Leitax Case Analysis

The problem in this case is concerned with Eastman Kodak losing its market share in film products to lower-priced economy brands. Over the last five years, in addition to being brand-aware, customers have also become price-conscious. This has resulted in the fast paced growth of lower priced segments in which Kodak has no presence.

The current demand forecasting method is based on qualitative techniques more than quantitative ones. If the forecast is not accurate, the company would carry both inventory and stock out costs. It might lose customers due to shortage of supply or carry additional holding costs due to excess production. If the actual demand doesn’t match the forecast ones, and the forecast was too high, this will result in high inventories, obsolescence, asset disposals, and increased carrying costs. When a forecast is too low, the customer resorts to a competitive product or retailer. A supplier could lose both sales and shelf space at that retail location forever if their predictions continue to be inaccurate. The tolerance level of the average consumer

By improving a forecast and production synergy, we will be able to capture closer to our market sales potential which will keep our inventory carry costs down and our ROS up.

* Forecasting is an impartial strategic ingredient that will ensure apt base for reputable planning. Our forecast is always the first step in developing plans in running the business along with our future plans of growth strategies. With this tool, we are able to anticipate our sales within reason that then can allow for us to control our costs in conjunction with inventory which will then help us to enhance our customer service. Sales forecasting is a vital strategic tactic in our company’s methodology.

(Bellis, 2009) Nevertheless, the main selling point of digital cameras was the convenient way that they could be stored. Every exposure is almost instantly saved to a removable disk drive, which remarkably expired the use of darkroom processing. It was convenient, less time was needed to produce an image, making it particularly appealing to journalism. The photograph has since then become an instant process. Combined with the invention of the Internet, and booming industry of personal computers, the newer technology would expire its predecessor. There are billions of photographs on the Internet, comprising the largest most diverse photo collection ever assembled. We have access to imagery from all over the world, using key words and hash tags to catalogue imagery and content; we can see what is happening without being there. The introduction of digital photography has enabled photographers to record terabits of imagery which can be stored in minute places, meaning the coverage that we have of the modern world is greater than ever. Unlike the formats that Henri Cartier-Bresson used, where each roll of film, or negative slide needed storing in a large physical place, under controlled conditions, an archive of objects. Automation came with digital photography, its combination of digital components allowed the camera to automatically detect light qualities, and

In 2004, the firm overestimated the demand for a new product family for the high end consumer market (need to extend the scheduled end-of-life by six months) and underestimated the cannibalization of the ShootXL by another newly introduced product the OptixR. Leitax didn't have a single, unified forecast to coordinate their operations. Sales developed their own projections, which production distrusted because the sales organization has the incentive to produce low-ball projections so they can "beat the mark."

Second, excess inventory will be reduced on items that have a lower demand. Third, there should be enhanced credibility with customers due to the better availability of product. Forecasting should also benefit scheduling and labor needs for production. Ultimately, there should be an increase in inventory for products with high demand, a decrease in overall inventory, and reduced operating expenses.

But even this is not possible in case of a new product or innovation. A forecast of sales, demand, cash, requirements and several such business valuables are extremely essential for a business in order to be able to appropriately plan and conduct its operations in an effective and efficient manner. Yet, forecasts cannot be made accurately as there are several factors and changes in the current environment that leads to variations in forecasts and impacts or causes a manager to make changes in the forecasts.

In 1888, George Eastman made the first light and portable camera under the company name Kodak (Graham 28). These cameras gave people the ability to take a photo almost anywhere. The cameras had to be sent back to the factory so the photographs could be printed. Twenty years after Kodak’s first camera, they produced an improved camera, called “Brownie”. The Brownie was simple to use, making the art of photography boom. Flash cameras did not appear until the 1930s, letting people take pictures in areas with dim or little lighting. In 1947, Edwin Land invented the instant camera. Land got the idea after his daughter asked to see her picture after he took her photo. The next step in improving the camera was by making it digital, which was done in 1975 by a Kodak employee. As the camera gets smaller and simpler to use, the quality of the photographs it produces gets better.

In the coming three-year "mid-term" period beginning next April, "We are considering decreasing investment in semiconductors greatly," Nakagawa said. Under the new policy, Sony intends to focus on three areas—imagers, game LSIs and system-on-chip LSIs for audio/video devices. Sony has about 60 percent market share in the imager market and is now reinforcing CMOS sensors as well. One hundred and fifty engineers were shifted to the imager section from audio/video sections to boost development. In the audio/video area, system-on-chip LSIs for TVs and Blu-ray Disc next-generation DVD products will be reinforced, but non-profitable chips such as GPS-integrated chips will be discontinued.

While Eastman Kodak has remained an industry leader in the sales of film for photo-imaging, over the past five years Kodak has underestimated the demand for digital cameras. Digital cameras require no film whatsoever and with Kodak’s main line of production being film Kodak has suffered great losses in net profit. Just in 2004 Camera film sales have been falling even than projected. The Photo Marketing Association predicted a six percent drop in film sales and Kodak projected an even more dismal 10-12 percent drop in film sales. The actual drop in sales reached an unforeseen 18%. In 2003 digital camera sales were greater than traditional film camera sales for the first time.

While Kodak has historically been a well-established brand name in the marketplace, it struggled to find a niche when the industry morphed from a film-based market to a digital-based market. Kodak has struggled to successfully evolve its film-based business structure to the new structure of digital-based technology, which has allowed for competitors to enter the market, decreasing Kodak’s market share. Competitors (such as Canon Inc., Fuji Photo Film Co., Hewlett Packard Co., Nikon, and Sony Corp.) have posed major threats to Kodak’s livelihood. Kodak faces a 5% drop in film sales (2001-2003) and a 3% reduction in overall revenues over the same time period. In addition, revenues and net income are expected to be fairly flat (or decrease) in future estimates. Kodak faces much pressure to revitalize their business through digital imaging, a radical innovation, or risk being eaten alive in an industry they thought they controlled.

Today Nikon and Canon constantly battle for the top position in the digital SLR cameras market. These two companies were the first to make the leap from film to digital, and their initial impressions in the market make them the dominant players. Nowadays, a growing number of individuals want to have their own digital SLR cameras, and it is no longer a luxury to the public. People always wonder which camera is right for them, and it is a common question when consumers

By the 1950’s, Canon attained the title of leading producer of cameras in Japan. Since that time, Canon has made it a point to expand and diversify their company as much as possible. They are able to accomplish this primarily through a strong Research and Development program. Through this program, Canon has explored many different technologies such as home electronics and x-ray

However, even in Japan Polaroid enjoyed a dominant market share. Thus in the consumer market, Polaroid’s strengths for instant photography was unrivaled.