BUSN11082 Influencing Organisational Strategy- Kodaks Case

Read the case study base on Eastlllan Kodak's Quest for a Digital Future and answer the following questions:

3. Was there a better alternative to the strategy?

Answer

Kodak’s Case Study

Kodak’s History of Innovation

Kodak’s Digital Imaging Strategy During 1992-2012

Kodak was the first company to invest and manufacture a digital camera in the 1970s and continued to invest more resources in the technology. The management was aware that in the coming decades photos would be shared online (Stimson, Thom & Uhl 2014). In fact, Kodak invested massive resources to a tune of billions to develop a range of digital devices for the market. Before the mid-1990s, the company hired a digital-savvy top executive George Fischer who worked for Motorola. John Scully, former CEO of Apple was also recruited into the board to ensure the company had tech-savvy executives who could understand how digital revolution was taking place (Hill 2012).

Hill (2012) adds that Kodak adopted an aggressive digital strategy to penetrate the market and sustain its dominance. From the 1990s through 2000s, ranges of digital devices were introduced like the first Wifi-equipped digital camera and a social site to share photos called Ofoto among others. The company’s digital imaging strategy during 1992-2012 included the hybrid and incremental approaches. In the incremental strategy, there is an increase in the marketing expenditure slowly by slowly and this allows the management to typically break down the marketing budget into short terms like monthly and annually until the milestone is achieved. In this strategy, money is released based on previous objective achievements (Ryan 2016). Additionally, the hybrid strategy is used to give consistency to the firm (Eggert, Thiesbrummel & Deutscher 2015).

Reasons for Kodak’s Failure

Kodak failed to adapt to the emerging photography technology hurriedly, and this resulted in dropping of its market share and subsequent decimation of its bussines. In the wake of digital imaging, Kodak and Fujifilm realized traditional business was gradually being replaced, and hence rendered obsolete (Cohan 2017). Also, it failed to act and fill the gap by adopting the new technology sufficiently to contain competition. The management proved its unwillingness to consider change as a way of increasing efficiency and further develop its capability to produce and distribute the film (Nylén & Holmström 2015). This means that Kodak lost the chance to retain its market share and leading position by failing to embrace the developing digital technologies.

Cohan (2017) further argues that the company insiders were unwilling to comply with George Fisher’s initiatives to fundamentally reinvent the firm in readiness to the new digital era and increased competition. Fisher, a former senior executive from Motorola, was capable of transforming the prevailing culture from top to bottom but stiff resistance from top managers who were unaware of the digital revolution rejected the strategy. Beckmezi (2013) argues that, although one cannot conclude that Fisher’s attempt could have been a success, the resistance to change of culture particularly in the top doomed his digital market strategy. The aim was to make the company vibrant like it was decades before and also change some aspects to match the technological changes. The CEO wanted to create another Motorola in Kodak by encouraging debating of ideas openly rather than receiving orders from the superiors.

Better Alternative Strategies for Kodak

Compared to the traditional market, the company was able to manufacture the cameras and other products, but this is different to that of the modern market. This is because digital cameras are made in a way that one can procure part in various company and countries. For example, one can buy cameras from Fuji or Kodak and then outsource technology from other nations like China at lower costs (Reiner & McKinley 2012). To conquer the shifting market, Kodak could have used some alternative strategies as explained.

The reason why Kodak faced economic difficulties is failing to cope with the emerging digital technology and taking it a step further. Traditional photography rapidly declined due to the continuous development of digital film technologies that switched the majority of customers to the world of digital photography. Kodak reacted on the market shifts and entered the market but found it very competitive that traditional market (Stimson, Thom & Uhl 2014). The best alternative for the company would have been concentrating all its skills to manufacturing products that pushed its market and profits up. It was necessary for the company to come up with revolutionary business models and new products in extremely short time. These meant differentiating itself from market rivals, strengthening its brand, restructure to save the market and adopt a pricing strategy that ensured thin profit margin to attract the consumers.

Lessons by Other Companies

Another lesson for companies is that companies should be paranoid to survive in the market. Andy Grove, in his book, Only the Paranoid Survive, argues that strategic measures should be put into place to match increased competition and changes in technology. The occurrence of strategic inflection means the necessity to replace conventional business rules (Grove 1996). Kodak and other tech companies like BlackBerry were not paranoid enough to withstand the market forces. No effort was directed to monitor the intensely increasing competition in different categories or understanding what increased consumer’s brand loyalty or studying the drivers of loyalty to the brand. In the digital realm, Kodak was not aware of how quick innovations developed, improved, and replicated. In the firm's case, the company did study all the perspectives to sustain or differentiate their products in the market (Eggert, Thiesbrummel & Deutscher 2015).

The culture of doing a thing should be open to revolution. Kodak’s culture of decision-making was so much entrenched and the company valued tradition that became a barrier to success in the wake of digital photography. The firm was founded on a manufacturing mindset where the products would be produced, placed in front of consumers, and customers would come to buy (Jones 2010). The strategy was well perfected and believed the same would work for digital photography. However superior their film were, the culture blinded it from moving forward, and the brand did not overcome revolution (Eggert, Thiesbrummel & Deutscher 2015). Big brands need to understand that the modern marketplace is changing at a fast pace and innovation will take place in the presence of large enterprises. For businesses like IBM, Microsoft, Apple, it is necessary to revolutionize the market before other companies fill the gap (King & Baatartogtokh 2015).

Conclusion

Reference List

Cohan, P.S., 2017. Growth via New or Current Customers. In Disciplined Growth Strategies (pp. 23-55). Apress.

Collins, D., 1990. The story of Kodak. Harry N Abrams Incorporated.

Grove, A.S., 1996. Only the paranoid survive: How to identify and exploit the crisis points that challenge every business.

Gustavson, T., 2009. Camera: a history of photography from daguerreotype to digital. Sterling Innovation.

Lucas, H.C. and Goh, J.M., 2009. Disruptive technology: How Kodak missed the digital photography revolution. The Journal of Strategic Information Systems, 18(1), pp.46-55.

Munir, K.A. and Phillips, N., 2005. The birth of the'Kodak Moment': Institutional entrepreneurship and the adoption of new technologies. Organization studies, 26(11), pp.1665-1687.

Ryan, D., 2016. Understanding digital marketing: marketing strategies for engaging the digital generation. Kogan Page Publishers.

Stimson, G.V., Thom, B. and Uhl, A., 2014. Disruptive innovations: the rise of the e-cigarette. International Journal of Drug Policy, 25(4), pp.653-655.