Principles of Management

Assignment – 1
Name : Saroj Kanta Nanda
Batch: EPG35-188
Reg. No : 1801016190169

MISSING THE BUS KODAK –Case Study

[1.] According to you what could have been the reason for Kodak to move slowly in
response to the changing External Environment.

In general, every organization has to cope with the changing business environment to run
a successful business. Regardless the size and industry of the business, the company must
have a strong perception of changes in its external business environment, which
comprised of stakeholders such as customers, suppliers, partners, regulators and other
stakeholders. Companies must create expected value of these parties to ensure survival
of the business in the industry. This consciousness of external environment of the
business is one of the supportive instrument for making right decision at the right time
to gain competitive advantages over competitors. If the company either do not strive to
understand what are the changes in its external environment or the company has a
complete awareness of the external environment, but do not response and adapt to the
changes, this mistake will slowly kill the business without being kind for any reason.

In Kodak’s case, Kodak’s core business was photo film, chemical and paper business.
Kodak failed to transform its business to a digital business at the right time. They were
slowly adapting to the digital technology. Kodak’s management was not willing to change
as they thought that it would be a threat towards its core business. Management was
struggling to make the right decision. Kodak could not concentrate on consumer
expectations though Kodak’s aim was to earn more profit. In this case of Kodak;

“Steve Sasson, the Kodak engineer who invented the first digital camera in 1975,
characterized the initial corporate response to his invention this way:

“But it was filmless photography, so top executives’’ reaction was, ‘that’s cute—but
don’t tell anyone about it.””
Above statement reveals; Even though one of the Kodak engineer invented the first
digital camera before their competitors, Kodak was not willing to market the digital
camera as Kodak’s priority was given to its core business.

1|Page
“The results of the study produced both “bad” and “good” news. The “bad” news was that
digital photography had the potential capability to replace Kodak’s established film based
business. The “good” news was that it would take some time for that to occur and that
Kodak had roughly ten years to prepare for the transition”.

The result of Kodak’s extensive research on its market has produced both good and bad
news, which were helpful to their digital transition. This reveals that the company had
enough time (10 years) to plan for their transition. They could have planned properly for
long term to change its business and adapt to the changes in external environment and
they did not consider environment uncertainty factor when planning. That is why they
could not manage this condition.

The case indicates that Kodak was not prepare for the later disruption. Kodak’s
management was not ready to take risks or prepare for its later disruptions even though
they had a sufficient time frame to be ready for the transition.

“The problem is that, during its 10-year window of opportunity, Kodak did little to prepare
for the later disruption. In fact, Kodak made exactly the mistake that George Eastman, its
founder, avoided twice before, when he gave up a profitable dry-plate business to move
to film and when he invested in color film even though it was demonstrably inferior to
black and white film (which Kodak dominated)”

In the revolutionary era of digitalization, Kodak was not able to make right decision at the
earliest time though they had a chance that could have kept its leading position in the
industry. They were not willing to change its core business to a digital one. The fact
‘Resistant to change’ had become a key issue of the company. Their commitments were
not enough to cope with the change.

“Barabba left Kodak in 1985 but remained close to it. Thus he got a close look at the fact
that rather than prepare for the time when digital photography would replace film, as
Eastman had with prior disruptive technologies, Kodak chose to use digital to improve the
quality of film.”

“The choice to use digital as a prop for the film business culminated in the 1996
introduction of the Advantix Preview film and camera system, which Kodak spent more
than $500M to develop and launch. ______Yet it still used film and emphasized print
because Kodak was in the photo film, chemical and paper business. Advantix flopped. Why
buy a digital camera and still pay for film and prints? Kodak wrote off almost the entire
cost of development.”
Above statements reveals that Kodak had chosen the easiest way to use digital
technology and concentrated hugely on its core business, which was photo film business
while their competitors already had implanted digital technology to their all products.
They introduced Advantix Preview film and camera system, but their introduction failed
to win the market.

2|Page
“In 1988, Kodak bought Sterling Drug for $5.1B, deciding that it was really a chemical
business, with a part of that business being a photography company. Kodak soon learned
that chemically treated photo paper isn’t really all that similar to hormonal agents and
cardiovascular drugs, and it sold Sterling in pieces, for about half of the original purchase
price.”

According to the findings of the case; Kodak has used its financial resources to invest in
its photo film, chemical and paper business practices. According to my point of view;
Kodak has wasted its financial resources on unnecessary practices. It seems to be that
they have underestimated the digital technology threat towards its business. They have
focused on selling its core products rather than react to the changes.

These all factors revealed that Kodak’s management heavily relied on its core business,
which fueled Kodak’s sales and profits for decades. Kodak’s late reactions to the changes
in external environment caused it to still face variety of issues. They had a misperception
in adapting digital technology as they thought it would be a threat towards its core
business and thought that digital technology as the enemy until the coming of new CEO;
Mr. George Fisher. Kodak did not accept the change at the right time and Kodak’s
management could not take right decision at the right time even though they had a
sufficient time frame to prepare for the change. They made wrong manufacturing and
financial decisions that could have used for adapting to be more innovative and
competitive. Management was not able to effectively allocate resources and plan to win
the market. According to my way of thinking, following factors could have been the
reasons for Kodak to move slowly in response to the changing External Environment.

 Kodak’s heavily relied on its core business practices.

 Kodak failed to manage the change-Resistance to change factors.
 Management was not willing to take risks and change the business design.
 Underestimated the threat of digital technology.
 Underestimated the pressure from competitors.
 Weaknesses in planning process –Management did not try to create a long
term plan.
 Weaknesses in allocating resources.
 Kodak’s management was struggling to make management decisions-
Conflict.
 Kodak failed to react quickly for changing business environmental factors.

According to the case of Kodak; we can say that Kodak has been slow in changing from
its core products to digital products as the end statement of the case implies that still
Kodak fails in making right strategic choices. Hence, it can be assumed these reasons are
all about; Kodak management’s failure to react and failure to plan at the right time.

3|Page
[2.] Giving justifications propose and explain Management Principles that you think can
be used by organizations operating in fast changing business environment.

Management is the continuous process of managing the organizational resources and its
all aspects to meet predetermined goals and objectives. No companies can run effectively
without proper management. Core management functions of the company can be
recognized as planning, organizing, controlling, monitoring and leading. It means
management involves in making plans, managing human resources, arranging other
available resources such as physical resources, monitory resources, information
resources, bring together, controlling all business activities, and evaluating performance
to maximize the value of the organization with the purpose of achieving organizational
goals and objectives. Manager’s role is to combine and coordinate all these resources
and activities to acquire the desired result. Every facet of the organization must be
managed effectively and efficiently to ensure survival of the business. Thus, management
involves creating a work environment in which organization can accomplish its goals.

We know that change is an inevitable feature of a business as businesses run in a rapidly

changing environment. Managers must anticipate future changes and adequately
respond to the changes in business environment. If not, competitors would get
competitive advantages, which could have been obtained by you. Most of the changes
could be identified as opportunities because it allows company to be innovative and
competitive. If the company’s response is late, the company is not able to get competitive
advantages. Kodak’s case is the best example for this. Consciousness of the changes have
occurred in a business environment can be used as a supportive instrument for making
strategic decisions and plans. Companies can use management principles to manage the
company effectively.

Decision-making is the prime step in planning process of management and decisions have
to be made under uncertainty. Managers often undervalue the importance of changes
and they take too long time to respond or they do not respond at all, though managers
aware of the changes at the right time. Kodak’s management did the same. Management
would have properly planned their actions to cope with the change. We know
contingency factors in planning that affect planning are manager’s level in the
organization, environmental uncertainty and the length of future commitment. Kodak
management did not consider these factors. These factors must be considered, as it is
essential to meet the goals of planning; provide direction, reduce uncertainty, minimize
waste and redundancy. Changes are occurred due to environmental uncertainty.
Managers must anticipate future changes when planning. Moreover, the factor, length
of the plan should be long enough to meet the results of commitments made by the
organization. Planning process is all about setting Specific, Measurable, Attainable,
Realistic and Time bound goals (SMART Goals) and determining the ways and means to
achieve them.

Therefore, all organizations can respond for the changes in external environment if they
can make right decisions under uncertainty, use available resources to make workable
strategies. Coordination of employees in each managerial levels help companies to
decide which option is the best to win the market. Managers need to respect opinions

4|Page
and suggestions of others. According to Henry Fayol; levels at which decisions are to be
made should depend on the specific situation, no level of centralization or
decentralization is ideal for all situations and he has identified five functions of
management; planning, organizing, commanding, coordinating and controlling activities
and resources of the company. These activities can be executed effectively and efficiently
to achieve goals and objectives of the company. When planning companies need to
consider contingency factors. The most important thing is plans should be flexible enough
to alter when companies have to face unexpected circumstances. Companies must give
enough time frame to achieve the desired results of the commitments made.

Also all the activities must be well organized and monitored throughout the management
process. Make sure that all employees are well informed and understood the change and
decisions made by management. Management must provide right information at the
right time to their employees. Change management in a company is another important
fact as each employees has different thoughts, attitudes, beliefs, personalities and
behaviors. Their performance is essential towards successful business. Management
team should focus on employee behavior, coordination and involvement of employees
towards achieving predetermined goals and objectives. Their contribution is necessary to
make right decisions. Every employees should be treated equally. Analysis of employee
behavior helps managers to handle human resources effectively. It helps to improve the
relationship between employees in managerial and non-managerial levels. Effective
manager can shape these different individual behaviors to achieve a common goal.

According to the contingency approach in management, management is circumstantial.

It suggests that there is no universally applicable set of management principles to
manage organizations. The way manage the company should be changed depending on
the circumstances. This approach helps managers to search for the correct situational
factors for applying right management principles. Thus, managers can improve their
ability of adapting to changes in business environment.

5|Page
[3.] “Planning for a very long term as well as for a very short term can be equally
problematic”. Give opinion in favour or against the statement referring to the
Kodak’s case.
Planning function plays a fundamental role in any organization as it precedes all other
managerial functions. Planning involves in defining and establishing goals, objective and
strategies to meet those goals and objectives and developing plans for activities of the
Company. Companies fail mostly because of poor planning not because of lack of
resources. When planning, managers must decide what to be achieved, how to be
achieved, how long it would takes to be achieved, which strategies to be used and other
business elements and practices which are required to be executed to achieve the
goals/objectives of the organization. It means plans have two basic components, which
can be recognized as plans and actions.

As we know, the external environment of a business is frequently changing. Plans need

to be flexible, as companies have to cope with the changing business environment.
Therefore, planning is an ongoing process in a company. Three contingency factors must
be considered when making a plan; Manager’s level in the organization, Degree of
environmental uncertainty and Length of future commitments are contingency factors.
Commitment concept in contingency factors say that plans should extend far enough to
meet the commitments made when the plans were developed. It means the company
has to live with the good and bad upshots of its decision. Planning for a very long time or
planning for a very short time can be equally problematic as it makes the plan inefficient
and ineffective. Hence, management of a company must create a plan, which extends far
enough to meet the requirements of the planned commitment.

In Kodak’s Case;

“The results of the study produced both “bad” and “good” news. The “bad” news was that
digital photography had the potential capability to replace Kodak’s established film based
business. The “good” news was that it would take some time for that to occur and that
Kodak had roughly ten years to prepare for the transition.”

Here, above statement of the case exposes that the results of the research effort of Vince
Barabba, produced both bad and good news for the company. The bad news was digital
photography had potential competency to replace Kodak’s core business. The good news
was Kodak had enough time to get ready for the transition. This information could have
been used as a strategic instrument when Kodak’s make plans. They could have ready to
face both good and bad conditions as Kodak has enough time. Nevertheless, Kodak’s
management was not willing to plan for the change, as they were focusing on their core
business, which was photo film, chemical, and paper business.

6|Page
“The choice to use digital as a prop for the film business culminated in the 1996
introduction of the Advantix Preview film and camera system, which Kodak spent more
than $500M to develop and launch.”

“Yet it still used film and emphasized print because Kodak was in the photo film, chemical
and paper business. Advantix flopped.”

“In 1988, Kodak bought Sterling Drug for $5.1B, deciding that it was really a chemical
business, with a part of that business being a photography company”

According to these statements; Kodak’s management did not create long-term plans with
SMART goals, they had planned for very short term without looking ahead. Majority was
given to ensure the survival of its core business without adapting to the changes in
external environment. If they could have planned well, they could have taken the best
decision without making huge investment on Sterling Drug. These factors caused the
business to teeter on bankruptcy. Effective business plan helps company to reduce their
waste and reduce uncertainty. Kodak could not respond effectively to the change. There
was no effective and efficient plan. Kodak’s management was not able to create a
workable plan for a long term even they had ten years’ time to prepare for the transition.
Kodak’s commitments were adapted to achieve very short-term benefits and not to
shape the business comparative to the changes in external business environment which
could have been given them a competitive advantage over their competitions. These
factors made their business unstable.

Even though Kodak’s management was well informed with bad and good outcomes of
their business transition. They could not create a sound plan for a long term. According
to me; their commitments were not enough to meet their plans and plans were not
within a reasonable time frame to achieve what they planned. The time frame of a plan
should be long enough to achieve the results of commitments made. It is visible that
Kodak failed in planning.
Thus, it is true that planning for a very long term as well as for a very short term can be
equally problematic.

7|Page