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Old competitors click as Kodak forges ahead

FEW things demonstrate how the business world has changed in recent years more effectively than the inability of such mighty companies as Eastman Kodak and IBM to compete on their own terms. Both these organisations, and countless others, are trying to fight their way back, at least partly, by forming alliances with groups that not long ago would have been enemies.

Kodak, now headed by the former chief of the hugely successful Motorola, George Fisher, forged a partnership with Canon of Japan three years ago and is building what began as a marketing agreement into a product-development alliance. The UK arm has recently formed a relationship with Erskine, part of US-based Alco Standard Corporation, and one of Britain's leading "super-dealers" in copiers and electronic printers.

As Tony Eatough, UK general manager for Kodak Office Imaging, explains, the Erskine deal essentially provides the company, which had hitherto sold its high-volume copiers and printers itself, with an additional route to market.

Under the arrangement, Erskine will market and sell Kodak equipment - a move that complements its existing position as a dealer for several other copier makers whose equipment is centred on the low to medium volume area.

In return, Erskine's 200-strong sales force will be supported by Kodak, which will establish a maintenance agreement with the customer once negotiations have been completed.

Mr Eatough envisages the relationship expanding. "It is likely that we shall establish links between Erskine and Kodak's document image capture and storage capabilities," he says.

This is pretty much how the Canon arrangement began, with the two companies badging some of their goods under each other's names. It is now much more about product development.

Rather like different makes of car that have similar floor panels and doors, today's photocopiers and the like increasingly tend to share components. Far from this being a curious kind of cop-out, Mr Eatough sees it as simply good business sense at a time of great competition. With the R&D costs of creating technological improvements becoming huge, it pays for each company to play to its strengths rather than constantly seek to reinvent the wheel in the interests of producing a "pure" product. Moreover, "it saves a repeat of VHS v Betamax," he says, referring to the war of technologies in the early years of video.

Since Mr Fisher's arrival, the group has put greater emphasis on creating alliances of various sorts, with the primary aim of accelerating market growth and improving the speed to market. But for all this, marketing remains important. The main reason for the reorganisation carried out about three years ago was the realisation that certain Kodak businesses had market synergies, especially customers in common, that could be dealt with more efficiently.

As Mr Eatough notes, the changes amounted to focusing increasingly on the developing needs of customers, establishing Kodak's core commercial business under one banner of imaging, and concentrating attention on what it sees as its main competitive advantage - a strong product combined with service.

But he cautions: "Customers are looking for confident vision, rather than product features." And this means giving people the right skills to deal with customers. Mr Fisher has no plans to develop an in-house university along the lines of his former company's operation outside Chicago. But he is keen to see extra stress put on existing training and development courses.

Kodak as a whole is a long way from being out of the woods yet. But there is a feeling that Mr Fisher has introduced an element that has been missing of late. If he can maintain this image and produce something concrete, he may recreate a company that can stand alongside the best.