Analyzing Managerial Decisions: Eastman Kodak Essay

Kodak has been losing market share for the past five years to the point it has gone from 76% to 70%. The underlying causes that have generated such losses and have ultimately led consumers to favor competing brands with larger growth are:

However, a number of flaws in the current performance system that may have to be rectified include; the recent decrease in the amount of bonuses of senior managers relative to hourly employees as it is demotivating, the fact that at least 20 percent of the workforce are not satisfied with the current system says a lot, and revelations that individual performance deficiency and decline of knowledge and skills over time shows that the company does not give room for creativity (Beer & Swier, 2015). Finally, the lower score that planning, budgeting and focusing was given shows that the particular managers under this obligations are incapable of delivering.

Eastman Kodak went through a considerable transformation change since it was founded. The organization structure at Eastman Kodak was a typical classical hierarchy with the CEO overlooking the entire organization. Later in 1984, the company went through a transformation change in which it was reorganized into 29 separate business units grouped into four lines of business. It included Photography (PPG), Commercial and Imaging Group (CIG), Chemicals (EC), and Health (HG) and three international segments. Each group operated under its own general manager.

Fisher’s tenure began a series of changes at Kodak: cost-cutting measures were introduced, faster decisions were encouraged and there was a move towards proactive business strategies. An informal manager, Fisher replaced the rigid hierarchical organization at Kodak and delegated decisions to line managers. The change in also resulted in a refocus of activities which resulted in reductions of 9,000 jobs worldwide during 1994 and 1995 - almost 10% of the workforce. The company posted a net income of $1,252 million in 1995 (Exhibit 1).

Kodak’s decision to create and market two million units implies that the project life cycle and the product life cycle are intertwined

Another contributing factor is the decision to stop manufacturing digital cameras and expand the company. According to the SWOT Analysis, the company has formed partnerships with Samsung to sell their printer and with LifePics to develop photo merchandising services (2012). Perhaps most impactful partnership Eastman Kodak has formed in recent years is with NovaCopy in 2012. This joint venture will “enable businesses to upload documents to Microsoft Office365, a cloud-based collaboration and productivity platform” (Eastman Kodak SWOT Analysis, 2012).

In 1998, Kodak lost market share when Fuji cut their prices. “As a result of this price war, by the end of 1999 the company has to cut $1.2 billion in costs and 19,900 jobs, or about one-fifth of its payroll, the most severe cutback ever at Kodak” (Gavetti, Henderson and Giorgi 10). By 2001, Kodak was losing $60 on every digital camera it sold (Gavetti, Henderson and Giorgi 10).

Here's a company that was trapped in an ever-dwindling niche of the PC business. Then came the iPod, a must-have device for music fans, and iTunes, an online music shop that turned music downloading into a profit-making business. By making iPod and iTunes work with Windows PCs, Apple broke out of selling only to its niche of loyal fans. But its transformation is even more profound than that: In essence, it switched from being a great designer of computer products into a great designer of consumer experiences delivered via devices and services. Now music represents 44% of Apple's revenues, and an even larger share of profits. If Kodak focused on the consumer experience they provided rather than the actual product the story might have been so

Since the early 1880’s, Kodak had proven themselves to be great innovators and had worked on building their brand on a domestic and international front. They invested heavily in marketing to establish their image and realized early on that their profits would come from consumables rather than hardware. They sold their equipment at low prices in order to fuel their highly profitable film sales. This use of a razor-blade strategy, coupled with strong relationships with retailers positioned Kodak as an industry leader. Additionally, their heavy investment in R&D allowed Kodak to grow organically, proving fruitful with the advent of color film. Thus, Kodak’s expertise in color film

As the world rapidly evolves, it forces the economic agents to develop alongside. Companies which do not comprehend and quickly respond to the changes in the micro and macro environment are likely to lose competitiveness and become unable to sustain themselves within the long term. Such is the case of Eastman Kodak, the American company that invented the digital camera, but which was unprepared to deal with the rapid pace of technologic development, and eventually filed for bankruptcy in 2012. Still ongoing success is nevertheless registered by its Japanese competitor Fujifilm.

Nowadays, ever-changing unstable business environment begins to question companies’ decision in using organizational development as a response to organizational change. According to Waddell, Cummings, & Worley (2011) Organizational change is an approach to correct the organization’s strategy in order to be fit with the current business environment. Organizational change is a natural course for nowadays changing business environment, unavoidable, and managers’ need to make sure that the organization is fit to the changing environments. This is because when an organization are unable to be fit with the current business environment, they will be forgotten and competitors will replace their position. Examples of business who is unable to follow business environment is Kodak. Back then, they used to be the most innovative business in their times, but since smartphones substitutes camera, they were not be able to overcome the changing business environment and keep being the Kodak that is used to be in their early days. As a consequence, consumers shifted brands because Kodak were not able to meet customers’ needs and demands (“The last Kodak moment?”, 2012).

In 1975, Kodak was ahead of the digital technology world. However, their failure to implement the technology caused them to be behind its competitors. Although Steven Sasson invented the digital camera while working for Kodak in 1975, top management never believed in the technology (McAlone, 2015). Sasson told the New York Times “It was just a matter of time, and yet Kodak didn’t really embrace any of it. That camera never saw the light of day.” (McAlone, 2015, p.2).

Evidently there were two significant sorts, making part in commercial printing which consolidating global leadership in high-resolution, color printing systems and for healthcare which leading in digital dental imaging and growing its market share in digital X-rays. However, the financial results continuingly shrank over the changes of pace as Kodak was expanding its tradition film business. Over the time of Kodak was increasingly developed their software and hardware, there were still some barriers which made Kodak had to adopt the emergent strategy to transform the business into the world technology. The most realized obstruction was its intense competition and more importantly what Kodak has failed to fill the gap was compressing the product cycles and declining product prices as it should be solved right after the

Fujifilm, on the other hand, set goals and implemented them. One goal was to penetrate the U.S. market and make a major impact. They succeeded. When they realized that there was a move towards digital, they prepared for it and then acquired new business lines. The developed a cosmetics line, they found new outlets for its film expertise (in one sort of film they have 100% market share). They slashed costs and jobs and spent millions on a mass reconstruction. The 60% of profits they loss from film was replaced with new revenue. They “embrace change and diversity to become a more effective force for a better future” (Fujifilm) (The Last Kodak Moment, 2012).

Technology shifts threatens Kodak’s traditional business model; there were no strategic plans in place to anticipate for future events and long-term objectives for business continuality therefore a downfall in leading and managing change to take advantage of new technology. This paper will argue that in order for organisation to survive in a world that is constantly evolving and face with many uncertain environment and technology factors effectively strategic planning is the key to success. The paper will also argue that the importance role of leadership in leading and managing change through their influences to the organisation.