kodak company (Essay Sample)

Title Kodak Company Analysis Name Institution Date Kodak Company Analysis Kodak Company is a filmmaking company that was founded in 1888 by an American entrepreneur called George Eastman. For a few years after its launch, the company ruled the film industry reaping huge profits from its exemplary services offered at friendly prices. The company's headquarters were located in Rochester, New York, United States. The main activities for the business included but were not limited to packaging, printing, and other professional services. Over the years, the company began losing its value and imminently huge losses drew closer the fear of collapse for the company. In the late 20th century, Kodak began experiencing financial problems majorly due to its sluggishness and obstinate strategy in the wake of a digitalizing technology. This paper sets out to explore the reasons behind the fall of the Kodak Company, possible ways the company could have turned to save itself from collapse among other facts related to the company. The fall of the Kodak Company is majorly attributed to the slow response the senior management of the company took. The management dismissed innovation and creativity among its workers. As it is common in business, innovation is the motivation workers need to be optimally productive. Instead of encouraging its workers to come up with more modern technology to help the company remain at the top of the game in the industry, the management seemed to quieten any innovative idea. As a result, the company rugged behind in aged technology when everyone else was seizing the opportunity to establish themselves. As said by Hal Gregersen, the company's management seemed to be complacent with aging technology and refused to participate in the innovation game. The disinterest in innovation is demonstrated by the manner in which the management hurriedly dismisses its engineer Steve Sasson's new innovative idea. Steve had invented a modern camera that could enable the company beat its competitors by offering better quality films. However, instead of appreciating the idea, the senior management hushed Engineer Sasson. The other major mistake that the company's management committed was the failure to make keen observation and predictions of the market trends. Despite the high speed at which the Japanese-owned Fujifilm company was coming, the management adamantly refused to believe that the new competitor would be a real threat. As a result, the management did not establish any serious attempts to try to fight competition from the new competitor. The Kodak Company management did not realize that the new competitor was earning more favor in the market due to its lower prices and better quality of services. As a result, Kodak continued in its outdated strategy giving the Fujifilm Company more time and easy method of kicking Kodak from the market. The senior management also made a fatal error by sticking to a single business model for a long time. This error made them oblivious to the necessity for change. Such a mistake proved fatal as the old business models were easily overcome by the new business models put in place bu new companies such as Fujifilm Company. This is because as market trends change, the business models should also change to match the trends. The importance of matching business models is the fact that they help companies supply to customers the quality of service they need at any particular time. An outdated business model makes consumers suffer poor quality of service which creates a loophole for other entrepreneurs to enter the market. The senior management also made the error of making assumed judgments which were not tested in the market in order to accurately accept or disapprove them. The management seemed to have lacked the ability to see the looming danger with the invention and introduction of digital cameras. As author Clayton Christensen states in one of his books, such discernment might have been caused by poor vision due to lack of interaction with the real consumer world that would make the management understand what was really needed in the market. Kodak Company could surely have avoided filing a Chapter 11 if the management had put in place some initiatives such as applying for discounted settlements, applying for a moratorium or trying to reach some out-of-court agreements with its creditors. The formal agreements with the lenders would most likely save the company from filing the Chapter 11. Although lenders can be tough in dealing with debtors due to their frustration and worry that the debtor may never be able to raise enough money to repay their financial obligations, most lenders' aim is not to have the debtors completely dissolved. As a result, when debtors get into really hard financial problems, some lender loosen their stand to give room for the debtor to continue operating while repaying their debts. Such agreements are graced with reduced repayment installments and longer time for the payment. In turn, these actions give more time for the company to restructure itself or seek alternative sources of finance to repay its debts. Recent trends also reveal that banking institution and other money lender are allowing companies in debt to sell part of their assets in a bid to finance their debts instead of leading them into a complete auction sale. If the Kodak Company decided to seek a formal forbearance agreement with its creditors, it is likely that they would not have to file a Chapter 11. in addition, the company cold have sought to apply for discounted debt settlements. Under this arrangement, the Kodak Company would have been granted by its lender to repay largely discounted debt units. This has worked for other firms and saved them from making the Chapter 11 filing. Discounted settlements are a form of settlement where a lender allows and motivates a debtor to repay their loans by giving them discounts. When lending companies come to the realization that the debtor is in a huge financial mess, they get worried that they risk losing every cent of the funds advanced to the debtor. As a result, some lenders accept to give discounted debt settlement agreements since losing a little is better than losing everything. Application for a moratorium would also be a very clever and effective initiative that would have protected the Kodak Company from making the Chapter 11 filing. The moratorium would have protected the company from being harassed by its creditors for some time until when it could be in a position to repay the loans. As a result, the company would continue with its work trying to make enough money to repay its loans. During the period of legal protection, the company would restructure itself and adopt a more effective operational and marketing strategy. Research and development studies are of critical importance in the modern day business environment. Companies operating within the consumer product industry are daily being faced with increasingly tough competition from their competitors operating in different regions. Companies in developed nations are coming up with new state-of-the-art technologies every day, endangering the survival or entry into the market of other companies from both the developed and developing nations. A report on a survey carried out by the Industrial Research Institute shows that most companies within the United States of America are willing to increase their spending on research and development by over 53% in order to keep up with the pace at which the market is racing. Research and development lead to increased quality of process and therefore the end product. In addition, the knowledge increases worker motivation and thus productivity. Research and development enable consumer companies to invent new goods and develop the quality of the exis...