Introduction
Kodak is a renowned global consumer electronic organization and in the recent past however, there were a number of factors that significantly influenced the Kodak Company that may be identified through a PESTEL analysis.
PESTEL is an environmental scanning tool which stands for political, economic, sociological and technological, environmental and legal factors (Macher & Richman 2004,p. 39). Technological changes over time have enormously influenced the Kodak Company in terms of changing as well as altering the company’s organizational customs and structure.
The biggest challenge faced by Kodak Company was the fact that in several markets, digital technologies had greatly advanced while Kodak looked on and did nothing. By the time the company attempted to catch up with these technologies, it suffered a major setback since it was too much at the rear to be able to catch up with the rapidly changing technology.
In addition, the strategy used by the company in an effort to fit in the changing technological times was nevertheless, unsuccessful.
This could be attributed to the fact that pursuing a joint venture with another organization caused conflicting situations, and Kodak could not match up easily with the already established performer. Consequently, the only viable option for Kodak was to split up the joint venture and work independent of each other.
Discussion
PESTEL Analysis
As earlier stated, there were a number of factors that significantly influenced the Kodak Company’s organizational change, and these factors can be identified through a PESTEL Analysis.
Beginning with the political factors, Kodak was greatly influenced by the political climate which caused considerable organizational change in the company.
Globalization as part of political development had a vital role in influencing the performance of Kodak. It is worth noting that besides politics, there were other factors that contributed significantly to the performance of the company. (Cooke 2002. p. 23).
Changes in the economic environment also played a significant role in the company. With the advent of globalization, there were more opportunities opening up in the global market, and this meant that more competitor companies infiltrated in the industry to compete for consumers.
According to an analysis undertaken by Tan & Tiong (2005, p. 27), the number of consumers Kodak served, changed significantly as a result of the company’s social economic consideration.
The increase in the amount of disposable income among the global population, as well as the rapid changes witnessed in terms of technological advancement allowed people to access new technologies that Kodak could not develop.
For these reasons, Kodak lost a significant market segment that it had controlled in the past. At attempt by Kodak to introduce changes to be at par with the rapidly changing technology made it much easier for the competitor companies to outshine the company.
In addition, social changes played a vital role in influencing organizational changes and performance of Kodak. There was a tremendous change in the consumer preferences and needs, and this called for changes to meet these needs as well as achieve the desired targets of consumers.
The consumers demanded high tech products for purposes of imaging and also to meet the needs of their status in the society. The circumstances as they were, practically forced Kodak to effect organizational changes in an effort to accommodate the changing needs of the consumers.
Pettinger (2004, p. 44) argues that due to globalization, the need to act swiftly and fast in respond to the consumer needs became the order of the day. Thus, there was a tremendous increase in the number of competing organizations each making an effort to outdo the other and win a bigger share of the market segment.
According to Henderson (1996, p. 36), the technological advancement in the imaging industry unlike any other, had witness rapid and sophisticated technological changes.
This rapid technological advancement had forced the already established players in the industry as well as the new entrants to device quick and viable means for purposes of responding to the consumers need and keep up with the technological trends.
Even though for a number of decades Kodak enjoyed international leadership in the field of imaging, the company was a little hesitant to engage itself in embracing and developing the new digital technologies for fear of the impacts that could emanate from such engagement.
Kodak further, failed to foresee the possibility of its products being outmoded by the emergence of the digital technology. Furthermore, the company failed to design a viable strategy to deal with the emerging competitors in other regions.
It should, therefore, be noted that by the time Kodak ventured into the development of the emerging technologies in the imaging sector, other competitors were far ahead of the company.
Further more, environmental factors also played a significant role in influencing organizational changes in the Kodak Company. Throughout the history of the company production process, there has been a big challenge particularly in terms of disposing off products from the company.
Tan & Tiong (2005, p.44), note that the chemicals used by the company to produce its product are very unfriendly to the environment. In addition, most of the products produced by the company do not decompose after disposal, thus, posing an environmental threat.
Developing and adapting a technology that would not compromise the status of environment posed a big challenge to Kodak, and in a way contributed to the sluggish performance of the company.
In the legal context, Kodak had to deal with different legal requirements of different countries in which it had established its subsidiaries, a factor that significantly affected the operation of the company. In an effort to mitigate this challenge,
Kodak decided to enter into joint venture with other organizations which were technologically advanced in different countries. As such, it could be able to meet the needs of consumers, as well as keep a significant market share.
Nonetheless, there emerged organizational conflicts within the joint ventures that obstructed the vibrancy of the company (Johnson & Scholes 2002, p. 13).
SWOT Analysis
SWOT Analysis involves identification of the pertinent factor and assessing the significance of each one of these factors. The factors are both internal (strengths and weaknesses) as well as external (opportunities and threat) as presented in the table below:
Conclusion
The operation of Kodak in an industry that has experienced massive evolution particularly in the context of digital technologies presented the company with challenges that saw the decline of the company in the recent past. Through PESTEL Analysis, one can be able to identify a number of factors that influenced the performance of Kodak.
PESTEL Analysis engages an assessment of issues such as political, economic, sociological and technological, environmental and legal factors, and their impacts on the company.
SWOT analysis, on the other hand, involves identifying the factors that are relevant to the company, and examining their significance. These factors in the SWOT analysis include the internal strength and weaknesses of the company and the external opportunities and threat of the company as discussed above.
References
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Johnson, G., & Scholes, K (2002), Exploring Corporate Strategy, FT Prentice Hall, London.
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Pettinger, R (2004), Contemporary Strategic Management, Palgrave Macmillan, Basingstoke.
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Appendices
PESTEL- Political, Economic, Sociological and Technological, Environmental and Legal Factors
SWOT- Strength, Weaknesses, Opportunities, and Threat.