Why Kodak Failed - Rise And Fall of Kodak

The rise and fall of Kodak is a notable story in the business world, highlighting the challenges companies face when adapting to technological changes.

Rise of Kodak:

Founding and Early Success:

Eastman Kodak Company was founded by George Eastman in 1888. Kodak became synonymous with photography and played a pivotal role in popularizing amateur photography. It introduced the first mass-market camera, the Kodak Brownie, in 1900, making photography accessible to the general public.

Market Dominance: By the mid-20th century, Kodak was the world's leading manufacturer of photographic film and held a dominant position in the global photography market. In 1968, Kodak had nearly 80 percent of the worldwide market share.

Strategies for Success:

1. Razor-Blade Model: Kodak's successful business model was based on selling cameras at a low price and making profits from selling film and paper (the "razor-blade" strategy).
2. Emotional Connection: The company created emotional connections with consumers through successful marketing campaigns like "Kodak Moments," associating its brand with capturing cherished memories.

The Fall of Kodak:

Digital Revolution: The advent of digital photography in the late 20th century posed a significant challenge to Kodak's traditional film-based business model. Despite being a pioneer in digital technology (with one of its engineers inventing the first digital camera in 1975), Kodak struggled to embrace the digital revolution.

Missed Opportunities: Kodak's management failed to recognize the potential of digital cameras, as they were concerned about cannibalizing their profitable film and paper business. In 1981, when Sony introduced the first consumer digital camera, Kodak executives dismissed its impact.

Resistance to Change: Kodak's reluctance to transition to digital technology and its overconfidence in the enduring appeal of film photography led to missed opportunities. The company invested more in defending its traditional products than in embracing digital innovation.

Leadership Decisions: Leadership decisions played a crucial role in Kodak's downfall. Choices like selecting a CEO with a traditional mindset in 1989 and a lack of strategic vision for the future contributed to the company's decline.

Missed Investments: Kodak's investments in unrelated businesses, such as the ill-fated acquisition of Sterling Drug in 1988, further strained its financial resources.

Bankruptcy and Restructuring:

Decline: By the early 2000s, Kodak faced financial troubles, losing its market share to competitors like Canon and Sony. In 2012, the company filed for bankruptcy, unable to adapt to the changing industry landscape.

Focus Shift: Kodak emerged from bankruptcy in 2013 but with a significantly reduced capacity. The company shifted its focus away from photography and imaging to areas like printing and advanced materials.

Legacy: While Kodak no longer dominates the photography market, it continues to exist in a smaller capacity. In recent years, there have been reports of Kodak exploring new ventures, such as working on manufacturing COVID-19 vaccines.

The rise and fall of Kodak serve as a cautionary tale about the importance of adapting to technological advancements and being open to innovation in a rapidly changing business environment.

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