Strategic project FUJIFILM Group A2 Dalina Ferrante Ernesto Ferrero Daniel Hall Ralph Ho Stian Lofstad Yoji Suetsugu

Analoge vs Digital VS

Agenda Industry characteristics Industry analysis The Fuji company SWOT analysis Strategic issues Recommendations

The imaging industry is an oligopoly… Others With several barriers to entry Capital requirements EoS production Brand perception

characterized by increasing concentration Others Others 49% 78% Big five Big five 1980 2003

C4 ratio nearly doubled in the last 20 yrs and rising C4 ratio… C4 ratio nearly doubled in the last 20 yrs

Sales are booming for digital cameras… $ ‘000

and camphones are growing even faster From 1.2m in 2001 to 18.3m in 2005

“My God, mega-pixels are cheap now!” $

Five forces affecting companies SUPPLIER POWER (-)Price sensitivity (-)Bargaining power THREAT OF ENTRANTS (+)Economies of scale (-)Absolute cost adv. (+)Capital requirements (+)Product differentiation (+)Access to dist. Channels (-)Government/legal barriers (-)Retaliation by est. producers INDUSTRY RIVALRY (+)Concentration (+)Competitor diversity (+)Product differentiation (-)Excess capacity (-)Exit barriers (+)Cost conditions THREAT OF SUBSTITUTES (+/-)Buyer propensity (+)Relative prices and performance BUYER POWER (-)Price sensitivity (-)Bargaining power

Enter Fuji Fuji photo film Founded in 1934 Sales : $ 18.1 billion (2002) Employees 72,000(2002) 2nd largest film provider in the world

Where does Fuji make its money? 56.4% Others 21.5% Rest of the world European market: 13.3% 2004.3

Strong price competition Price competition is hurting Fuji Sales million EBIT Strong price competition

Is Fuji over-relying on “old” products? Other products

Pleasing different markets Digital/Hardware Instant camera “Cheki” One-time-use-camera Lens-attached film) Analog/Film

Digital imaging is R&D – intensive Stable 6% R&D Competitors ~5% R&D budget/Sales

Fuji’s customer segments and product lines Professional Commercial IMAGING SOLUTIONS Film Digital camera Photographic paper INFORMATION SOLUTIONS Photographic paper Graphic art Recording media DOCUMENT SOLUTIONS Recording media Color copiers Color printing systems Fax

FinePix – Fuji’s digital cameras Sensible A-Series Sophisticated F-Series Serious S-Series Point & shoot ease Compact size Easy download Price $130 - $150 Unique form Additional features Price $300 - $500 Traditional SLR - style look Long zooms Price above $ 500

SWOT analysis Weaknesses Strengths -Strong brand name -Flexibile business model and marketing mix -Technological advantage -Originally not digital maker -Strong influence from Japan Opportunities Threats -Change in customer preference -More familiar with taking pic -Storage problem of customer -Picture making goes home -Camphone popularity -Decreasing demand of analog film

Strategic issues – need for actions --Threat of decreasing demand of traditional products. 26%

What do you associate with Fujifilm?

How can Fuji gain competitive advantage? Pursue cost leadership Make processing digital images to paper easier Establish a leading role as supplier to camphone manufacturers Retain traditional products Bundle products Focus on high-end digital cameras Rebuild the Fuji brand

Thank you Questions?

Backup slides

Fuji has fought battles and won before 1950s Battle with Konica in Japanese market Fuji focused on quality and technology 1971 Deregulation of Japanese film market Started fighting with “Giant” Kodak Fuji decide to focus on quality (Sensitivity) Kodacolor vs Fujicolor 1976 Fujicolor 400 (4times higher in quality) Share of Japan market became around 70% Into the world market

Speed – Keeping customers happy Mini-labo network Reduce developing time 1day a few hours

Mission and Values To be the recognized leader in providing integrated solutions to meet each customer’s imaging and information needs Commitment to people Continuous process improvement Customer driven Open communication Teamwork Individual and Organizational Accountability

Organizational Policy Imaging and Information (I&I) LIGHT THIN SHORT FOCUS Continuos Restructuring Team work basis Life time employment Seniority level

Promotion Arts Sport Events Sponsorships brand image

Strong R&D Source of quality and speed Film industry -- Oligopolistic and technology driven Most important technologies were patented by Competitors Difficult to use patent, OEM Necessary for Fuji to start from the begging

Example: One time use camera “ Utsurun-desu” -Lense attached film -Recycle camera -Collect not only film but camera itself Called “Vein flow” Production Reprocess Customer shop develop Called “Artery flow”

Digital products Film & printing Are Fuji over-relying on “old” products? Revenue of each products & service (Imaging solution) Digital products 30% Film & printing 55% Others

Strategic issues and actions --Organization issue Keep its organization active and efficient by “continuous restructuring” since 1980’s Brand recognition of Fuji as a digital camera manufacturer is lower than those of other competitors such as Canon, Sony and Olympus Both globalization and diversification of Fuji would make its organization bigger, uncertain and also require additional managerial cost and skills.

Strategic issues and actions --High growth and competition among digital market

Focusing on making High quality film History Quality and speed Focusing on making High quality film 1970 Fuji color ISO 100 1976 Fuji color FⅡ400 Sensitivity×4 1984 Fuji color Super HR 400 Quality×4

How can Fuji gain competitive advantage? Bundling sales 1+1 > 2 Digital cameras with potable printers Digital cameras with memory cards Brand building as a digital camera manufacturer Build a strong brand image of digital cameras