In January 1998, the top management of the US-based Eastman Kodak Company (Kodak) in Rochester, New York,
Question:
In January 1998, the top management of the US-based Eastman Kodak Company (Kodak) in Rochester, New York, was extremely worried after reviewing the company's financial results for the year ending December 1997. The company's revenues had come down from $15.97 billion in 1996 to $14.36 billion in 1997, a fall of more than 10%. Kodak's net earnings had taken a big hit falling from $1.29 billion to just $5 million for the same period.
I). However, the most worrying factor for Kodak's management was the more than five percentage points decline (from 80.1% to 74.7%) in its US market share. Kodak had been consistently losing its market share to its competitors since the early 1980s even when it enjoyed almost a monopoly status in the photographic film and paper industry in the US with more than 85% market share. However, the fall of 5 percentage points in just one year was alarming. Market observers wondered what had happened to Kodak, which had built a strong presence in the US markets and had established a household brand name synonymous with films.
Some analysts felt that Kodak had underestimated its competitors, especially Fuji Photo Film (Fuji). From being a lean player in the US during the initial years of its entry in the mid-1960s, Fuji went on to become a major competitor of Kodak in the photographic film market.
Though Fuji was able to build just 10% market share till the early 1990s, the increase in the market share was faster during 1993-1997 when Fuji's market share increased to 17%.
Moreover, Fuji had intensified its efforts to gain a share in the US, the largest market for photographic film and paper. The company established a production plant in the US, marketed aggressively and brought down prices significantly. In the late 1990s, the rivalry between Kodak and Fuji further intensified. Fuji had become the world's second-largest manufacturer of photographic film and paper after Kodak. Analysts felt that for the first time in Kodak's century-long history had emerged a challenger who could dethrone Kodak in the US and hence Kodak should not take its home market for granted. According to Ray Pryor, Vice President,
Gamma Labs, "Fuji is not just winning over cost conscious-consumers. Fuji is steadily eroding Kodak's lead in the professional photography market."
Source;
a) In order to remain relevant to the market needs, companies have to continuously gather information about the international markets. Using the above case illustrates how Kodak company can collect data to remain relevant to the market needs.
(20 Marks)
b) “The essence of strategic marketing in Global Marketing lies in relating the competitive strengths of an organization to its environment”. Using the Kodak-Fuji case, and the material covered in this course demonstrate the relevance and importance of gaining a competitive advantage in the Global Marketing environment.
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen