Case Study on Downsizing StrategyBackground Eastman Kodak, often simply referred to as Kodak, was a multinational company that produced camera-related products. It was a dominant player in the photographic film market for most of the 20th century. However, the Company struggled with the rapid transition to digital photography in the late 1990s and early 2000s. Despite inventing the first digital camera, Kodak failed to embrace this new technology fully and instead continued to focus on traditional film products. As the Company’s profits and market share began to decline, Kodak initiated several rounds of downsizing to cut costs. From the mid-1990s onwards, Kodak startedreducing its workforce drastically. In 1988, the Company had 145,300 employees. By 2007, the number had shrunk to 24,400. In the short term, the downsizing helped Kodak stay afloat, but it wasn’t enough to compensate for the Company’s strategic missteps. Kodak’s financial condition continued to worsen, and in 2012, the Company filed for bankruptcy. The Company emerged from bankruptcy in 2013 as a much smaller entity focused on digital imaging and printing technologies but never regained its former prominence. By 2014 Kodak appointed a new CEO Matt Daymond to turnaround the failing company with a revised organizational strategy. Current technological trends have demonstrated that producing stand alone cameras and printed photos was no longer lucrative. As a result, Kodak will adopt a cost leadership strategy while entering intothe mobile phone and computer components industry. Its was determined that 7 to 10% of the workforce do not posses the competencies (knowledge, skills and abilities) to support its strategic direction. Question As the newly appointed, Director, Human Resources, how will you implement and manage organizational change at Kodak with the new strategy? Additionally, what alternatives to downsizing can be recommended in this scenario? Include references and website links with your response.
Case Study on Downsizing Strategy
Background
Eastman Kodak, often simply referred to as Kodak, was a multinational company that produced camera-related products. It was a dominant player in the photographic film market for most of the 20th century. However, the Company struggled with the rapid transition to digital photography in the late 1990s and early 2000s. Despite inventing the first digital camera, Kodak failed to embrace this new technology fully and instead continued to focus on traditional film products. As the Company’s profits and market share began to decline, Kodak initiated several rounds of downsizing to cut costs. From the mid-1990s onwards, Kodak started
reducing its workforce drastically. In 1988, the Company had 145,300 employees. By 2007, the number had shrunk to 24,400. In the short term, the downsizing helped Kodak stay afloat, but it wasn’t enough to compensate for the Company’s strategic missteps. Kodak’s financial condition continued to worsen, and in 2012, the Company filed for bankruptcy. The Company emerged from bankruptcy in 2013 as a much smaller entity focused on digital imaging and printing technologies but never regained its former prominence. By 2014 Kodak appointed a new CEO Matt Daymond to turnaround the failing company with a revised organizational strategy. Current technological trends have demonstrated that producing stand alone cameras and printed photos was no longer lucrative. As a result, Kodak will adopt a cost leadership strategy while entering into
the mobile phone and computer components industry. Its was determined that 7 to 10% of the workforce do not posses the competencies (knowledge, skills and abilities) to support its strategic direction.
Question
As the newly appointed, Director, Human Resources, how will you implement and manage organizational change at Kodak with the new strategy?
Additionally, what alternatives to downsizing can be recommended in this scenario?
Include references and website links with your response.
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