Eastman Kodak & Its Performance

Eastman Kodak is a company which is synonomous with photography in the United States, although it has gained additional competition from 35mm camera manufacturers. However, Kodak brought photography to the masses through its instamatic cameras, and its film products dominate the American market. The company has recently encountered competition from Polaroid in the instant camera market, and from Fuji (a Japanese company) in the film market. In addition, digital technology offers new challenges to companies in the photography industry that did not exist a decade ago. This research considers how Kodak can build on its strengths and renew investor confidence in its performance.

Kodak develops, manufactures and markets consumer and commercial imaging products. The consumer imaging products are used for capturing, recording or displaying a consumer originated image. For example, traditional amateur photography requires, at a minimum, a camera, film and photofinishing. Photofinishing, in turn, requires equipment and supplies, including chemicals and paper for prints. Kodak manufactures and markets various components of these imaging systems. For amateur photography, Kodak supplies films, photographic papers, processing services, photographic chemicals, cameras and projectors. Recent imaging products developed by Kodak include new generations of films, cameras, photographic papers and single-use (disposable) cameras.

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her strength that Kodak has is its long history and strong brand recognition. Because Kodak film has been on the market for generations, American consumers are familiar and comfortable with the product. Its longtime association with American consumers also gives it some edge over Fuji Photo, which suffers from periodic "Buy American" backlashes toward imports (McClenahen, 1996, p. 72). Weaknesses Although Kodak is strong financially, its recent performance has suffered from its participation in a largely mature (and therefore price-sensitive) market. During the last ten years, sales have increased at a lackluster 5.5 percent annually, while earnings have increased at only 2 percent annually during the same period. Over the past five years, sales have fallen, despite the strong performance of the single-use camera, and earnings have decreased at the rate of 1.5 percent per year (1996 SEC 10-K Filing, 1997, p. 4). These poor financial results are due in part to the maturity of the industry, but also to the volatility of the dollar, which is a problem which any multinational company faces. Recently, the dollar has gained strength overseas, which makes Kodak's products more expensive overseas and thus less competitive. This,

Category: Business - E