Wednesday, May 16, 2012


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To compete in todays world, we needed a business model that allows us to make full use of our assets. These changes put us on a path to achieving that goal. - Kodak Chairman and Chief Executive Officer Daniel A. Carp.


The Eastman Kodak Company was founded in 1880 as a full-service photography company, manufacturing cameras and film that the customer returned to Kodak for processing and printing. The company now employs approximately 100,000 people worldwide, with approximately ,000 of those in the Rochester, NY, area.

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Kodak’s problems included

· Unrelated diversification;

· Long-term under-performance in its core businesses; and

· Poor long-term strategy.


Kodak’s goal is to be the number one or number two positions in markets where rates of return consistently exceed the cost of capital. In 001 Kodak announced a new strategy to tackle digital imaging head on. Their action is based on the knowledge that demand for traditional products is declining, especially in developed markets. Kodak’s chairman and chief executive Daniel Carp had the following to say on this topic, Given this reality, we are moving fast - as digital markets demand - to transform our business portfolio, with an emphasis on digital commercial markets. The digital world is full of opportunity for Kodak, and we intend to lead it, as we have led innovation in the imaging industry for more than a century.


Previously, businesses shared those responsibilities, which affect sales and earnings with the companys Global Operations division and other corporate-wide departments, an arrangement that increased complexity and cost while reducing accountability. This structure could be considered a bureaucracy approach, which has certain shortfalls such as functional unit goals can override the overall goals of the organization and obsessive concern with following the rules.


In the new model, resources will flow to those product groups that have the greatest opportunity to generate profitable growth, and businesses will become more vertically integrated, giving them more control over how they spend their money. This new product- and market-focused model aligns natural teams for addressing customer needs, eliminates organizational silos, and pulls together functions that previously were spread across the businesses.

Specifically, the changes include aggressively managing the business portfolio with an increased focus on product performance; instituting a vertical operating model that reduces complexity and gives businesses more decision-making authority; and realigning Kodaks businesses so that opportunities to accelerate growth and reduce costs are more easily captured. Instead of the varied and complex sharing arrangements of the past, the new model gives business groups and product managers authority for making those decisions that have the biggest influence on generating profitable growth.

Under this new model, the businesses will be more responsible for managing those activities that affect sales and earnings, such as supply chain management, inventory, administrative spending, marketing and customer-service activities. In the new model, the Global Operations organization and most of its functions will be integrated into the business groups.

This new organizational structure constitutes that of a team structure, which entails the use of teams as the central device to coordinate work activities.


Kodak’s current approach of a team structure will assist them to contribute to their corporate strategy as it liberates them from all the bureaucratic red-tape and allows them to focus on the business as hand, which is to be number one or number two positions in markets where rates of return consistently exceed the cost of capital.

A word of caution though, Kodak should avoid the hang-ups of a bureaucracy as a team structure is linked to this approach as it is similar to bureaucracy, but offers the flexibility that a team provides. With a team structure Kodak should reap the rewards and with the right personnel that they recruit, such as Pat Russo as President and Chief Operating Officer, assists them in having the “right people” tackling the task at hand.

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