The Strategic Position and the Competitive Environment of Kodak

The external environment of Kodak is complex. As Kodak is focusing on imaging business, this market is the vital market for it. In the digital age, more and more activities are related to digital means, same as more and more business are derived from digital technologies. Digital trend, indeed, represents a long-term threat to Kodak’s core business – silver print. Although experts disagree over how long it will take for digital imaging to start shrinking the worldwide traditional imaging market, that day is surely coming. According to Lyra Research, a market research company in the US, the worldwide film sales will grow only 1% annually through 2003 and slowly shrink after that, whilst digital imaging business will expand 20% annually in next five years (Kodak internal marketing article, 2001). One way to consider the competitive position of Kodak is by means of the Directional Policy Matrix (Thompdon, L. J. 1993: 470). This matrix is constructed above two axes: the Industry Attractiveness in the horizontal axis and the organization’s competitive position in the vertical axis. By evaluating relevant factors of these two dimensions we can place appropriate positions for the discussed organization. With detailed evaluation factors list in Table 1, we will find that Kodak has strong competitive strength in its core business of traditional imaging but this industry is around unattractive and average. On the other hand, digital imaging business is a promising market though Kodak is under intense competitive pressure every step of its way to the digital world. Based on the aforementioned factors, we can draw up two pie charts in the matrix representing the Traditional Imaging market and Digital Imaging market as well as Kodak’s market share (Refer to Figure 1). Consequently, we can draw out the professional comments on these markets from the Directional Policy Matrix. For Digital Imaging market, Kodak should “invest to retain market share as the industry grows ” or even set it as “priority products and service”. While for Traditional Imaging market, “invest selectively to maximize cash generation” perhaps is the best choice to be selected. As mentioned above, it can be easily understood why Kodak selects Digital Imaging as its key business in the present and in future (Part 1 of Kodak strategic position) whilst maintain its investment on the traditional Imaging market (Part 2 of Kodak strategic position). It is apparent that Directional Policy Matrix provides a useful method to direct managers’ attention to key forces in the competitive environment and bring forward questions about appropriate strategies for different business units and the portfolio as a whole. However, It should be kept in mind that the effectiveness of this approach depends on the precise information of a competitive nature between competitors in the market. Moreover, the procurement of information in depth is not always straightforward.