Read the passage below and solve the questions based on it.
Kodak decided that traditional film and prints would continue to dominate through the 1980s and that photo finishers, film retailers, and, of course, Kodak itself could expect to continue to occupy their long-held positions until 1990. Kodak was right and wrong. The quality of digital cameras greatly improved. Prices plunged because the cameras generally followed Moore’s Law, the famous prediction by Intel co-founder Gordon Moore in the 1960s that the cost of a unit of computing power would fall by 50 per cent every eighteen to twenty-four months. Cameras began to be equipped with what the industry called removable media – those little cards that hold the pictures – so pictures were easier to print or to move to other devices, such as computers. Printers improved. Their costs dropped, too. The internet caught the popular imagination, and people began e-mailing each other pictures rather than print them. Kodak did little to ready itself for the onslaught of digital technology because it consistently tried to hold on to the profits from its old technology and underestimated the speed with which the new would take hold. Kodak decided it could use digital technology to enhance film, rather than replace it. Instead of preparing for the digital world, Kodak headed off in a direction that cost it dearly. In 1988, Kodak bought sterling drug for $5.1 billion. Kodak had decided it was really a chemicals business, not a photography company. So, Kodak reasoned, it should move into adjacent chemical markets, such as drugs. Well, chemically treated photo paper really is not that similar to hormonal agents and cardiovascular drugs. The customers are different. The delivery channels are different. Kodak lost its shirt. It sold sterling in pieces in 1994 for about half the original purchase price. George M.C. fisher was the new CEO of Kodak in 1993. Fisher’s solution was to hold on to the film business as long as possible, while adding a technology veneer to it. For instance, he introduced the advantix preview camera, a hybrid of digital and film technology. User took pictures the way they always had, and the images were captured on film. Kodak spent more than $500 million developing advantix, which flopped.
Fisher also tried to move Kodak’s traditional retail photo-processing systems into digital world and in this regard installed tens of thousands of image magic kiosks. These kiosks came just as numerous companies introduced inexpensive, high-quality photo printers that people could use at home, which, in fact, is where customers preferred to view their images and fiddle with them. Fisher also tried to insert Kodak as an intermediary in the process of sharing images electronically. He formed partnerships that let customers receive electronic versions of their photos by e-mail and gave them access to kiosks that let them manipulate and reproduce old photographs. You do not need Kodak to upload photos to your computer and e-mail them. Fisher also formed a partnership with AOL called “You have Got Pictures.” Customers would have their film developed and posted online, where friends and family could view them. Customers would pay AOL $7 for this privilege, on top of the $9 paid for photo processing. However sites like snapfish were allowing pictures to be posted online free. Fisher promised early on, that Kodak’s digital-photography business would be profitable by 1997. It was not. In 1997 Philippe Kahn led the advent of cell phone camera. With the cell phone camera market growth Kodak did not just lose out on more prints. The whole industry lost out on sales of digital cameras, because they became just a feature that was given away free on cell phones. Soon cameras became a free feature on many personal computers, too. What had been so profitable for Kodak for so long-capturing images and displaying them was going to become essentially free.
In 1999 fisher resigned and carp became to new CEO. In 2000, carp’s first year as CEO, profit was about flat, at $1.41 billion. Carp, too, retired early, at age fifty-seven. Carp had pursued fisher’s basic strategy of “enhancing” the film business to make it last as long as possible, while trying to figure out some way to get recurring revenue from the filmless, digital world. But the temporizing did not work any better for carp than it had for fisher. Kodak talked, for instance, about getting customers to digitize and upload to the internet more of the 300 million rolls of film that Kodak processed annually, as of 2000. Instead, customers increasingly skipped the film part. In 2002, sales of digital cameras in the united states passed those of traditional cameras-even though Kodak in the mid-1990s had projected that it would take twenty years for digital technology to eclipse film. The move to digital in the 2000s happened so fast that, in 2004, Kodak introduced a film camera that won a “camera of the year” award, yet was discontinued by the time Kodak collected the award. Kodak staked out a position as one of the major sellers of digital cameras, but being “one of” is a lot different from owning 70 per cent to 80 per cent of a market, as Kodak had with film, chemicals, and processing. In 2002 competition in the digital market was so intense that Kodak lost 75 per cent of its stock-market value over the past decade, falling to a level about half of what it was when the reporter suggested to carp that he might sell the company. As of 2005, Kodak employed less than a third of the number who worked for it twenty years earlier. To see what might have been, look at Kodak’s principal competitors in the film and paper markets. Agfa temporized on digital technology, then sold its film and paper business to private-equity investors in 2004. The business went into bankruptcy proceedings the following year, but that was not Agfa’s problem. It had cashed out at a halfway reasonable price.
i. Kodak bought sterling drug as a strategic choice for a chemical business as it was already in the business of chemically treated photo paper. ii. The chemical business was in sync with the existing business of Kodak running across the customer segment, delivery channels and the regulatory environment. iii. Kodak committed a mistake by selling sterling in pieces at a loss of 50%. iv. Kodak’s diversification attempt with purchase of sterling to strengthen its core business and shift to digital world was a shift from its strategic focus.
Which of the following statements is not true?
i. Kodak bought sterling drug as a strategic choice for a chemical business as it was already in the business of chemically treated photo paper.
ii. The chemical business was in sync with the existing business of Kodak running across the customer segment, delivery channels and the regulatory environment.
iii. Kodak committed a mistake by selling sterling in pieces at a loss of 50%.
iv. Kodak’s diversification attempt with purchase of sterling to strengthen its core business and shift to digital world was a shift from its strategic focus.