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Eastman Kodak Company

Solution Id Length Case Author Case Publisher
2373 745 Words (4 Pages) Robert J. Dolan Harvard Business School : 599106
This solution includes: A Word File A Word File

Kodak’s’ claim of following the low-cost strategy when entering the pharma business is backed by their plan of using the advanced manufacturing techniques which will help them in being both, cost competitive as well as environmentally safe. Using such technology is pertinent to their claim because the traditional manufacturing technology in the pharma industry of the U.S.A. can never achieve the labor and cost advantages that China or India have.

Following questions are answered in this case study solution:

  1. How can Kodak claim that they will be able to follow a low-cost strategy by entering the pharmaceutical industry? How can this strategy be achieved?

  2. Critically analyze whether Kodak should diversify into the pharmaceutical industry.

  3. Even though this is considered a diversification into an unrelated industry (the camera industry and the drug industry are unrelated) what are some ways that Kodak can claim the existence of cross-business sharing or transfers of resources and capabilities?

  4. Experts speculate that drug prices will likely rise due to moving the manufacturing of drugs from China to the USA (through Kodak), what are the options that you think are the best solution to this challenge? Think about this from both a micro and macro level.

Case Study Questions Answers

This strategy can be achieved by using 3-D printing technology, robots or adopting continuous manufacturing techniques to achieve economies of scale. Moreover, they already own Eastman Business Park with a capacity of manufacturing about 25% of the United States’ APIs which could also be up-scaled when needed. Hence, Continenza is confident that Kodak can provide the highest value at the lowest cost. 

2. Critically analyze whether Kodak should diversify into the pharmaceutical industry.

Kodak should diversify into the pharmaceutical industry as it can easily leverage its massive infrastructure and assets (Eastman Business Park that is an ideal location for any pharma business with the state of the art manufacturing facilities and also for its location which is central to the required talent who are experts in the pharma industry), expertise in the chemical manufacturing (2013 diversification into specialty chemicals), pharma experience (Sterling 1988) and its history of innovation and quality (R&D expenditure 2019 was 42 Million). Kodak has both upstream (manufacturing specialty chemicals – the production plants, procurement technicalities, manufacturing knowledge, relationships with the suppliers, etc.) and downstream (Sterling acquisition gave access to marketing infrastructure and strong insights on the regulatory processes of pharma industry) knowledge which can easily be leveraged for this diversification. 

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