Table of Contents
2.1.2 Application of the Complex theory to the Kodak’s case. 4
2.2.1 Relevant theory and model 7
2.2.3 Application of the model 8
List of figure
Figure 1: Porter’s Five Forces Model …………………………………………………………….8
Coming up with an excellent organizational change plan is a hard task that faces many leaders in the current business environment. Managers today experience a lot of challenges due to the increase in technology and globalization; they need to understand various change theories, models, and concepts. On the other hand, organization culture and ethics plays a significant role in the change implantation since it requires human potential input to learn different ways of achieving organizational change goals (Beauchamp, 1998).Some companies like Kodak were top most advanced companies during the 18th and 19th century but have found no place in the present days market environment.According to Miller (1982), the rate of change in almost all organizations has become constant thus those leaders who act swiftly in implementing various changes always find themselves successful in the business environment. Moreover, leaders who focus on the future outcomes in a business, and design change innovations become more successful. Studies find that the complexity associated with organizational changes comes from the cooperation between the planners and implementers.
The digital products market has lately developed rapidly due to the high rate of technological increase in the sector. The emergence of many substitutes in the digital product market has seen the past methods of doing the business overtaken by the modern technology. Most companies ended up being caught in the technological revolution resulting to low business output. Kodak fell on this trap, being the innovator of the first digital camera, the company lacked competitive advantage. This allowed other upcoming digital camera manufacturing companies like Sony, Panasonic, Dell, and Hewlett-Packard to occupy the digital market. In 1984, the Japanese photo firm Fuji Photo Film Co. overcome Kodak’s market shares by winning most customers. The company developed a high speed color films that were cheaper than Kodak films (Gacetti, Henderson, and Giorgi, 2005). Several driving forces are responsible for changes in an organization, which managers should understand in order to plan a successful organizational change. In managing change, several models are put in place, the most common one being John Kottler 8-step model that many organizations use in implementing changes.
2.0 Analysis of the case
The analysis of Kodak case study will entail finding answers to the four questions.
2.1 Question one
Reasons for Kodak’s failure in the digital revolution through evaluation of the nature of digital product market
2.1.1 Relevant theory
Complexity theory of organizational change is the most significant in Kodak’s scenario. The theory makes use of the internal and external environment in analyzing issues affecting an organization. This theory also considers factors that lead to organization unable to implement a given change, which is caused by the emergence of certain parameters, for example, digital revolution. The complexity of the organization change emerges when adapting to the changing environment becomes a hard task leading to failure of the organization. Organizational leaders in the present days face changes in their organizations depending of the type of change, quantity of change, and speed. On the other hand, it is necessary for leaders to make future decisions regarding changes in an organization that might be either long term or immediate (Mason, 2007).
2.1.2Application of the Complex theory to the Kodak’s case
Since the year 1984, Kodak has been experiences a tremendous decrease in profits achieved due to lack of innovation and poor management. The value of its brands, which used to rank in the first position in the past years, has gone down to 33 percent. The main reason for the failure of the company was through lack of a good marketing strategy that catered for the future changes. MacKay, Munro, & Canales-Manns argues thatthe complexity theory stresses that the business environment surrounding an organization determines its ability to implement changes. To start with, Kodak lacked good business logistics and creativity strategies. In every organization, the most important action in developing a perfect strategy is the choice of the initial plan. Developing a strategy aimed at solving a certain issue is dependent on two perspectives; Rational Thinking Perspective (RTP), and Generative Thinking Perspective (GTP) (2005). Kodak relied on one undiversified approach whereby, it used the RTP approach in its sales operations.
Kodak made use of the razor-blade strategy by selling cameras at low prices, whereas its films generated more profits. This made the business become more independent on sale of films due to the high profits generated, but paid less attention to other digital equipments (Citigroup, 2005). Later other companies, like Fujifilm emerged and overtook the whole market since they sold quality and technologically advanced digital equipments, coupled with quality services. Kodak found it difficult to cope with the competition leading to its failure in the digital industry. On the other hand, Kodak maintained a culture that the Americans only purchased their products, only to find out that other companies were making huge sales in America.Maintaining some organizational cultural believes hinders the change process, since people have changed into the modern ways of doing business by abandoning their cultures (Burnes, 2011).
Secondly, the revolution and evolution within the digital product business lead to the failure of Kodak. Strategic change has always been a dream for every organization, though many entrepreneurs overlook it as a component of making changes. In 1981, Sony Corporation announced the launch of the Mavica, a digital camera capable of generating pictures without using a film. This was a very new technology that Kodak had not achieved, and this made Kodak CEO to act quickly on the issue of technology (Sway, 1997). The evolutional change from film to filmless cameras made many customers shift from Kodak to Sony. Kodak was more concerned with evolutionary change that often failed it. By the time the management thought of adapting revolutionary change, the digital revolution had already shaken Kodak image making it fail in the digital industry. Though Kodak had the ability to adapt revolutionary change, time was too much gone, and other companies like Sony Corporation and Fuji films had already overtaken the digital market.
Kodak Company was guilty of its own failure since it could not make use of future strategic planning for the digital market. Even when the management tried hard to implement the changes, the process was too slow whereby by the time they implement a given change, technology has already shifted to another level.
2.2 Question two
By applying the theories of change strategy, evaluate the limitations of Kodak’s new strategy of repositioning itself as a printing company.
Kodak failed to put itself in today’s business environment by not meeting the customers’ needs and requirements.An excellent marketing strategy should place an organization in a position to emerge the best in the market and maintain its top position.According to Bernard Burnes, in developing a change strategy an organization should focus on the current environment in relation to culture, power, politics, and resistance to change (2011).Kodak failed to implement its marketing strategy as a printing company due to the many issues that presented themselves in the organization.
2.2.1 Relevant theory and model
Failure of Kodak to implement the printing business can be analyzed using Porter’s Five Forces model. The model enables an organization to make an analysis based on the marketing strategy and the new market segment. Analysis of Kodak new marketing strategy will show the economic and technical characteristics that contributed to its failure in the new market strategy. Figure 1 is a representation of the model.
Figure 1: Porter’s Five Forces Model
2.2.3 Application of the model
The five forces according to the diagram are; threats to new entrant, threats from suppliers, threats from buyers, threats from substitutes, and rivalry among existing firms.
Threats from potential entrants
Kodak faced a lot of challenges from the new companies like, Sony and Fujifilms since they had a more advanced business tips. After failing in the film producing industry, Kodak decided to adopt the new strategy in the printing market. On the other hand, the company is experiencing financial problems due to its bankruptcy.
Bargaining power of suppliers
Even if the marketing strategy for Kodak to shift into the printing industry, the company still faced many threats from printing material suppliers. Kodak aimed at producing Kodak inkjet capable of printing more pages within the shortest time possible. This was not the case since the suppliers of these raw materials charged a lot of revenue that made the company to increase its cost of sales. In response to the above, many people opted to use smart phones and tablets to read notes. The traditional hardcopy and paper works was done away with leaving Kodak with no option but to close its enterprise (Grant, 1991).
Threats from Substitutes
With the advancement in technology, many devices have emerged that substitute paper work. Most people now prefer using their mobile phones and personal computers to read and store documents. Kodak printing strategy faced a huge threat from substitute companies that manufactures these gadgets and eventually, the marketing strategy was overwhelmed. On the other hand, changes in the market areas of products and services availability, price, and technology have a great impact on the new market entry (Kottler & Keller, 2007).
Bargaining power of Buyers
Buyers in the market depict the success of a given marketing strategy. On planning the new marketing strategy, Kodak discovered that most buyers longed for more advanced methods possessed by other companies. Kodak had no competitive advantage due to lack of revolutions in its company. The results indicated that most buyers went into digital ways of accessing and storing their documents, as opposed to the manual printing methods.
Rivalry from competitors
Sony Corporation and Fuji Films form the most challenging rival for Kodak Digital Company. Although the company is traditionally known in the provision of quality services in the digital film industry, the emergence of the modern technology made it lag behind. Rivals like Sony came up with diversified ways of doing business whereby they incorporated both digital production business and printing services. Kodak could not get many customers since most were absorbed by Fujifilms and Sony(Citigroup, 2005).
The Porter’s five forces analysis is very critical on this case since it puts the company in a challenging situation. The analysis creates an attractive environment forcing the company settle in the new country, although starting a business in foreign countries is always a challenging situation. From the model, competitive rivalry is a function of all other four forces.. The model also assists in planning for future rate of returns but does not account for changes that might come across with time. In addition, the analysis focuses more on the business external environment as opposed to the SWOT analysis that concentrates on both internal and external analysis (Grundy, 2006).
2.3 Question three
How theories of culture excellence and approach to organizational learning will assist Kodak in adapting to future market challenges
Leaders in the present day’s organizations face changes in their organizations depending of the type of change, quantity of change, and speed. Therefore; it is necessary for leaders to make future decisions regarding changes in an organization that might be either long term or immediate. Culture excellence distinguishes between leaders of today and past leaders in that in today environment, leaders need a plan of 20 years and above while in the past they used to plan for 3-4 years when it comes to long term change plan. Presently organizations experience rapid changes as compared to the past due to globalization and changing technology. Consequently, there is an increase in market demands and many opportunities arise that stimulate organizational growth (Cummings & Worley, 2005).
Organization changes imply that processes occur in order to develop a good competing ground. Kodak should focus on the future of the digital product industry and developa marketing plan that caters for all future changes. In addition, changes are very rapid and some organizations find it hard coping with the changing environment today therefore opting for a long term change. The idea of developing change in an organization is developed after the leaders realize the need for more marketing strategies or after an organization reduces its market share prices.
2.4 Question four
Recommended human resource and leadership practices to promote organizational learning and modify Kodak’s organization culture
Research shows leaders to give positive feedbacks to their employees concerning the planned changes. In one instance when employees learn from their leaders about the benefits of organizational change they are likely to follow the change plan. On the other instance, revealing information on the planned change motivates employees towards the direction of change. In addition, change supporting tactics are very important since they assist in strengthening the decided change by bringing about behavioral change among members. The most useful method for supporting change is the verbal reinforcement. Kodak Human Resources Manager should come up with a strong committee responsible for teaching staff and community the need for advancement. Communicating change to employees makes them develop good attitude toward change and preach to others on the need for change. Moreover, leaders need to explain to employees how the change is capable of increasing the organizational returns leading to increase in their wages(Burnes, 2011).
Organizations that understand the marketing characteristics always find it easier to compete in the business environment. The strategies adopted by any organization determine its excellence in the market, both the present and the future. Kodak failed to decide perfect future strategies and ended up experiencing many difficulties in the digital film market. On trying the printing industry, the company could not fit because it lacked the necessary marketing tools. Managers always make changes within their companies but face the challenge in that, one planned change finds a substitute in the following day. This forces them to keep on thinking of new innovations (Greenwood & Hinings, 1993).
Beauchamp, T. L. Case Study of Business, Society and Ethics, the fourth edition. (Upper Saddle
River, NJ: Prentice Hall, 1998), 58-76
Burnes, B., Managing Change: Culture, Power, Politics, and Resistance to Change. (The Fifth
Edition, Australia: Prentice Hall, 2011): 3
Burnes, B., Managing Change: In Search of New paradigms, (The Fifth Edition, Australia:
Prentice Hall, 2011): 7-12
Citigroup, Eastman Kodak, (Analyst Report Citigroup, 2005)
Cummings, T. G. and Worley, C. G, Organizational Development and Change,( United States:
Gavetti, G., Henderson, R. and Giorgi, S., Kodak and the Digital Revolution (A), (Harvard
Business school, HBS Press, 2005)
Grant, R. M. The Resource-Based Theory of Competitive Advantage: Implications for strategy
Formulation, Vol. 33, Issue No. 3. (California Management Review, 1991): 119-135
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Archetypes. Academic of management Journal, (Vol. 36, 1993): 1052-1081
Grundy, T., Rethinking and Reinventing Michael Porter’s Five Forces Model. (John Wiley &
Sons, Ltd, 2006).
Kottler, P., & Keller, K., A Framework for Marketing Management, (The Third Edition, New
Jersey: Prentice Hall, 2007).
MacKay, B., Munro, I., & Canales-Manns, I., MN4203 Dynamic Strategic Management
Lectures, (University of St Andrews, 2005)
Mason, R. “The External Environment’s Effect on Management and Strategy. A Complexity Theory Approach”, Management Decision, Vol. 45, Issue No. 1. (2007): 10-18
Miller, D. “Evolution and Revolution: A Quantum View of Structural Change in Organizations”,
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