Strategic project FUJIFILM Group A 2 Dalina Ferrante

Strategic project FUJIFILM Group A 2 Dalina Ferrante Ernesto Ferrero Daniel Hall Ralph Ho Stian Lofstad Yoji Suetsugu

Analoge vs Digital VS

Agenda 1. Industry characteristics 2. Industry analysis 3. The Fuji company 4. SWOT analysis 5. Strategic issues 6. Recommendations

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

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

and rising C 4 ratio… C 4 ratio nearly doubled in the last 20 yrs

Sales are booming for digital cameras… $ ‘ 000

and camphones are growing even faster From 1. 2 m in 2001 to 18. 3 m 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 BUYER POWER (-)Price sensitivity (-)Bargaining power THREAT OF SUBSTITUTES (+/-)Buyer propensity (+)Relative prices and performance

Enter Fuji • • • Fuji photo film Founded in 1934 Sales : $ 18. 1 billion (2002) Employees 72, 000(2002) 2 nd 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

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 l Competitors ~5% l R&D budget/Sales

Fuji’s customer segments and product lines Customer Professional I M A G I N G Ø P D i g i t a l h o t o g r a p INFORMATION SOLUTIONS ØPhotographic paper ØGraphic art ØRecording media DOCUMENT SOLUTIONS ØRecording S O L U T I O N S F Ø Ø Commercial media ØColor copiers ØColor printing systems ØFax i l c a m e h i c p a r p m a e r

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

SWOT analysis Strengths Opportunities -Strong brand name -Change in customer preference -Flexibile business model and marketing mix -More familiar with taking pic -Storage problem of customer -Technological advantage Weaknesses Threats -Originally not digital maker -Picture making goes home -Strong influence from Japan -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 1950 s 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 (4 times higher in quality) Share of Japan market became around 70% Into the world market

Speed – Keeping customers happy Mini-labo network Reduce developing time 1 day 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 FOCUS SHORT Continuos Restructuring • Team work basis • Life time employment • Seniority level THIN

Promotion Arts Sport Events Sponsorships

Source of quality and speed Strong R&D 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” Customer shop develop Reprocess Called “Artery flow” Production

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

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

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

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