Central Problems of the Case
The major problems facing Eastman Kodak Co. can be traced back to the early 1970s. They emanate from the rapid changes in the market and industry conditions (Jones 464).
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Other issues are associated with the company’s management and organizational structures. Failure of Eastman Kodak Co. to respond to changes in the global market resulted from complacency brought about by its supremacy in the industry (Jones 464). The success the company enjoyed in its core market segments made the management neglect developing trends and rising competitors.
Even after acknowledging the increasing competition and need for layoffs, as well as further organizational restructuring, Kodak’s top management did not make any move (Jones 465). As a result, the introduction of electronic digital photography dealt a major blow to the entity, a problem from which it may never recover.
In addition to the management’s resistance to change, the operational strategies adopted between 1980 and 1990 were very ineffective. For instance, Chandler’s decision to engage in acquisition of other companies was misinformed (Jones 466). The company acquired organizations operating in market sectors in which it lacked adequate competency.
The intense competition and pursuit of non-profitable acquisitions by Kodak reveals lack of a viable business model (Jones 467). The company grew by buying out organizations that were perceived to be capable of boosting its capabilities in the rapidly changing market. However, lack of a clear market vision led to a decline in the popularity and profitability of Eastman Kodak Co.
Experts argue that Kodak should have put in place cost cutting measures from as early as 1990. The organizational structure led to wastage, inefficiencies, and ineffectiveness. For instance, transfer of resources between product groups resulted in numerous conflicts, leading to poor relations among employees. The development which jeopardized the achievement of corporate goals (Jones 468)
The chances of Eastman Kodak’s survival in the consumer and business imaging markets are very slim. It is apparent that the decision to diversify into other market segments without a viable business model had far reaching impacts on the future of the entity. Currently, the company is lagging behind in relation to the development and adoption of technological innovations.
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In addition, it is serving a relatively small market segment. It is also bogged down by huge debts, especially in pension settlements for its former employees (Jones 472). Most of the company’s business sectors are facing small (but every efficient) competitors. The emerging players are posing a threat to the future of the firm.
The current CEO, Antonio Perez, has initiated strategies aimed at making the company a leader in the business and consumer imaging business. The models seem to be the right approach to the problems facing the entity. However, the speed at which the firm is developing new products, together with their relevance to consumers, does not match the industry needs (Jones 470). Consequently, Perez should primarily focus on altering Eastman Kodak’s organizational structure.
The first step to take in achieving this entails increasing the autonomy of the core business units. Each of the units should focus on its market segment without hindrances from the organization’s bureaucratic establishment. In addition, each of them should have the capability and freedom of innovating and developing new products at a fast pace. As a result, their utilization of resources will be optimized.
The future of Eastman Kodak Co. remains bleak. It is likely that the company may end up being acquired by one of its major competitors. In light of this, the owners should consider selling off the entity in case of persisting poor performance. Such a move will increase the value of the business.
Jones, Gareth. “The Rise and Fall of Eastman Kodak: How Long Will it Survice Beyond 2011?.” Organizational Theory, Design, and Change. 7th ed. 2013. Ed. Gareth Jones. Upper Saddle River, New Jersey: Prentice Hall. 463-474. Print.