Examining A Business Failure
June 25, 2011
Dr. Catherine Garcia
Examining a Business Failure
This paper is about the company Kodak that recently filed for the bankruptcy. Kodak, once a very profitable organization is on the verge of another failure, like Enron, Tyco, etc. This paper will cover how the incorrect management decision lead to its failure. It will compare and contrast leadership, management, and organizational structure that contributed to this failure.
History of Kodak and timeline
George Eastman started Kodak in 1878. In 1888 Eastman presented a first simple camera to the world. He made the complex and complicated process of photography easy and simple ...view middle of the document...
As a desperate measure, Kodak increased the price of the film role by 5% even as its competitors Fuji and private labels reduced their price by 9% and 11%. This step propelled more market share loss for Kodak. The final setback transpired when Kodak posted loss of $142 million and its bond value rated as junk. Like other businesses Kodak is unquestionably in trouble – particularly in the current economic times - but what disconnects Kodak from other similar companies is the recurrent management failure. It filed for bankruptcy in 2012. Why did Kodak fail?
Organizational structure and leadership
In today’s competitive market the success of any organization depends on organization structure, leadership, strategy, and relation of strategy to different levels in the organization. The organizational structure identifies different tasks and divides it into different groups to coordinate (Robbins & Judge, 2011). There are six key element of organizational structure: work specialization, departmentalization, and chain of command, span of control, centralization, decentralization, and formalization.
Leadership definition changed quite a few times from1950. Initially the leadership was directing the activities of group towards shared goal. In 1978 the leadership was influential towards shared goal and today it is the ability of individual to influence, motivate, and enable others towards success of the organization (Yukl, 2010) .
Management contribution in Kodak's failure
In the initial days of Kodak, Eastman was responsible for making decisions at every level. This was why Kodak was successful in the Eastman era. Kodak transformed this single point decision concept into its organizational structure, called as centralized organizational structure. Kodak has three organizational levels. The first level is corporate level that includes board of directors and individuals with a variety of skills and experience and are important for establishing company strategy. The chief executive officer (CEO) is the highest ranking officer in the organization that makes every decision. The second level is strategic business unit level and third level is functional level.
A centralized type structure does have significant drawbacks, such as slow reaction time, conservatism, and high resistance to market changes. These shortcomings played big role in Kodak’s failure. In early 2000, the technological advancement was very rapid and new technologies were emerging at a high rate. When the technology changes some companies miss the opportunity and others anticipate the change and adapt in time. Companies like Kodak anticipated to the change but could not figure out what to do with it. A centralized style often finds it difficult to break old patterns, especially ones that have generated the success in the past. Kodak did not have a clear business strategy that could adjust to the changes in technology and time.
The innovation is part of Kodak culture. Eastman...