Category: Kodak

Introduction

The selected organization for this analysis is Eastman Kodak Company, simply called Kodak. The company has been in operation for a century now and has its headquarters in New York, United States. Within the past decade, Kodak has been experiencing various organizational challenges that might affect its future performance and sustainability. This discussion begins by identifying Kodak’s “intended organization”, the actual organization, and the best suggestions to help the managers close the recorded gap.

Intended Organization

To learn more about the anticipated organization, interviews targeting one of the departmental managers and a salesperson at Kodak were completed. Such exercises were done via Skype and video conferencing since the company was not operating fully in Saudi Arabia. The completed exercise presented unique observations and views about the intended goals. The respondents revealed that Kodak was strategizing and focusing on the best approaches to become a leader and competitor in the imaging industry (Anthony, 2016). The leaders were keen to establish a results-oriented structure that would support a superior culture, provide experiences to more customers, and guide them on the best ways to process capture and even store pictures that contributed to their memories.

The organization was also keen to consider solutions that were cost-effective while maximizing the quality of its products. Workers were empowered to deliver world-class skills and competencies while focusing on the changing goals and expectations of the targeted customers. These aspects form the ideal Kodak Company that is capable of maximizing profits and meeting the demands of all customers across the globe. The organization fosters a superior culture, structure, and hierarchy that resonate with the demands of customers and workers in different regions (Grant, 2016). The intended company would have a unique team of workers and innovators who take the concept of innovation seriously to meet the demands of different customers and take digital imaging to the next level.

Actual Organization

While Kodak is an organization positioning itself to become a leader in modern digital imaging, numerous gaps and challenges exist that affect the anticipated goals. In reality, Kodak has been facing financial problems since it filed for bankruptcy in 2012. Towards the end of the 20th century, the organization began to innovate and experiment with emerging digital cameras. This strategy made it a leader and provider of such devices. However, the leaders were not keen to focus on this interruptive technology that would eventually redefine photography in the future (Anthony, 2016). Most of the leaders were keen to capitalize on photography film paper that had delivered profits for decades. The professionals would agree that digital cameras were not going to change or transform the company’s profitability.

Compared with the intended organization described above, it is agreeable that the workers are becoming disenfranchised and unmotivated. The company is unable to compete directly with the existing company in some of the sectors it operates in. The current culture is unreflective of the recorded experiences (Gluckman, 2016). The key similarities include the presence of superior products and a focus on the best strategies to achieve organizational goals. The ideal company is also focusing on the best approaches to maximize profits and transform customers’ experiences. However, things appear to be different in reality since the company is fighting constant competition, lacks an effective organizational strategy, and has poor business outcomes.

Closing the Gap

The current situation at Kodak reveals that the organization might take longer to achieve the anticipated goals and regain its original position as a leader in imaging. The company is facing financial problems and is incapable of identifying the right sectors to invest in and maximize profits (Grant, 2016). While the managers have set and defined the right mission, goals, and vision, the reality is that the recorded organizational culture and model affect the confidence of most of the employees and partners. Such gaps have the potential to affect profitability in the long term. However, several proposals are worth considering turning operations around and maximizing performance.

First, the time has come for the managers to present a different mindset. These professionals will begin by setting the most appropriate attitudes and consider the best ways to approach or address situations. This strategy will make it easier for all partners to collaborate, identify the current gaps, and consider the best approaches to change the current culture. A superior leadership presence will help all stakeholders think together and focus on the gaps affecting overall performance (Gluckman, 2016). The professionals will go further to identify some of the best practices from different companies and emulate them to improve performance.

The second approach to take Kodak closer to its “ideal organization” is that of effective problem-solving. The reality is that this company is facing the challenges and aftermath of bankruptcy. Unfortunately, the leaders failed to consider some of the best approaches that could have redefined the situation. Through the proposed concept, the managers will embrace the power of creativity and envision the best future (Hussain et al., 2014). They will provide the right culture, structure, and resources that can innovation to the next level. The workers will get additional guidelines for experimenting and analyzing some of the best practices from its immediate competitors. This model will make t possible for the company to avoid making some of the mistakes that led to its demise.

Third, the adoption and application of a better leadership approach will make it possible for more employees to promote a better organizational culture. Workers will find a reason to solve their differences, engage one another, and become more productive. The professionals will offer a sense of direction and solve internal disputes (Gluckman, 2016). The leaders can provide a wider picture of the intended goals, offer the right support, and promote a sense of direction. Constant evaluation, analysis, and experimentation are powerful approaches that can help Kodak transform its current position and eventually become more profitable.

Finally, the use of an effective change theory is essential to help transform the situation at Kodak. Such an approach will help the leaders identify the current problems, cultural issues, and performance gaps existing at the company. The organizational leaders will embrace the model to introduce new concepts that can take performance to the next level, including cultural transformation, innovation, research and development (R&D), customer satisfaction, and sustainability. These attributes will change the current situation and eventually make this company more successful and competitive.

Conclusion

The completed discussion has identified Kodak as an international organization struggling to succeed in the imaging industry. The ideal organization is currently unattainable due to the existing inefficiencies, culture, structure, and leadership. The proposed approaches will transform managerial practices, present a superior structure and culture, and guide the workers to become more innovative. The final products and services will eventually meet the demands of the company’s customers and maximize the recorded profits.

Reference List

Anthony, S.D. (2016) ‘Kodak’s downfall wasn’t about technology’, Harvard Business Review. Web.

Hussain, N. et al. (2014) ‘Kodak stunning journey of fortune to misfortune (a case study –financial analysis)’, Research Journal of Finance and Accounting, 5(17), pp. 127-140.

Gluckman, R. (2016) ‘Management lessons from a Kodak career’, Journal of Business & Economic Policy, 3(4), pp. 9-12.

Grant, R.M. (2016) Contemporary strategy analysis. New York: Wiley.

Establish five (5) key objectives for Eastman Kodak that encompasses the operational, financial, human resource aspects of the business. Next, argue that each of the established objectives is essential to the success of the company within the Cloud service industry.

The presented case study explains why Kodak is no longer profitable. The company is currently facing numerous challenges. Such challenges are currently making Kodak’s business strategy unsustainable. A new business consultant “would recommend the most appropriate Corporate-Level Strategy for the company in order to increase its profitability, improve declining sales, and expand Kodak to the emerging Cloud Service Industry” (Hill & Jones, 2013, p. 68). The company should identify five key objectives in order to achieve its objectives and goals (Coulson-Thomas, 2013). Eastman Kodak should ensure such objectives encompass the financial, human resource (HR), and operations of its business. I would therefore propose se objectives as the new business consultant at Eastman Kodak:

• Identify a successful company in the industry to form a new merger.
• Ensure the firm invests a lot in its Research and Development (R&D) department
• Embrace a better business model (BM) that has the potential to support the company’s departments
• Use modern technological processes to execute its business operations.
• Embrace a positive organizational culture that supports effective communication, decision-making, teamwork, and information-sharing

It is agreeable that the Cloud Service Industry is becoming profitable. The above objectives will ensure the company succeeds in this new industry. For instance, the proposed R&D department will ensure the company succeeds in its cloud business operations. The use of modern technologies will support the company’s culture. Eastman Kodak can collaborate with a successful partner in the targeted industry. The strategy will ensure the company remains profitable. The company’s HR department must hire individuals and managers based on their competencies and skills. They should also be ready to address the challenges affecting the company (Coulson-Thomas, 2013). This strategy will ensure the company is on the right path towards achieving its goals. The above objectives will ensure the company competes successfully in the Cloud Service Industry.

Analyze Kodak’s horizontal and vertical integration strategy and determine the corporate level strategy that is more appropriate for the company to establish a competitive advantage in the Cloud service industry. Provide a rationale for the determination.

The best mission for Eastman Kodak is to establish its competitive strength in the Cloud Service Industry. Eastman Kodak currently uses both vertical and horizontal integration approaches. The above horizontal strategy has increased Kodak’s assets. The company also expanded its business operations in the 1980s. The acquisition of new companies, such as Eikonix Corporation and Disconix, expanded Kodak’s business operations (Jones, 2012). This integration strategy supported the company’s goals. Kodak’s vertical integration approach has also transformed its business operations. The introduction of new products and services in the company has made the company more profitable. This discussion explains why a vertical integration approach can be essential in supporting the company’s future goals. The strategy will make it easier for Kodak to establish a better competitive edge.

Although “the company’s business strategy and model have been ineffective, a new approach will ensure the company combines its efforts with a successful company in the proposed industry” (Coulson-Thomas, 2013, p. 34). The best business approach towards achieving this goal is by merging with profitable companies in the selected industry. The strategy will ensure the company acquires the best competencies and technological skills in order to support its objectives (Coulson-Thomas, 2013). The approach will also reduce the costs incurred at the company. The objectives proposed in this paper will also ensure Eastman Kodak engages in positive practices. These recommendations will ensure the company understands the issues encountered in the targeted industry (Hill & Jones, 2013). This practice will make it easier for Eastman Kodak to engage in profitable business operations.

Determine five (5) ways in which pursuing a multibusiness model based on diversification may increase profitability for the company. Provide at least two (2) examples of such use of a multibusiness model from industry to support the rationale.

Diversification is a powerful multi-business model that can make every firm successful. This business model has the potential to support the profitability of every company. Eastman Kodak has embraced the power of diversification in order to become a leading company in its industry. For instance, the company “began to produce new products such as inkjet printers, digital cameras, and kiosks thus emerging competitive” (Jones, 2012, p. 5). This business model has been supporting the company’s goals. Diversification “can make it easier for Kodak to compete with various corporations in different industries” (Hill & Jones, 2013, p. 49). A good example is investing in the Cloud Service Industry. The approach will also minimize the company’s business risks, thus improving its income levels. The “process will also create new departments and products that can increase the company’s profitability” (Jones, 2012, p. 5). The approach will also make the company more profitable. Diversification also reduces “the dangers and risks associated with a specific industry” (Hill & Jones, 2013, p. 67). This approach encourages a company to operate in more than one industry. Diversification will make it easier for Kodak to form new partnerships and mergers. This strategy will equip Kodak with new skills and competencies, thus improving its profitability (Hill & Jones, 2013).

Several companies have achieved their potentials through diversification. Hewlett Packard (HP) is one of the leading companies in the world. The company produces printers, e-materials, cameras, and tablets. Such products have made it easier for HP to compete in different industries. The strategy has also increased the company’s profitability. Another diversified company is Virgin Group Limited. The company’s businesses “cover different areas such as entertainment, air travel, financial services, digital media, and health” (Hill & Jones, 2013, p. 139). This approach has played a critical role in supporting the company’s goals. Eastman Kodak can learn numerous lessons from Virgin Group and Hewlett Packard in order to diversify its businesses.

Recommend one (1) implementation strategy for Eastman Kodak that considers organizational design, strategic control systems, structure, and the type of organizational culture fitting for the organization and its new industry. Justify the recommendation.

The “best implementation strategy for Eastman Kodak should take the form of a powerful organizational change” (Hill & Jones, 2013, p. 92). This organizational change will address different issues “such as organizational design, structure, culture, and strategic control systems that can support the company’s new strategy” (Hill & Jones, 2013, p. 94). The “purpose of the proposed change is to ensure the company embraces new practices such as planning, acquisition of resources, and promotion of positive objectives” (Hill & Jones, 2013, p. 103). The first step towards implementing the proposed change is by identifying the challenges affecting the company. The proposed change should deal with existing obstacles. Critical analysis can outline the required resources, ideas, and inputs to support the proposed change. The concept of planning will also support this new strategy.

The company will also implement the targeted change by merging with an appropriate company in the Cloud Service Industry. The managers should ensure every employee supports this implementation strategy. The company has failed to achieve its goals because most of its managers have not been collaborating with their employees. The above strategy “will make it easier for Eastman Kodak to monitor its operations and involve every stakeholder in the decision-making process” (Jones, 2012, p. 6). Strategic Planning (SP) will also make the company successful. New improvements and recommendations will be critical towards supporting the company’s goals. The leaders at Eastman Kodak should also promote “the concepts of assessment, evaluation, and planning” (Hill & Jones, 2013, p. 84). This approach will ensure every control system produces positive results. The practice will eventually produce a powerful organizational design. The new organizational culture at the company will ensure the company competes successfully in its new industry.

Speculate on the way in which both the corporate-level strategy and the implementation strategy you recommended in Question 2 and Question 4 would support ethical business behaviors. Analyze the significant manner in which ethics, corporate social responsibility, and environmental sustainability impact the implementation of the strategies that you have recommended.

A good organizational culture has the potential to produce the best results. The proposed corporate-level strategy will ensure Eastman Kodak focuses on its objectives and goals. The company’s Chief Executive Officer (CEO) must support the best ethical practices and ideas. Every successful company depends on the support of its stakeholders. That being the case, the ethical practices of a company will support its business goals. Corporate social responsibility (CSR) and environmental sustainability are powerful practices that can make every implementation strategy successful (Hill & Jones, 2013). These practices will ensure every stakeholder is part of the proposed implementation strategy. The employees should also be part of Kodak’s corporate-level strategy. The practice will ensure the company merges with an ethical company in order to achieve its goals.

It is agreeable that Eastman Kodak will not achieve its business goals without engaging in ethical practices and activities. A company that promotes such practices gets the best support from every stakeholder. This new relationship will ensure the company achieves most of its business objectives. According to Hill & Jones (2013, p. 58), “every successful company should support the surrounding community, safeguard the natural environment, offer good working conditions, and promote ethical business activities.” Eastman Kodak’s CEO should, therefore, embrace the above practices in order to achieve its objectives. These elements work effectively towards supporting a positive business model. The above business model will ensure Kodak understands its social and legal obligations. This practice will ensure Eastman Kodak promotes the best practices in order to emerge profitably.

Eastman Kodak has faced numerous challenges in the market that almost saw it exit out of an industry it once dominated. Kodak was the leading player in the industry before it was upset from the position by Fujifilm.

According to Sadler and Craig (2003), “As late as 1976, Kodak commanded 90% of film sales and 85% of camera sales in the United States and in the Global Market.” however, this started changing in the 1980s and 1990s when the firm was overtaken by Fujifilm due to its inability to embrace the emerging technologies.

The firm’s key objectives have been geared towards reclaiming the lost glory. The following are some of the specific objectives of the Eastman Kodak that defines its operational strategies in the current market.

• To use the recent technological invention in order to boost its operational strategies in the local and international markets.
• To align its financial strategies in order to reflect the current focus of the firm in research and development.
• To boost the financial resources of this firm through effective marketing strategies of the existing products of this firm.
• To source for highly qualified human resource that will be able to participate in the firm’s revolutionary strategies towards embracing technology.
• To encourage human resource to use their knowledge, skills, and talents in order to enhance innovation at this firm.

The management of this firm has come to realize the importance of diversification and embracing the emerging technologies. It has shown strong interests in the cloud service industry. Each of the above objectives plays an important role in ensuring that the firm is successful in cloud computing industry. Using the recent technologies to enhance its operation is the first step of being successful in the cloud industry.

The objectives of investing more resources on research will enable this firm understand some of the fundamental aspects of the cloud service industry. It will also be important for the firm to strengthen its financial resources in order to meet its financial costs as it makes an entry into a new market.

Having a highly qualified staff will enable the management to come up with products that will meet the needs of its customers in this new market. Motivating the employees to be innovative will be important in coming up with new superior products in the market. If realized, these objectives will ensure that Eastman Kodak remains successful in the market.

Kodak’s Horizontal and Vertical Integration Strategy

In order to succeed in the cloud service industry, the management of Kodak must come up with effective strategies that will be able to address the problem of market competition. Both horizontal and vertical integration strategies may be appropriate in managing the market competition in order to achieve success. In its horizontal integration strategy, Kodak will need to identify some of the leading competitors in this market.

In order to manage the negative effects of market competition, sometimes it may be good for the competitors to form an alliance in order to face the challenges as a single stronger unit. The management will need to team up with a selected number of competitors in the market.

The choice of the partners should be made wisely. The partners must have qualities that Kodak lacks in order to make the union successful. Each of the partners will need to offer something that is unique and desirable in order to make the partnership more successful.

The management of Eastman Kodak may also consider a vertical strategy that integrates the firms in the supply chain. According to Hill and Jones (2013), this strategy is always necessary in eliminating the middlemen who may try to exploit the firm when supplying raw materials or buying the products of the firm.

The strategy will help Kodak to minimize the power of the suppliers and buyers by having the control of the entire supply chain. This will enhance chances of its success in the new industry.

Pursuing a Multi-business Model Based on Diversification

The decision of Eastman Kodak to diversify its product delivery through a multi-business model is a clear indication of the firm’s strategy to increase its profitability in the market.

The firm is keen on ensuring that it achieves success in the market in order to recover from the challenges it faced from the late 1990s to 2012. The following are some of the ways through which Kodak will increase its profitability using this multi-business model.

• The model increases the amount of products that Kodak avails to the market. The increased products will increase its sales, which in turn, would lead to increased profitability.
• The multi-business model will help Kodak expand its market share both locally and internationally. The market share taken by the competitors in one industry is compensated by the profits made in the other industries.
• This model helps the firm to reduce the power of its competitors. The profits earned from one industry can be used to expand the operations of the struggling industry. This would help in boosting the overall success of the firm.
• According to Amit and Zott (2012), multi-business model is always important in spreading the risks within a firm. When one industry is affected by the external forces which are beyond the capacity of the firm, success in the operations of the firm in other industries can be used to compensate the losses.
• This model also expands the knowledge and experience of the firm on how to deal with the market forces. The knowledge learned from one industry can be used to boost the operations of the other industries. This would increase the profitability of the firm.

It would be important to identify cases where firms have used this model in the past successfully. A good example is the General Electric, a leading electrical firm in the world. The firm co-owns NBC Universal in the communication industry.

The firm has also invested into the financial industry with a massive success. Another example is Samsung. The firm has diversified its products, and is currently making a move towards the cloud computing industry that is dominated by Apple Inc.

Implementation Strategy for Eastman Kodak

At this stage, it is important to suggest a strategy that Eastman Kodak can use to implement its strategy to operate in the cloud computing industry. The firm should consider acquisitions in order to expand its strength in the market. By acquiring some of the successful upcoming firms in this industry, the firm will be spared on the cost of starting from a scratch in this competitive industry (Coulson, 2013).

The strategy will not interfere with Kodak’s current organizational design because it will have a full control of the new unit. It is also a fact that this approach will give Kodak full control of the strategic systems. The management will also define the structure of the acquired firm. It is always recommended to allow the new firm to operate independently without interference, but with some guidance from the parent firm.

This approach will also be important in protecting the type of the organizational culture practiced at this firm (Kashmanian, Wells & Keenan, 2011). The new firm will be allowed to operate in a manner that would yield the best success, and for this reason, none of the two firms will need to adjust its organizational culture in a way that may upset their operations.

Ethical Business Behaviors

The vertical integration strategy mentioned in section two of this report will help this firm to maintain ethical behavior in the market. The strategy will give Kodak control over the entire supply chain, eliminating the temptations to bribe some of the parties in the chain to get their favor. Acquisition strategy suggested in the section above will also promote ethics in the firm.

It eliminates cases of internal rivalry or intimidations which is always common in cases of joint ventures (Mellat-Parast, 2013). Corporate social responsibility is important in endearing a firm to the public. It is one of the best ways of marketing which makes the customers realize how the firm cares for them.

This strategy helps in promoting the popularity of a firm’s products in the market. Environmental sustainability activities and ethical practices are parts of corporate social responsibility that help in the promotion of a firm’s brand and products in the market.

References

Amit, R., & Zott, C. (2012). Creating value through business model innovation. MIT Sloan Management Review, 53(3), 41-49.

Coulson, C. (2013). Implementing strategies and policies. Strategic Direction, 29(3), 33-35.

Hill, C., & Jones, G. R. (2013). Strategic management: An integrated approach. Independence: Cengage.

Kashmanian, R. M., Wells, R. P., & Keenan, C. (2011). Corporate environmental sustainability strategy. The Journal of Corporate Citizenship, 44(1), 107-130.

Mellat-Parast, M. (2013). Supply chain quality management: An inter-organizational learning perspective”. International Journal of Quality & Reliability Management, 30(5), 511-529.

Sadler, P., & Craig, J. C. (2003). Strategic management. London: Kogan Page.

Strategies Used in the 1990s

Kodak’s digital imaging strategy of the 1990s was aimed at a gradual transition from making products for traditional photography to a digital photo market. In 1990, the company launched a Photo CD system focused on storing photos. In the following year, Kodak introduced its first digital camera. In 1994, the company’s CEO stated that the firm was in the business not for photography but for pictures. Kodak introduced many innovative services and devices in the photography market, such as products for image sensors and scanners.

When George Fisher became the CEO, he concentrated the company’s activity on pursuing the digital strategy in the market since it was becoming popular in the 1990s. Fisher was a professional manager and a scientist, and he had some experience of successful product development. Fisher wanted to divest those of Kodak’s businesses that were not related to imaging. Simultaneously, he focused on the development of a single digital imaging division that became the core of the company. The following CEOs kept the strategy initiated by Fisher and managed to transform Kodak from a company famous for its traditional photography and related products to a digital photography firm.

Strategies Employed in the 2000s

In 2001, Kodak launched its own software system called EasyShare, the purpose of which was to provide customers with new features of digital experience. Due to this system, consumers were enabled to take photos and view them on different devices, as well as print them conveniently. By 2005, all Kodak’s cameras were included in the system. The EasyShare software system made Kodak’s products more competitive in the market in comparison with digital cameras and other devices of various rivals. In addition to the photo market, Kodak continued its activities in healthcare, commercial, and other spheres.

In the early 2000s, a general strategy of digitalization continued, and Kodak remained the leader in the US market in the production of digital cameras. During the same period, the company was behind Canon and Sony in the global digital camera market. However, Kodak was the leader in the production of megapixel image sensors, which allowed running numerous retail printing kiosks and digital minilabs successfully. Kodak applied various strategies for the consumer and commercial markets. The company benefited from external sourcing of knowledge and experience through making alliances and acquisitions, as well as hiring professionals.

In addition to the mentioned strategies, Kodak succeeded in the market because of a gradual and relatively slow transformation from the traditional to the digital market for photography. Since both traditional and innovative products were offered by Kodak, it became accessible for customers to change their photo preferences gradually. Still, despite being a leader in several markets, Kodak demonstrated an exacerbating financial situation and faced a decline in production volumes. For instance, in 1991, it was the 18^th among the US firms by revenues, and in 2011 – only 334^th. The number of employees fell from 133,200 to 17,100, and the company experienced considerable operating losses during the early 2000s.

Strategy Evaluation

Transformation to the Digital Photo Market

Kodak’s strategies related to digital imaging may be evaluated as mostly positive ones. In the 1990s, a transformation from traditional printed photographs to digital ones occurred, and Kodak succeeded in this change by modifying its business processes and diversifying the product assortment. Kodak was among the leaders of the photography market because it introduced new products regularly, applying the latest technologies to develop them, and made a focus on the photo business in priority to all other businesses of the company.

Kodak conducted strategic alliances and partnerships, which made it possible to exploit the experience and knowledge of the professionals from other companies to create innovative and competitive products of high quality. One more strategy of Kodak that contributed to its success was that all transformations of products were conducted gradually. Due to that, customers were able to shift to new products together with the market. At the same time, they still could use traditional products for making and printing photos if the latter were more convenient for them.

Accessibility to Customers

One more positive aspect of Kodak’s strategy was that its products and services were based on simplicity of use. In the market for businesses, Kodak used different strategies in comparison with the market for consumers. For businesses, solutions were professional and innovative, and it was a positive decision. For consumers, photo cameras and other products had high quality, but at the same time, they were very easy to use.

Due to the accessibility and customer focus, Kodak easily became a leader in the market for consumer photography. People usually want to buy things that are convenient to use and easy to learn. In addition to the mentioned benefits, Kodak applied a systems approach to its products and services, which turned out to be positive. The strategy presupposed that all products, software, and related services were integrated with each other. Due to that, consumers did not need to study complicated instructions or integrate various devices and software by themselves.

Presence in Different Markets and Spheres

Finally, the strategies applied by Kodak may be evaluated positively due to the company’s attempts to be represented in different markets and spheres. It was active in the market for digital and printed photography, markets related to electronics, as well as healthcare and other spheres. Because of that, Kodak succeeded in being among the market leaders until the end of the 2000s. However, gradually, its performance lowered in comparison with other firms, such as Fujifilm.

Alternative Strategies

A focus on the Digital Photo Market

The main reason for the deterioration of Kodak’s position in the market was growing competition. It is obvious that Fujifilm is a good example of a competitor that used similar strategies in the 1990s, but in the 2000s, it succeeded in outperforming Kodak due to differences in strategies. Thus, an alternative strategy for Kodak to apply was to improve its focus on the digital photo market and produce more goods and services related to that market. For instance, due to the rapid development of various electronic devices, other companies were in a more favorable position compared to Kodak due to innovations and a wider choice of devices. Thus, it would have been beneficial for Kodak to create more appliances as well and benefit from digitalization.

Refusal from Other Markets

Another alternative strategy that would have saved Kodak in the 2000s was to refuse from markets not related to the digital and photospheres, such as the market related to medical services. The focus on diversification may be positive for companies because they may benefit from each market. However, under the pressure of powerful competition in the digital photo market, it would have been better for Kodak to exit the market where its revenues were not significant. With such a strategy, the company could focus on a single branch and spend more funds on research and development. Under such circumstances, its products and related services could have been more innovative and competitive.

Reevaluating Kodak’s Strategy

In terms of responding to the post on strategic errors made by Kodak since 1990, I tend to disagree with the student’s argument that this company paid much attention to boost the future of the shrinking film industry rather than identifying innovative changes.

In my opinion, I think Kodak was right when it applied a resource-based view approach to ensure that it utilizes available opportunity to save the shrinking future of the film market.

It is imperative to note that a company cannot employ innovative changes without having clearly defined strategy on its future performance (Hill & Jones 2012, p. 382). Therefore, I advocate that this was not an error and instead, Kodak was on the right track as opposed to the argument presented in the post.

In addition, despite the fact that the company missed a chance to be the first one to enter digital imaging market, it does not necessarily indicate that it lacked a competitive advantage amidst other film companies.

It is notable that there are film companies that could be leading in the digital market especially due to innovation but fail to succeed especially if the internal environment is not conducive. Contrastingly, industries which consider their market-based view to evaluate the external and internal environment of the business are likely to take off quite easily (Thompson et al 2012, p. 53).

Secondly, in as much as innovation is important as the student notes in the post, marketability of film products cannot be excluded since it can boost the performance of company in spite of minimal innovation (Thompson et al 2012, p. 53). Nevertheless, I agree with the student’s argument that innovative changes are essential since they enable a company to produce topnotch services to clients (Barney 2001, p. 44).

For this reason, I concur with the opinion that failure by Kodak to adopt digital technology in 1990s led to the emergence of other film industries that slowly took its position.

Therefore, despite the fact that Kodak has maintained its competitive advantage, other upcoming film companies have dominated the market and consequently low returns for Kodak.

Comments on the alternative strategic moves which Kodak could have made since 1990 to produce better outcomes for its stakeholders

It is definite that information provided by this post is a clear indicator that the main goal in an organization is to increase the profitability and better outcomes that will benefit the shareholders. Previous studies have revealed that there are strategies that can be applied in order boost share prices.

I tend to disagree with the student’s argument presented in this post that Kodak should abandon its profitable traditional business and embrace the digital one. In my opinion, I suggest that the company should incorporate both traditional and digital platform since it might take time before customers get used to the new changes.

Huang (2011, p.173) notes that changes should be effected gradually. Nevertheless, gradual elimination of ancient technology for modern one could be a vital strategic move for the company. In this case, I support the argument that highlights that technological diversification would finally save the company from being bankrupt and boost its potential to expand its sales.

Additionally, I own up the suggestion presented by the student that Kodak should gradually sell off the ancient business imaging, a factor that will save it from high operational cost. This will also enable the company to reshape and release its digital products to numerous niche markets and hence eliminate its historical competitors.

References

Barney, J.B 2001, ‘Is the resource-based “view” a useful perspective for strategic management research? Yes.’ The Academy of Management Review, vol. 26 no. 1, pp. 41-55.

Hill, G & Jones, G 2012, Strategic Management: An Integrated Approach, Cengage Learning, Mason, USA.

Huang, K. 2011, ‘Technology competencies in competitive environment.’ Journal of Business Research, vol.64 no. 2, pp. 172-179.

Thompson, A. et al 2012, Crafting and Executing Strategy, McGraw-Hill Companies Inc, New York.

Executive Summary

The purpose of this management report is to analyze the strategy used by Kodak otherwise known as Eastman Kodak Company. Kodak is the world’s leading company when it comes to imaging innovations and products. Kodak provides imaging technology as well as products and services to the image and photography industries around the world.

Some of the company’s products and service include retail printing kiosks, digital cameras, picture frames, online imaging services, image scanning equipment and photographic paper. The report will cover background information on the company by looking at the history of the company as well as the industry in which the company operates in.

The various environments in which the company operates in will also be assessed in this report by conducting an environmental assessment or a PEST analysis of the political, economic, social and technological environment for the company. The report will also focus on Henry Mintzberg’s 5P’s for business strategies which include pattern, position, perspective, plan and ploy.

Introduction

Eastman Kodak Company is a US corporation that specializes in the production of photographic products and equipment. The company’s operations have been divided into four segments which include digital and film imaging, graphic communication, commercial imaging and health sector (Kodak Patents 2010).

The major Kodak products include Colorburst, Kodamatic, Kodak DCS 100 and DCS DSLR, digital picture frames such as the Kodak smart picture frame, image sensors in digital cameras such as the Leica M8 and the KAF-10500 image sensor, document imaging and scanners as well as movie pictures and TV production (Kodak 2010).

George Eastman, who was the founder of Kodak, introduced the first camera to the world in 1888 that allowed people to capture special moments in still formats. Since then, Kodak has been the main provider of imaging, photography products and services as well as photography equipment such as cameras and picture scanners (Murat 2008).

Kodak’s Strategy and Business Industry

The company took aggressive steps in 2003 to re-invent itself to be a stronger and diversified company in the photo imaging industry by leveraging its operations to focus on the core businesses to ensure that its customer base had access to quality imaging and photography products/ services (Kodak.com 2004). In 2008, the company experienced a significant growth as a result of a five year restructuring program that would see its business strategy changing to improve revenue and profit margins.

As a result of the restructuring exercise, revenues from the digital businesses grew by double digits for four consecutive quarters between 2007 and 2008. The decline in revenue for the traditional segment of the company’s business was seen to be in line with the restructuring program which was meant to shift the operations of the business from traditional to more innovative and modern digital businesses (Kodak 2010).

The restructuring exercise saw the company investing $4 billion dollars in research and development activities that would see an increase in its digital businesses. The $4 billion investment was also used in acquiring several small businesses that had been successful in the digital imaging industry to improve the company’s market share as well as improve its technological innovations and services.

The restructuring exercise saw Kodak developing new business strategies that included expanding the digital segment of the company in both retail and home locations. This would see the development of photo kiosks and mini photo labs as well as the development of printer docks that would ensure the easy transfer of images from digital cameras to printers without the use of a computer (Gia 2008).

The photographic equipment and supplies industry has changed in recent times to be known as the imaging industry. The current imaging industry defines companies according to whether they have innovative and novel technology instead of whether they have the best equipment or supplies in the photography industry.

The major association that manages the imaging and photographic industry is known as the International Imaging Industry Association (I3A). The purpose of the I3A is to enable the use of imaging activities to simplify and enrich the lives of ordinary people through the use of visual experiences (I3A 2010). The association brings together various members who have invested in the imaging and photography industry to ensure that the appropriate imaging standards have been met.

The International Imaging Industry Association is viewed as the global imaging ecosystem that is meant to make the creation and production of visual images easier and simple. Companies such as Kodak, Sony and HP have the power and authority to connect and collaborate with other leaders in the imaging industry to deal with any imaging challenges that might arise (Service Architecture 2010).

Internal Environmental Analysis

SWOT Analysis

Like any other company, Kodak has strengths, weaknesses, opportunities and threats. The table below shows a SWOT analysis of Kodak Company (Gia 2008)

Kodak’s Financial Performance

Kodak has been identified by financial analysts to be the second largest company after Canon that produces photographic products and services in the photographic equipment and supplies industry. The company has a market capitalization of $8.1 billion when compared to that of Canon which has been estimated to be $58.4 billion (Seed 2006).The financial performance of the company as at 2008 saw the company’s net sales decreasing by 9%.

This decrease was mostly attributed to the global economic recession whose effects were being felt as early as 2007. The fourth quarter of the company’s financial year of 2008 saw its revenues decreasing by 24 percent which was lower than that of the previous year. The impact of this downturn in its revenues was severe to the company’s financial performance as it usually experienced high sales returns during the last four months of its financial year.

The revenue downturn was mostly caused by the declining sales in Kodak’s Film Capture and traditional photofinishing products. This decline in sales was however offset by the company’s increasing sales volume in document imaging and consumer digital imaging products such as digital capture devices and consumer inkjet systems which experienced an increased growth in 2008.

The gross profit of the company declined in 2008 due to the decline in its sales volumes as well as the unfavourable price mix in its business segments. The tables below show the net sales, profit margins and income tax benefits of the company for the year ended December 2008 (Kodak Financials 2010).

(Source: Kodak Financial 2010)

GAP Analysis: Kodak’s Resources and Capabilities

The company’s has a variety of resources and capabilities that have given its products and services a competitive advantage over its competitors. The table and graph below show the various resources and capabilities of Kodak.

FAR Analysis

When analysing the functional areas of Kodak, two main areas of interest are usually considered; product development and sales and marketing. In Kodak’s product development, the design team is usually focused on creating products that are innovative and more superior to those of the competitors in the imaging market.

Digital cameras which are a major innovation for the company have seen a lot of development where designers and developers of the product focus on creating cameras that are easy to use and compatible with other products such as computers and printers (Seed 2006).

Kodak has continued to add value to its products by continually investing in research and development activities that will see its innovations being superior and unique to those of its competitors. Kodak’s EasyShare camera line demonstrated the ability of the company to produce a camera that was simple and easy to use as well as of a high quality when compared to the other digital cameras in the market.

The EasyShare digital camera ensured that the company was able to achieve brand recognition and brand affinity within the imaging and photography industry. It enabled Kodak to move away from the traditional line of photography and equipment to a more modern and unique product line (Seed 2006).

Under the development segment of the company is production which deals with the actual development of the product designs and innovations. Kodak pursues a high cost strategy when it comes to its product innovations which are meant to ensure that the best materials and designs have been used in the development of high quality digital cameras. The second area of the company deals with sales and marketing where the company employs the use of various marketing tools and strategies to market its products.

The photo finishing kiosks are a major marketing tool for the company as they cater for photo editing of customers digital images and they also offer complementary products such as free memory cards for storing the digital images as well as free photo printing paper. The online photo sharing sites such as Ofoto are valuable marketing tools for the company as they allow customers to create and share their pictures with other users which increase the appeal for Kodak digital products (Seed 2006).

Another segment that works in conjunction with sales and marketing is distribution. As with any other company distribution plays an important role when it comes to making the products of a company available in the market. Kodak places a lot of emphasis of on-time deliveries, inventory management and good supplier relations. The company however pursues a low-cost efficiency strategy in its distribution activities as it has placed a lot of emphasis on product research and development.

The company utilises the strategy of placing value of the quality of the product rather than on its availability during its distribution activities (Seed 2006).The diagram below represents a FAR analysis of Kodak based on the two areas of focus which are development, sales and marketing

Mintzberg’s 5Ps for Strategy

The varied definitions of strategy have made it difficult to pinpoint a specific definition that can be used to explain the concept of strategy. Because of this, Henry Mintzberg came up with the 5Ps that could be used in explicitly defining the term strategy. These 5Ps include plan, ploy, pattern, perspective and position (Frankenberger 2006: McCabe 2010: Davies and Ellison 1999).

Plan defines strategy as an intended course of action or guideline that is developed by an organization or company to deal with a given situation (Gane 2007). Plan describes strategies to be actions that are formulated purposefully and consciously in advance to deal with situations that are meant to happen or about to happen (Institute for Manufacturing 2010: Morden 2004).

Strategies that are defined by plans are intentionally organized to take place as they ensure that the progress of projects and activities has been predetermined and the expected outcomes have been projected (Tiwari 2009).

Strategies that include the use of plans involve developing schedules that can be used in product developments and launches, company acquisitions and mergers, investment activities and financial ventures, human resource training programs and downsizing in companies (Campbell et al 2002). Kodak has developed a planned strategy known as the content strategy that is used in its overall marketing strategy.

The content strategy is focused on two aspects one of which is creating content that showcases the products and services that the company uses in its business operations. The tips and projects centre has been identified as the perfect example of the content strategy as it involves the use of inspirational photo essays, imaging projects and photography tips in developing the company’s content for its new product innovations and services (Hoehn 2009).

The second aspect that is considered under the two pronged content strategy is the aspect of distribution which focuses on distributing the created content through the various channels of the company. The company has developed the Kodak distribution channel information portal to distribute the created content (Yunhao 2005).

The distribution channels used by Kodak include blogs, social networking sites, company websites and partnership sites The Company also has a distributed publishing model that involves various bloggers and the company’s employees posting their comments about the company’s new products and innovations in the publishing model.

Mintzberg and Ghoshal (2003) describe a ploy as a manoeuvre that is used to outwit a competitor, a rival or an opponent in a certain activity or industry. Ploy as a strategy is used as a short term goal for companies because a ploy usually tends to have limited objectives and goals.

Ploys are also subject to change within short notice given their short term nature and also given the varying reasons for using the ploy in the first place (Kew and Stredwick 2005). Ploy’s usually operate within the context of competition and competitive rivals within a specific industry where a company tries to eliminate its competition through the use of ploys such as a reduction in commodity prices and introduction of new products into the market (Chappelet and Bayle 2005: Gronfeldt and Strother 2006).

Kodak has used various ploys within the imaging and photography industry to try and gain a competitive edge over its rivals in the same industry as well as increase its market share.

Such ploys include the activation of numerous fronts during major sporting competitions such as the Olympic Games and the World Cup, the use of blogs and social networking sites to market its activities, the promotion of the Kodak brand during the season finale of the Celebrity Apprentice show and the showcasing of the company’s presence in golf through the incorporation of the Kodak Challenge which is a fantasy game (Hoehn 2009).

Mintzberg et al (2005) describe pattern as behaviour of strategy that describes the level of progress that has been made after a particular course of action or form of behaviour has been adopted by an individual or a particular company. Strategies that are patterns have been viewed to just occur as a result of consistent and inconsistent behaviour (Bilton and Cummings 2010).

Pattern defines strategy as a stream of planned actions and behaviour that is consistent and intended. Strategy as a pattern is different from that of strategy as a plan because patterns are viewed to be strategies that have been achieved or realised while plans are strategies that have been identified and intended for action (Evans et al 2003: Wagner 2006). Patterned strategies are therefore those actions that have been developed without any intention or deliberation (Bilton 2007: Ehrnreich 2004: Tate 2009).

Pattern strategies are mostly common in small businesses such as scrap dealerships and scrap metal collection agencies. Such businesses operate on the premise of buying as much scrap metal and materials as they can meaning that they do not need any type of strategy or plan to purchase scrap metal (Simons 2005).

These businesses however cannot buy old and used plastics because these purchases will be outside their pattern of business behaviour. Such patterns are therefore deemed to be unconscious strategies because businesses do not realise that they are following any consistent pattern (Smith et al 1999).

The definition of strategy as a position is described as locating an organization in a particular environment. Strategy through the use of position describes the mediating forces that are used to match the functions of the organization within the industry or environment that it operates in (Marx 2004: Dinsmore and Brewin 2010).

Mintzberg views a position strategy to be appropriate when the most important aspect to an organization is how it relates to its competitors, investors, stakeholders and employees. An organization that incorporates the use of position strategy usually seeks to defend a particular position within a certain market segment and industry (Capon 2008: Morris and Pinto 2007).

Kodak has developed its position in the photography and imaging industry by being the first company to develop photographic equipment that incorporates the use of sensory technology (Northeast 2007). It has also established its position in the imaging industry by focusing its products and services on specific industries and companies. Kodak has developed products for educational institutions such as Kodak scanners and integrated imaging equipment that are used during course training and practical applications.

The company has also developed services for financial institutions that incorporate the use of digitized microfilms used to create, store and protect financial data that is irreplaceable in nature. Kodak has also developed products for health institutions and public hospitals that are mostly used in maintaining patient medical records and also for taking body X-rays (Kodak Graphics 2010).

The definition of perspective strategy is that it is a chosen position and a perceived notion that the company has of the general world. Mintzberg (2007) describes perspective as a view that an organization has of its internal and external environment. Perspective strategy is important as it enables a company to formulate objectives and goals that can be used to achieve business operations through the optimal use of company resources (Magalhães 2004: Carsrud et al 2007).

Perspective determines the patterns of behavior of the company as it outlines the intentions of the employees and the company as a whole. Perspective strategy involves the incorporation of employee’s ideas and intentions into strategic plans to achieve business goals and objectives (Lechner 2005: Clausen 2003: Buytendijk 2010).

Kodak practices strategies that are perspective in nature. It has developed distribution channels for its products and services that incorporate the ideas of its workers and employees.

These channels include the social networking sites as well as company blogs where employees are able to post their comments about particular products and services that the company wishes to introduce to the imaging market. These opinions and comments are usually published by the company in its distributed publishing channel after which these channels are used in the creation of content analysis for the company’s products (Phillips 2004).

PEST Analysis

PEST analysis which is also known as environmental analysis is the assessment that a company performs on its external environment. A PEST analysis involves looking at the political, economic, social and technological environment in which a business operates in (Qin 2009: Tovstiga 2010).

Despite the fact that many organizations view environmental analysis as an important activity, such an analysis ends up making a minimal contribution to the overall operations of the business. This is mostly based on the fact that many organizations view the environments in which they operate in to be volatile and uncertain. This limits their ability to control the impact of the environment on the company’s operations (Bensoussan and Fleisher 2008).

These environments also have indirect effects on the operations of a company which leads to minimal outcomes of environmental analysis (Smith and Raspin 2008). Despite all of these aspects conducting a PEST analysis is an important activity for many companies as it ensures that the company has knowledge of its external environment (Gregory 2000).

A PEST analysis usually allows a company to conduct a SWOT analysis more easily because it assesses the external environment of a business. It is therefore important for a business to conduct a PEST analysis before it performs a SWOT analysis (Applegate and Johnsen 2007: Grant 2005).

Political Environment

As the imaging industry continues to undergo new technological innovations and services, the company has been faced with the problem of patent infringement and patent law suits. This has been because the various imaging technology and equipment developed in the industry is similar for all companies which makes it difficult to establish the company that had the original patent (Mendes 2010).

Patent infringements are common in the imaging industry because of the similarity of products and services that are produced by each company. As a result of this Kodak was involved in a patent infringement with Sony because of the similarity of cameras and photographic equipment that were produced by both companies (Digital Photography 2004: Gustavson 2009).

Kodak launched a patent law suit against Sony for breaching 10 of its patent rights when it came to its digital cameras. The company alleged that Sony used technology invented by Eastman Kodak in developing its digital cameras that incorporated the use of image compression and digital storage hardware (BBC 2004).

Privacy is another political environment that has impacted on Kodak’s business operations. This has mostly been attributed to the fact that digital technology in the US has become smaller and more compatible with equipment that is used on a regular basis. Digital imaging equipment has been incorporated into equipment and technology that is commonly used by ordinary US citizens.

Such equipment includes mobile phones that now have camera features as well as photo editing and image viewer technology. These devices are easily available in the technology market and they have been used for activities that invade the privacy of other people (Seed 2006).

Economic Environment

The economic environment of Kodak has shown that the company’s products are used by both individual and industrial consumers. Individual consumers have recorded a high purchase of pocket digital cameras developed by the company for their own personal use while the health sector has been identified as a major buyer of Kodak’s imaging and scanning equipment.

As much as many people own pocket cameras and photographic equipment, the high inflation and interest rates as well as the recent global recession have made most high end Kodak products to be considered a luxury item for most customers (Khosrowpour 2007). The increasing inflation rates which were as a result of the 2009 economic meltdown saw a decrease in the disposable income which forced many people in the United States and the rest of the world cutting down on their spending.

This meant that people only spent on what they could afford and what they considered to be important. This saw a curb in luxury spending which in turn affected digital camera sales in Kodak (OECD 2009). Such high inflation and interest rates will also affect the spending of industrial consumers such as health institutions and government offices that are the main consumers of the company’s imaging and scanning technology (Barnwell 2006).

Since companies make their capital expenditures on borrowed funds, they might have to postpone their borrowing because of the high inflation rates. This will mean that they will not have enough money to purchase any of the company’s products (Gwartney et al 2009).

The company will also be faced with other economic factors such as decreasing growth in film sales. As the world embraces digital technology, film photography is projected to be obsolete in the next ten years as more people switch towards digital photography and technology.

The company’s current strategy has been to invest the revenues it earns from film sales to be used in the development of digital products (Reliable Plant 2010). This strategy will however be difficult to achieve given the current slow film sales that are being experienced in the digital market. These sales have also been affected by its competitors who have developed far more superior products than the company (Barney and Hestelry 2006).

Social Environment

The social environment has impacted on the business operations of Kodak through the proliferation and increasing use of social networking sites. The world has experienced an increasing growth of Internet communities and networking sites where millions of people join to discuss and share their opinions about certain issues that might be affecting them (Quick MBA 2010).

These sites have affected the operations of Kodak because they incorporate features that allow users to edit and upload their photos to these sites. These sites also have photo sharing capabilities that allow users to share their images with other users. Such features limit the need for Kodak photo sharing and photo editing products (Zastrow and Ashman 2010: Thomases 2010).

The social environment has also affected the operations of the company because of the cultural diversity and beliefs that various countries hold around the world (Zastrow and Ashman 2010). While many countries have embraced technology such as digital cameras, others view these devices to be an invasion of their privacy especially in countries that limit the photographing of national symbols and statues.

This impedes the sale of the company’s products to these countries because of their view of imaging technology as an invasion of personal privacy (Osborne and Brown 2005: Anderson et al 1999).

Technological Environment

The imaging and photography industry is one that experiences fast technological innovations and developments meaning that the company’s technological environment is one that is subject to a lot of changes (Kurtz et al 2010). Such a high degree of technological innovations has mostly been driven by a need to have imaging devices that incorporate the all-in-one features (Worthington and Britton 2006). Consumers in this environment have shown that they prefer equipment that incorporates all features into one device.

Consumers now prefer to have mobile phones that have camera and photo imaging features incorporated into them (Schweibenz and Cabral 2010). Many mobile phone makers around the world are developing products that have more advanced camera works into their mobile phones. For example Nokia’s smart phones have digital camera features that allow the users to take digital images as well as create, edit and view these images (Turner 2010).

Such technological innovations have therefore had an impact on Kodak’s operations given the high demand for all-in-one devices that mostly incorporate digital camera features (Fullen and Podmoroff 2006). The growth of integration and portability in the imaging market has increased the need to constantly replace technology with newer innovations.

Kodak has been faced with the technological challenge of constantly updating its products to ensure that they remain relevant within the imaging industry. While a 1.3 Mp camera might have experienced high sales five years ago, the same cannot be said for the camera now as higher mega pixel cameras are being introduced into the market (Kodak Store 2010).

Kodak’s processing kiosks have also experienced slow growth and film sales as a result of the digital printing of images where consumers load their images onto memory cards or mass storage devices for printing. The availability of color and image printers has made it easier for people to print their images at their convenience at cost.

This has led to a marked decrease in the number of people that visit the company’s image processing kiosks to have their pictures printed. The technological environment has therefore affected the growth of the company given the high rate of technological innovations in the market that make it easy to create, store and produce a digital image (Kodak Kiosk 2010)

Recommendation

In order for Kodak to become the world leader in the production of digital imagery products and services the company should intensify its strategic alliances with other companies within the industry to ensure that it increases its market share. The company could also share its brand name and logo with other companies such as Sony, Canon or Fuji film especially in its low performing product lines such as the digital scanners.

The company should also consider expanding its operations in countries such as China and India as well as other eastern countries that have continued to experience rapid growth and developments especially in their technological industries. Kodak should also consider acquiring technology firms that have demonstrated an increased rate in the production of technological innovations to ensure that it has up to date digital products.

Conclusion

The 5P’s for strategy have shown that the company has incorporated the use of various strategies to achieve its business goals and objectives. The PEST analysis has however shown that the company faces a tough external environment that might affect its business strategies and objectives.

The company therefore needs to reassess its business strategies and goals to deal with the external environmental factors that might affect its business operations to ensure that it remains relevant in the current competitive environment as well as survive the external pressures.

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Introduction

Kodak Company was founded by George Eastman 133 years ago. It replaced the glass photographic plates with a roll of film that was simple to use. The Kodak Company was guided by principles of mass invention at a low price, quality, continuous innovations, thorough marketing and global supply (Rupert, 2011).

Eastman worked hard towards firm establishment of the company by coming up with the operation strategies and business guiding principle which was, “nothing is more important than the value of our name and the quality it stands for” (Gavetti, Henderson & Giorgi, 2005).

This was a strong pillar which Kodak Company has been standing on and has seen its success through marketing of quality products. By 1963, Kodak company had became the industry standard and by 1981, it had invented other products such as cameras, medical imaging and graphical arts which made the profits to rise to US$10bn in 1981 (Gavetti, Henderson & Giorgi, 2005).

Kodak operates in three segments; digital and film imaging segment which provides customer oriented traditional and digital products as well as photographic services, health segment which provides analogue products such as chemicals, processing equipments, medical films and digital products.

Graphic communication segment manufactures inkjet printers, document scanners and digital image systems. All the products were aimed at the commercial print market (Gavetti, Henderson & Giorgi, 2005). This paper will assess what went wrong in the Kodak company that led to it’s under performance to appoint of filing for bankruptcy protection.

The evaluation will concentrate on the Kodak case study based on article “Kodak falls in the creative destruction of digital” (Rupert, 2011). The paper will give an analysis of what affected the Kodak Company by considering the political, economic, social and technological factors.

The paper will conduct the SWOT analysis so as to determine the current state of the company as well as the opportunities that the company can venture into in order to expand both locally and internationally.

What went wrong?

For years Kodak Company had dominated in photography industry but it has not managed to stay at the top due to the current market trends. It failed to invent its own innovations of digital cameras which are dominating in the market today.

Kodak stocks have continued to fall for the last ten years by 95% and it has continued to be listed low as it shares traded at $47 (Gavetti, Henderson & Giorgi, 2005). The company has experienced losses for the last three years with the latest been $222 million in the third quarter of 2011.

It failed to invest in digital market and instead focused on traditional film and clinical supplies. It also ventured into printers where it ranks fifth among the major suppliers with a 2.6% market share.

Kodak was the first company to invent digital camera but it failed to invent in its innovations which made it to succumb to the digital revolution. This made its products lack market and was overtaken by other companies. Kodak failed in innovating digital cameras and assumed that people would continue to print photos (Gavetti, Henderson & Giorgi, 2005).

Kodak Company failed in its strategic planning when it failed to research on the current market opportunities and customers’ needs. Instead it reinvented in manufacturing of printers in order to “capitalise on its reputation as the best company for film printing”.

This was due to lack of creativity and flexibility of its executives to move with the current market demand. They feared that the digital cameras would overtake their main product that is, chemicals. This has left the company with no option but to file for bankruptcy protection.

Today Kodak’s company assets are worth $5.1bn while its debts totals are $6.8bn thus the company is already operating at a loss.

The Kodak competitors invested in the digital cameras and even advanced in technology such that Kodak’s digital cameras were as not as good as for competitors. This made the company lose its reputation as the best one in the photography industry (Gavetti, Henderson & Giorgi, 2005).

Though Kodak had enough staff, it failed to invest and uphold technology thus it is to be blamed for its own down fall. It was “unable to adopt transition into the 21^st century” because it was caught up in storms of technology, economic and social change.

Today, people have resulted to use of cell phones in taking photos and videos. Many mobile phones have a 5-megapixel resolution which has dominated the market by becoming the key factor in customers’ decision making. The society has changed from using photos for personal memories to photo sharing through social networking (Guardian, 2011).

PESTEL Analysis

Political

Kodak was impacted by some political issues concerning the organisational change. The US copyright law has put in place strict rules that hinder photo printing and their sales. The law states that all photo businesses should not print or release digital images without a copyright release.

This has hindered the Kodak Company which specialises in photography more than digital images from thriving because images taken by amateur photographers may not have their professional images in print. This affects Kodak which embarked on photo printing to maintain its reputation (Gavetti, Henderson & Giorgi, 2005).

Economic

Kodak has faced increased competition due to an increase in the number of substitute products Such as smart phones and Iphones. Other factors that determine competition level include the presence of global distribution system, prices charged on various products and facilities and any other innovation that may come into the industry.

Over the years, the photo and image industry has been undergoing a considerable change. This has been due to increase in competition internationally and the change toward global supply sequence. The end users play a major task in terms of choice of suppliers and in decision making of products which is changing from being operational to being strategic (Tan & Tiong, 2005).

For instance, increasing demand for digital cameras caused a decline in traditional film camera sales in 2002. Also photo prints made out of traditional films reduced by 700,000. Digital camera sales dominated the market due to its declined prices which made it more affordable for the consumers.

This resulted in high demand for digital cameras thus Kodak had no market for its products. The world is under recession out of the financial crisis which hit it at the end of 2007 (Campbell & Craig, 2005).

This affected most industries especially those who were not stable financially for example, Kodak since the more economically developed a nation can be, the more helpful it is in making the industry to achieve its objectives behind attaining direct marketing (Tan & Tiong, 2005)

Social change

Lifestyle trends and consumer preferences affect the business’s performance. For instance, men have been shown to purchase digital cameras more than women. To ensure that all customers are satisfied, the company has to provide extraordinary services that match with the society demands (Neild & Carysforth, 2004).

Consumers are using digital cameras to send images to electronic mail for social net working and thus Kodak Company should have moved with the social trend. This ensures that it is able to retain its customers and attract new ones.

Kodak failed to move with the society change from traditional photos which were used for personal memories to digital images used for social networking. Kodak retained the tradition of printing photos while society has changed to storing digitally taken images on-screen viewing.

The demographic composition changes with time and so the industry has to keep on revising its strategies to ensure that all customers are satisfied. For instance, the increased number of youths and teenagers are for digital cameras which the Kodak failed to invest in. This makes the company miss the rising market for digital cameras thus low revenues in return (Griffin, 2011).

Technology

The world is adopting technology in its processes of doing things. There is development of computers in different sectors of business (Campbell & Craig, 2005). Imaging industry has not been left behind as it has come up with digital cameras.

Kodak was the first to innovate the first digital camera but they failed to invent it because they feared it would not thrive. Technology is a critical aspect of the business environment for the industry. Use of internet has led to high demand for digital cameras. All the electronic companies are developing their own technologies with advance means for attracting global customers.

This has posed a great competitive pressure on the electronic retail market and same on the retail companies such as Kodak (Gavetti, Henderson & Giorgi, 2005). Internet has contributed greatly in making cameras communication devices as many people are using phones that have cameras.

Technology development in cameras brought about increase in operational costs as it requires highly skilled staff for production of equipments and marketing.

Kodak felt threatened with development of digital technologies because of its core chemical processing business. Kodak failed to venture into digital cameras and this has contributed greatly to its down fall (Gavetti, Henderson & Giorgi, 2005).

Environmental

Environmental factors have also affected the performance of the Kodak Company. This is because the company has been affected by the green issues due to its production of chemicals that are a hazard to the environment. This has affected construction of digital products by the Kodak Company (Gavetti, Henderson & Giorgi, 2005).

Legal

Joint-ventures have helped in the attempt to minimise its exposure in being a multinational company to the influences of national legal environments (Campbell & Craig, 2005).

SWOT Analysis

Strengths, weaknesses, opportunities and threats of Kodak Company.

Conclusion

Kodak Company had dominated in photography industry but it has not managed to stay at the top due to the current market trends. It failed to invent its own innovations of digital cameras which have dominated in the market today.

This was caused by poor strategic planning for future market opportunities and poor management. Kodak Company also experienced storms of technology advancement in the industry because many companies developed superior digital cameras that made the Kodak digital cameras loss market.

Political environment also contributed to the down fall of Kodak as it emphasised on regulations of printing images. Kodak failed to embrace the digital technology as society trends changed to digital images and social networking.

Reference List

Campbell, David J. & Craig, Tom, 2005. Organisations and the business environment. Butterworth-Heinemann, UK, p 130-140.

Fine G, 2009.The SWOT Analysis: Using Your Strength to Overcome Weaknesses, Using Opportunities to Overcome Threats. CreatSpace, New York, p163-185.

Gavetti, G., Henderson, R. & Giorgi, S, 2005. Kodak and the Digital Revolution (A), Harvard Business School, HBS Press, UK, p 222-228.

Graetz, F. et al, 2002. Managing Organisational Change, John Wiley, UK, p 156-170.

Greiner, L.E, 1998. Evolution and Revolution as Organisations Grow. Harvard Business Review, UK, p188-193.

Griffin R, 2011. Fundamentals of management. Cengage Learning, London, p 233-38.

(Rupert N, 2011).Kodak falls in the ‘creative destruction of the digital age’. Retrieved from www.guardian.co.uk.

Neild, C & Carysforth, C, 2004. BTEC First Business. Heineman, UK, p 74-89.

Pahl, N & Richter, A, 2009. SWOT Analysis- Idea, Methodology and a Practical Approach. Grin Verlag. London, p 106-130.

Tan, V. & Tiong, N.T, 2005. Change Management in Times of Economics Uncertainty, Singapore Management Review, First Half Vol. 27 Issue 1, p 88-103.

Introduction

Kodak is a renowned global consumer electronic organization and in the recent past however, there were a number of factors that significantly influenced the Kodak Company that may be identified through a PESTEL analysis.

PESTEL is an environmental scanning tool which stands for political, economic, sociological and technological, environmental and legal factors (Macher & Richman 2004,p. 39). Technological changes over time have enormously influenced the Kodak Company in terms of changing as well as altering the company’s organizational customs and structure.

The biggest challenge faced by Kodak Company was the fact that in several markets, digital technologies had greatly advanced while Kodak looked on and did nothing. By the time the company attempted to catch up with these technologies, it suffered a major setback since it was too much at the rear to be able to catch up with the rapidly changing technology.

In addition, the strategy used by the company in an effort to fit in the changing technological times was nevertheless, unsuccessful.

This could be attributed to the fact that pursuing a joint venture with another organization caused conflicting situations, and Kodak could not match up easily with the already established performer. Consequently, the only viable option for Kodak was to split up the joint venture and work independent of each other.

Discussion

PESTEL Analysis

As earlier stated, there were a number of factors that significantly influenced the Kodak Company’s organizational change, and these factors can be identified through a PESTEL Analysis.

Beginning with the political factors, Kodak was greatly influenced by the political climate which caused considerable organizational change in the company.

Globalization as part of political development had a vital role in influencing the performance of Kodak. It is worth noting that besides politics, there were other factors that contributed significantly to the performance of the company. (Cooke 2002. p. 23).

Changes in the economic environment also played a significant role in the company. With the advent of globalization, there were more opportunities opening up in the global market, and this meant that more competitor companies infiltrated in the industry to compete for consumers.

According to an analysis undertaken by Tan & Tiong (2005, p. 27), the number of consumers Kodak served, changed significantly as a result of the company’s social economic consideration.

The increase in the amount of disposable income among the global population, as well as the rapid changes witnessed in terms of technological advancement allowed people to access new technologies that Kodak could not develop.

For these reasons, Kodak lost a significant market segment that it had controlled in the past. At attempt by Kodak to introduce changes to be at par with the rapidly changing technology made it much easier for the competitor companies to outshine the company.

In addition, social changes played a vital role in influencing organizational changes and performance of Kodak. There was a tremendous change in the consumer preferences and needs, and this called for changes to meet these needs as well as achieve the desired targets of consumers.

The consumers demanded high tech products for purposes of imaging and also to meet the needs of their status in the society. The circumstances as they were, practically forced Kodak to effect organizational changes in an effort to accommodate the changing needs of the consumers.

Pettinger (2004, p. 44) argues that due to globalization, the need to act swiftly and fast in respond to the consumer needs became the order of the day. Thus, there was a tremendous increase in the number of competing organizations each making an effort to outdo the other and win a bigger share of the market segment.

According to Henderson (1996, p. 36), the technological advancement in the imaging industry unlike any other, had witness rapid and sophisticated technological changes.

This rapid technological advancement had forced the already established players in the industry as well as the new entrants to device quick and viable means for purposes of responding to the consumers need and keep up with the technological trends.

Even though for a number of decades Kodak enjoyed international leadership in the field of imaging, the company was a little hesitant to engage itself in embracing and developing the new digital technologies for fear of the impacts that could emanate from such engagement.

Kodak further, failed to foresee the possibility of its products being outmoded by the emergence of the digital technology. Furthermore, the company failed to design a viable strategy to deal with the emerging competitors in other regions.

It should, therefore, be noted that by the time Kodak ventured into the development of the emerging technologies in the imaging sector, other competitors were far ahead of the company.

Further more, environmental factors also played a significant role in influencing organizational changes in the Kodak Company. Throughout the history of the company production process, there has been a big challenge particularly in terms of disposing off products from the company.

Tan & Tiong (2005, p.44), note that the chemicals used by the company to produce its product are very unfriendly to the environment. In addition, most of the products produced by the company do not decompose after disposal, thus, posing an environmental threat.

Developing and adapting a technology that would not compromise the status of environment posed a big challenge to Kodak, and in a way contributed to the sluggish performance of the company.

In the legal context, Kodak had to deal with different legal requirements of different countries in which it had established its subsidiaries, a factor that significantly affected the operation of the company. In an effort to mitigate this challenge,

Kodak decided to enter into joint venture with other organizations which were technologically advanced in different countries. As such, it could be able to meet the needs of consumers, as well as keep a significant market share.

Nonetheless, there emerged organizational conflicts within the joint ventures that obstructed the vibrancy of the company (Johnson & Scholes 2002, p. 13).

SWOT Analysis

SWOT Analysis involves identification of the pertinent factor and assessing the significance of each one of these factors. The factors are both internal (strengths and weaknesses) as well as external (opportunities and threat) as presented in the table below:

Conclusion

The operation of Kodak in an industry that has experienced massive evolution particularly in the context of digital technologies presented the company with challenges that saw the decline of the company in the recent past. Through PESTEL Analysis, one can be able to identify a number of factors that influenced the performance of Kodak.

PESTEL Analysis engages an assessment of issues such as political, economic, sociological and technological, environmental and legal factors, and their impacts on the company.

SWOT analysis, on the other hand, involves identifying the factors that are relevant to the company, and examining their significance. These factors in the SWOT analysis include the internal strength and weaknesses of the company and the external opportunities and threat of the company as discussed above.

References

Booch, G (1996), Object Solutions: Managing the Object Oriented Project, Addison- Wesley, London UK.

Cooke, FL (2002), Maintenance Work, Maintenance Skills, Blackwell, Oxford UK.

Graetz, F. et al (2002), Managing Organisational Change, John Wiley, London.

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Henderson, RM (1996), Technological Change and the Management of Architectural Knowledge, Sage Publications, Thousand Oaks, USA.

Johnson, G., & Scholes, K (2002), Exploring Corporate Strategy, FT Prentice Hall, London.

Macher, JT., & Richman, BD (2004), Organisational Response to Discontinuous Innovation: a Case Study Approach, International Journal of Innovation Management, Vol. 8 no. 1, pp. 37-52.

Pettinger, R (2004), Contemporary Strategic Management, Palgrave Macmillan, Basingstoke.

Tan, V., & Tiong, NT (2005), Change Management in Times of Economic Uncertainty, journal of UK Management Review, Vol. 27, no.1, pp 23-40.

Taylor, H., & Cooper, CL (1998), Organizational Change: Threat or Challenge? The

Role of Individual Differences in the Managing of Stress, Journal of Organizational Change Management, Vol.1, no. 1, pp 56-72.

Appendices

PESTEL- Political, Economic, Sociological and Technological, Environmental and Legal Factors

SWOT- Strength, Weaknesses, Opportunities, and Threat.