| Abstract: | The Profile of the Corporate and Financial Policies of Eastman Kodak Co. Advisor : Dr. Junming Hsu Ming-Hwa Chang Chien EMBA Program , Tunghai University Master’s Thesis Abstract We provide clinical analysis in several areas of SWOT analysis, corporate strategies, corporate governance and financial policies for Eastman Kodak Company. Beginning from the year of early 1980s, NO.1 competitor-Japanese company Fuji started aggressively to challenge Kodak. Although the different national cultures resulted different corporate governance mechanism, corporate strategies and financial policies, but, both of them were concentrated on the acquisitions for growth since the photography industry appeared to be in a downward trend from then. While Kodak focused on the short-term performance with defensive strategy and Fuji emphasized on the long-term growing with attack strategy, resulted Fuji’s sales grew to 1.38 times of Kodak for the fiscal year of 2001 whereas Fuji’s sales was only one fifth of Kodak in the year of 1981. Kodak’s key strategies were restructuring and acquisition including downsizing, spin-off, and employee buyout while it was failure on the acquisitions. The 1993 divestiture of Sterling Drug Co., which was acquired in February 1988 with $5.1 billion, resulted a loss of $2.2 billion mainly reflecting the failure of its unrelated diversification, while most of its downsizing activities were useless to the company’s performance with losing employees morality, and in 1991 Kodak eventually paid US$935 million to Polaroid for infringement patents due to the company’s wrong decision, caused Kodak triple debt. Furthermore, due to the problems of corporate governance with conservative inner circle, Kodak’s board picked wrong CEO Whitmore due to while the board aggressively pushed CEO to hire outsider CFO Steffen, resulted Kodak stock price gained $3.45 billion in value, and then, the aggressive CFO Steffen suddenly quitted under the CEO’s pressure, it ensued a loss of $1.7 billion in value, until 1993, the institutional investor activism pushed the board to hire the head of Motorola - George Fischer to replace the gentle CEO Whitmore, and its stock price and performance were improved. But the premier CEO Fischer gained $9 million from exercising stock option just prior to the announcement of company’s poor financial forecast, which decreased the company’s stock price on the market. This also was a typical problem of corporate governance. Despite Kodak and Fuji have different management policies to result different company’s performances, the cumulative returns on Kodak’s stock was only about a half of Fuji’s ADR and also the worst among the Dow-Jones 30 companies during the past decade.
The Profile of the Corporate and Financial Policies of Eastman Kodak Co. Advisor : Dr. Junming Hsu Ming-Hwa Chang Chien EMBA Program , Tunghai University Master’s Thesis Abstract We provide clinical analysis in several areas of SWOT analysis, corporate strategies, corporate governance and financial policies for Eastman Kodak Company. Beginning from the year of early 1980s, NO.1 competitor-Japanese company Fuji started aggressively to challenge Kodak. Although the different national cultures resulted different corporate governance mechanism, corporate strategies and financial policies, but, both of them were concentrated on the acquisitions for growth since the photography industry appeared to be in a downward trend from then. While Kodak focused on the short-term performance with defensive strategy and Fuji emphasized on the long-term growing with attack strategy, resulted Fuji’s sales grew to 1.38 times of Kodak for the fiscal year of 2001 whereas Fuji’s sales was only one fifth of Kodak in the year of 1981. Kodak’s key strategies were restructuring and acquisition including downsizing, spin-off, and employee buyout while it was failure on the acquisitions. The 1993 divestiture of Sterling Drug Co., which was acquired in February 1988 with $5.1 billion, resulted a loss of $2.2 billion mainly reflecting the failure of its unrelated diversification, while most of its downsizing activities were useless to the company’s performance with losing employees morality, and in 1991 Kodak eventually paid US$935 million to Polaroid for infringement patents due to the company’s wrong decision, caused Kodak triple debt. Furthermore, due to the problems of corporate governance with conservative inner circle, Kodak’s board picked wrong CEO Whitmore due to while the board aggressively pushed CEO to hire outsider CFO Steffen, resulted Kodak stock price gained $3.45 billion in value, and then, the aggressive CFO Steffen suddenly quitted under the CEO’s pressure, it ensued a loss of $1.7 billion in value, until 1993, the institutional investor activism pushed the board to hire the head of Motorola - George Fischer to replace the gentle CEO Whitmore, and its stock price and performance were improved. But the premier CEO Fischer gained $9 million from exercising stock option just prior to the announcement of company’s poor financial forecast, which decreased the company’s stock price on the market. This also was a typical problem of corporate governance. Despite Kodak and Fuji have different management policies to result different company’s performances, the cumulative returns on Kodak’s stock was only about a half of Fuji’s ADR and also the worst among the Dow-Jones 30 companies during the past decade. |
