The End of the Road

KODAK Philippines Bids Adieu To RP
by: Jerry Liao

Talk about pictures and photography, the name KODAK will definitely be around the corner. Yes, the name has been so popular here in the Philippines to the extent that people will say “I-KODAK mo ako” (take my picture), “KODAK-AN Tayo” (group photo) or “Pa-KODAK Tayo” (lets have our picture taken) most of the time rather than using the right terms – that is because the name KODAK became synonymous to pictures.

But like Barbara Streisand’s song “Some Good Things Never Last”, the end of the road has come for KODAK Philippnes. By May 30, 2007 – KODAK Philippines will be officially out of the Philippine market, they will cease their operations here. Reason – Worldwide Cost-Cutting.

Kodak is in the midst of a restructuring designed to drum up more sales of digital picture-taking and home-printing products as consumers switch from traditional snapshots and services to digital technology. And because of this restructuring, Kodak has piled up $2.6 billion in restructuring charges and accumulated $2 billion in net losses over the last 10 quarters.

Last February as part of their cost-cutting measures, KODAK eliminated 3,000 more jobs — bringing its planned tally of layoffs to 28,000 to 30,000 since 2004. By year-end, its work force will slip below 30,000, less than half what it was just three years ago. KODAK’s work force had dipped below 50,000 from a high of 145,300 in 1988.

So why am I writing about this? First is because it’s a big news. KODAK leaving the Philippines after its years of existence in the country says a lot about our business climate. Althought its a worldwide decision, deciding to close down its Philippine operation cast some question in my mind. Why would a company who has been doing business here in the Philippines for years will suddenly pack their bags and ship out just because the company is in a financial fix? Why the Philippines?

Let me share with you a story that will more or less answer the question I raised. I have this friend who travels a lot. This friend of mine is really into fashion. One time, I ask my friend that since he/she is into fashion, I am curious to know where he/she does his/her shopping? This is what my friend said: “I don’t do my shopping here in the Philippines, I do it abroad. It is true that we have the shops of popular and top brands here in the country, but the products they’re selling are not the latest. I go to other Asian countries and they have the latest designs.” From this answer, I hope you’ll get an idea how important is the Philippines in as far their worldwide strategy.

Now that KODAK Philippines is out, does this mean we will not be seeing any new KODAK products? What happens now to the KODAK’s clients? Who will provide the support?

I heard that the KODAK Philippine team has decided to form a new company called “TECHTRENDS” which will act as the local and exclusive distributor of KODAK products. Some may say that it is but normal and a logical choice to have the local team to continue where KODAK Philippines has left off – I beg to disagree and here are my opinions, concerns and questions:

1. What support will this new company get from KODAK who already decided to abandon its operation here in the country? As far as I am concern, Kodak has wiped-out the Philippines in its corporate map.

2. What will happen to the existing distributors if the new group will be the exclusive distributor? What will happen to the efforts of the previous distributors in bringing KODAK products to the market? What happens to their distributorship contracts – will they just be considered null and void?

3. Is it fair that the new group will just take over the clients served by the old distributors? It’s like handing the new group everything in a silver platter. Why is the new group given priority over the existing distributors? Do they have the experience and technical know-how?

4. Did the existing distributors given enough time to adjust with the new setup? Were they informed ahead of time?

5. With all due respect, does the new team have enough capital to supply the needs of the market? Money to buy Kodak products that will sustain them for months since payments will be made in terms (mostly 90 to 120 days). Do they have enough marketing funds to support their channels? Do they have enough manpower to provide support and service to the market? Taking over the operation of KODAK Philippines is no joke. It will entail millions or even billions of pesos. All I am saying is If the new group have the money, they should have setup their own company long time ago and not work for Kodak. We are talking of long-term business here and not short-term.

6. And if the new team fails to perform as expected by KODAK, what will KODAK do? Go back to their old distributors? Do you think the old distributors would want to do business with KODAK again after the abrupt cancellation of distributorship appointments?

7. And how will the distributors, dealers and customers feel regarding the move of this new group – who saw the opportunity, seized it without considering who will get hurt during the entire process. Very cunning and devious if you ask me. Remember, in business – its all about relationship and professionalism.

If my memory serves me right, the same situation happened to KODAK copier when KODAK decided to discontinue its selling efforts for their copiers (I just forgot which country). The local team decided to continue KODAK’s copier operation – and guess what, they folded up after sometime. With all honesty and sincerity, I wish the copier experience will not happen to our local team.

I just want to say that the main reason why KODAK is leaving is because of its restructuring program – technology advancement is forcing KODAK to innovate which they should have done long time ago. Leaving the country does not change a thing, digital technology is already here, will stay and will haunt them for as long their company exist. And the local team should realize that digital imaging technology leaders like Canon, HP, Epson, Sony and others are still here to give them a tough fight. The new team has a lot of catching up to do – and gaining more partners is the key to their success.

Adieu KODAK Philippines and thank you for the memories. I hope you have enough pictures to remember
us by.

*****

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5 responses to “The End of the Road”

  1. Bren D Buenaluz says :

    A company, in order to survive in an advancing technological environment must stay relevant and must keep-up with the present trend. Kodak has not, by my own reckoning and therefore it is only proper that it must cease to exit. A company must be in the forefront of this rapidly changing time. Kodak was a part of our past but it must spend money for research and development. Kodak rested on its laurel and did not keep-up. It is only fitting and proper that it should rest.

  2. hmmmm says :

    Hmmmm, does MA and his team think that the IT resellers are easy to deal with? Does he think that the resellers will give him the time of day now that they won’t have the title KODAK to their names.

    They would be just like any “ordinary” distributor. Let’s see how well they do. Let’s see how long they last.

    J Liao hit it right on the head with point #5, diyan palang they will already be drowning in the challenge of balancing their profitability.

  3. camille says :

    I wonder where you got this information? This is not true at all. Kodak will maintain office in the Philippines and will be just as active. They have a pending bidding for the Guinness Book of Records for the World’s Largest Photo Album for the Phil. Now, that’s what I call commitment.

  4. Pol Lanting says :

    As the first comment said, Kodak simply failed to keep up with the times. I don’t believe its pulling out of the country reflects anything on our current business climate. After all, other photo firms such as Fuji has kept a very high profile here. These companies are still expanding and growing. Also, Kodak won’t do a total pullout. As you said, distributors will keep the Kodak brand in circulation. This is purely a business decision on their part and should not be made a barometer in assessing the present business climate in the country.

    I believe your story about your friend is irrelevant. I could cite my foreigner friends who comes to the country to shop because they find many interesting things here that are “cheaper and of higher quality” (their words not mine.) Perhaps it depends on the things you wish to shop for. Perhaps the Philippines is really not the mecca for “top brands.” I don’t find that disturbing at all. We as a member and player in the world economy is in constant search for our niches and strengths. Selling the latest model of a top brand may not be our forte, but that is offset by a myriad of other factors that still keep our businesses competitive and attractive to the rest of the world. Just ask the export sector. We may not be foremost in Kodak’s business interests, or in the business strategies of other “top brands”, but that doesn’t substantially reflect on the country’s business climate nor on its potential. Build on our niches and strengths. That is the way to go.

  5. anonymous says :

    Please read this instead. This is the official article released by Kodak’s PR agency:

    ——————————-

    Kodak signs distributorship agreement with Techtrends Corporation

    Makati City, May 22, 2007 – Kodak Philippines has appointed newly formed Techtrends Corporation as the authorized distributor of Kodak products in the Philippines. The move forms part of the company’s adoption of the “Go To Market” business model that will position Kodak to compete and serve customers more effectively.

    “This is a critical step for Kodak in order for it to sustain its strong market position and effectively take advantage of growth opportunities in the market,” explained Ed Reyes, Country General Manager of Kodak Philippines. “Other regions like China, Hong Kong and Taiwan have successfully implemented the plan and we’re looking forward to enjoying the same success in the Philippines.”

    With the “Go To Market” model in the Philippines, Kodak will continue to serve its customers through the distributor with both traditional and digital imaging products and services. There will be no change in the availability of Kodak products – consumers and professionals will be able to obtain them in the future as today.

    Techtrends will be responsible for sales, marketing and service functions currently performed internally by the Kodak Philippines team. Members of the management team of Kodak’s Consumer Digital Group (CDG) and Film Photofinishing Systems (FPS), who are already familiar with Kodak products and services as well as the actual needs of the Philippine market, will run Techtrends.

    At the helm is past Kodak country manager Raymond Albert who serves as President and CEO of Techtrends. Former Kodak South Asia Regional Manager Timmy Jayme is the Marketing Communications and Kodak Express Channel Manager. The new company has also absorbed most of Kodak’s FPS/CDG sales representatives, marketing personnel, service engineers and office support staff.

    “We are confident in partnering with Techtrends and look forward to a fruitful relationship with the company,” Reyes said. “We know that the expertise of Techtrend’s management will make the transition seamless for the benefit of Kodak’s local customers and business partners.”

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