Kodak Fuji Rivalry

The Kodak –Fuji RivalryPresented By:

Ajay Avhad 62Poonam Bhondve 64Anuj Deshmukh 66Sudhir Ghanekar 68Omkar Inamdar 70Namrata Kalaskar 72

Topics covered• Introduction of case• About Fuji and Reason for success of Fuji• Strategy of Fuji• Pros and Cons of Fuji• Kodak in Japan• Diversification of Kodak• Reasons for poor performance of Kodak• Distribution strategy of Kodak and Fuji• Relate Porter's 5 models to case study• Dispute• Role of WTO

Introduction to the Case

KODAK 1996 19997

Revenues $15.97 billion $14.36 billion

Net Earnings $1.29 $ 5 million

US Market Share 80.1 % 74.7 %

Financial Results for year ending 1997

• Analysts felt that Kodak had underestimated its competitors especially Fuji Photo Film.• Fuji entered the market in the mid- 1990s with 10% market share and increased it to 17% in 1990s• Aggressive marketing by Fuji brought down prices significantly

• Top Management of US based Eastman Kodak Company were reviewing the company’s Financial results for the year ending 1997.

Background Note• George Eastman founded Eastman

Kodak Company in Waterville, New York

• In the wet plate camera, Photographic images were made on heavy, fragile glass plates that had to be coated with a wet emulsion just before picture was taken.

• Eastman developed and patented the dry plate process.

1879 Eastman developed and patented the dry plate process.

1884 Eastman introduced a “Roll of Film” as a replacement for glass photographic plate

1887 Eastman turned attention towards manufacturing Cameras

1889 Eastman Photographic Materials Company Limited in London

1892 The company settled on the name Eastman Kodak Company

1905 Kodak Setup a distribution outlet in Japan

1924 George Eastman retired . Became the chairman of Board of Directors.

1970’s Kodak faced competition from Polaroid, Berkley Photo, 3M, Agfa and Fuji

1981 Sony Corporation introduced electronic camera “Mavica”

Though several Japanese companies entered the US Market, Kodak faced real threat only from Fuji

Introduction to the Case

Kodak’s revenues were down from $15.97 bn in 1996 to

$14.36 bn in 1997 and net earnings fell from $1.29 bn to just $5 mn

More than 5 percent points decline in the US market share (from 80.1% to 74.7%)

Analysts felt that Kodak had underestimated its competitors especially Fuji Photo Film

Fuji entered the market in the mid- 1990s with 10% Market share and increased it to 17% in 1990s Aggressive marketing by Fuji brought down prices

significantly

Contd…

Analysts felt that Kodak should not take its home market for granted as Fuji had become the world’s second largest manufacturer of photographic film and paper after Kodak

Fuji was not just winning over cost-conscious consumers but also steadily eroding Kodak’s lead in the professional photography market

Background

George Eastman founded Eastman Kodak Company in Waterville, New York

Photographic images were made on heavy, fragile glass plates that had to be coated with a wet emulsion just before picture was taken

Pioneered and patented the dry plate process

About Fuji……

About Fuji……

Founded in 1934, with its headquarter at Tokyo, Japan

Entered the US market in 1964 as a supplier of private label films

Focused on providing quality and innovative products at cheap price

Was the market leader in Japan, world’s second largest market for photography products

Reasons for Success

Built a reputation for quality and innovative products

Gained market share by offering products at prices lower than that of Kodak’s

Consumers viewed the company as Customer-oriented

Regular introduction of new products, promotions and slashing of prices

Being follower it was using wait and watch policy instead of provoking Kodak

Fuji’s Strategy

Established a Production plant in US Cost Efficiency Reactive Follower Customer & Quality were the prime focus CLV &

CRM Distribution Strategies Compatibility with Kodak Cameras & Films Aggressive Marketing

FUJI’S PROS

Fuji’s chances for future growth Fuji is attacking market leader by innovating in

almost every sphere. Fuji looks to be more in line with customer needs

and have a great distributor network. The high spending on R&D has reaped results in the

past and might do the same in future. Digital technology seems to be the future of

photography. Fuji will do well to concentrate on this.

FUJI’S CONS

Fuji has to overcome following disadvantages They have concentrated on long term strategy and their profits are low as of now. Their market share might stagnate because of

counter offense by Kodak with much higher profits. Might result in low performance in the eyes of

stakeholders It is still not seen at par with Kodak in US market.

Reasons for poor performance of Kodak in Japan

Poor distribution network

Neglect Japanese market

Underestimation of it’s competitors

High product price

DISTRIBUTION NETWORK of Kodak-Fuji

Kodak:In 1977 KODAK tied up with the distributor Nagase & co. in Japan.

Increased its workforce from 12 to 4500.

Joint Venture and strategic alliance with many Japanese partners. Such as Bandai a leading Japanese toy manufacturer – co. to established branding .

The concept of “minilabs” at certain retail outlets in Japan.

DISTRIBUTION NETWORK of Kodak-Fuji

Fuji:• Fuji products were sold through 216000 retail

outlets

• Fuji owned a controlling interest in 3 of the 5 major wholesalers

Distribution Strategy of Kodak and Fuji

Fuji

Asanuma(Distributor)

Ohmiya(Distributor)

Ohmiya(Distributor)

Large retailers / wholesalers


storesstores

Misuzu(Distributor)

Kashimura(Distributor)







storesstoresstoresstores storesstores storesstores storesstores storesstoresstoresstores

Distribution network of Kodak and Fuji

Kodak



stores

Nagase(Distributor)







storesstores stores stores stores storesstores

DIFFERENCE IN DISTRIBUTION

In US manufacturers sold directly to retailers & photofinishers

In Japan distributors acted as intermediaries

Fuji had strong ties 4 main distributors Asanuma, Misuzu, Kashimura and Ohmiya

Whereas Kodak had only 1 distributor – Nagase

Fuji gave high commission to the distributors

Documents

Kodak Fuji Rivalry