Influencing Organisational Strategy

Document Type:Coursework

Subject Area:Business

Document 1

Was There A Better Alternative To The Strategy? 8 4. What can other companies facing disruptive change in their core business can learn from the experience of Eastman Kodak? 10 4. Difficult Technology Transition 11 4. Difficult Scaling Down 12 4. Troubles of Ecosystem 13 References 14 1. For instance, the first CEO-George Fisher declared that the company was to start using digital technology at the beginning of 1995 (Grant, 2015). According to Fisher, the company needed to recognize that digital image could undergo revolution to create a strong position within a digital technology market. The central aspect of the strategy involved introduction of aspects of digital imaging. The company wanted to design high value products that could enhance functionality experiences of users. For instance, management recognized that image capture was likely to gain dominance from traditional film.

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In order to achieve this, the company ended up creating several services to allow potential customers the opportunity to digitize their conventional photographs, editing of digitized images, and collecting of their printed photographs presented in different formats. Kodak launched EasyShare system in 2001. The objective for launching the system was to make all potential customers benefit from the first easy-to-use digital photography experience. For example, the head of photography – Willy Shih pointed out that digital photography works beyond digital cameras (Grant, 2015). While this was the first step, the company sought to allow customers get their pictures in their PCs after which, they could share by either e-mailing or printing. Strategic alliance involves two or more organization making decisions that lead them to share resources and activities as they pursue their strategies.

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Motives for using strategic alliances range from the need for critical mass, co-specialization, and the need to learn from partners. Kodak organized for partnership with some of the companies that were leaders in software, hardware, and technology products. For instance, management forged for strategic alliance and joint venture with Canon, AOL, Intel, Olympus, Sanyo Electric Co. and Hewlett-Packard. The company failed to relinquish its traditional “razors-and-blades” model of charging relatively lower prices for ink while at the same time, charging higher prices for its printers. Why the Strategy Failed Kodak’s digital imaging strategy established in 1990s went through the leadership of three CEOs. However, besides the efforts of these leaders, Kodak failed to embrace customers and commercial market by creating a sustainable competitive advantage.

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Even though Kodak had enjoyed the monopoly of film cameras in UK, the company failed to utilize the opportunity of its digital imaging strategy to remain ahead of other competition companies from china, Japan, and its own market US. Taking long Transitioning from Traditional Analogue to Digital Kodak’s major problem came from taking long to transition its technology. The company could scale up the new technology to high-volume markets like communication chips, logic circuit, and microprocessors. The fact that suppliers could sell technology components to anyone, Kodak did not have barriers to new entrants. Kodak’s organizational capabilities and core know-how was beyond its semiconductor technology. Besides investing along of capital in R&D, the company had little hope of creating a competitive advantage against other companies.

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For instance, even after Antonio Perez announced in 2012 that Kodak was now taking a significant step towards creating an enterprise to achieve its transformation, most of the observers had little faith in such words. The second approach involved harvesting of tradition photography business. While Kodak had a strong belief that transitioning from traditional to digital photography was likely to be gradual, it believed that such a transition period was likely to earn more profits from the legacy film business. However, the forecast was wrong basing on how the market demand was emerging. For instance, after acquiring a Chinese photographic film company, management assumed that Kodak would increase its sales volume of roll film. Was There A Better Alternative To The Strategy? Through the benefits of insights, the company could have used an alternative strategy.

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A company that uses this strategy can ensure that it increases its scope. Similarly, Ishikawa and Saisho (2013) argues that diversification requires that an organization build strong relationships with existing products and markets. Ansoff matrix indicates that as a business moves away from the current customers and products, the likelihood of learning. Three key reasons that would make diversification an alternative strategy include the following. First, Kodak will manage to gain from efficiency. Even though this highlights the discussion presented in the above paragraph, it highlights the corporate parenting skills neglected by Kodak three CEOs. McManners (2014) suggests that during the corporate parent level, leaders might design a competence to manage a range of products and services. The strategic alliance created by Kodak with other market leaders such as Canon, AOL, Intel, Olympus, Sanyo Electric Co.

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and Hewlett-Packard, would have played a major role of sharing operational resources and competences. The strategic alliances would have helped in creation of value through addition of parenting skills. Difficult Technology Transition As pointed out under the section of why a strategy failed, companies can learn that a challenge could come from their current technologies. A company such as Sony has worked hard to develop and refine its manufacturing processes that allow customers get value from digital cameras. Similarly, a company such as Walt Disney has succeeded in developing products that allow customers to watch and download animated videos. However, because of advancement in technology, they should always set a period to transition from one activity to another that is disruptive.

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While doing this, they should not spend more time in the transaction phase. Consequently, this could lead to challenges of reduction in sales volume. Difficult Scaling Down Even though the technology created one aspect of a problem, conceptualizing on ways to manage declining film sales led to another problem. Growing companies like Sony, Microsoft, or Walt Disney must learn on ways to invest in the manufacturing efficiency and how to achieve economies of scale. Even as they continue to increase volume of their product, they must ensure that unit costs will continue going down. While at the same time, management must achieve an improved efficiency. Other companies need to be carefully when controlling the level of inventory. Management from other companies needs to force consumers to transition to other new digital platforms.

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A company such as Microsoft should consider forcing its customers that have previous operating systems such as Windows 7 or 8, to transition to the latest windows 10 operating system. However, this could imply that Microsoft gives up a larger percentage of customers that contributes towards its profitability. Troubles of Ecosystem Scholars have tried writing about the significance of a company ecosystem when management develops new products or services that complement tangible asset. and Karim, S. Resource Redeployment and Corporate Strategy. Bingley: Emerald Group Publishing Limited Grant, M. R. Case 12: Eastman Kodak’s quest for a digital future. Exploring corporate strategy (8th ed. Prentice Hall McManners, P. J (2014). Corporate Strategy in the Age of Responsibility. Farnham, Surrey, England: Routledge. MIT Sloan Management Review, 59(2).

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