Kodak, Fuji, and Olympus. Kodak had been slow to introduce full digital technology, fearing that it would hurt sales of existing photographic products. But it now aims for 45% of its sales, and 27% of profits, to come from digital sales by 2005. Mr Carp said that the introduction of broadband and other high-speed internet connections would speed the take-up of digital technology.

There were more than 4 m digital cameras sold in the USA, and 1 m in Europe, last year, and Kodak has a 25% market share. Kodak was targeting Europe for expansion, particularly in regard to internet products. Mr Carp said that Kodak was focusing on its investments in emerging markets like China, where it was investing$1 bn in new capacity. Kodak's expansion abroad comes after years of consolidation. In 1997 the company was forced to layoff around 20,000 workers. Mr Carp said he did not foresee any more mass redundancies, although the company would need to keep a tight control on costs in order to ensure it could invest enough in its strategic priorities.

Thursday, 24 January, 2002, 23: 48 GMT Kodak earnings slump In October the company warned its earnings would be hit by the economic slowdown, and announced plans to cut 4,000 jobs because of falling demand for film and cameras. ' Our strategy during this difficult economic year has been to strengthen our balance sheet so that the company will be in a better financial position once the recovery begins,' said chief executive Dan Carp. But Kodak warned that it Friday, 29 - Oct - 04 could be some time before this pick-up was seen. 'We are not currently expecting an economic recovery in 2002, but we are factoring in a recovery in 2003,' chief financial officer Bob Brust told analysts. Wednesday, 23 July, 2003, 13: 57 GMT 14: 57 UKKodak sheds 6,000 more jobs Kodak is cutting up to 6,000 more of its 70,000 staff, as it struggles to cope with the sluggish economy and the prolonged nosedive in sales of camera film.

The photo giant has already shed 10,000 jobs since 2000, as the introduction of film-free digital cameras eats into its core market. Since digital cameras came onto the market, Kodak has tended to insist that its consumer photography business would not suffer. Now, it has started to acknowledge the damage the technology - largely in the hands of companies outside the traditional photography sector - has done to its bottom line. But chief executive Dan Carp insisted that Kodak had the brand strength to make money from digital imaging itself. Friday, 26 September, 2003, 06: 12 GMT 07: 12 UKKodak shares dive 18%Shares in photography giant Eastman Kodak plunged 18% after it revealed its new strategy to adapt to the growing trend for film-free digital cameras. Investors rushed to sell the shares after they learned Kodak plans to fund its switch to digital products by cutting its dividend pay-out to shareholders by 70%.

Kodak has cut thousands of jobs this year and watched profits fall as it struggled to cope with the popularity of new, digital photography. But analysts warned that Kodak's decision - until now - to cling to its focus on its traditional markets of film, non-digital cameras and paper-based photographic printing means it is coming late to a crowded market. ' We are acting in the knowledge that demand for traditional products is declining, especially in the developed markets,' said Kodak chief executive Daniel Carp. But analysts believe that rivals like Canon, Sony, Dell and Hewlett-Packard are already far ahead of Kodak in developing digital photography. Wednesday, 22 October, 2003, 16: 36 GMT 17: 36 UKKodak investors hold crisis meeting By Mark Gregory BBC World Service business reporter The growing popularity of digital cameras that do not use traditional film has severely dented the market Kodak has dominated for more than a century. And the company's net profits have slipped to $122 m (lb 73 m) for the July to September quarter, marking a 63% drop when compared with the same period a year earlier.

In an effort to sort it out, a group of rebel investors who control about a quarter of the company's shares are meeting in New York on Wednesday. The investors want to find a way to reverse a plunge in the company share price that has been caused by both the falling profits and by concerns about the group's strategy going forward. Last month Kodak unveiled plans to invest $3 bn to increase its presence in the area of digital technology. But such plans have infuriated some investors whose dividend payments have been cut by 72% to pay for the diversification.

The rebel investors say Kodak is taking too many risks. The investors want Kodak to avoid head to head competition with established electronics giants like Sony, Canon and Hewlett Packard, which have big leads in digital imaging. They are worried that Kodak will spend too much on buying up other companies to beef up its position in an area its unfamiliar with. After all, they insist: Film may be in decline, but its still provides Kodak with sizeable profits. Besides, in some parts of the developing world demand for film is actually rising. Rebel investors say the company should stick to the business it knows.

But Kodak is mindful of the fate of the instant picture group Polaroid, which went bust two years ago after failing to move with the times. Mark Tran, The Guardian - Thursday January 22, 2004 Kodak to cut workforce by 20%Eastman Kodak, the world's leading photography company, said today it would cut 12,000 to 15,000 jobs, or about fifth of its workforce, as it accelerates its shift to digital imaging. In switching focus from film to the more lucrative digital market, Kodak will incur charges of up to $1.7 bn (lb 922 m) over the next three years. Between $700 m and $900 m will go towards severance costs and $600 m to $800 m towards the sale of buildings and equipment.

Kodak, based in Rochester, upstate New York, announced the job cuts as it reported an 83% fall in fourth quarter net income, with film camera demand continuing to decline. Kodak posted net income of $19 m, down sharply from$113 m a year earlier.