A NEW STRATEGY FOR KODAK 9
ANew Strategy for Kodak
EastmanKodak Company is known for the photographic film products that itproduces. It was developed by George Eastman in the year 1888. In thetwentieth century, Kodak dominated the market with over 90% of themarket share in the United States from the sales of photographicfilms. Despite being one of the dominant companies in the UnitedStates, Kodak failed to adapt to the development of digitalphotography (Hill& Jones 2013).It made it struggle financially due to decline in sales. During 2007,the company recorded a profit, and the strategy was to concentrate ondigital photography and printing as well as through patentlitigation. Later in 2012, the company decided to stop digitalcameras and instead focus on the digital imaging market. KodakCompany is committed to enhance a digitally oriented growth approachthat will focus on assisting people better images and meaningfulinformation in their life.
Kodakis among the many companies that have capitulated to a digitaldivide. It has been declared bankrupt more than once, and this hasgiven it time to restructure the organization. One of the keyobjectives for Eastman Kodak Company will be to restructure theinternal core (Hill& Jones 2013).It will lead to a focus on the operations of the business and theways to leverage the venture to improve on profitability. A focus onthe functional aspect will lead to a sustainable competitiveadvantage in the market. Kodak should start by identifyingorganizations that are worth doing business with and entering intomutual agreements in order to implement the cloud service withoutaltering Kodak business model. The process will eliminate chances ofthese companies being rivals.
Theother principal goal is to recreate the group model in such a waythat the new venture includes so as providing the cloud service (Hill& Jones 2013).It ensures that consistency is achieved in the organization bysupporting company`s objectives and maintain a dominant force in themarket. Increasing investment is an essential objective for EastmanKodak. It is increased through an extensive research and developmentof the cloud service that will lead to innovations. Further, changeswill make the services remain a competitive element in the market.Cloud service require frequent monitoring because it is a verytechnical service and with technology being a fast moving industry,it will help the company to stay abreast with the rivals.
Inrespect to the human resource aspect, Kodak experiences challenges ofincreasing restructuring costs and a decrease in demand for digitalproducts in an attempt to redefine the company`s structure and brandname. Further, there is a stiff economic headwind from consumers whospend on luxurious items. In response to these problems, KodakCompany has cut costs through layoffs and reduction of otherexpenditures. The company needs to improve on infrastructure andavoid risky investments in order to improve the unstable economy bygenerating additional revenues.
Understandingthe buyer`s need is the most essential step when attempting tomaximize the company`s value. Understanding the strategies of mergersand acquisitions can provide guidance to fit the business into thevalue chain of the customer`s operations (Campbell,2014).These strategies can either be horizontal or vertical integration.Using these strategies will contribute to the establishment of majorcorporations as well as restructure the entire sectors of theorganization and the economy as well.
Thefirst integration model that Kodak adopted was the horizontalintegration. This seeks to bring together business of the same sectorin the same production stage or the same type of business. Eastmancombined with various organizations in order to get a larger marketshare. Horizontal integration eliminates competition amongst firms(Hill& Jones 2013).It further allowed Kodak to control prices and get access to othergeographic markets. Due to a larger scale of production, economies ofscale are achieved. This helped these companies sell differentproducts using similar sales force and distribution channels.Moreover, it enabled the same technology and knowhow used to makephotographic films to be used to make some of the other products ofother companies (Hill& Jones 2013).
Theother model is vertical integration. It refers to a combination offirms that operate in different stages of production. An example ofthis integration is when Eastman combined with IBM, Matsushita andTDK. The main advantage that customers get is having control over aparticular company (Hill& Jones 2013).The value creation advantages included an improvement in qualitycontrol, elimination of unnecessary expenditures like transportationcosts and enhanced an efficient flow of information. Further, it ledto lower transaction costs in production processes and advertisingcosts due to the elimination of intermediaries.
Corporatelevel strategies are actions taken to achieve a competitive advantageby selecting companies that compete in different markets. The primaryconcerns are on what the company should get involved in and how thegroup of companies should be managed. A measure of a company`scorporate level strategy is that the portfolio should worth moreunder the current management (Campbell,2014).The appropriate corporate level strategy for Kodak Company to adaptin order to establish a competitive advantage in the cloud serviceindustry is product differentiation. It ensures that value isprovided to buyers via unique features of an organization rather thanoffering low prices. It includes product innovation, advancement intechnology and high customer service among others (Campbell,2014).
Diversificationrefers to the process of venturing into new industries, differentfrom the original industry in order to produce new products thatprove profitable. A diversified company is one that deals with two ormore different industries (Campbell,2014).A multi-business model that is based on diversification leads tobeneficial results because it focuses to maximize the firm`sdistinctive competencies to improve the value of products in newindustries that it seeks to diversify.
Thefirst justifications for implementing a multi-business model based ondiversification is being able to transfer competencies in industriesas it enables new businesses to acquire the same strategyestablishing commonality between their value chain functions(Campbell,2014).
Theother justification is leveraging competencies by using a competencysuccessful in one industry and transferring them to other firmscreating a competitive advantage to one`s differentiation. Sharingresources for economies of scale is another model (Campbell,2014).It enables an organization to lower costs because materials and otherfacilities are shared.
Thefourth way in which a multi-business model based on diversificationwould increase profitability is by using product bundling. This willallow the firm to differentiate their products by sharing sameindustry with another and link them together. Product bundlingpermits expansion of product line that lead to customer satisfaction(Campbell,2014).Lastly, the model utilizes the general organizational competenciesthat assist top and lower management. Organizations may becomediversified by entering into new business operations or throughmergers and amalgamation. Some of the best known diversifiedcompanies in America include Motorola and 3M.
Inorder for Eastman Kodak Company to sustain a competitive advantage,it should transform the whole business model strategically in orderto capture unique and new business opportunities. There are numerousoptions that Kodak can explore to come up with the best strategy.These strategies focus on organizational designs, structures,resources and control systems (Johansson,2010).
Oneof the best implementation strategies that Eastman Kodak should adaptis the Business Process Re-engineering. There is a need toreconstruct the company using this method because the currentbusiness operations are vertically integrated. It will ensure thatthe company is redesigned to a horizontally integrated businessthrough a process oriented organization restructuring (Johansson,2010).The approach will provide a more simple organizational structure.
Theoutcome of BPR leads to improved business simplification andefficiency. In order to succeed effectively in a tough competitiveenvironment, Kodak should deliver quickly, innovative and timelyproducts to the market. Business Process Re-engineering will enableKodak Company to focus on real core competencies in their productionand processing to create new products, services and markets. Thebenefit associated with this technique is a reduction in bureaucracyin organization (Johansson,2010).On the other hand, the drawbacks of BPR include resistance to changeand lack of management support.
Inbusinesses, being ethical means that the business operations shouldapply principles of fairness and honesty to the relationships betweenworkers and customers. Moral people in an organization candifferentiate between right and wrong, and they strive to set goodexamples to others. Business Process Re-engineering help in breakingdown the existing business processes. Organizations that considerundertaking BPR and those in the process should temper their actionsso that BPR becomes ethically sensitive and increase chances ofsuccess (Johansson,2010).It is achieved through consideration of social responsibility andethical issues in the Business Process Re-engineering process,training and adherence to ethical principles.
Theprocedures of BPR and product differentiation support ethicalbusiness behaviors in a number of ways. First, these strategies helpbuild customer loyalty (Johansson,2010).The methods help attain a long range business success. This isbecause there are no marketing costs involved retaining an existingcustomer. Ethical behavior will enable the company to create apositive reputation in the market, and more customers will beabsorbed.
Secondly,BPR and product differentiation help an organization keep goodemployees. Through BPR processes, talented individuals are employed,and this leads to increase in productivity (Johansson,2010).Career advancement in the organization is enhanced, and the workersare compensated fairly. Organizations that have open dealings withemployees on when reorganizations and layoffs are being contemplatedhave better opportunities to retain highly qualified staff members.
APositive work environment is another significant approach in whichenvironmental sustainability, ethics and corporate socialresponsibility impact the implementation of BPR and productdifferentiation (Johansson,2010).Employees have the responsibility of being ethical throughout theemployment period. Honesty about their capabilities and experiencesis essential in order to deal fairly with customers. Moral workersare team players. Employees are entrusted with sensitive informationregarding these approaches and providing a healthy workingenvironment will lead to success of the organization in achieving thegoals (Johansson,2010).
Campbell,A. (2014). Strategyfor the corporate level: Where to invest, what to cut back and how togrow organizations with multiple divisions.
Hill,C., & Jones, G. R. (2013). Strategicmanagement: An integrated approach(10th ed.) Independence, KY: Cengage.
Johansson,H. J. (2010). Businessprocess reengineering: Breakpoint strategies for market dominance.Chichester England: Wiley.