Porters 5 Forces Analysis of Kodak Company
By conducting Porter’s 5 Forces analysis of Kodak Company, its management will be able to determine the avenues to pursue in order to effectively compete with rival companies in the photographic film sector. The Kodak Company has dominated the industry for so many years but just like other firms, the company has also faced numerous challenges. The US-based technology company deals in a wide range of photographic film and digital imaging products and services, including innovative hardware, software, consumables among others.
Porter’s 5 Forces analysis evaluates five key elements that might impact the competitiveness of a company in the market including, bargaining power of buyers, bargaining power of suppliers, threat of new entry, threat of substitution and competitive rivalry.
Evaluation of Porter’s 5 Forces Analysis of Kodak Company
The following is a comprehensive Porter’s 5 Forces analysis of Kodak Company;
Bargaining power of buyers
The Kodak Company has been in business since 1880, offering differentiated photographic film products and services. However, there has also been stiff competition from various companies offering digital camera products. As a result of this, buyers have a wide range of choices to make when shopping for Kodak’s products. Thus, they expect the company to offer the best quality of custom products and services.
Threat of New entry
Apart from just the existing rivals in the market, the Kodak Company can also be threatened by the possibility of new companies entering the market. The photographic industry is experiencing moderate threat of new entrants. For a company to effectively enter into the photography and digital imaging industry, it requires vast investments in terms of finances and professional resources. The complexity of technology, high Research and Development costs are among the key elements that have hindered many companies from venturing into the sector. As a result of this, there is no significant threat from new firms venturing into the business.
Bargaining power of suppliers
There are quite a number of suppliers of photographic and digital imaging products and services that Kodak can rely on. The company has contracts with suppliers ranging from one to three years. However, there are also some finished products that are purchased by the third party suppliers of the company, which may threaten the organization. These unique suppliers may hinder the profitability of the firm.
In some cases, Kodak has partnered with suppliers to manufacture products, improve quality and enhance value addition. This makes it a bit challenging for suppliers to have an upper hand in the performance of the company. Hence, the bargaining power of suppliers ranges from weak to moderate.
Threat of substitute products
The Kodak Company faces a greater threat of substitute products. For instance, the introduction of digital technology has revolutionized the photography industry. In order for many companies to remain competitive in the market, they tend to match pricing with features and specs of products and services. However, there are few switching costs between different kinds of brands or substitute products since buyers can easily move to updated models based on their perceptions.
The introduction of mobile phones and devices with integrated digital cameras has in the past impacted the performance of Kodak, especially in the still cameras category. In order to beat the competition, Kodak has focused on enhancing imaging quality and technical features of its products.
Competitive rivalry
Today, there are several high-tech companies dealing in photographic and digital imaging products and services. The Kodak Company faces stiff competition from major companies like Canon, Nikon, Sony, Hewlett Packard, Fuji Photo Film among others, which also offer better quality products and services. This has pushed competitive rivalry so high for Kodak Company. In 2010, the company recorded poor results in its prepress solutions, imaging and digital devices, mainly resulting from competitive pricing and increasing prices of products.
Conclusion on Porter’s 5 Forces Analysis of Kodak Company
The above Porter’s 5 Forces analysis of Kodak Company has outlined some of the areas that the company should focus on in order to maintain a competitive edge in the photography and digital imaging industry. However, it should also emphasize on strategic transformation of its entire business model in order to capture the new and available opportunities for growth.
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References
http://www.grin.com/en/e-book/132248/case-study-kodak-at-a-crossroads-the-transition-from-film-based-to-digital
https://prezi.com/7mbsylr2tj0w/kodaks-strategic-failure/