Deadline (March 19, 2021)
Critical Thinking: The Nature of Change (105 points)
In this module, we learned that everything is in a state of constant change. This is a challenge of strategic management, as the industry environment is driven by technology, consumer needs, politics, economic conditions, and many other influences. Consider these influences as you analyze the following cases.
Eastman Kodak’s (Kodak) Quest for a Digital Future (R. M. Grant, Contemporary Strategy Analysis: Text and Cases, 10th ed., Wiley, 2019)
To support the case analysis read Chapter 8 and the assigned reading. In addition, view the following video:
Company Man. (2018, June 13). The decline of Kodak…What happened? [Video file]. Retrieved from https://youtu.be/eVrmFgvEnAA
Remember that a case study is a puzzle to be solved, so before reading and answering the specific case questions, develop your proposed solution by following these five steps:
Case Study Questions:
Your well-written paper should meet the following requirements:
Kodak case study questions
There is always that one disruptive technology that throws companies off their feet and this was the case for Kodak. For Kodak, it was mainly due to complacency. The company was the first one to invent the digital camera in 1975 but did not take advantage of its leading market position since the senior management believed that its marketing power could persuade its customers from ignoring digital photography (Pham-Gia, 2009).
Kodak operating model was all wrong. As digital technology was beginning to take shape in the industry, Kodak was forced to operate with its already existing capital production lines that had high fixed costs that were optimized for big orders. Less was allocated to digital technology. The company had invested so much on the older technology that it could not easily let go without counting some revenue losses. The company feared that portraying that digital technology was the future would only make the retailers pull out Kodak current products of the shelves faster (Ashwin, 2012). Simply, Kodak’s business model did not mesh with digital technology that was already shape.
Kodak had also built heavy relationships with its retailers that relied on mutually profitable ecosystem where customers would come to their stores and purchase film, drop the film and return later to pick the finished prints. This way, with every visit, the retailers made more business. Digital technology eliminated this ecosystem and loyalty to Kodak shrunk. The company’s success mainly focused on relationships with retailers and it was hard to start all over with an entirely different model. The other fear that the company had was moving from the analogue film market when it had over 70% market share to a much smaller digital smartphone world.
Some of Kodak’s core competencies included the Kodak brand. The name was catchy and the ‘Kodak moment’ was synonymous with taking of still pictures in events. It ringed a bell in so many people and homes. The company also had a good distribution system that was unrivaled in the industry. The efficient distribution system helped ensure that its products were able to reach as most people as possible. Their other competency was found in the research that the company used to undertake in its earlier years. For some time in the 80s, the company had one of the biggest research efforts in imaging. Between 2000-2005, the company’s labs in the U.S, U.K, France, and Japan employed a sizeable number of employees. The most distinctive competence for the company was found in imaging and this greatly allowed it to have an edge over competition. The company back then did not see itself as being in film business but rather as being in imaging business.
Other strong points for the company are found in having a strong brand portfolio which took years to build. It also enjoyed good returns on capital expenditure and very reliable suppliers. The company in its heydays also enjoyed very reliable suppliers which enabled it to overcome supply chain bottlenecks. Other competencies included the fact that the high satisfaction levels from customers were high, availability of skilled workforce and strong free cash flow among others.
The idea to brand Kodak as an imaging company rather than a chemical company was a mistake in my opinion. It stifled the company to stick to one line segment. As a company, it should have diversified its business.
Strategic changes and how it is managed affects how a business succeeds (Lin, 2018). The company ignored the advice of one of its employees who suggested the idea of having a digital camera. Kodak was less bothered with the idea since it had about 80% of the market and it was making huge sales. The company took no action on the matter that eventually led to its failure. The company was unable to manage its internal crisis on the issue. It failed to find a way to deal with competition but rather opted to continue urging its current customers to use its products. Kodak lagged in organizational ambidexterity. It failed to consider the capabilities and resources for advancing its products in the market.
Kodak also failed to source for funds for upgrading its goods in the market amidst the emerging technologies till the moment the digital cameras came to be. The company relied on the false notion that it could not lose customers. The company also failed to maintain employee expertise which eventually led to its collapse. Dynamic capabilities refers to the capacity to consider, develop and reconfigure the internal competencies that are brought about by the changing sorroundings. This could be in terms of sensing danger and shaping opportunities that emerge to shape the future. Kodak failed to take into account how the future would turn out to be like and plan accordingly. Knowledge management failed when the company’s executives failed to adopt the digital camera technology as was being proposed by one of its engineers. The management was very comfortable with the present. The management fumbled the future.
The first problem that the company failed in is how they dealt with technology. The company all along thought they were in the film business when in the actual fact they were in the memory business. This assumption made it miss on making changes that related to digital change. Kodak failed to innovate and keep up with the changing times that their customers needed. To solve this problem, the company could have evaluated the current business needs and identify that there was something out of alignment.
The company also failed to embrace the shift from digital cameras to social ones. Smartphones came to be and this saw people moving from printing pictures to storing them on digital devices or even sharing them on social media platforms. In 2001 even before social media came to being, Kodak had acquired Ofoto, and rather than allow for sharing of photographs like it happens on Instagram, Kodak used Ofoto for the purpose of getting more people to print digital images (McDonald, 2015).
Kodak failed to reinvent itself and many lessons can be learnt from this. Most companies fail to embrace new business models. Kodak developed the digital camera, invested in technology and even foresaw that photos would be shared online but failed to realize that the new business was going to be photo sharing rather than the printing business (McDonald, 2015). Business should learn that they need to always reinvent themselves and move with times.
The company was also complacent. It failed to keep up with digital revolution like its competitor Fuji was doing. The latter was able to exploit a huge gap that was not being filled. The company also lacked organizational agility. It lacked strategic creativity that led it to misinterpret its line of work and the industry it was operating in something that was later disrupted with the shift to digital age. Kodak largely avoided risky decisions and largely sought to maintain the status quo.
There are several lessons to be learnt from the case of Kodak. Businesses need to transform the way that they view their strategy and business models. Business entities should be ready to protect their competitive advantage to making radical changes (Chasser & Wolfe, 2010). They should also avoid complacency and allow innovation to have a voice which is considered. They should also adopt agility as a strategy for development.
Chasser, A. H., & Wolfe, J. C. (2010). Brand rewired: Connecting intellectual property, branding, and creativity strategy. Hoboken, N.J: Wiley.
Pham-Gia, K. (2009). Case study: Kodak at a crossroads – The transition from film-based to digital photography.
Lin, O. C. C. (2018). Innovation and Entrepreneurship. Singapore: World Scientific Publishing Co Pte Ltd.
McDonald, M. (2015). Corporate bankruptcy: The case of Kodak. London: Henry Stewart Talks.
Such a cheap price for your free time and healthy sleep
All online transactions are done using all major Credit Cards or Electronic Check through PayPal. These are safe, secure, and efficient online payment methods.