1) What factors motivated Kodak to change its organizational architecture?
When Kodak began making changes to its organizational architecture in 1984, its current architecture did not fit the business environment for the industry. The largest factor that motivated Kodak to make this change was increased competition and decreased market share. Until the early 1980’s, Kodak owned the film production market with very little competition. This suddenly changed when Fuji Corporation and many other generic store brands began producing high quality film as well (Brickley, 2009, p. 358). Another factor in this change was technology advancements. As technology rapidly expanded in the 1980’s, other competitors obtained the ability bring new products to market in a much shorter timeframe (Brickley, 2009, p. 358). Film and related products became more readily available, resulting in a more competitive film production industry. With this changing market environment and technological advancement, Kodak lost its monopoly in the film production market and was forced to make a change.
2) What mistakes did Kodak make in changing its architecture?
In order to regain some of its lost market share, the company made some rapid and unbalanced changes to its architecture. However when making changes to one area of the company, it failed to coordinate the changes to other areas. In 1984, the company restructured and changed its decision making process to become more decentralized. As a result, 17 new departments were created. These new business units had profit-and-loss responsibilities, and their corresponding managers were given the responsibility to decide on new products, pricing, and other important policies (Brickley, 2009, p. 359). The result of this major restructuring had very little impact of the company’s plan to regain market share and profits. In reaction to this lack of impact, the company implemented the Management Annual