In my March 6 memo, I discussed the need for Kodak to revamp its core strategy and regain popularity. Eastman Kodak has been the leader of photography and printing products for nearly 130 years. Over the last few years Kodak has been in distress due to its poor fundamental shift into the digital age. Lack of strategic creativity led Kodak to misunderstand the industry in which it was operating. This lack of strategic creativity was costly for Kodak.
This memo will explore the options I briefly discussed in the previous memo, in order to find a solution to this problem. Each option will be assessed based on the same criteria. The options to consider are:
* Hire a new CEO- new bolder leadership
* Enter into a new aggressive market- ink cartridges
* Partner with a new company to expand popularity- NFL
In order to determine which option will be most suitable for company revamp, all options will be assessed on an equal scale. The following criteria will be used in this assessment:
* Ease of Implementation
* Cost of Implementation
Ease of implementation directly refers to the level of difficulty faced when implementing an option. This takes into consideration planning, time and the obstacles that will be faced for each option. Cost of implementation directly refers to any costs associated with an option. It will include costs such as infrastructure, logistics, operations, marketing and sales, and service. Risk directly refers to the level of danger affiliated in implementing each option. This criterion will be measured by the possible change in costs with each option.
Option 1: Hire a new CEO
A CEO with superior innovative and systematic performance is vital for Kodak in its current position. A CEO’s main responsibilities include developing and implementing high-level strategies, making major corporate decisions, and managing the overall operations and resources of a company. The CEO will act as the main point of communication between the board of directors and the corporate operations. Enforcing positive growth and creating an effective rebound strategy have been ongoing problems for Kodak. Current CEO Antonio Perez has changed Kodak’s business strategy three times hoping to reinvent its core structure. He has been unsuccessful. The first steps for Kodak would be to fire Perez then hire a new CEO. The new CEO when hired must follow these goals: * Align the Company’s cost structure with external economic realities * Fund core investments
* Transform portions of its product portfolio
* Drive positive cash flow before restructuring
The CEO must ask the right questions in relationship to the market. By taking into consideration these goals, the new CEO will be able to develop successful alternatives for Kodak’s turnaround strategy. This option would be relatively complicated to implement. It will be complicated during initial process of finding a CEO with the background to follow these criteria effectively. Even if the CEO is qualified and meets the criteria there is still a chance that his/her performance will prove dissatisfactory. This is a big risk for Kodak but could initiate the turnaround process. This option could also be costly for Kodak. The new CEO will have full capabilities to implement financial and nonfinancial changes throughout the value chain. The costs are based on adding or subtracting funds within the value chain. The value chain includes:
The CEO must implement a cost effective strategy in the operations and logistics segment of Kodak’s value chain to minimize decline in sales.
From 2008 - 2009 Kodak’s percent of sales decreased $442 million. This decline was primarily due to volume declines within the following segments:
* Digital Capture and Devices in the CDG segment
* Prepress Solutions in the GCG segment
* Traditional Photofinishing and Film Capture in the FPEG segment.
This option could be very beneficial for...
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