Background: In the 1990s, the Eastman Kodak Company (Kodak) yielded to changes in demand that threatened to make its signature products outdated. The company made a strategic decision to move away from traditional film and toward digital products. The company characterized this decision as a historic shift, and this decision was not without its critics. Many people wondered if Kodak could compete effectively with companies including Hewlett-Packard, Canon, and Epson who were firmly entrenched in the market niches that Kodak was interested in moving into.
Kodak announced that it would make no significant investments in the traditional consumer film business, but Kodak did begin actively making private-label film under non-Kodak brand names and became more aggressive in pursuing market share in the film business. This represented a dramatic shift from its previous strategy of using brand image to demand a premium for its branded film.
The problems facing Kodak parallel the problems of many companies whose business models has been threatened by rapid changes in technology, but the success of this dramatic change in tactics was never certain. However, if Kodak had done nothing it might have suffered the same fate as Polaroid Corporation. Polaroid, a long-term rival of Kodak was forced into bankruptcy protection in 2001 after its repeated efforts to introduce new products to replace its outdated instant photography products continued to fail.
Even before this major change in strategic direction, Kodak was aware of the 'digital threat' to its business. The company had begun to build revenue in other areas including a profitable digital-imaging business. The decision to shift into a high gear was driven by a faster-than-anticipated shift from film to digital photography.
According to the Yahoo! Finance website, Kodak has organized its business into four segments: Photography, Health Imaging, Commercial Imaging and All Ot...