Strategic projectFUJIFILM

Group A2Dalina FerranteErnesto FerreroDaniel HallRalph HoStian LofstadYoji Suetsugu

VS

Analoge vs Digital

1. Industry characteristics2. Industry analysis3. The Fuji company4. SWOT analysis5. Strategic issues6. Recommendations

Agenda

The imaging industry is an oligopoly…

Capital requirements

EoS production

With several barriers to entry

Brand perception

Others22%

Sony21%

Canon20%

Olympus13%

Kodak12%

Fujifilm12%

Others

characterized by increasing concentration

Big five

OthersOthers

49% 78%

1980 2003

Big five

and rising C4 ratio…

C4 ratio nearly doubled in the last 20 yrs

0,39

0,59

0,7

0 0,2 0,4 0,6 0,8 1

1980

1999

2003

Sales are booming for digital cameras…

$ ‘000

0

500

1000

1500

2000

2500

Jan Feb Mar Apr Mai Jun Jul Aug Sep Okt Nov Des

2002

2003

0

4

8

12

16

20

2001 2002 2003 2004 2005

and camphones are growing even faster

From 1.2m in 2001 to 18.3m

in 2005

“My God, mega-pixels are cheap now!”

0

100

200

300

400

500

600

700

800

900

1998 1999 2000 2001 2002 2003

$

Five forces affecting companies

INDUSTRY RIVALRY(+)Concentration(+)Competitor diversity(+)Product differentiation(-)Excess capacity(-)Exit barriers(+)Cost conditions

THREAT OF SUBSTITUTES(+/-)Buyer propensity(+)Relative prices and performance

THREAT OF ENTRANTS(+)Economies of scale(-)Absolute cost adv.(+)Capital requirements(+)Product differentiation(+)Access to dist. Channels(-)Government/legal barriers(-)Retaliation by est. producers

BUYER POWER(-)Price sensitivity(-)Bargaining power

SUPPLIER POWER(-)Price sensitivity(-)Bargaining power

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

Enter Fuji

European market: 13.3%

56.4%

21.5%Others

2004.3

Where does Fuji make its money?

Rest of the world

0

10000

1999 2000 2001 2002 2003

\J apanOthers

0

1000

2000

1999 2000 2001 2002 2003

EBIT

Sales

millionmillion

Strong price competitionStrong price competition

Price competition is hurting Fuji

Is Fuji over-relying on “old” products?

30 %

15 %

55 %

Other products

Analog/Film

One-time-use-cameraLens-attached film)

Digital/Hardware

Instant camera “Cheki”

Pleasing different markets

6.1% 6.1%5.7%

6.1% 6.3%

0

500

1000

1500

2000

1999 2000 2001 2002 2003

0.00%

5.00%

10.00%

R&D budget/Sales

Stable 6% R&D Competitors ~5%

Digital imaging is R&D – intensive

Customer Professional Commercial

INFORMATION SOLUTIONSPhotographic paperGraphic art Recording media

DOCUMENT SOLUTIONSRecording mediaColor copiersColor printing systems Fax

Fuji’s customer segments and product lines

IMAGING SOLUTIONS Film Digital camera Photographic paper

•Traditional SLR - style look

•Long zooms

•Price above $ 500

•Unique form

•Additional features

•Price $300 - $500

•Point & shoot ease

•Compact size

•Easy download

•Price $130 - $150

Sensible A-SeriesSensible A-Series

Sophisticated F-Series

Sophisticated F-Series

Serious S-SeriesSerious S-Series

FinePix – Fuji’s digital cameras

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

--Threat of decreasing demand of traditional products.

Sales of Traditional Products of Fuji

31.00%

42.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

2003 2006

26%

Strategic issues – need for actions

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

1950s Battle with Konica in Japanese market

Fuji focused on quality and technology

1976 Fujicolor 400 (4times higher in quality)

Share of Japan market became around 70%

1971 Deregulation of Japanese film market

Started fighting with “Giant” Kodak

Fuji decide to focus on quality (Sensitivity)

Kodacolor vs Fujicolor

Into the world market

Fuji has fought battles and won before

Mini-labo network

Reduce developing time 1day a few hours

Number of Mini-lab in Japan

0

10000

20000

30000

19851987

19891991

19931995

19971999

Speed – Keeping customers happy

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 THINSHORTFOCUS

Continuos Restructuring

• Team work basis• Life time employment• Seniority level

Promotion

Arts

Sport Events

Sponsorships

Source of quality and speedSource of quality and speed

Strong R&DStrong R&D

Film industry -- Oligopolistic and technology driven Film industry -- Oligopolistic and technology driven

Necessary for Fuji to start from the beggingNecessary for Fuji to start from the begging

Most important technologies were patented by Competitors Most important technologies were patented by Competitors

Difficult to use patent, OEMDifficult to use patent, OEM

Example: One time use camera “ Utsurun-desu”

-Lense attached film-Recycle camera -Collect not only film but camera itself

Customer shopdevelop Reprocess Production

Called “Artery flow”

Called “Vein flow”

Film & printing

Revenue of each products & service (Imaging solution)

Others

55%

Digital products30%

Are Fuji over-relying on “old” products?

Strategic issues and actions

• 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.

--Organization issue

Number of shipment

0

2000

4000

6000

1989 1990 1991 1992 1993 1994 1995

Strategic issues and actions

European market shares

Others23% Sony

21%

Canon20%

Olympus13%

Kodak12%

Fujifilm11%

Sony

Canon

Olympus

Kodak

Fujifilm

Others

--High growth and competition among digital market

Focusing on making High quality film

1970 Fuji color ISO 100

History

1976 Fuji color FⅡ 400

Sensitivity×4

1984 Fuji color Super HR 400

Quality×4

Quality and speedQuality and speed

• 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

How can Fuji gain competitive advantage?