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Eastman Kodak Company’s Strategy Report

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Updated: Apr 2nd, 2020

Executive Summary

The purpose of this management report is to analyze the strategy used by Kodak otherwise known as Eastman Kodak Company. Kodak is the world’s leading company when it comes to imaging innovations and products. Kodak provides imaging technology as well as products and services to the image and photography industries around the world.

Some of the company’s products and service include retail printing kiosks, digital cameras, picture frames, online imaging services, image scanning equipment and photographic paper. The report will cover background information on the company by looking at the history of the company as well as the industry in which the company operates in.

The various environments in which the company operates in will also be assessed in this report by conducting an environmental assessment or a PEST analysis of the political, economic, social and technological environment for the company. The report will also focus on Henry Mintzberg’s 5P’s for business strategies which include pattern, position, perspective, plan and ploy.


Eastman Kodak Company is a US corporation that specializes in the production of photographic products and equipment. The company’s operations have been divided into four segments which include digital and film imaging, graphic communication, commercial imaging and health sector (Kodak Patents 2010).

The major Kodak products include Colorburst, Kodamatic, Kodak DCS 100 and DCS DSLR, digital picture frames such as the Kodak smart picture frame, image sensors in digital cameras such as the Leica M8 and the KAF-10500 image sensor, document imaging and scanners as well as movie pictures and TV production (Kodak 2010).

George Eastman, who was the founder of Kodak, introduced the first camera to the world in 1888 that allowed people to capture special moments in still formats. Since then, Kodak has been the main provider of imaging, photography products and services as well as photography equipment such as cameras and picture scanners (Murat 2008).

Kodak’s Strategy and Business Industry

The company took aggressive steps in 2003 to re-invent itself to be a stronger and diversified company in the photo imaging industry by leveraging its operations to focus on the core businesses to ensure that its customer base had access to quality imaging and photography products/ services (Kodak.com 2004). In 2008, the company experienced a significant growth as a result of a five year restructuring program that would see its business strategy changing to improve revenue and profit margins.

As a result of the restructuring exercise, revenues from the digital businesses grew by double digits for four consecutive quarters between 2007 and 2008. The decline in revenue for the traditional segment of the company’s business was seen to be in line with the restructuring program which was meant to shift the operations of the business from traditional to more innovative and modern digital businesses (Kodak 2010).

The restructuring exercise saw the company investing $4 billion dollars in research and development activities that would see an increase in its digital businesses. The $4 billion investment was also used in acquiring several small businesses that had been successful in the digital imaging industry to improve the company’s market share as well as improve its technological innovations and services.

The restructuring exercise saw Kodak developing new business strategies that included expanding the digital segment of the company in both retail and home locations. This would see the development of photo kiosks and mini photo labs as well as the development of printer docks that would ensure the easy transfer of images from digital cameras to printers without the use of a computer (Gia 2008).

The photographic equipment and supplies industry has changed in recent times to be known as the imaging industry. The current imaging industry defines companies according to whether they have innovative and novel technology instead of whether they have the best equipment or supplies in the photography industry.

The major association that manages the imaging and photographic industry is known as the International Imaging Industry Association (I3A). The purpose of the I3A is to enable the use of imaging activities to simplify and enrich the lives of ordinary people through the use of visual experiences (I3A 2010). The association brings together various members who have invested in the imaging and photography industry to ensure that the appropriate imaging standards have been met.

The International Imaging Industry Association is viewed as the global imaging ecosystem that is meant to make the creation and production of visual images easier and simple. Companies such as Kodak, Sony and HP have the power and authority to connect and collaborate with other leaders in the imaging industry to deal with any imaging challenges that might arise (Service Architecture 2010).

Internal Environmental Analysis

SWOT Analysis

Like any other company, Kodak has strengths, weaknesses, opportunities and threats. The table below shows a SWOT analysis of Kodak Company (Gia 2008)

  • Major player in the imaging and photography industry as it is the top three provider of image and photography products and services.
  • Wide product portfolio that covers digital products and online photo galleries.
  • The company has a strong brand name and brand affinity.
  • Kodak has a core competency in both traditional and digital photography and imaging business.
  • The company has the financial capability to invest in research and development activities for new digital products.
  • Kodak has a multinational market presence in over 100 countries around the world. This has enhanced its global distribution capability.
  • Kodak lacks technological leadership as it mostly focuses on competitor innovations especially in the digital industry.
  • The company lacks detailed and clear strategies that can be used to convince stakeholders and investors to invest in Eastman Kodak.
  • The company has weak strategic alliances and partnerships that have not been successful in the past. For example the failed alliance between Hewlett Packard (HP) and Lexmark.
  • Kodak has weak innovation capabilities in its other business segments apart from its digital technology segment.
  • It has a lower financial power when compared to its competitors such as Sony and HP.
  • The company is behind technology wise when it comes to the quality of its digital printers and mini labs as well as its online photo imaging services
  • There is an increasing demand for digital photography products and services.
  • There are new emerging markets and countries for Kodak’s business operations which include China, India and Russia.
  • Kodak has the opportunity to expand its product portfolio to meet its customer’s needs.
  • The company has expanded its digital camera and printer market to meet the increasing demand for digital technology.
  • It has also expanded its operations to include online sales as a result of an increased demand in photo online services.
  • Kodak has acquired smaller businesses to gain a market share in the image and photography industry.
  • The company has expanded its operations to cover the expensive digital market for cameras and photo imaging services.
  • The increasing development of devices that incorporate digital camera features has threatened the company’s camera production segment.
  • The shifting tastes and preferences of consumers in today’s constantly changing market has made it difficult for the company to keep up with these trends.
  • The availability of substitute products from companies such as Sony, Fuji Film and HP has threatened the company’s products and services.
  • The digital photography industry has experienced a high growth rate but the profit margins are still very low.
  • The company faces the threat of new competitors from countries such as China and the Middle East.
  • The weak economy and the recent global recession affected the operations and business segments of the company

Kodak’s Financial Performance

Kodak has been identified by financial analysts to be the second largest company after Canon that produces photographic products and services in the photographic equipment and supplies industry. The company has a market capitalization of $8.1 billion when compared to that of Canon which has been estimated to be $58.4 billion (Seed 2006).The financial performance of the company as at 2008 saw the company’s net sales decreasing by 9%.

This decrease was mostly attributed to the global economic recession whose effects were being felt as early as 2007. The fourth quarter of the company’s financial year of 2008 saw its revenues decreasing by 24 percent which was lower than that of the previous year. The impact of this downturn in its revenues was severe to the company’s financial performance as it usually experienced high sales returns during the last four months of its financial year.

The revenue downturn was mostly caused by the declining sales in Kodak’s Film Capture and traditional photofinishing products. This decline in sales was however offset by the company’s increasing sales volume in document imaging and consumer digital imaging products such as digital capture devices and consumer inkjet systems which experienced an increased growth in 2008.

The gross profit of the company declined in 2008 due to the decline in its sales volumes as well as the unfavourable price mix in its business segments. The tables below show the net sales, profit margins and income tax benefits of the company for the year ended December 2008 (Kodak Financials 2010).

Income Tax Benefit

(dollars in millions)

For the Year Ended

December 31,

Loss from continuing operations before income taxes

Benefit for income taxes

Effective tax rate









For the Year Ended December 31 Change Vs. 2007

Amount ($)

Change vs.2007 Volume Price/mix Foreign Exchange Manufacturing and other costs
Total net sales 3,088 – 4.9% 8.6% – 14.6% 1.1% n/a
Gross profit margin 19.2% -6.3 pp n/a -13.4pp 0.7pp 6.4pp

(Source: Kodak Financial 2010)

GAP Analysis: Kodak’s Resources and Capabilities

The company’s has a variety of resources and capabilities that have given its products and services a competitive advantage over its competitors. The table and graph below show the various resources and capabilities of Kodak.

Kodak’s Resources Kodak’s Capabilities
Code Importance Strength Code Importance Strength
Technology R1 8 8 Environmental


C1 8 4
Brand Name R2 9 8 Government Relations C2 4 6
Distribution R3 10 10 Imaging Capabilities C3 8 10
Financial resources R4 7 10 Sales and Marketing C4 8 9
Image sensing R5 10 8 Research and Development C5 10 10
KODAK’S GAP ANALYSIS Technological development C6 7 9
Colour management C7 8 8
Market share C8 10 9
New product development C9 7 4
The graph shows the various resources and capabilities of Kodak.

FAR Analysis

When analysing the functional areas of Kodak, two main areas of interest are usually considered; product development and sales and marketing. In Kodak’s product development, the design team is usually focused on creating products that are innovative and more superior to those of the competitors in the imaging market.

Digital cameras which are a major innovation for the company have seen a lot of development where designers and developers of the product focus on creating cameras that are easy to use and compatible with other products such as computers and printers (Seed 2006).

Kodak has continued to add value to its products by continually investing in research and development activities that will see its innovations being superior and unique to those of its competitors. Kodak’s EasyShare camera line demonstrated the ability of the company to produce a camera that was simple and easy to use as well as of a high quality when compared to the other digital cameras in the market.

The EasyShare digital camera ensured that the company was able to achieve brand recognition and brand affinity within the imaging and photography industry. It enabled Kodak to move away from the traditional line of photography and equipment to a more modern and unique product line (Seed 2006).

Under the development segment of the company is production which deals with the actual development of the product designs and innovations. Kodak pursues a high cost strategy when it comes to its product innovations which are meant to ensure that the best materials and designs have been used in the development of high quality digital cameras. The second area of the company deals with sales and marketing where the company employs the use of various marketing tools and strategies to market its products.

The photo finishing kiosks are a major marketing tool for the company as they cater for photo editing of customers digital images and they also offer complementary products such as free memory cards for storing the digital images as well as free photo printing paper. The online photo sharing sites such as Ofoto are valuable marketing tools for the company as they allow customers to create and share their pictures with other users which increase the appeal for Kodak digital products (Seed 2006).

Another segment that works in conjunction with sales and marketing is distribution. As with any other company distribution plays an important role when it comes to making the products of a company available in the market. Kodak places a lot of emphasis of on-time deliveries, inventory management and good supplier relations. The company however pursues a low-cost efficiency strategy in its distribution activities as it has placed a lot of emphasis on product research and development.

The company utilises the strategy of placing value of the quality of the product rather than on its availability during its distribution activities (Seed 2006).The diagram below represents a FAR analysis of Kodak based on the two areas of focus which are development, sales and marketing

The diagram represents a FAR analysis of Kodak.

Mintzberg’s 5Ps for Strategy

The varied definitions of strategy have made it difficult to pinpoint a specific definition that can be used to explain the concept of strategy. Because of this, Henry Mintzberg came up with the 5Ps that could be used in explicitly defining the term strategy. These 5Ps include plan, ploy, pattern, perspective and position (Frankenberger 2006: McCabe 2010: Davies and Ellison 1999).

Plan defines strategy as an intended course of action or guideline that is developed by an organization or company to deal with a given situation (Gane 2007). Plan describes strategies to be actions that are formulated purposefully and consciously in advance to deal with situations that are meant to happen or about to happen (Institute for Manufacturing 2010: Morden 2004).

Strategies that are defined by plans are intentionally organized to take place as they ensure that the progress of projects and activities has been predetermined and the expected outcomes have been projected (Tiwari 2009).

Strategies that include the use of plans involve developing schedules that can be used in product developments and launches, company acquisitions and mergers, investment activities and financial ventures, human resource training programs and downsizing in companies (Campbell et al 2002). Kodak has developed a planned strategy known as the content strategy that is used in its overall marketing strategy.

The content strategy is focused on two aspects one of which is creating content that showcases the products and services that the company uses in its business operations. The tips and projects centre has been identified as the perfect example of the content strategy as it involves the use of inspirational photo essays, imaging projects and photography tips in developing the company’s content for its new product innovations and services (Hoehn 2009).

The second aspect that is considered under the two pronged content strategy is the aspect of distribution which focuses on distributing the created content through the various channels of the company. The company has developed the Kodak distribution channel information portal to distribute the created content (Yunhao 2005).

The distribution channels used by Kodak include blogs, social networking sites, company websites and partnership sites The Company also has a distributed publishing model that involves various bloggers and the company’s employees posting their comments about the company’s new products and innovations in the publishing model.

Mintzberg and Ghoshal (2003) describe a ploy as a manoeuvre that is used to outwit a competitor, a rival or an opponent in a certain activity or industry. Ploy as a strategy is used as a short term goal for companies because a ploy usually tends to have limited objectives and goals.

Ploys are also subject to change within short notice given their short term nature and also given the varying reasons for using the ploy in the first place (Kew and Stredwick 2005). Ploy’s usually operate within the context of competition and competitive rivals within a specific industry where a company tries to eliminate its competition through the use of ploys such as a reduction in commodity prices and introduction of new products into the market (Chappelet and Bayle 2005: Gronfeldt and Strother 2006).

Kodak has used various ploys within the imaging and photography industry to try and gain a competitive edge over its rivals in the same industry as well as increase its market share.

Such ploys include the activation of numerous fronts during major sporting competitions such as the Olympic Games and the World Cup, the use of blogs and social networking sites to market its activities, the promotion of the Kodak brand during the season finale of the Celebrity Apprentice show and the showcasing of the company’s presence in golf through the incorporation of the Kodak Challenge which is a fantasy game (Hoehn 2009).

Mintzberg et al (2005) describe pattern as behaviour of strategy that describes the level of progress that has been made after a particular course of action or form of behaviour has been adopted by an individual or a particular company. Strategies that are patterns have been viewed to just occur as a result of consistent and inconsistent behaviour (Bilton and Cummings 2010).

Pattern defines strategy as a stream of planned actions and behaviour that is consistent and intended. Strategy as a pattern is different from that of strategy as a plan because patterns are viewed to be strategies that have been achieved or realised while plans are strategies that have been identified and intended for action (Evans et al 2003: Wagner 2006). Patterned strategies are therefore those actions that have been developed without any intention or deliberation (Bilton 2007: Ehrnreich 2004: Tate 2009).

Pattern strategies are mostly common in small businesses such as scrap dealerships and scrap metal collection agencies. Such businesses operate on the premise of buying as much scrap metal and materials as they can meaning that they do not need any type of strategy or plan to purchase scrap metal (Simons 2005).

These businesses however cannot buy old and used plastics because these purchases will be outside their pattern of business behaviour. Such patterns are therefore deemed to be unconscious strategies because businesses do not realise that they are following any consistent pattern (Smith et al 1999).

The definition of strategy as a position is described as locating an organization in a particular environment. Strategy through the use of position describes the mediating forces that are used to match the functions of the organization within the industry or environment that it operates in (Marx 2004: Dinsmore and Brewin 2010).

Mintzberg views a position strategy to be appropriate when the most important aspect to an organization is how it relates to its competitors, investors, stakeholders and employees. An organization that incorporates the use of position strategy usually seeks to defend a particular position within a certain market segment and industry (Capon 2008: Morris and Pinto 2007).

Kodak has developed its position in the photography and imaging industry by being the first company to develop photographic equipment that incorporates the use of sensory technology (Northeast 2007). It has also established its position in the imaging industry by focusing its products and services on specific industries and companies. Kodak has developed products for educational institutions such as Kodak scanners and integrated imaging equipment that are used during course training and practical applications.

The company has also developed services for financial institutions that incorporate the use of digitized microfilms used to create, store and protect financial data that is irreplaceable in nature. Kodak has also developed products for health institutions and public hospitals that are mostly used in maintaining patient medical records and also for taking body X-rays (Kodak Graphics 2010).

The definition of perspective strategy is that it is a chosen position and a perceived notion that the company has of the general world. Mintzberg (2007) describes perspective as a view that an organization has of its internal and external environment. Perspective strategy is important as it enables a company to formulate objectives and goals that can be used to achieve business operations through the optimal use of company resources (Magalhães 2004: Carsrud et al 2007).

Perspective determines the patterns of behavior of the company as it outlines the intentions of the employees and the company as a whole. Perspective strategy involves the incorporation of employee’s ideas and intentions into strategic plans to achieve business goals and objectives (Lechner 2005: Clausen 2003: Buytendijk 2010).

Kodak practices strategies that are perspective in nature. It has developed distribution channels for its products and services that incorporate the ideas of its workers and employees.

These channels include the social networking sites as well as company blogs where employees are able to post their comments about particular products and services that the company wishes to introduce to the imaging market. These opinions and comments are usually published by the company in its distributed publishing channel after which these channels are used in the creation of content analysis for the company’s products (Phillips 2004).

PEST Analysis

PEST analysis which is also known as environmental analysis is the assessment that a company performs on its external environment. A PEST analysis involves looking at the political, economic, social and technological environment in which a business operates in (Qin 2009: Tovstiga 2010).

Despite the fact that many organizations view environmental analysis as an important activity, such an analysis ends up making a minimal contribution to the overall operations of the business. This is mostly based on the fact that many organizations view the environments in which they operate in to be volatile and uncertain. This limits their ability to control the impact of the environment on the company’s operations (Bensoussan and Fleisher 2008).

These environments also have indirect effects on the operations of a company which leads to minimal outcomes of environmental analysis (Smith and Raspin 2008). Despite all of these aspects conducting a PEST analysis is an important activity for many companies as it ensures that the company has knowledge of its external environment (Gregory 2000).

A PEST analysis usually allows a company to conduct a SWOT analysis more easily because it assesses the external environment of a business. It is therefore important for a business to conduct a PEST analysis before it performs a SWOT analysis (Applegate and Johnsen 2007: Grant 2005).

Political Environment

As the imaging industry continues to undergo new technological innovations and services, the company has been faced with the problem of patent infringement and patent law suits. This has been because the various imaging technology and equipment developed in the industry is similar for all companies which makes it difficult to establish the company that had the original patent (Mendes 2010).

Patent infringements are common in the imaging industry because of the similarity of products and services that are produced by each company. As a result of this Kodak was involved in a patent infringement with Sony because of the similarity of cameras and photographic equipment that were produced by both companies (Digital Photography 2004: Gustavson 2009).

Kodak launched a patent law suit against Sony for breaching 10 of its patent rights when it came to its digital cameras. The company alleged that Sony used technology invented by Eastman Kodak in developing its digital cameras that incorporated the use of image compression and digital storage hardware (BBC 2004).

Privacy is another political environment that has impacted on Kodak’s business operations. This has mostly been attributed to the fact that digital technology in the US has become smaller and more compatible with equipment that is used on a regular basis. Digital imaging equipment has been incorporated into equipment and technology that is commonly used by ordinary US citizens.

Such equipment includes mobile phones that now have camera features as well as photo editing and image viewer technology. These devices are easily available in the technology market and they have been used for activities that invade the privacy of other people (Seed 2006).

Economic Environment

The economic environment of Kodak has shown that the company’s products are used by both individual and industrial consumers. Individual consumers have recorded a high purchase of pocket digital cameras developed by the company for their own personal use while the health sector has been identified as a major buyer of Kodak’s imaging and scanning equipment.

As much as many people own pocket cameras and photographic equipment, the high inflation and interest rates as well as the recent global recession have made most high end Kodak products to be considered a luxury item for most customers (Khosrowpour 2007). The increasing inflation rates which were as a result of the 2009 economic meltdown saw a decrease in the disposable income which forced many people in the United States and the rest of the world cutting down on their spending.

This meant that people only spent on what they could afford and what they considered to be important. This saw a curb in luxury spending which in turn affected digital camera sales in Kodak (OECD 2009). Such high inflation and interest rates will also affect the spending of industrial consumers such as health institutions and government offices that are the main consumers of the company’s imaging and scanning technology (Barnwell 2006).

Since companies make their capital expenditures on borrowed funds, they might have to postpone their borrowing because of the high inflation rates. This will mean that they will not have enough money to purchase any of the company’s products (Gwartney et al 2009).

The company will also be faced with other economic factors such as decreasing growth in film sales. As the world embraces digital technology, film photography is projected to be obsolete in the next ten years as more people switch towards digital photography and technology.

The company’s current strategy has been to invest the revenues it earns from film sales to be used in the development of digital products (Reliable Plant 2010). This strategy will however be difficult to achieve given the current slow film sales that are being experienced in the digital market. These sales have also been affected by its competitors who have developed far more superior products than the company (Barney and Hestelry 2006).

Technological environment

The imaging and photography industry is one that experiences fast technological innovations and developments meaning that the company’s technological environment is one that is subject to a lot of changes (Kurtz et al 2010). Such a high degree of technological innovations has mostly been driven by a need to have imaging devices that incorporate the all-in-one features (Worthington and Britton 2006). Consumers in this environment have shown that they prefer equipment that incorporates all features into one device.

Consumers now prefer to have mobile phones that have camera and photo imaging features incorporated into them (Schweibenz and Cabral 2010). Many mobile phone makers around the world are developing products that have more advanced camera works into their mobile phones. For example Nokia’s smart phones have digital camera features that allow the users to take digital images as well as create, edit and view these images (Turner 2010).

Such technological innovations have therefore had an impact on Kodak’s operations given the high demand for all-in-one devices that mostly incorporate digital camera features (Fullen and Podmoroff 2006). The growth of integration and portability in the imaging market has increased the need to constantly replace technology with newer innovations.

Kodak has been faced with the technological challenge of constantly updating its products to ensure that they remain relevant within the imaging industry. While a 1.3 Mp camera might have experienced high sales five years ago, the same cannot be said for the camera now as higher mega pixel cameras are being introduced into the market (Kodak Store 2010).

Kodak’s processing kiosks have also experienced slow growth and film sales as a result of the digital printing of images where consumers load their images onto memory cards or mass storage devices for printing. The availability of color and image printers has made it easier for people to print their images at their convenience at cost.

This has led to a marked decrease in the number of people that visit the company’s image processing kiosks to have their pictures printed. The technological environment has therefore affected the growth of the company given the high rate of technological innovations in the market that make it easy to create, store and produce a digital image (Kodak Kiosk 2010)

Social Environment

The social environment has impacted on the business operations of Kodak through the proliferation and increasing use of social networking sites. The world has experienced an increasing growth of Internet communities and networking sites where millions of people join to discuss and share their opinions about certain issues that might be affecting them (Quick MBA 2010).

These sites have affected the operations of Kodak because they incorporate features that allow users to edit and upload their photos to these sites. These sites also have photo sharing capabilities that allow users to share their images with other users. Such features limit the need for Kodak photo sharing and photo editing products (Zastrow and Ashman 2010: Thomases 2010).

The social environment has also affected the operations of the company because of the cultural diversity and beliefs that various countries hold around the world (Zastrow and Ashman 2010). While many countries have embraced technology such as digital cameras, others view these devices to be an invasion of their privacy especially in countries that limit the photographing of national symbols and statues.

This impedes the sale of the company’s products to these countries because of their view of imaging technology as an invasion of personal privacy (Osborne and Brown 2005: Anderson et al 1999).


In order for Kodak to become the world leader in the production of digital imagery products and services the company should intensify its strategic alliances with other companies within the industry to ensure that it increases its market share. The company could also share its brand name and logo with other companies such as Sony, Canon or Fuji film especially in its low performing product lines such as the digital scanners.

The company should also consider expanding its operations in countries such as China and India as well as other eastern countries that have continued to experience rapid growth and developments especially in their technological industries. Kodak should also consider acquiring technology firms that have demonstrated an increased rate in the production of technological innovations to ensure that it has up to date digital products.


The 5P’s for strategy have shown that the company has incorporated the use of various strategies to achieve its business goals and objectives. The PEST analysis has however shown that the company faces a tough external environment that might affect its business strategies and objectives.

The company therefore needs to reassess its business strategies and goals to deal with the external environmental factors that might affect its business operations to ensure that it remains relevant in the current competitive environment as well as survive the external pressures.


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