Functional Area Objectives for Strategic Decision Making
Kodak was founded in 1892 and is in the photographic segment. Head quartered in New York, it has an annual global turn over of more than $13 billion in the last financial year. Kodak revamped its business strategy after it lost the instant camera patent from Polaroid and decided to exit and emphasis on the emerging technologies. The hierarchy of strategic intent laid a foundation for the strategic management of the organization which led to the growth of a successful growth story compared to Polaroid’s short victory gain.
The strategic intent makes clear what an organization stands for. Kodak has a well defined approach to a problem with an aim of offering extensive portfolio of products. It is defined along three dimensions viz a viz product, customer and technology which reflects on Focus and Differentiation. The former is the business of functions and the business performs rather than the broad spectrum of industry in which the organization operates.
The business differentiation feature concentrates on achieving superior performance in the market on the bases of quality, price, delivery, service or any other factor which the concerned market segment values. Kodak’s digital cameras are priced competitively as compared to its competitors in the same product
Kodak emphasises on the accomplishment of the organisational objectives, which leads forward to it strategy. Fig 1: Functional Area Objectives for Strategic Decision Making Environmental Analysis A large part of the process of environmental analysis seeks to explore the unknown dimensions of the future which emphasizes on what would happen in the near future. The factors which the environment comprises of Kodak’s environment are • Factors which influence environment directly including suppliers, customers and competitors
• Factors which influences the firm directly including social technological, legal and economic factors. (Applied Microeconomics for Decision Making,1993) For doing the environmental analysis, there can be the strategic advantage profile which provides for analysis of internal environment, and the organization capability profile as well. For analyzing the external environment, environmental threat and opportunity profile has been be adopted which was given scant regard in case pf Polaroid. An organization has to continuously grow in term of its core business and develop core competencies.
The analysis provides for elimination of alternatives which are inconsistent with the organizations objectives. Due to the element of uncertainty, environmental analysis provides for certain anticipated changes in the Kodak’s network which equipped itself to meet the unanticipated changes and face the ever increasing competition from Polaroid. Kodak was able to identify the strengths of new technology and emphasize on them while Polaroid continued to bank upon exiting resources to make profits.
At the same time, it identified its weaknesses and exited the instant cameras business. Organizational threats and opportunities, strengths and weaknesses helped in identifying the relevant environmental factors for detailed analysis of the management. (Strategic Management: Competitiveness and globalization, 2001) STRATEGIC ALTERNATIVES Strategic alternatives results into large number of alternatives through which an organization relates itself to the environment. Fig 2 summarises the success model of performance adopted.
On the study of environmental analysis, Kodak chose four grand basic strategic alternatives to garner the market share: 1. Expansion: This is adopted when environment demands increase in pace of activity. Company broadens its customer groups, customer functions and the technology. This kind of a strategy had a substantial impact on internal functioning of the organization. 2. Modernization: Digital technology was used as the strategic tool to increase production and reduce costs in long run. Through modernization, the company aimed to gain competitive and strategic strength.