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Kodak and the Digital Revolution (A) Case Solution
Adoption of a new technology is mainly based on the type of consumers that compose a market. People are looking for convenience. Kodak’s process of photography was quite long and tedious. Films had to be bought and then developed. After development, sharing was another hassle. In general, consumers are looking for convenience. In the era of personal computers, digital camera helped consumers in making photography easy. There are several factors linked to it. As soon as competitors increase, the price of the camera started to fall. Reduced prices were the main driver of sales of a digital camera. Not only people could buy a camera at a lower prices, but they also did not have to go through the hassle of film development and other stuff. Simple printing would make their photographs ready. Other than that, changes brought in by the internet and communication also helped in the adoption of digital cameras. Instead of sharing photos in a physical form, it could be now sent via internet without a substantial cost. By 2000, prices of cameras were reduced and there were no service charges, and there was no price for sharing. The elimination of retailers’ markup reduced the overall cost, which led to increase in sales and adoption of digital cameras.
Following questions are answered in this case study solution:
Compare traditional photography to digital imaging. What are the main structural differences? Will digital imaging replace traditional photography? How have value creation and value appropriation changed in digital photography relative to traditional photography?
Fisher Era: Fisher arrives from Motorola in 1993 and stays until 1997. How would you assess Fisher’s attempt to transform Kodak? What did he do? Why did it fail?
Sometimes new technology is introduced before the market is ready for it. When was the market ready for digital photography and what were the prerequisites?
Case Study Questions Answers
1. Compare traditional photography to digital imaging. What are the main structural differences? Will digital imaging replace traditional photography? How have value creation and value appropriation changed in digital photography relative to traditional photography?
The main difference between digital and traditional photography was the use of film. Due to the film that was used in traditional cameras, it gave rise to other business segments that helped in the development of those films. Kodak not only based its business on those films, but also on the development of such films. It has spread a whole network that helped people in the development of such films. On the other hand, digital cameras simply took pictures, which could be easily printed. There was no need to the extensive procedure of film development. This is one the main structural difference between the two. Moreover, digital cameras only required electronic gadgets; whereas, for traditional photography, a whole value chain had to be developed as discussed in the aforementioned text. This is one of the main structural differences between the two. Digital Photography did replace traditional photography as one of the Kodak’s managers rightly said, “my goodness, photography is dead.” As per Exhibit 9, digital cameras revenues grew by 82% from 2000 to 2006E. During the same time period, the growth of traditional cameras was -63%. Hence, it is safe to say that digital photography will replace traditional photography as consumers were adapting to the new digital technology.
2. Fisher Era: Fisher arrives from Motorola in 1993 and stays until 1997. How would you assess Fisher’s attempt to transform Kodak? What did he do? Why did it fail?
Fisher’s efforts revolved around several premises:
Hardware Based Strategy
Injection of new leadership
Fisher tried to build ties with Tech giants of that time so that he could use hardware to deliver customers the type of service that would satisfy them. In order to do so, he spent a large sum of money on R&D, and he tried to use Kodak’s retail/kiosk strategy by molding it to the digital phase that was coming. His second effort was an injection of new leadership. He brought top management from companies like Apple and IBM. He redefined the definition of growth by making performance KPIs customer centric. Lastly, he tried to change the corporate culture so that people would openly discuss ideas. The question is that why did still Kodak lose market share. There were two main reasons that his hardware based strategy did not work. He managed to change the top leadership but was not able to bring the culture of open discussion in the middle management. He tried to bring change and resistance to change is inevitable. Along with internal factors, the competition was the main external factor that ensured the failure of the strategy. These factors are the reason due to which Fisher’s strategy did not work, and he has to withdraw it.
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