The case presents us with the problems that Kodak is facing because they have been complacent in maintaining their market, which paved the way for Fuji to encroach on their territories. Kodak has been on top of the market for so long that they did not expect a relative newcomer in the US market to succeed that much. Fuji has the advantage of capitalizing on the support of the Japanese government, as well as an almost monopoly in Japan, which is why Fuji can afford to lower prices in the United States market. Right now Kodak is faced with two main dilemmas, one its competition with Fuji that will become more pronounced since they both plan to enter the lucrative Chinese market, and the bigger problem that is its struggle to stay relevant despite the advent of the digital cameras. By 1998 Kodak was suffering relatively constant declining sales. The only thing that saved them financially that year so they could post a positive net income was the layoff of more than 16,000 employees. This is referenced in the financials by cutting the SG&A Expense by nearly half as compared to that of a year ago. It is mentioned in the article and unclear if the cut in SG&A also was a result of cutting marketing. If that occurred, then as mentioned in the case, it was a business mistake. The second problem with Kodak's is that it has been the industry leader for so long that it developed a collective mindset of invincibility. They did not keep strong tabs of their competitors and if they do notice changes in the market, they do not act swiftly on it. If a leading company looks back and finds that a company, like Fuji, which marketed innovative new products that Kodak’s core market actually buys, this must mean that they do not innovate enough and they do not satisfy their customer’s needs. Kodak waited too long before it acknowledged Fuji as an actual threat to losing market share.