Kodak and Fujifilm: Leaders in Film

Anita Annunziata
Professor Fardanesh
Business 302
May 1, 2013

Kodak and Fujifilm are both well-known companies in the households of the United States and across the world. These two companies are each other’s main competition in the film market. They have been competing with each other for years. George Eastman, who was the founder of Kodak, was a lover of the photo taking procedure and wanted to simplify the photography process. Eastman established the Kodak Company in 1880. The Kodak Company was built on four basic principles: mass production at low cost, international distribution, widespread advertising, and customer focus. Years later, he was able to add the following policies: growth and development through continuing research, human resources, and a profit reinvestment program. Mr. Eastman knew that he had to make the photo process easy for amateur photographers. The Kodak camera debuted in 1888. The slogan “you press the button, we do the rest” was born. Kodak made the process of taking and developing pictures easy and accessible to nearly everyone. Kodak has led the way with a abundance of new products and processes that makes photography simpler, more useful and enjoyable. Kodak is not just known to be the film for amateurs, many professionals use Kodak film for commercial, leisure, and entertainment purposes. The Kodak Company is continually researching the needs of the consumer to improve their products. The Kodak Company brand is a premier global corporation and is recognized in virtually every country. Kodak has helped make technological advances in the motion picture industry and the healthcare imaging industry, document imaging, printing and publishing, and even space exploration.

George Eastman believed that workers should be rewarded for their hard work and loyalty. He understood that the prosperity of an organization was the result of the dedication that the employees put into it. Eastman started the “Wage Dividend” in which each employee benefited from the yearly dividend on the company stock above his or her wages. The wage dividends represented a large part of the company’s net earnings; the wage dividends were viewed as an innovation. To show even more appreciation to his employees, Eastman gave one-third of his own holdings of company stock to his employees. He also provided them with a retirement annuity, life insurance and disability benefit plans. (History of Kodak) The Kodak Company had a virtual monopoly on the photo industry until the Japanese company, Fujifilm was established in 1934. Fujifilm has established itself as a leader in motion picture photography, videotape, audio tape and floppy disc industries. The company is also involved in still cameras, camcorders, photofinishing equipment, paper and chemicals, imaging and information products for office and health care markets. Fujifilm began with the production of motion picture film, dry plates and photographic paper. One major task was that Fujifilm needed to develop brand recognition which was difficult because of the competition with Eastman Kodak Company. Fujifilm had a reputation for lower quality film and had to focus on improving the quality of the products it developed. Fuji attacked this challenge and developed film and paper that were compatible with the processing systems used mostly worldwide. By 1969, all of their films, photo paper and chemicals completely matched these processing systems. Due to the concentration on the quality of the product, Fujifilm developed its first film product and a motion-picture negative film. This proved to the Japanese consumers that Fujifilm was technically proficient in the motion-picture industry. The result was a huge demand for their products. After World War II, Fuji was able to begin exporting film and optical products to South America and Asia. The postwar boom was a great advantage to Fuji with the demands for new products to be developed. One downfall for Eastman Kodak, but an advantage to Fuji, was that Kodak agreed to let Fuji produce black and white amateur roll film during 1952 and three more black and white roll film products by 1958. The company became the number one manufacturer of consumer films in Japan. Because of the agreement with Kodak this opened doors for Fuji and they were able to make more export agreements and opened sales offices in other countries, including the United States. (Photography Type – The History of Fujifilm, Part I, 2010) It appeared that Fujifilm was ready to take on their second challenge: The Kodak Company. When Fujifilm entered the US market, it did not do so quietly. Fujifilm introduced a cartridge-film eight-millimeter home movie system. Kodak reacted by introducing their own version of the same system which swept Fujifilm to the side. The Fujifilm Company decided to advertise to the amateurs and professionals about the differences between the two products. The Kodak Company continued to concentrate only on the beginner consumers. Fujifilm had to concentrate of making advancements in the film market ahead of Kodak if they wanted to stay in the film product business. This forced them to develop, manufacture and market comparable products quickly before Kodak released new merchandise. By 1980, Fujifilm was the third largest film producer in the US market. Fujifilm took advantages of many avenues that Kodak did not. For example, Fuji introduced the first digital camera in 1988, which was a historical moment in the camera industry. Fuji has been an innovative competitor since the start of the company. (Photography Type – The History of Fujifilm, Part II, 2010) Kodak failed to grasp the importance of the complex environmental changes that were occurring in the industry. They didn’t react fast enough to stay as the leading company in the industry and Fujifilm took advantage of that. While Kodak had the technological skills to develop products, their rigid leadership culture prevented them from adapting with the changes taking place. Kodak had the “mentality of perfect products, rather than the high-tech mindset of make it, launch it, fix it.” Fujifilm embraced the changes that were occurring in the photographic market. They diversified through acquisition and changed its business model to conquer digital photography with a commitment to innovation and new technologies. Fuji showed a technological discontinuity by developing the first digital camera. This shows they are innovative and creative in their thinking and think ahead of what is happening in the industry. (Integrated Company Analysis, 2009) The one management concept that has impacted both Fuji and Kodak are their marketing strategies. The Kodak Company focused on marketing to amateur photographers, Fujifilm put the focus on both amateurs and professionals. Due to the very different marketing styles, Kodak has limited itself for advancing in the market. Fujifilm, on the other hand, has had great success in the United States. The Kodak Company is now developing products to react to what Fujifilm releases. Fujifilm seems to be able to adapt better to the consumer than Kodak does. Kodak filed a complaint with the United States that the Fujifilm Company was not being ethical and was blocking their products from entering the Japanese market. By blocking Kodak from entering the Japanese market, Fujifilm was able to maintain its profits while it stopped potential revenue for Kodak. Even if Kodak sold its products in Japan, the Japanese citizens would most likely still purchase Fujifilm since that is the product that they recognize and are familiar with. One way a company should build in flexibility is to be receptive to innovative ideas. Upper management need to be open to new and different ideas regardless of where they come from. They should look to their employees for those ideas. Very often it is usually the employees who are using the product or service and can then give feedback. New ideas from outside the company can produce huge gains in research and then the bottom line. The task of decision making is another process that executives need to monitor. For example, if a company is ten years old and has had the same five people on the executive board, making decisions using the same system, it may be time to make changes. A stagnant company does not produce profit. The growth and prosperity of the company should always be the most important goal of the executive members. The decision making process and outcome affects everyone right down to the newest employee. Analyzing the functions and systems of a company is required in order to determine where improvements and adjustments need to be made. The needs of consumer are constantly changing and a company must be willing to change with them in order to continue to provide products or services. A company that utilizes forward thinking employees can stay one step ahead of the competition. Management that is willing to listen to those ideas and consider them as possibilities will see a higher profit margin.

References

History of Kodak. Retrieved April 30, 2013, from http://www.kodak.com/ek/US/en/Our_Company/History_of_Kodak/Imaging-_the_basics.htm

Integrated Company Analysis – Kodak. Fall 2009. Wisconsin School of Business. Retrieved April 30, 2013, from http://business.library.wisc.edu/resources/kavajecz/09%20Fall/kodak_rep.pdf

Photography Type – The History of Fujifilm, Part I (2010). Retrieved April 30, 2013, from http://www.photographytalk.com/photography-articles/1682-photography-tipthe-history-of-fujifilm-part-1

Photography Type – The History of Fujifilm, Part II (2010). Retrieved April 29, 2013, from http://www.photographytalk.com/photography-articles/1686-photography-tipthe-history-of-fujifilm-part-2