Why Did Kodak Failed but Fujifilm Prevailed

One time ago before the digital age began to spread widely, it was rather a popular time to take pictures using old fashion cameras and two companies manage to dominate the market which is Kodak and Fujifilm.

Kodak was based in the United States whereas its competitor Fujifilm was from Japan. These two big names have conquered the market for printed pictures and they own special technologies in order to make it look nice at the time.

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However, after the existence of the digital camera, the popularity of owning physical pictures began to decline and Kodak was running out of ideas on how to keep up resulting in their bankruptcy. Things were quite the opposite for Fujifilm as they manage to keep up their hopes alive until today.

The secret to the success of Fujifilm can be seen in their diversification of running their business.

Before the End of Kodak

Things were quite different back then and despite some people thinking how the companies can go bankrupt if they do sell cameras, well it's mainly because most of the company's revenue came from selling films as well as printing the images from the film.

Due to the number of profits gained from this business, Kodak is willing to give out free cameras or sell them at a low price to promote its products and services. This strategy is known as silver halide since this was the chemical used to make the film.

The same strategy can be seen in the companies that sell shavers and photocopy machines as they gain a lot from the sales of their blades and ink. Before the year 2000, the shift to the digital age, 72% of Kodak's revenue came from sales related to film compared to Fujifilm which is at 60-66% for Fujifilm.

Therefore, the competition at the time was only between Kodak and Fujifilm. There were other small companies called Konica and Agfa but their existence did not affect the two giants in any way.

The Impact of Digital Revolution

Starting in the year 2001, the sales of the film can be said to be at their peak but at the same time, it was also the start of its fall. The digital age has started to commence and it seems that Kodak is falling left behind in the world of photography.

It was the start of a bad year for Kodak since the market for film started to drop by 20-30% each year. By the time it was 2010, the demand for the film have reduced so much that the demand for that year was only 10% of the previous year.

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Since the sales of the film have dropped drastically so has the service for washing the pictures. The main problem for Kodak isn't that they did not have any demands for their digital camera since in the year 2005 Kodak managed to conquer 15% of the market in the US.

Kodak's main issue is that they weren't able to generate revenue from the sales of the digital camera since their business in the film has plummeted to the ground and according to a study, Kodak lost $60 for every camera sold in 2001.

The company's liability increased so much that they were not able to keep up and later in the year 2012, Kodak was forced to file for bankruptcy.

How did Fujifilm Manage to Thrive?

The most important element of Fujifilm's success was diversifying its business plan. In the year 2010, the film market has reduced to 10% compared to the year 2000.

Despite all odds, Fujifilm has managed to increase its revenue by 57% in these 10 years while Kodak on the other hand, has lost as much as 48%. Fujifilm took the upper hand under Shigetaka Komori's lead as president in the year 2000. Fujifilm has reformed the company entirely.

Komori has a 6-year plan which he calls 75 Vision which referred to the 75th anniversary of Fujifilm. The purpose of this plan is pretty clear which is to save Fujifilm from this disaster and to ensure that the company will be able to compete with other top companies out there.

Firstly, the management has restrategized the company's business in films by reducing production and closing any excessive facilities. On the other hand, the research and development department was also moved to enhance and promote communication as well as innovation among the engineers of the company.

Secondly, the company also focused on R&D to see how far their technologies and expertise would come to good use for other industries out there. The outcome is that Fujifilm managed to incorporate its technologies to suit new markets such as pharmacy, cosmetics, and many more.

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For instance, the company managed to predict the use of LCD screens and invested a lot in this field. By making good use of the company's technology in films, its engineers were able to build FUJITAC which is beneficial in the making of LCD panels for TC, computers, and even smartphones.

As of now, FUJITAC has managed to own 70% of the market for LCD polarizers. Not just that but Fujifilm has 70 years of experience in using gelatin as the main ingredient in making the film. It was a good thing that this gelatin came from collagen and is widely used in cosmetics. Therefore, Fujifilm used its expertise to launch its very own makeup products in 2007 under the brand name Astalift.

Thirdly, if they don't have the technology or expertise needed to do something, the company will use the strategic merger and acquisition(M&A) which is to obtain a company that has a deep understanding of the required technology and incorporates it into Fujifilm-owned expertise. This way Fujifilm will be able to produce the required products much quicker and more efficiently to penetrate the competitive market.

In the year 2010 after the peak of selling films, Fujifilm is now considered a fresh new company. Despite their revenue making up to 60% of the sale of films in 2000, that has dramatically dropped to less than 16% of Fujifilm's revenue in 2010.

Fujifilm has beaten the odds and managed to get out of the crisis, unlike Kodak which sunk into the ocean of despair. Fujifilm's strategy managed to make the company go even further by expanding its own business plan.

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