Thebackground of Eastman Kodak Company can be traced back to the year1880. It was started by George Eastman through the invention of a dryplate process and the establishment of the factory for making dryphotographic plates. It was the first company to come up with aplant that manufactured products in large scale and standardizes themto ensure a fine chemical laboratory (Appelbaum,et al, 2012).Despite the fact that it has been under a number ofdifferent leadership, it has continued to develop significantly inorder to sustain its competitive advantages in the market (Boudreau,Serrano and Larson, 2014).
Thestructure of the company mainly centers on products that arestrategically grouped. This implies that they use the samemanufacturing platforms, technology and customer base. The threemajor segments of the company include, commercial imaging,photography and health imaging (Calegari,et al, 2015).The first segment obtains its revenues from scanners, the media,printers and microfilm tools. The photography segment gains itsrevenue from the digitalization services offered to customers,processing of photos and online tasks. The last one derives itsproceeds from radiograph devices and selling of digital products(Hoang& Kauffman, 2016).
Currently,Kodak focuses on digital technology (Scarbrough,Robertson & Swan, 2015).However, it is salient to point out that it has been reluctant onchanging to classical products. Notably, Kodak never realized thatthe customers were adapting to digital technology at an alarming rate(Calegari,et al, 2015).In spite of its exquisite struggle to acquire the moderncompetencies, Kodak has drastically failed in impressing itsconsumers. Since September 2005, the performance of the company wasin question for the claim that its proceeds had an increase of 3%with a significant net loss which amounted to US$1.32bn (Calegari,et al, 2015).
Thecase under study will therefore expound on the background to theproblems facing the company, the weakness of the organization inimplementing appropriate strategies and the change models adapted byKodak in a bid to get the company back to profitability. It will alsoexplore on how the company failed to use the change modelseffectively. The essay will conclude by giving suggestions on whatthe company should do to ensure that Kodak reduces the loss marginsand starts generating profits again.
ERRORSIN DIRECTION OF CHANGES IN KODAK
Relianceon the company history
Themanagers of Kodak were unable to adapt to the technologicaladvancements because they relied on the history of the company(Economist.com,2016).The organization was established on principles that seemed to beexquisitely successful. They relied on their earlier performancesince they were competitively sustained in that the sale of films ata lower price made customers demand their products (Munir,2016).They ultimately ignored any change that interfered with theirprinciples. Despite the fact that Fisher made attempts to change theculture at the top of the organization, it is vivid to state that themiddle managers were against the change since the company had beensuccessful for a long time.
Lackof an inherent approach in solving the problem
Puttingreliance on its customer base made the company insensitive to thechanges in the market. This is due to the fact that the company wasthe first one in exploring the digital technology in photographingand imaging (Utterback,2012).However, it failed to integrate it in the market.
Theurge to maintain the self-interest and the status quo
Theleadership of the company lacked a leadership which had vision((Utterback,2012).Their aim was to just maintain their status quo.They did not realizethe changes in the external environment. Therefore, the blame goes tothe leadership of the company. This is because the company had gaineddominancy in imaging for quite a long time (Utterback,20`12).This implies that the management of the company had adequateknowledge and effective supply chain to ensure that it maintained itscompetitive advantage ((Utterback,2012).
Lackof agreement on the common objectives and use of more defensiveroutines
Itis salient to point out that the conflicts which were coherent in thecompany led to the failure of the company (Utterback,2012). . Moreover, there was lack of unity among the leaders since some ofthem advocated for the change to digital technology while others werereluctant (Utterback,2012).This internal competition created room for the rivals to enhancetheir strategies.
Theleaders also had a perception that they can only sustain theircompetitiveness through retaining of the services and process itused. For instance, when the company created the first camera in theyear 1975, it became dormant in making use of the new technology andput more emphasis on its activities. The other companies such as Sonytook advantage since its leadership had been keen on the changes inthe external environment ((Utterback,2012).
THECHANGE MODELS USED BY KODAK, THEIR EFFECTIVENESS, AND HOW THE COMPANYFAILED IN USING THEM
KOTTER’SMODEL OF CHANGE AND THE BEERS SIS STEP MODEL OF CHANGE
Kodakhas made use of the Kotter’s model of change to ensure that it issuccessful. It instituted an approach in which it reduced the sellingprice of the films. However, its efforts to establish changethereafter were not effective (Appellbaum, et al, 2012). This isbecause in the change model, the first step of change is “crisis”.Without crisis change cannot be effected (Avota,McFadzean, and Peiseniece, 2015).Therefore the stakeholders did not realize the urgency to change(Mendes, 2016). If the leaders could have seen the crisis, then theycould have realized the dire need of change. Therefore, the failureof the leaders in identifying the problem at hand made them follow aninappropriate innovation path (Calegari,et al, 2015).
Thesecond step of change in the model involves forming a powerful andguiding coalition. Regarding to the case under study, it is paramountto elucidate that the leaders of Kodak did not have a guidedcoalition (Calegari,et al, 2015).Thisis because some members advocated for change while others did not.This implies that they did not have a strong coalition. On the otherside, Pérez as the leader of the company during those times tried inbringing together people who were determined to enact change(Cummings, Bridgman and Brown, 2015).
Inthe change model, the third step involves creating a vision whichenables an organization to develop a sense of direction. Similarly,in this step it is required that a company comes up with strategieswhich may help it in achieving its vision (Hidenori,2015) As noted from the case study, when Perez took over the leadership ofthe company, he came up with the strategies which made thestakeholders of the company to reflect on the future through thecustomers. However, it is paramount to identify that he failed tostate clearly his vision on where he wanted to company to be in thenear future (Smith,2011).It is clear to point out that the leaders of Eastman Kodak failed tocreate a vision in the organization. Understandingly, their targetwas to ensure that their status quo is maintained ((Calegari, 2015).Consequently, they failed to realize the changes in the externalenvironment. An effective strategy for success of the company was notdeveloped. For example, the company should have laid down a twelveyear strategic plan and come with the strategies of achieving theplan.
Thefourth step according to the model of change is communicating of thevision. This is in a bid to ensure that the stakeholders are workingtowards a common goal. Even if the company had an effective internalcommunication system, the leaders failed drastically in communicatingsome of the future plans (Mangundjaya,2015).
Accordingto the model of change, the fifth step entails the empowering ofpeople to act on the change. This can be done through creation offorums targeted towards making the stakeholders understand theessence of change (Mangundjaya,2015).It is salient to point out that Kodak succeeded in this step. This isbecause the management of the company scheduled business meetings tohave a discussion with the employees on how to improve ((Mangundjaya,2015).
Thesixth step involves the creating and planning of the short term wins(Meier,Ben and Schuppan).This is targeted towards enhancing improvement. Employees who havecontributed towards the improvement should be recognized andrewarded. Markedly, this motivates employees to work towardsimproving performance. The company succeeded in this step since ithad set its short term goals. In this case their goal was to increasethe volume of sales (Calegari, et al, 2015).
Consolidatingimprovements and producing more change is the seventh step in thismodel (. Arguably, the step is salient because it enables anorganization to compete favorably following the technologicaladvancements. Despite its ignorance to change, the company had madeefforts to compete favorably in its early years of development((Calegari, et al, 2015).
Forinstance, in 1888 the company was one of the first organizations torevolutionize photography for the consumers ((Calegari, et al,2015).It was an innovator and it came up with new products andservices the users to use the photograph equipment effectively.
Thelast step connotes the institutionalizing of new approaches (Neiva,et al, 2015).This fosters performance since employees are taught new ways ofhandling tasks. It is evident to note that the company made attemptsto come up with new approaches. One of the approaches which they usedis the reduction of the film price strategy when they realized thatit had a large customer base. However, they failed to implement a newapproach when competition emerged following the introduction ofdigital technology ((Calegari,et al, 2015).
Similarly,the company failed in committing members of the organization towardschange(Calegari, et al, 2015). According to Beer’s six step modelof change, the first step in establishing change is mobilizing of thecommitment to change through joint diagnosis (Shamiyeh,M2014.This triggers members to work towards the change process. Under themodel the company did not mobilize individuals towards change(Pollack,2015).
Inthe second step of the model, it is connoted that when establishingchange, a shared vision on how to organize should be created(Shamiyeh,2014).Principally, this plays a pivotal role since the stakeholders worktowards the same goal .Regarding to the case under study it isevident that the stakeholders did not have a shared vision (Nuity,2011). Although the management attempted to bring the memberstogether it is patently clear that the leaders did not have a sharedvision (Nuity, 2011).
Inregard to the model, the third step involves the fostering ofconsensus, commitment and competence. Fundamentally, this aid inensuring that the change advocated for will yield excellent results(Pollack,2015).The organization lacked a sense of consensus in that it lacked unityhence it was difficult to enhance change in the organization. Thecompetition of the company was internal in that the leaders did nothave a common goal hence they had a tendency to compete amongthemselves. Therefore this gave room for its competitors to defeatthem (Nuity, 2011). Even if the company had attained muchachievement in the early years, it is unfortunate to realize that itfailed to improve its products and incorporate the newly developedtechnologies.
Spreadingthe word about change is the fourth step in the change process.Outstandingly, this creates awareness of the need for change .It isclear to state that the management of Kodak did not communicate thechange process to the stakeholders (Nuity, 2011). This thereforecontributed to its downfall.
THEBULTON SEVEN STEPS SUMMIT MODEL OF CHANGE
Bulton has a seven step model. It demonstrates that having a clear visionis essential to the success of any company (Appelabaum, et al, 2012).Essentially, having a defined vision is the first step in introducingchange. This aids an organization to perform its activities such thatthey are aligned with its goals and objectives (Pimenteland Major 2014).Based on the case under study it is evident that Kodak did not have avivid vision, a factor that facilitated its demise (Pimentel andMajor, 2014).
Anotherelement that is clearly defined by the model is the need for greatsupport from the top management (Pimenteland Major, 2014.This is the second step .The prototype provides that in the casewhere the management is united there is a likelihood that muchsuccess will be accorded to the company. Nonetheless, the sort ofmanagement by Kodak did not demonstrate unity since it is heeded thatwhile some leaders did advocate for change, others embraced (Meier,Ben and Schuppan, 2013). This disunity in the senior managementresulted to its downfall.
Appreciably,communication is essential in any organization. Despite the fact thatKodak had an appropriate internal system it did not communicatechanges taking place effectively ((Meier,Ben and Schuppan, 2013).
TheBulton Seven Steps stereotype necessitates that there is need forownership of change. Given that the company had observed theexternal environment, it is obligatory that it would not haveexperienced failure that it faced ((Meier,Ben and Schuppan, 2013).
Thefifth step of change in the model is realism. Besides the lack ofownership of change, it is noted that the company did not haverealistic expectations. This is evidenced in the case where they hadexpectations that the organization would increase its sales andreturns from the sale of films and yet the digital era had set in((Meier, Ben and Schuppan, 2013). This implies that the leaders werenot realistic. It is obvious that customers would buy from companiesthat had digital-based films rather than those provided by Kodak.
Thecompany should ensure that all its members have a common goal
Asproposed by Burtons change model, the first step in establishingchange is thatthere should be a clear vision and support from thetop (Vande Ven, Andrew and Kangyong Sun, 2011).The team should be united and it should ensure that there iseffective communication to other members and within themselves (Vande Ven, Andrew and Kangyong Sun, 2011).Owing to the case under study, it is vivid to comprehend that themembers and leaders had divided goals and perceptions towards change.Therefore, they should embrace the use of Burtons change model inorder to work towards the same ambition.
Themanagement of the company should communicate the urgency of change
InKotter’s model of change, the first step is that there should beurgency for change .The management should make the stakeholders awareof the need for change (Appelbaum, et al, 2012). They should be madeto understand the importance of change (Appelbaum, et al, 2012). Through the creating of urgency, the company would have realized the dire need for change hence it could have been triggeredto changein order to meet the conditions which were to give it competitiveadvantage. (Barney,et al,2016). As explained in the model of Kotter,the urge to change is expounded to be a process ((NgChoi and Rashad, 2015). ). Therefore, people should be made aware of the change because theyare prone to resist. Arguably, Kodak could have made use of therevolutionary strategy so that it could get informed of the necessityto change. In this case it is recommended that the company employsthe use of Kurt lewin’s model for change (NgChoi and Rashad, 2015).Even if the results of change are not realized immediately, membersof the company are advised to persist.
Avoidhast decisions such as acquisition and merging without properconsiderations
Beforemaking a decision whether to merge or not it is imperative that thecompany ascertains whether the step will be profitable to theorganization and the impact it will have on the potential investorsand the clients (Shamiyeh, 2014). Therefore, the management of Kodakshould first identify its target market and partner withorganizations which can aid it in providing the appropriate productswith the updated technology to the customers.Thiscan be done through the application of the Beer six steps process asone of the change model. The theory of change is on an argument thatthe commitment to enhance change can be mobilized through sharing ofa vision and institutionalizing of the change while using formalpolicies (Ramos,et al,2016).
Buildingof the global strategy with the use of Global Conservativeperspective (GCP)
Thecompany should be aware that, even if their technology may thrive inthe western markets which are emerging, the intense developed westernmarkets may not demand their products. It is paramount to state thatthe use of the GCP strategy will aid Kodak in using the silver halidetechnology in the current markets and incorporate digital technologyin the western markets (Shamiyeh, 2014).
Inthe light of the above discussion, it is patently clear that thereare a number of factors which may result to the failure or success ofa business. This has been depicted as in the case of Kodak as one ofthe companies. However, leadership plays a significant part in thesuccess of a firm (Cappellaro,2014).Notably, this is because the leaders are the ones who are responsiblefor the coming up with policies that should be implemented in theorganization. The mistakes in the strategies implemented alsocontributed to the downfall of the company. In most cases themanagement was faced with a dilemma on the type of policy to use(Bishwas,2015).As pointed out earlier, it is paramount to ascertain that most of thestrategies implemented in the company were prone to errors andtherefore resulted to the failure of Kodak.
Similarly,resistance to change and conservativeness of the stakeholders playeda pivotal role in the downfall of the company (Iachini,Cross and Freedman, 2015).Fundamentally, this is because they had a perception that persistingin selling similar products and use of the same processes willenhance their competitiveness. As a result, it became unaware of thechanges in the external environment.
Preferably,it is recommended that the company should make use of therevolutionary strategy for it to identify the need for change.Alternatively, taking prior considerations before merging oracquiring another firm will take the company to higher levels. Goingglobal and selling its products to the target market will immenselyaid it in developing and sustaining competitive advantage (DESAI, 2016).Similary,themodels of change should be embraced in an effective manner in orderto bring about positive change.
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