Changes Effected by Kodak in External and Internal Environment - Example

Program Changes Effected by Kodak Module and Number: of the Assignment: Number: Table of Contents Introduction The Kodak Company has remained a major manufacturer of photography and picture gadgets. They have been in the market since 1901. They currently deal with many consumer products but majorly deal with imaging for business. The imaging business had been the brand behind Kodak in the past years and was its major selling point. However, in the period of its activities it acquired other businesses that it later shed of to enhance its survival Stuart, N. M. (2005).In the event of managing its survival, Kodak Company experienced some challenges. The article will tackle some of the challenges experienced in the management of Kodak and the changes made. Challenges Posed by Kodak External Environment a) Disruptive Technology Changes Technological changes brought forth digital imaging revolution. Although Kodak had been the inventors of the same, they could not immediately roll out the technology, as it would result in a decrease in the film industry. Therefore, they were incapable of planning for and adapting to changes effectively hence the declined growth (Håkansson 2002). In addition, in 1975, Kodak Company took care of the shift by creating a working prototype of a digital camera through their engineer, Steve Sasson (Rick 2014) b) Market Demand and Opportunities Market trend and demand has been changed. Now customers are more inclined towards smartphones and tablets (Smith and Cockburn, 2013). Kodak’s films and digital cameras have not sufficient demand in the market. In this situation, company has changed the scope of its business to compete with the current market trend (Mattioli 2012). As film is one of its core competencies; the company signed business deals with Hollywood film studios to provide not only films but also the advanced digital movie cameras (Giardina 2015). c) Lewins Force-Field Analysis Kurt Lewin presented a model on developing change in the organization in 1940. He introduced a tool called ‘Force Field Analysis’ for making different business decisions (Lewin 1946). When applying it to Kodak it shows that influential forces to change were irreversible technology development, great market demand, development opportunities, expand into new market and new client base. Conversely, forces that were resisting the change are crowded market place, Alienate old customer base and company restructure at expenses. In addition, vicious competition in relation to capital investment and the need for controlling happened to be the strongest forces against the enactment of the digital photography technology ( Grant ,2013). Poole (2007) and Grant (2013) shows that forces against change score equivalent to 30 while forces for changes were 33 which indicates that it is one of the reasons for change. (Appendix 3) Internal Environment a) Poor Stakeholder Map The management’s decision to engage in the design and development of the digital devices was viewed as a teleological form of change. The management thought it fit and instructed the allocation of more funds for the production of the digital imaging that was later noted as detrimental to the development of the organization (Henry 2005). To change of the poor stakeholder change, Kodak decided to involve everyone in decision-making. It was purposefully for the company to make a valid decision for the firm to help the company curb competition (Richard 2012). (Appendix 4). b) Organizational Culture and Design International business environment has increased the competition among companies. Organizational culture and design plans a pivotal role in supporting the business in different markets. Flexible organizational structure helps the companies to manage the business operations in different regions. According to Martins (2002), flexible and independent organizational structure, rewards and recognition system, risk taking and continuous learning culture and lower communication gap between management and workers lead to the creativity and innovation in the organization. Kodak is associated with technological industry where companies come up with new products and ideas daily (Bate 1995). Innovation and creativity in the companies can only be possible when management makes their organizational culture flexible and supports new ideas. In other words, innovation and creativity are accepted as cultural norms in the organization. Company also needs to change the design of the organization from vertical to horizontal (Brown 1998). The culture web model was presented by Johnson and Kevan in 1992. This model defines the culture of an organization in six different dimensions. It also helps the management to make changes in the culture to meet the business targets (Johnson 2008). In terms of Kodak it symbols could be seen that it a strong brand in the market and is well-recognized brand (Grant 2012).However, the arrival of digital photography caused substantial change in the company paradigm. The transfer from analogue imaging to digital imaging has led to a massive redundancies (Alvesson 2002). From 1991 to 2011, Kodak’s employment has minimized from 140,000 t0 17,000 employees (Grant 2012). Thus, it could be critically observed that many workers left the organization gladly, which views Kodak’s mismanagement and incapability to control their employee’s opposition even though, Kodak was successful in the implementation of disruptive technology, it was unsuccessful in terms of its financial presentation (Baulcomb 2003). Therefore, it needs to make changes in the culture to overcome the current business challenges. The complete cultural web analysis is given in Appendix 4. c) Failure of Kodak’s Leadership Kodak’s last five leaders disrupted a photo giant company to financial losses. In 2012, total number of employees decreased from 60,400 to just 7,000. Company’s operating losses let them to lower its operating cost and cut the business. Perez’s business approach to invest in digital images without considering other aspects of this technological change on the other business units suffered the business and other stakeholders (appendix 5). Film was the main product of this company, which was neglected in developing the change. With the inception of digital imaging, it was highlighted that it will replace the film (Castella 2012). Company did not pay attention to come up with any substitute of film. As a result, digital imaging replaced the silver halide-based photographic industry which was like lifeblood for the company (Dickinson 2012). In 1970s, company came up with highly successful product which was copier machine. This business was so much flourished that only two major players, Kodak and Xerox, ruled this business in the market. Moreover, company launched EasyShare in 2001 which was quite successful service by the Kodak. This “EasyShare” Gallery was praised by customers and corporate customers. As a result, it was reached on top of the US market in terms of market share. At that time, Carp was leading the company. But, Carp’s successor named Perez in the quest of developing digital imaging unit, closed down this business unit (Dickinson 2012). In 1980s, Chandler and Whitmore used the Kodak’s organic chemistry research work in the field of pharmaceutical industry. As the major clients were commercial and corporate, the profit margin was also very high as compared to other consumer products. In 1994, under the leadership of Fisher, the company had to sell its pharmaceuticals and chemicals businesses because of failure to find expansion in this business unit and to proceed to pay down the debt (Isaksen and Tidd 2006). Fisher further sold the chemical unit used to provide chemical for films (Grant 1997). This project was low profit generating business but was well managed and important for film business (Dickinson 2012). Leadership of Kodak was also ignorant of the true picture of market. Analysts assert that Kodak never made money out of camera; in fact, they made money by selling films and papers. At the end of 1990s, people went for traditional cameras. Although, the internet sharing and viewing changed the behavior of people but the demand of printing paper did not affect significantly (Dickinson 2012). Remedies to Challenges as faced by Kodak Company In an attempt to survive in the changing markets, Kodak had to rely heavily on their films for major capital. The film that was their source of money continued to bring in revenue for the organization even in the advent of the digital images.. They acquired more money from the film business that they had to use their digital switch or development of new business lines that assisted the company financially (Katz et al. 1980). Technological changes related to the digital imaging Kodak engaged a scientific research activities that helped them develop their digital cameras (Henry et al. 2005). However, the cameras lasted in the market for a short while due to the invention of smartphones with their cameras but Kodak is in the process of developing an Android phone that will place them on the technological map again (KLeiman 2014). The Kodak’s managerial team has come up with strategies that suit the current needs and wants of the digital customer. George Fisher, who served as Kodaks boss from 1993 until 1999 distinct digital cameras and gave customers the capability to post and share, photos online. This was a great move in the technological needs and wants of the current consumers but did not work effectively due to lack of innovation and development (Seleshi 2006). In an approach to bring in new skill and expertise in Kodak, they outsourced different leaders. It was an excellent plan because new leaders brought in new ideas. The Sourcing of new people to help the manager in decision-making helps the organization realize their stand from an independent point of view (Burnes 2009). The skills of these individuals also help revamp the organization that was down for Instance Jessie Green who was Assistant Treasurer of IBM and who built up a finance organization (in Kodak) from scratch almost effectively. The management of Kodak tried to tackle the lifecycle form of change by talking to the middle-level managers to sell them the ideas they were trying to implement the changes. This was done after management had realized they had set up new structures and policies to counterchange, but the lower workforce was not in agreement with these changes. (Beech and Macintosh 2012). The results were favorable to the organization as the ideas were explained to the staff via the mid-level managers and those who thought they would not fit in the organization were allowed to leave (Henry and Mayle 2005). Sales of some of the businesses the organization had acquired was an excellent move though lately done. It was a change thought of to be okay by the leaders, but these changes were more of the life cycle form of change as they affected the workforce at large (Wilkinson 2006). The acquired businesses were pulling down the organization due to massive financial investments in them. These businesses, therefore, were best sold, and the monies used in the development of the main Kodak imaging business. Currently, Kodak has majored its focus on Digital Printing & Enterprise and Graphics, Entertainment & Commercial Films businesses (Andriopoulus and Dawson 2009). Kodak in its final attempts to still be in the market has severally set into agreements with other companies. These companies have helped the Kodak products alive or substantially assisted Kodak in the acquisition of capital to run its activities. Through this mergers and agreements, Kodak can realize some of its goals currently as it attempt not to repeat the past mistakes (Henry and Mayle 2005). Conclusion From the case study of Kodak, it is evident that no matter how strong a brand is, slight miscalculations in the strategies and forecast can lead to serious implications on the brand (Grant 2012). Kodak was always on top of their game but failed to inculcate changes in their system effectively. Additionally the management was not visionary to see the impending dangers resulting from the digital revolution. As a result, new arrivals entered the market and bypassed them (Burnes 2009). Critical Analysis of Kodak’s Case Study There is no doubt that Kodak was a very successful company in the photographing and imaging industry. However, the company was declared bankrupt in 2012, which was a direct result of top management’s decision to invest in those businesses, which obsolete its own major products. Its revolutionary step to digitalizing the photos and films, redundant its core competencies but also diverted the industry into the hand of computer hardware and software companies (Merced 2012). However, managing the technological change is very important for the companies. For Kodak, innovation prove to be disruptive innovation for existing product portfolio (Hashim 2013). Furthermore, the mismanagement of such technological change resulted the huge losses to the business (Jackson 2011). Bibliography Alvesson, M. 2002. Understanding Organizational Culture. London: Sage. Andriopoulus, C & Dawson, P. 2009 Managing Change, Creativity, and Innovation. London: Sage Ayres, R.U. (2005). "Resources, Scarcity, Technology, And Growth". Scarcity and growth revisited: natural resources and the environment in the new millennium, pp.142–154. Burnes, B. 2009 Managing Change: A Strategic Approach to Organizational Dynamics. 5th ed. London: FT Prentice Hall Beech, N.and Macintosh, R, 2012. Managing Change: Inquiry and Action. Cambridge University Press Bate, P. 1995. Strategies for Cultural Change. Oxford: Butterworth-Heinemann. Brown, A. 1998. Organizational Culture. 2nd ed. London FT Pitman DICKINSON, MIKE. (2012) ‘How Kodak Lost Its Way’ Rochester Business Journal [Online] Available At: Gratton, L. 2007 Hot Spots: Why Some Companies Buzz with Energy and Innovation, and Others Dont. Harlow: Pearson. Henry, J, and Mayle, D. 2005. Managing Innovation and Change. 2nd Ed. London: Sage. Isaksen, S. and Tidd, J. 2006.Meeting the Innovation Challenge: Leadership for Transformation and Growth. Chichester: Wiley Jackson, Tony. 2011. ‘ Kodak Fell Victim to Disruptive Technology’ Financial Times[online] Available At: http;//www..ft.com/cms/s/0. Grant, R.M. 2010. "Contemporary strategy analysis and cases: text and cases": John Wiley & Sons. Håkansson, H., & Waluszewski, A. 2002. Dealing with Technological Growth: IKEA, the Environment, and Technology. London: Routledge Lewin, K. 1946. "Force Field Analysis". The 1973 Annual Handbook for Group Facilitators, pp.111–113. Martin, J. 1992. Cultures in Organizations: Three Perspectives. New York: OUP. Poole, M. , & Van. V. A. H. 2004. Handbook of organizational change and innovation. Oxford, UK: Oxford University Press. Rickards, T. 1999. Creativity and the Management of Change. Oxford: Blackwell. Schein, E. 2010. Organizational Culture and Leadership 4th ed. San Francisco: Jossey-Bass. Seleshi, S. 2006. The Ecosystem of Administration Accounting and Control Systems: Implications for Managing Teams and Labor Groups in Complex Organizations. Westport, CT: Preger Publishers Stuart, N. M. 2005. The Past of photographic Teaching in Rochester, New York, 1960-1980. Tidd, J. and Bessant, J. 2009. Supervision Invention: Incorporating Technological, Market, and Organizational Alteration. 4th ed. Chichester: Wiley ed Wilkinson, D. 2006. The Uncertainty Benefit: what great leaders are great at. Basingstoke: Palgrave Macmillan Kleinman, J. 2014. Kodak is making an Android Phone with Special Camera Software. New York; Cambridge Publishers. Grand, J. L. 2010. Knights and knaves return: public service motivation and the delivery of public services. International public management journal, 13(1), 56-71. Rochester, N. Y. 2004. Kodak Announces Milestones in Implementing Growth Strategy. Available in https://www.kodak.com/US/en/corp/pressReleases/pr20040122-02.shtml Rick, T. 2014. Blind to Disruptive Technology Changes in the Marketplace. Oxford; Oxford Press. Appendix No. 01 (Major Decisions Made By The Last Six CEOs) CEO Name Appointed As of Major Business Decisions Walter. A Fallon 1972-1983 Sold photocopying business to DANKA; proved disastrous for DANKA Leaders saw digital doing away with traditional photography, so bought other companies Colby Chandler 1983-1989 Acquired an over the counter drugs company Launched Ektachem Blood Analysers which became successful Kay R. Whitmore 1990-1993 Whitmore was one of the 15 worst CEO’s in history Launched Ektachem Blood Analysers which became successful. George Fisher 1993-2000 Sold off pharma business and paid down debts Sharp turn away from diversification to a focus on core imaging technologies, including digital imaging Also sold Eastman Chemical Co. (Doing well now and in hindsight could have provided Kodak with a sustainable business venture) Launched Ektachem Blood Analysers which became successful. Daniel A. Carp 2001-2005 Changing the culture of Kodak as a necessity Recognised Kodak needed external expertise to gain competitive advantage Ordered a multi-million dollar project to completely restructure the Kodak sites Built a leading brand in Digital Cameras, with EasyShare technology reached no. 1 in the US and no.3 worldwide. Lots of acquisitions. Antonio M. Perez 2005-2014 Perez warned about cell phones replacing digital cameras. Changed and solidified Kodak’s proposition in the market: Consumer and commercial inkjet, workflow software, packaging solutions. Appendix No. 02(Impact of this disruptive technology on different businesses) Disruptive Innovation For Impact on Businesses Kodak Incremental innovation was slow – wanted to invest in colour earlier Targeting most profitable customers in the distant market through sustaining innovation They didn’t want to release a digital product until it was at similar quality to their current product If they had entered digital earlier and created a new market disruption giving customers a new context of use in the market then they could have improved product performance whilst sustaining sufficient revenue streams from already existing markets. Fuji Film Low-end disruption – through belief customers were over served and tried to be “good enough” in terms of product performance – at a lower price. New financial model earned attractive returns low prices. Exploited the future in colour – Radical break through led to exploitation of a the new niche market which later led to a mass market Gained a huge market share from this (Kodak went from 95%-65%) Digital Camera Manufactures New market disruption that welcomes new customers or gives a new context of use to existing customers Original Product performance dimensions reduced – improved performance on new attributes: Convenience New distribution channels through lack of consumables A premium was charged in order to sustain product performance through consistent investment into sustaining innovation Technology innovation could be seen to be a sigmoid curve in that innovation was to begin with slow then exponentially increased and then slowed when product performance had overtaken traditional film Mobile Phone Companies New market disruption again Reduced product performance along traditional dimensions However improved performance on new attributes: Convenience New distribution channel through combined technology with that of mobile phone - more convenience A premium was charged in order to sustain product performance through consistent investment into sustaining innovation Technology innovation could be seen to be a sigmoid curve in that innovation was to begin with slow then exponentially increased and then slowed when product performance had overtaken traditional mobile phones and digital cameras. Later, other mobile phone companies cam in at low end disruption Appendix 3: Force Field Analysis: Forces for Change Score Change Proposal: Digital Photography Score Forces against Change Irreversible Technological Advances 8 7 Financial Investment High market demand 9 8 Crowded marketplace Expand into new markets ie. Smart phones 5 4 Require finance or partners to move into new markets New client base 5 5 Alienate old client base Expansion opportunities 6 7 Company restructure at expense Total 33 30 Total Appendix 4 . A Cultural Web Figure 1 Appendix 5 Read More