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In the early 20th century, you could count the number of organizations selling the same products or those of a similar nature in the market. A time when the desires of prospective consumers weren’t that sophisticated and when strategy was not regarded as a crucial element for success. Orcullo (2007) states that it was only in the 1970s that more and more companies started to be aware of the importance of strategic management.
Many businesses operated with their own products in uncompetitive fields. All an organization required was a business plan and viability to start running a business. One such company, Eastman Kodak, a photography company, was set up in that period in 1889. Despite that, population growth increases the desire for numerous products and services, the outcome of which was that there was an increasing number of businesses taking advantage of market demand.
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Certain companies are even required to develop demand for their products and services which heightens competition even further. This makes strategy the most crucial aspect for organizations.
Whittinton (2001) states that with regards to the definition of strategy, theorists lining up to advice companies are not even able to come to an agreement on what exactly is corporate strategy is. Johnson, et al. (2008) states that strategy is an organization’s long term direction through the management of its many resources in overcoming a competitive environments and to fulfill both market demands and stakeholder expectations.
Besides that, Michael Porter (2001) states that strategy is the survival of the organization is regarded as the minimum aim and the development of value-added as the supreme aim.
For the majority of the 20th century, it was the market leader in the photography imaging industry. It was the pioneer for chemical-based film technology and the creator of the digital camera. It made photography simple, enabling people to capture images by just pressing a button. The company was steered by its vision “You push the button- we do the rest!”. Kodak was, without a doubt, successful. Despite all that, Kodak filed for bankruptcy after its 131st year in business. In comparison, Kodak’s shares were at $93 in 1997 whereas its shares stood at just 36 cents a week after the company filed for bankruptcy. (NewsStraightTimes, 2012). However, contrary to widespread belief, the company’s failure cannot be simply said to have been caused by rapidly evolving technology. As stated before, Kodak was the first to produce a digital camera. Furthermore, most of the technology used in several big brand electronic products are reportedly patented by Kodak. Hence, the organization’s failure is primarily due to its strategic management.
Kodak had numerous strengths in comparison to its competitors. Aaker (1992) states that Kodak had outstanding brand recognition which was far superior compared to its rivals (Simonson et al., 1994). Grant (2005) states that it was assisted by its far reaching global distribution presence and this equipped Kodak with competitive advantage in leading the pack. It was the undisputed leader in its market. Besides that, according to Grant (2005), Kodak also had an enviable portfolio of 11,000 patents as a result of its R&D investments during the early 1980s.
One of Kodak’s most obvious weaknesses was that it was an organization that avoided taking risks. Gavetti et al (2005) states that it was not sufficiently innovative and depended on tried and tested processes and policies in maintaining their standards. Grant (2005) states that they were slow in developing and introducing new products to the market. As a result of the increase in the usage of personal computers and printing advancements, Kodak’s retail network of outlets was a depreciating asset. Too much focus was placed on the highly competitive entry-level market and and they were not able to create and introduce products in response to the change in demand.
To add to that, Lucus & Goh (2009) states that Kodak’s employees were impervious to new methods, directions, and trends, and were not able to accept the world moving into the digital era. Kodak’s managers took research obtained from their diminishing market share with a pinch of salt (Gavetti et al., 2005). In short, they lacked the ability to see where the company was heading to and strategy.
Kodak had several opportunities. According to Smith (1999), it could have built consumer confidence in digital imaging; the same kind of confidence that the organization already had in film. Gavetti et al (2005) states that the company could also focus on its main business and develop new technology and new products. This essay will later touch upon Kodak’s actions with regards to these opportunities in a more detailed manner.
According to Lan (2012), Kodak was subjected to longstanding risks to its main franchise in the film industry as there was no ability within the company to anticipate the market trend and decided to broaden its brand name to digital imaging. It had also been struggling in a price war with Fuji Photo Film, also a huge name in the photographic film industry.
This essay will address several management theories and tools to assess the strategic development of the company and analyse the obstacles encountered by the company and whether these obstacles were dealt with appropriately.
Orcullo (2007) states that the product life cycle model states that every product or service, no matter what industry, possesses a life cycle. A product’s life cycle can be translated into its market, organization or industry’s life cycle. Basically, there is not a product, market or industry in existence that can withstand the test of time for an infinite period, or that it will certainly not come to maturity, peak and decline.
The product life cycle model points out that there is a start and a finish for all products, markets or industries. The implication is that the people in charge must take advantage of the circumstance when a product or service’s life cycle is rising. At the peak, the company should develop new products so that in the event that the initial product achieves its maturity, the company can launch the new product while the old one declines and is eventually discontinued. Company strategists are required to constantly make preparations for the end of every product (Orcullo, 2007).
We currently live in an innovative era, and this can be seen through the life cycles of products that are becoming shorter and shorter. To add to that, the shortened product life cycles have also impacted the life cycles of businesses, the way they strategize and their business models. Nowadays, companies are being thrown into disarray by external forces such as globalization, technological shifts and cut throat rivalries. Organizations are at the very least, required to constantly innovate to keep their customers happy; all this while preparing for comprehensive changes to be made imperative due to huge shifts in consumer demands. A business that fails to keep up with the rapidly changing market will be deemed irrelevant and obsolete.
In the 21st century, as the life cycle of its products and business model were declining, Kodak had the obstacle of reinventing it business model and developing new products. The decline in demand of Kodak’s existing products came so hurriedly that they not able to anticipate it. Kodak had failed to come up with the new products that would take the company to the next level in future at the peak of its life cycle during the 1990s. The tsunami that is the digital age came so rapidly that it had immense repercussions on Kodak. Kodak was just not able to cope with the evolving demands of the market.
The Ansoff growth matrix can be used to determine between four essential growth strategies. The first box, which would be on the upper left corner of the matrix, represents a company’s existing products in their existing markets. Here, the company has 2 options. It has to make a decision between consolidating upon its existing products and markets or to penetrate further within that sphere. At this point, the company can then choose to create new products for that same market or to enter into a new market with the products that it already has. The company may also decide to go out of the box and decide to diversify, with totally new products in an absolutely new market (Johnson et al, 2008).
Taking the life cycle of the company’s superstar products and its presence in the global market into account, the organization was confronted by the obstacle of creating new products and a new set of consumers within its market. Even as the desire for old school photography diminished, the organization could not bear to stop production of its previous products in existing or new markets. Thus, Kodak was left with 2 options; either create new items for its existing market or to undergo diversification. It decided to do both. It attempted to create new products for its existing market. It noticed that digital imaging was progressively succeeding traditional photography and thus, it attempted to help consumers slowly transition from old school photography to digital imaging. Kodak invested into digital photography and created numerous products that helped digitize images taken, edit them, and share them digitally or in print.
Kodak acquired several organizations that were proficient in digital imaging. Despite that, the philosophy that they held fast to was to continue the legacy of old school photography and switch towards digitization at the same time. Unfortunately, this strategy was too slow paced. To add to that, it was not pursued with the scope needed. While Kodak was still deciding between old school and digital imaging, various organizations had gotten their hands on software capabilities, user interfaces and integrated technologies; strategic capabilities in digital imaging, and this left Kodak far behind in the game.
Regarding the attempt to diversify, Kodak made the step to invest in numerous new products for new consumers, most notably in the health care sector with regards to commercial printing and imaging. Despite that, this step was not regarded as a business strategy. It was a reaction to their waning market share in its main businesses. As an example, Johnson et al (2008) states that Microsoft’s decision to diversify and venture into gaming consoles, namely, the Xbox was done to alleviate the organization’s declining revenue because of its stagnant development in its main software business. The majority of Microsoft’s shareholders would have preferred to let other big players handle the gaming business and that the money be passed to them (the shareholders) instead. Kodak was unable to integrate most of its newly acquired companies and to add to that, medical imaging was monopolized by GE and Siemens. Kodak simply did not do all it could in allocating its resources in its attempt in making its diversification strategy work.
According to Nielson (2014), as the digital age surfaced and the eventual demise of film was apparent, Kodak invested into digital photography while Fujifilm focused on document solutions. Fuji acquired the majority of shares in a joint venture they had created with Xerox in the 60s to build copy machines in 2001. By doing so, Fujifilm was able to weather the digital photography storm through the subsequent profits made from the acquisition.
Kodak, once a market leader, filed for bankruptcy in 2012 because of its unyielding manner towards change and innovation. The world has moved into an era where businesses are dominated by technology, innovation, and globalization, an era where business success is determined by the company’s ability to identify changing market trends, competition, consumer needs, and upcoming trends. Kodak started off the digital revolution, but it did not have the ability to keep up with the evolving market. Kodak’s fall from grace is highly regrettable as it was preventable. As seen earlier, Fujifilm is a great example of this.
According to Summerfield (2014), in the today’s turbulent business environment, companies are increasingly competing against each other for the attention of customers with a decreasing attention span. It is imperative that those organizations employ all the tools at their disposal to develop and sustain a successful marketing strategy. That strategy should most definitely reflect and supplement the wider financial aims of the company. Organizations should follow a distinctly defined and scrutinized road which directly focuses on the its targeted market. Despite that, it is crucial that a company’s marketing strategies are flexible when it is required to be. The top marketing plans braces organizations for any unexpected changes in both the vast business environment, and on a microeconomic level. It is when unforeseeable and potentially harmful changes occur when a strong yet flexible strategic plan would be needed.
Kodak failed to diversify at the right stage of its cycle. It did not possess the tools needed to compete in the new digital environment. Kodak was too lethargic; it failed to predict the market and customer trends and was unable to react in response to the new era. Kodak’s life cycle was such that it had to either reinvent itself form the ground up to start a new life cycle or lose the game. Kodak lost the game.
Company Organization Planning: Kodak Swot Analysis. (2024, Feb 10). Retrieved from https://studymoose.com/company-organization-planning-kodak-swot-analysis-essay
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