Question

Scaling success :How you scale successfully ? based video documentary fuji film company

Answer 1

How Did Fuji Overcome the Crisis and Thrive?

The critical element in Fujifilm’s success is diversification. In 2010, the film market dropped to less than 10% compared to 2000. But Fujifilm, which once made 60% of its sales with film, diversified successfully and managed to grow its revenue by 57% over this ten years period while Kodak sales felt by 48%.

Faced with a sharp decline in sales from its cash cow product Fujifilm acted swiftly and changed its business through innovation and external growth. Under the decisive grip of Shigetaka Komori, appointed president in 2000, Fujifilm quickly carried out massive reforms. In 2004, Komori came up with a six-year plan called VISION 75 in reference to the 75th anniversary of the group. The goal was simple and consisted of “saving Fujifilm from disaster and ensuring its viability as a leading company with sales of 2 or 3 trillion yen a year.”

First, the management restructured its film business by downscaling the production lines and closing redundant facilities. In the meantime, the research and development departments moved to a newly built facility to unify the research efforts and promote better communication and innovation culture among engineers. But realizing that the digital camera business would not replace the silver halide strategy due to the low profitability of his sector, Fujifilm performed a massive diversification based on capabilities and innovation.

Even before launching the VISION 75 plan, the president ordered the head of R&D to take inventory of Fujifilm technologies, its seeds and compared them with the demand of the international market. After a year and a half of technological auditing, the R&D team came up with a chart listing the all existing in-house technologies that could match future markets.

The president saw that “Fujifilm technologies could be adapted for emerging markets such as pharmaceuticals, cosmetics, and highly functional materials.” For instance, the company was able to predict the boom of LCD screens and invested heavily in this market. Leveraging the photo film technologies, the engineer created FUJITAC, a variety of high-performance films essential for making LCD panels for TV, computers, and smartphones. Today, FUJITAC owns 70% of the market for protective LCD polarizer films.

The company also targeted unexpected markets like cosmetics. The rationale behind cosmetics comes from the 70 years of experience in gelatin, the chief ingredient of photo film which is derived from collagen. Human skin is seventy percent collagen, to which it owes its sheen and elasticity. Fujifilm also possessed deep knowhow in oxidation, a process connected both to the aging of human skin and to the fading of photos over time. Thus, Fujifilm launched a makeup line in 2007 called Astalift.

When promising technologies that could match growing markets didn’t exist internally, Fujifilm proceeded by merger and acquisition (M&A). To develop new business ventures, the group made active use of M&A. By acquiring companies that already penetrated a market and combine their assets with Fujifilm’s expertise, the Japanese firm could release new products to the market quickly and easily.

Based on technological synergies, it acquired Toyoma Chemical in 2008 to enter the drug business. Delving further into the healthcare segment, Fujifilm also brought a radiopharmaceutical company now called Fujifilm RI Pharma. It also reinforced its position in existing joint ventures such as Fuji-Xerox which became a consolidated subsidiary in 2001 after Fujifilm purchased an additional 25% share in this partnership.

In 2010, nine years after the peak of film sales, Fujifilm was a new company. Whereas in 2000, 60% of its sales and two-thirds of the profit came from the film ecosystem, in 2010 the Imaging division accounted for less than 16% of the revenue. Fujifilm managed to ride out of the storm via a massive restructuration and diversification strategy.