Kodak is a company that has been performing very well in the market for the last many years. It dealt with the production of pictures; a process involved taking photographs and then developing them. The major reason behind the success of the company was that it invested a lot in the advancement of technology. The company was therefore able to maintain a clear lead over its competitors in the market. The value of the company’s shares thus remained high for a long period of time. The inventions of the company involved digital printers and digital cameras. The company however suffered a great deal because it lacked economies of scale in its operations, a fact that exposed it to stiff competition from other players in the industry (Lessing 2005, 67). Recently, the company was declared bankrupt. It had failed to incorporate the new technology it had discovered in its activities. Other companies in the industry had taken advantage of this and adopted the same technology Kodak had invented, removing the company from the market. However, the government has offered to help the company out of the situation. This research paper will evaluate the failure of Kodak Company. It will evaluate various theories and models that relate to the case. In addition, the research will evaluate the role of cultural excellence and organizational learning in organizations. It will show the importance of applying the two concepts in Kodak’s case.
Features of Digital Products market
The digital market is very dynamic. There is always invention of new products causing obsolescence of the earlier products (Dreyer 2006, 78). This means that companies that deal with digital products need to invest a lot in technology and use this technology to their advantage. The company that is able to come up with unique products is the one that succeeds in this market (David 2010, 98).
Technology is able to reduce the production costs considerably because the costs of producing goods and services reduce when new technology is invented. It should however be noted that new technology comes after an investment of huge sums of money on it. Reduced costs generally lead to a decline in the prices of goods and services (Dreyer 2006, 123). Companies that use outdated technology in their production activities are competed out of the market due to the fact that the customers will go for the products that are affordable to them.
The Failure of Kodak
There are various factors that contributed to the failure of Kodak in the digital market. First, the company faced a stiff competition from other companies. There are other companies that have been producing products similar to those produced by Kodak (David 2010, 72). Kodak did not concentrate so much on application of new technology in its production and provision of its services. It obstinately stuck to the old technology of using older cameras and photograph films and competing companies took advantage of this. The other factor that facilitated to failure of Kodak is the invention of close substitutes of the products that the company was producing. The invention of products like smart phones and laptops that have digital cameras has led to low demand on the products produced by Kodak. These new devices are convenient to carry around and produce high quality pictures (Peres 2008, 86).
The management of Kodak is also to be blamed for the financial tribulations of the company. During the olden days, the company made cameras that it sold cheaply and got a lot of profits from the sale of films. However, the company’s management did not take any action after it realized that the use of films was becoming an outdated technology (Peres 2008, 92).
The Theories of Change
The change strategy that Kodak is planning to implement involves changing its business line completely and this is designed to come complete with downsizing. The organization intends to sell patents to raise the required capital to start and operate a new printing business. This change of strategy has various limitations.
First, according to cultural model of change, change in an organization should be a slow process. Considering the case above, the company wants to change its activities abruptly which is a which may prove to be an uphill task because it will be difficult to change the culture of the current organization within this short period of time. Culture in any organization is important in that it determines how activities are carried out in an organization (carter 2005, 87). Engaging in printing requires a new culture in the management and the employee sector that requires time to implement.
The Life cycle theory is another theory that challenges the strategy that Kodak is planning to implement. According to this theory, change in business strategy involves development from a lower level to a higher level. It is not possible for Kodak to start the business and compete with other firms within a short period of time. The sale of patents and other assets and starting another business is therefore not the best way to go. It is possible for the company to start the new venture and lose tremendously due to competition that is already in the market (Brian 1996, 91).
Teological model also challenges the change being adopted by Kodak Company. According to this model, a company planning change should have goals and objectives set to be achieved. This is important in facilitating focus in achieving the set goals. In addition, the model recommends that a proper management is put in place to manage change. The limitation of change in this case is that Kodak may collapse again due to the fact that change is not intrinsically motivated.
The plans of Kodak Company contradict with the recommendations of evolutionary model of change. According to this model, change is a slow process that is brought by a combination of various factors. One of the factors to effect change is comparative advantage (Aggarwal 2005, 111). The company adopting the change should prove that it has a competitive advantage over its competitors. Kodak Company has no proof of its competitive advantage considering the well established competitors in the printing industry (Briggs 2008, 89). The porter’s five forces theory also demonstrates the limitations that the Kodak Company is facing. First, the rivalry between firms in the printing market can greatly reduce the costs the company is likely to incur.
There are many factors that may prevent Kodak Company from entering the new market, or achieving considerable success there. The company needs proper planning and evaluation of the project before entering the new market. The company should continue with its previous business but adapt to changes in its environment. Even though the new business appears to be attractive to the company, there is a possibility that the business will not perform as expected due to the challenges that are in the market as described above. Furthermore, this business does not seem attractive. It is important that the company develops a more attractive strategy to come out of the current situation it is facing. The older business activities are not completely unprofitable. All what is required is that the company should embrace the use of technology this time round (Peter 2011, 91). The management should note that every business faces challenges in the application of modern technology but this should not be a limitation to the use of modern technology.
Organizational learning is an important factor for a firm like Kodak that deals with a market that changes constantly. It is necessary that the organization responds to the changes in its environment so that it is able to survive in the environment (Muller 2011, 98). Through organizational learning, the organization can be able to remain ahead of its competitors. Organizational learning enables an organization to learn about the environment and hence manipulate it in such a way that the environment is favorable to it. The organization also is able to adapt to the environment for its advantage.
Understanding the business environment is important in planning the actions to take to be ahead of the others. Such knowledge is instrumental in helping businesses to develop innovative ways of coping with the market. In addition, a learning organization encourages innovative ideas that are brought forward in the organization by the employees (Anderson 2011, 87).
In this case, Kodak should emphasize on research on new technology that creates cheap and quality products that would be able to meet the needs of the customers. The organization should be in a position to learn the needs of customers and respond to these needs. The company should engage in producing digital cameras that produce the highest quality pictures at a lower cost. This will make it capture a large proportion of its customers (Anderson 2011, 123).
Organizational learning is advantageous in that it creates effectiveness in organizations. It enables people to work as a team and hence learn from each other leading to efficiency. As a result, the total output and quality of goods and services is good and the satisfaction of the customers is assured. People working in teams are able to learn various skills (Anderson 2011, 145). They are hence able to carry out different tasks that may not be related to their area of specialization. This increases the marginal product of labor and this benefits the organization.
The Cultural-Excellence approach
Cultural excellence is a process whereby the general performance of an organization is improved over time. The goals of the organization are set and so are necessary activities to be carried out to achieve the set objectives. ‘Generally, organizations aim at being ahead of others in all matters (Agawam 2011, 132). This includes producing goods of high quality, using the highest technology and offering the best prices to the customers. This is advantageous in that it creates customer loyalty. In the case of Kodak Company, cultural excellence has not been emphasized. Recent technology was never applied by this company in its operations. The quality of their products has been low. The company should therefore adopt a strategy that ensures its performance is greater than that of its competitors. The process of achieving cultural excellence is a slow process (Lessing 2005, 131). The plan to implement abrupt change in strategy is not a wise decision by the Company. The management should, instead, implement this change over a period of time until the excellence is achieved. This should be initiated within the organization through training of the employees.
Human resource should play a big role in the achievement of organizational learning. First, the management should set goals that an organization aims at achieving. This creates focus in the organization. In the planning process, the management should incorporate other employees as a way of motivating them (Briggs 2008, 94). By this, the employees are able to learn how to make quality decisions. In addition, the employees feel recognized and hence will struggle to achieve organizational goals.
The Culture of any organization is the basis of competitive advantage. It involves creating a strong bond between the employers and the employees. The employees become loyal to their work and do their activities without being pushed. People in the organization are motivated to do activities not because they have been instructed by their managers but because it is right to do the activity (Carter 2005, 87). A good culture in an organization ensures that employees do not just choose to do the simple activities in an organization. Instead, they are motivated to do challenging jobs and this leads to high performance of the organization (Carter 2005, 162). It is usually difficult to achieve advantageous culture in an organization because it involves influencing the beliefs and habits of the employees and making them change to help achieve organizational objectives.
The other factor that the management should consider is being a good role model to the employees. The managers should be comprised of people with great hopes and aspirations for the organization. They should be individuals capable of encouraging the employees and helping them in any activity that challenges them. This will motivate the employees to struggle towards the achievement of the organizational goals.
Team work is an important factor that the management must consider. The management should create teams within the organization that will facilitate the achievement of the organizational goals (Peter 2011, 72). The output of a team is greater than the sum of output of individual employees hence the importance of teams in an organization. In addition, teamwork enables employees to learn from each other, a sure recipe for efficiency in the performance of organizational activities.
Kodak Company can promote organizational learning through its reward system. There should be recognition for good performance of the employees where some employees can receive rewards in form of cash and other materials benefits (Lessing 2005, 113). This would serve as a challenge to employees who will try as much as possible to receive the same rewards in the future and in turn improve the overall organizational performance.
Proper training of employees can promote organizational learning. Employees should receive training annually especially those working in environments where technology is ever changing. It is important that Kodak takes its employees to learn about new technology in the market. This will enable the employees to apply the new technology for the benefit of the company. In addition, the productivity of the employees increases with training (Paul 2007, 167). Employees are able to learn new skills of handling different tasks. These skills improve their productivity and hence increased output of the organization.
Proper recruitment of employees can facilitate organizational learning (Peter 2011, 154). Qualified employees share ideas in their activities leading to quality performance of an organization. Therefore employment of qualified employees is important in facilitating learning in an organization.
Another way of promoting learning in an organization is by putting employees in positions they enjoy working in. Jobs should be shared according to areas of expertise of an individual. When a person works in a job area they like, his/her performance is good (Lessing 2005, 125). This is because such a person develops interest to learn new ways of doing things in his/her area of duty performance.
Generally, organization learning is an important aspect that should be adopted by any organization that operates in an environment that is constantly affected by technological change. This case shows the challenges that companies working in the dynamic environment of modern technology face. There is always a need to be aware of any advancement in technology for such companies so that the advantages associated with the new technology can be of benefit to the company. Kodak is such a company (Paul 2007, 121). Planning is another sensitive factor in any organization. Good management skills of coming up with appropriate plans and provision of resources required in the implementation of the plans is very crucial. The managers should have the ability to communicate freely and effectively with their employees. They should encourage and act as role models of their employees since this act as a motivation towards the achievement of the organizational goals. The company should facilitate the development of a beneficial organizational culture (Paul 2007, 112). This requires a lot of time and commitment. The management should be able to incorporate the workers in all activities of the organization as a way of motivating them. The managers should also have ways of influencing the behavior of the workers in a way that facilitates the achievement of organizational goals.
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