Strategic project FUJIFILM

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

2. Analoge vs Digital VS

3. Agenda • Industry characteristics • Industry analysis • The Fuji company • SWOT analysis • Strategic issues • Recommendations

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

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

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

7. Sales are booming for digital cameras… $ ‘000

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

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

10. 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

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

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

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

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

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

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

17. 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 Fuji’s customer segments and product lines Customer Professional Commercial

18. 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

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

20. Strategic issues – need for actions --Threat of decreasingdemand of traditional products. 26%

21. What do you associate with Fujifilm?

22. 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

23. Thank you Questions?

24. Backup slides

25. 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% Fuji has fought battles and won before Into the world market

26. Mini-labo network Speed – Keeping customers happy Reduce developing time 1daya few hours

27. 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

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

29. Arts Sport Events Sponsorships Promotion brand image

30. 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

31. 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”

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

33. 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.

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

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

36. 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