A New Strategy for Kodak
1. Establish five (5) key objectives for Eastman Kodak that encompasses the operational, financial, human resource aspects of the business. Next, argue that each of the established objectives is essential to the success of the company within the Cloud service industry. Kodak is one of the many companies that has succumbed to a disruptive technology some call the digital divide. They recently came out of chapter 11 bankruptcy, which allowed them to restructure the organization. Entering the company at this point and as a business consultant for the company, I would recommend a restructuring of the internal core.
Focus on the business’s operational and functional aspects and how to leverage the new venture to increase profitability and sustain a competitive advantage in the industry. To start the process, Kodak should identify a worthy organization and enter into an agreement with a reputable organization to implement the cloud service using the existing Kodak business model. This will reduce the possibility of the selective company to be a competitor. Replicate the business model across the multidivisions to include the new joint venture company that will provide the cloud service.
This will provide consistency across the organization and support both organizations goals and objectives building a stronger force in the market. Increase investments in the research and development of the cloud service that will produce innovations and assure the service remains competitive. This is important because technology is a very fast moving industry and the cloud service is a highly technical service that will require constant monitoring of the market to stay abreast with competitors (Khanna, 2013).
As for the human resource aspect, with the layoff history and unstable economy, to improve the organization’s infra-structure and avoid risky investments will build confidence in the workforce and retain loyal resources to reduce work force turn over across the multiple business units. Another very important objective is to increase value through differentiation in the service, to improve competitive advantage set long-term goals to improve sustainability in the industry and improve stakeholders return on investment and confidence in the organization
(Hill & Jones, 2012). 2. Analyze Kodak’s horizontal and vertical integration strategy and determine the corporate level strategy that is more appropriate for the company to establish a competitive advantage in the Cloud service industry. Provide a rationale for the determination. First to identify with horizontal integration as a strategic move to acquire or merge with a competitor organization or an organization which specializes in an industry for which a company want to enter for the sake of establishing a competitive advantage in a desired market.
In Kodak’s case, as a strategic plan, I would recommend a merger versus an acquisition at this time. My reasoning for this revolves around the pass history Kodak has with acquisitions and their recent situation from bankruptcy restructuring. The court proceedings allowed them to sell off many of their previous acquisitions. The results of many of those acquisitions are much the cause of Kodak’s’ problems due to ineffective management and non-profitable strategies ventures.
A horizontal integration would be effective only given that Kodak choose the appropriate strategic partner for which to enter an agreement for the cloud service industry. I would recommend Kodak business unit research the target businesses for their credibility, core competencies and goals to include business compatibility for strategic business approach and an overall business fit (Hill & Jones, 2012). Not only will this be a beneficial for the horizontal integration, but for the vertical integration as well.
Horizontal integration has several benefits that would be good for Kodak. First, it lowers the cost structure they would have to pay compared to what would be paid for an acquisition. Second, it increases product differentiation with the merging of innovations. Third, the companies are seeking to replicate their business model for the venture. For the integration to work, the two companies’ business models need to be the same. Forth, the merger or acquisition helps to reduce industry rivalry. Lastly, it would increase the bargaining power when bargaining with suppliers and buyers.
The vertical integration Kodak should ensure their internal core competencies are compatible with the merging company. Vertical integration is based on Kodak entering the cloud industry for the purpose of adding value to their core products in imaging. For Kodak, vertical integration will be used to expand its operations backward into the cloud industry since the cloud service will produce an input for the company’s imaging products (Hill & Jones, 2012). 3. Determine five (5) ways in which pursuing a multibusiness model based on diversification may increase profitability for the company.
Provide at least two (2) examples of such use of a multibusiness model from industry to support the rationale. Kodak has a long history in pursuing the multibusiness model. However, many of those ventures were unsuccessful at being profitable for the company. Kodak’s desire to enter into the cloud service can be a complement to their core industry and its competencies. There are five primary ways in which pursuing a multibusiness model based on diversification can increase company profitability.
For Kodak, to diversify to increase profitability, their strategic managers should seek to employ the following strategies, transfer competencies between the two business units because they a of different industries, leverage those competencies to create business units in the new industry of cloud service, share their resources between business units to develop collaboration between the units to achieve their goals, utilize or implement product bundling, and utilize common organizational competencies to increase the performance of all company business units (Hill & Jones, 2012).
4. Recommend one (1) implementation strategy for Eastman Kodak that considers organizational design, strategic control systems, structure, and the type of organizational culture fitting for the organization and its new industry. Justify the recommendation. Eastman Kodak is a company that is well seem to welcome diversification. They have previous experience and knowledge of how to operate across borders. Although they have acquired and merged with various organizations outside of their industry, some of their efforts were not profitable.
In this instance I believe that they will be cognizant of the strategies that are better suited for their new industry venture. As a business consultant I will recommend an implementing strategy that is best suited for organizations that compete across industries and countries (Hill & Jones, 2012). Eastman Kodak is a multibusiness organization with multiple divisions across many countries. Adding a cloud service to their value-chain it will be in their best interest to apply their focus to a revised organizational design within their multidivisional structure.
A multidivisional structure has the characteristics that will allow for change or adjustments to the design over time as needed. One advantage is this can allow the company for which they enter into a merger agreement to function as a self-contained business unit that can be advised and adjusted when it becomes visible that their strategy does not correspond well with Kodak’s. This holds true for strategic control systems, structure and ensuring that the other organization’s culture is compatible with Kodak (Hill & Jones, 2012). 5.
Speculate on the way in which both the corporate-level strategy and the implementation strategy you recommended in Question 2 and Question 4 would support ethical business behaviors. Analyze the significant manner in which ethics, corporate social responsibility, and environmental sustainability impact the implementation of the strategies that you have recommended. I believe that of the strategies I previously selected, the concerns about ethics, corporate social responsibility, and environmental sustainability all will rely on the internal structure of both organizations.
This is one reason I feel the Kodak and the new company should implement a decentralized their management hierarchy. This will remove the bulk of decision making from the responsibility of one person. In earlier years Kodak’s CEOs seem to have kept the decision making process centralized (Hill & Jones, 2012). Although previous CEOs made decisions in good faith and efforts to grow the business and improve profitability, many of the ventures were unsuccessful. With a decentralized management system in place I believe that they will improve in the corporate social responsibility area.
Nonetheless, ethics do not seem to be a factor for Kodak (Hill & Jones, 2012). The implementation of corporate level and implementation strategies I selected both encompass a focus on these areas. Kodak already have good business ethics, corporate governance mechanisms, social and environmental strategies in place, the same concepts must be applied across the multidivisions to include the merger company. For the merger to be successful, the other company need to have similar ethics, corporate social responsibility, and environmental sustainability processes in place or adapt and/or merge organizational cultures.
A good example of an organization for which may not have had a transparent full disclosure process in place was the Goldman-Sachs investment business. Investors unknowingly invested in risky mortgages without being aware, and that one person conducting the transactions was not fully disclosing the truth about their investments. The entire situation may have been avoided or mediated had Goldman-Sachs had a corporate process in place to govern the approval of the evaluation of risky transactions as such. I would think that a board of representatives should have to approve such transactions.
The board should be assembled to function in the best interest of the company to evaluate transactions for possible ethical violations, to also ensure that the processes prove to be of good corporate and social responsibility in that they do not bring harm to the banking industry. The failure to monitor such actions caused devastating hardships on the housing industry and mortgage banking. The company was fined millions and their inattentiveness to one person’s actions posed great threat to the financial economy (Helweg, 2010) (Hill & Jones, 2012).