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Week 9: Cumulative Lecture Kodak Case Study

Week 9: Cumulative Lecture Kodak Case Study . MIS5001: Management Information Systems David S. McGettigan. Agenda. Prior Lecture Recap Kodak Case Study Next Week. Prior Lecture Recap. Prior Lecture Recap. Cost / Benefit Analysis Tangible vs. Intangible Benefits

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Week 9: Cumulative Lecture Kodak Case Study

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  1. Week 9: Cumulative LectureKodak Case Study MIS5001: Management Information Systems David S. McGettigan

  2. Agenda • Prior Lecture Recap • Kodak Case Study • Next Week

  3. Prior Lecture Recap

  4. Prior Lecture Recap • Cost / Benefit Analysis • Tangible vs. Intangible Benefits • Total Cost of Ownership • Financial Formulas • Enables value comparison of projects versus each other • Enables value comparison of projects versus a company’s cost of capital • Portfolio Management • Business Drivers • Methodology • Portfolio Types

  5. Kodak Case Study Nothing is more important than the value of our name and the quality that it stands for. George Eastman

  6. Cumulative Case Study • The Kodak Case brings together several of the key concepts discussed in the course to date: • Disruptive technology • Innovation and the culture of innovation • Financial concepts such as NPV • Change management • We will approach the Kodak case in the following fashion: • Foundation / history • Pre-Fisher Era • Fisher’s Era • Today

  7. Foundation / History • What was the company’s fundamental product philosophy? • Why has the company been so successful throughout the history of the film industry, up until the Digital Revolution? Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

  8. Pre-Fisher Era • It’s 1981. Chandler’s team have just discovered that Sony is introducing Mavica, a filmless camera. • They are concerned and invite you to assess the future prospects of the film business. • How would you respond to the question: is film dead? • See exhibit 5 in the case. After the Sony announcement, Kodak invested $5B in digital imaging (approx 50% of budget). • Was this the right response? • What would the NPV model look like? • What proportion should be allocated to digital? • At the beginning of the foray to digital, Kodak began to lose market share to Fuji. Is Fuji stoppable? Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

  9. Pre-Fisher Era • Imaging being part of Kodak’s management team during the dearly 1980s. Chandler asks you and a colleague to predict the evolution of film and digital imaging. If you and your colleague each draw the curve below, what determines the difference in these curves? Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

  10. Fisher Era • Fisher arrives from Motorola in 1993. What kind of company did he find? • What is the logic of the strategic transition he initiated? • Fisher stepped down in 1997. What was his fatal flaw? Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

  11. Fisher Era • Kodak had developed excellent digital imaging technology, yet it introduced products only in peripheral areas of digital imaging (e.g. Photo CD). • How can we explain this disconnect between Kodak’s product market strategy and R&D output? • Why did a company with leading edge technology become fixated on Photo CD? • How did Kodak’s culture play a role here? • Cultural Exercise Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

  12. Kodak Today • Which of the following segments of Image Capture and Printing are most attractive and why? • Home printing • Online • Retail • Looking back at Kodak’s history in digital imaging, where has Kodak missed the boat? Has it made any major strategic mistake? Source: Kodak and the Digital Revolution, HBS, Giovanni Gavetti Teaching Note

  13. Kodak Today • Compare 2009 revenue to the revenue information in the case. • What has happened to total net income and why? Source: Hoovers.com

  14. Next Week Globalization of Wyeth

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