Change Management Problems in Eastman Kodak - Case Study Example

Change Management Problems (Eastman Kodak) Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction One thing that can be talked of in the 21st century in the world of business is how businesses can thrive and become excellent in their areas of specialization especially in the era of globalization where competition has become very stiff and every organization is doing anything at its disposal to ensure prosperity and long term sustainability. However, the success of any organization depends on how well it keeps with the pace of change in the operating environment (Whittington 2001). It is from this point it can be said that management plays a very central role in designing and implementing different business strategies that could help the business move to the next level irrespective of the obstacles it faces. Those businesses that have failed to succeed, must have failed to embrace new changes like technological change, diversity management and change in customer demands (Mintzberg 1990). It is from this view that this analysis is aimed taking a critical evaluation of the situation at Kodak Inc. to establish different problems that have faced the company and that require immediate attention by the management. The analysis will further try and determine some of the issues that have led to the development of these problems. The ultimate objective is to try and develop different recommendations in form of interventions that can help improve the situation in the company amid stiff competition. Problems facing the company Many problems are currently facing Kodak Inc. a company that has been in the filming and photography industry for over a century now. Because of this, the company name has become a household name and is recognized globally for being the first company in the industry. This is because for over years, it has been very successful in different products that are user friendly and convenient to the customers before the discovery of the digital technology. However, with the change in the world of business that has been contributed by three main factors which include globalization, technological change and power control by the owners of the business (Wit, de & Meyer 2004). This has led to numerous problems that are facing the company and this is because of the model which has continued to place more emphasis on traditional markets and products that are not adding value to the customers in the 21st century and that have faced stiff competition from rival companies such as Fujifilm, Sony and Apple which have invaded the industry with digital technology which is considered most convenient by the market (Jaworski 2012). Intensified Competition For many years, the greatest competitor for Kodak has been Fuji Company (The Economist 2005). Fuji, a company that was started in the 1970s, has been the major competitor for Kodak especially on the overseas markets where Kodak is expected to expand its business and more particularly in Asia where there is one of the fastest demands filming industry in countries like China and Asia. This is because Fuji has been able to provide virtually almost what every products Kodak does offer and in some the expectations even exceeded. Because of the Invasion of the American market by Fuji, Kodak has also experienced decline in the market share in the region. For example, at the beginning of the 1997, Kodak experienced a decline in the market share in America by about 80% despite being its stronghold (Mendes 2005). Further, because of the aggressive marketing campaign and development of different relationships with various distribution outlets by Fuji, it has managed to win a very strong global reputation in terms of price and quality as well as marketing, things that have attracted a very large following from professional photographers and now the traditional consumers previously served by Kodak. The emphasis on quality, pricing and marketing campaign campaigns are key pillars for any organization that is expected to succeed in the global arena. This is because they all value for the customers’ money (Mahoney and Pandian 1992). Emergency of the digital world The world of business has tremendously changed not only in the way business undertake transactions, but also in the development of different products that are highly advanced in terms of technology and that are likely to serve customers better and offer convenience. However, this has not happened in isolation but in almost every industry including that of filming and photographing. However, despite the fact that world of technology has witnessed tremendous changes, Kodak has not been able to keep up with the pace in the business environment (Whittington 2001). For instance while other companies like Fuji have gone beyond filming, paper, chemicals and photo developing, Kodak was still holding to this old business model that has failed to deliver in the current business environment. Further, the company is depending on the traditional razor blade which has continued to disappear and losing demand in different markets. What this means for the company therefore, is that there is need to move towards those products are more relevant in the market and are likely to offer value and convenience in use. This is especially important in moving away from the Big Yellow which the company is known for to the digital era (Jaworski 2012). Slowdown in market growth The performance of any given company in the industry is depended on how strategically one is positioned in meeting and surpassing the traditional expectations by the customers. On the same line, when the competition stiffens, the challenge for many of the competitors is how to maintain and even grab the market share from the other competitor (Mahoney and Pandian 1992). This has been the scenario in the filming and photographing industry where Kodak has remained dominant for very many years. Despite this, the filming and photographing market has witnessed by some declines in the recent past and this is because of the increased competition and advanced technology by different electronic firms like Apple, Cannon, Sony and many more to engage in developing alternative products that can be used to produce excellent quality photos almost instantly without the use of the film (Mendes 2005). This is possible as the digital technology developed by some of these companies, have enabled the development of what the customers need in a more convenient manner. The inability to provide products that other companies can offer is an extreme problem that the company is facing currently (Jaworski 2012). A good example is when it increased the price Big Yellow roll by 5% while Fuji was revising its prices downwards by 9% and 11% respectively for Fuji and Private Labels. This was a big blow for Kodak market as the customers will always consider value and convenience before making any purchase from any given company. Increase in bargaining powers by the customers In the market, there are also various forces that can affect the performance of any given organisation as explained in Porter’s five forces model which provides for different forces that influence operations and strategies employed by different companies. One such force that is common and is being experienced in the filming industry where Kodak is operating in is the bargaining power the customers have. According to Michael Porter, the theorist behind the development of this model is likely to be experienced when the suppliers are many and customers can make their purchases from different sellers (Mahoney and Pandian 1992). Since the industry has grown and many companies like Fuji and Cannon alongside other electronic companies like Apple, Samsung and Sony, customers have now different choices and therefore can dictate what they want from the seller and this may be so expensive in terms of expertise and technological change to respond accordingly (Dyer et al 2001). Important problems for management Given the situation at Kodak, two major problems that are facing the company and that need urgent attention have been identified and they include competition and technological advancement. These two problems are a major worry to the business and are likely to contribute greatly to the failure of the company. In the world of business, there are those industries that have experienced very stiff competition and can be likened to the case of filming and photographing (Jaworski 2012). One such good example is the communication industry that for many years has been dominated Microsoft Inc. However, this is not the case anymore as now we have other companies like Google, Facebook and Apple which have invaded the industry with a bang. The situation is now becoming even more difficult for Microsoft which for many years has dominated the activities of the industry. This is because of both the ability to compete in market positioning and also in technology advancement (Oswick et al 2000). Competition Competition in the Filming and Photography industry, for about four decades now, has experienced very stiff competition since the entry of Fuji. This is because previously, the industry was dominated by Kodak which for long had enjoyed a very strong brand. Other than, traditionally known companies operating in the industry, companies from the electronic industry have also come in (Jaworski 2012). Examples include such companies as Sony, Apple, Samsung and many others that have developed digital cameras and smartphones that can be used on behalf of the traditionally Big Yellow roll film from Kodak. This has direct effect on the company in terms of the market share and revenue growth both of which are expected to decline further in the future. This is because the different companies will be targeting the same markets and only the smartest will survive (Andrews 1987). Technological advancement Technology advancement is a very important aspect in any given industry in the contemporary business context. This is because it is considered to provide solutions to some of the problems that existed in the past especially in market penetration and customer relationship management (CSM) and integration of various functions in an organization. However, what is emerging today as a critical function of the advanced technology, is product development and delivery. This is because to some extent, technology can be used in enhancing research and development (R&D) and consequently development of new and convenient products and services (Jaworski 2012). Management issues leading to the problems 1. Failure to connect logic and creativity: While it is recognized that strategy in any given business is very important, the biggest challenge for many businesses is the choice of the approach to apply in a business strategy. In the case of Kodak, while there are two important schools of thought namely the Rational Thinking Perspective (RTP) and the Generative Thinking Perspective (GTP) to strategic issues in order to offer possible solutions to certain problems, the major problem has been overreliance on the former (Mendes 2005). This is continued subjected the company to continue engaging in the production of films which was known to give more profit margins and thus forgetting about the development of equipment. The effect of this approach to management is limited diversity and thus decline competitive advantage as a result of less attention to innovation and creativity (Oswick et al 2000). This management model is not relevant in the present age of post-digital since it limits recognition of change. 2. Failure to implement change: There are two views to implementing change that include discontinuous renewal perspective (DRP) which is characterized by radicalism and revolution and continuous renewal perspective (CRP) which is characterized by incremental approach to strategic change (Mendes 2005). At Kodak despite change has been spotted as earlier as 1981 when Sony Corporation did announce that it was to introduce a filmless digital camera but still the company could not believe that there would be any other business product that would be more profitable than the film one. However, in 2003, the company could be forced to take a drastic change and embrace digital technology even though this swift change and could not beat other companies that have been changing with change in the business environment (Andrews 1987). In other words, the DRP kind of management is one source of the many problems at Kodak. 3. Management of competition and co-operation strategies: Competition is a reality in any market or industry where more than one organization operates. However, co-operation among different organizations is optional and should always be based on strategic issues like new market venture and resource mobilization (Mendes 2005). While there are two views to explaining the relationship and co-operation strategies, Discrete Organisation Perspective (DOP) and the Embedded Organisation Perspective (EOP), Kodak model of management and that can be termed as one of the problems that the company is facing is attributable to the increased use of the EOP which explains the importance of establishing different relationships in a highly networked environment. This type of management model to competition and co-operation recognizes all the values that are realized from strategic alliances, acquisitions and mergers of firms operating in different marketplaces. While mergers, acquisitions and strategic alliances reduces competition and increases diversification and globalize to where opportunities exist (Andrews 1987). Despite the benefits associated with this management approach in building new capabilities, it is important to note however, that more concentration by the company has been placed on managing different relationships and alliances thus creating very little opportunities to look into how businesses could be improved (Pettigrew 1988). This to some extent has been negative in that a lot of wealth has been invested in activities that do not allow the organization exploit its existing resources and other capabilities (Kim and Mauborgne 2006). This approach if not well managed can impact very negatively on the company cash flow and also dampening the spirits of the investors following numerous wrong partnerships that result from wrong selection evaluation criteria used. Available interventions There are various interventions that could be applied by the company to remedy itself from the current situation. However, the interventions proposed are based on the various strengths, weaknesses, opportunities and threats that an organization is faced with. 1. Step up support for managerial approaches that are supportive of enhancing capabilities that are required in innovating and developing new products through investment in R&D and this could integrated further to strategic alliances, joint ventures and acquisitions that have already been completed. This will help create valuable technology and highly sophisticated collaboration for competitive advantage. The advantage with this intervention is that it will increase diversity and quality of operations. The disadvantage however, is that it will require change of organizational structure and behavior which some may resist (Kim and Mauborgne 2006). 2. As one way to shrink existing competitive liabilities from the lost market share, extensive advertising, promotion and delivery of high quality products at affordable price is considered paramount in this case where competition is very stiff and customer demands have continued to change. The advantage with this intervention is that it will help build strong brand (Stober 2008). The disadvantage on the other hand, is that it will be an extra cost to the business in the long run. 3. Finally, there is also need to reduce investing a lot of resources on acquisitions as this may not always be productive. Instead what the company should seek to do is to ensure it engages in continuous innovation and creativities to develop its own capabilities towards strategic change since this approach will be problem specific and will address challenges as they emerge without causing any major shake up to the company and its structure. The advantage with this intervention is that the organization will have time to concentrate in core activities. On the other hand, the disadvantage of this approach could be globalization into areas of opportunities may take a bit of time (Kotter 2006). Ongoing management issues 1. Continuous evolvement of the digital world 2. Increased competition 3. Slowing down of the market growth 4. Continued high power of bargaining by the customers because of the many other rival manufacturing companies References Andrews, K. 1987, The Concept of Corporate Strategy, McGraw-Hill Companies Inc. Demers, C 2007. Organizational change theories: A synthesis, Thousand Oaks: Sage Publications. Dyer, J.H., Kale, P. and Singh, H 2001, How to Make Strategic Alliances Work, Sloan Management Review, 42(4), Summer, pp. 37-43 Jarzabkowski, P 2004, Strategy as practice: recursiveness, adaptation, and practices-in-use, Organization Studies, 25(4), 529-560. 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