Success in business is often about being in the right place and at the right time, anl get the right consultants in topic like payroll administration services. Very much like in football, tennis or rugby amongst many other sports. In this article we shall look into two different companies that in its heyday were astronomically successful but they both made the same mistake of not changing quickly enough with major changes that happened in the markets and the result was devastating for both even if they are still around and operating as going concerns, business management at best. The companies chosen are Eastman Kodak of Rochester USA and Nokia smartphones from Finland.
Eastman Kodak was founded in 1888 by George Eastman of the USA. The company started making inexpensive photographic cameras following the ‘razors and blades’ business model of selling inexpensive cameras with small profit margins and making large margins from consumables, namely film, chemicals, and paper. Up until the late 70s, Kodak virtually controlled the film market with 90% of film sales and 85% of camera sales in the US. In addition, Kodak developed and patented the first handheld digital camera in 1975.
Way before that the Kodak company was a pioneer in photographic cameras. They launched a leather covered camera with 100 exposures with the famous slogan “You press the button, we do the rest”. Kodak virtually controlled the market for over one hundred years. Reason to be highly confident and to believe that nothing could change the trend winds.
But sadly for some and happily for others, trends do change.
But sadly for some and happily for others, trends do change and that is where the well positioned companies and entrepreneurs make a successful move. Kodak did not see the photographic tsunami coming with the digital camera era. They strongly believed that people would stick to paper and physical photographs and that the digital trend was a mere short-term fashion. This has hardly ever been the case in the past. When a great new idea comes up and makes a successful landing in the markets, it is here to stay and expand.
As a result of these changes and other trends in the market Kodak’s profits sank from $1.29 billion to $5 million at the end of 1997. Slow reaction together with underestimation of its competitors only made things get worse in the future. Whilst Kodak and Fuji saw the trend of digital photography taking over, it was Fuji that became slightly more successful in its diversification strategies. Years later, with the sales of 35mm film having plummeted to disproportionate levels, in 2012 Kodak filed for Chapter 11 bankruptcy protection. It took some drastic measures and major changes to put the company back on track. At the end of 2013 it emerged from Chapter 11 bankruptcy protection as a company focused on serving commercial customers. It was never going to be the same again.
Today Kodak concentrates in its new strategies, its core business being Print Systems, Micro 3D Printing and Packaging, Software and Solutions, and Consumer and film. Its present equity stands at $77 million. Had Eastman Kodak made drastic changes before the Digital era arrived, the outcome would have been totally different and entering Chapter 11 would have been unnecessary.
This is how it works. Being in the right place at the right time.
Nokia is a Finnish multinational telecom company who was once a highly successful smartphone company. The company was founded in 1865 and went from strength to strength peaking in the late 1990s, namely in 1998 when it became the world largest vendor of mobile phones and smartphones. In year 2000 and onwards Nokia suffered from poor management decisions and lost its throne in the mobile and smartphone market with its sales dropping sharply.
After a partnership with Microsoft and eventually a sale of their telephone division to them, Nokia started focusing on its effective communication infrastructure business. Certainly successful, but far from being the world’s biggest selling phone company.
The reasons for this are complex to understand and explain but it has been concluded by researchers that Nokia suffered severely from deep internal rivalries within the management. Greed and a lack of future vision perhaps? It certainly did them no favours and its competitors took advantage of this to launch their own brands namely Apple with their iPhone and Samsung amongst others. This is how it works. Being in the right place at the right time.