Why Kodak Failed in terms of Need Issue and Investment Issue

Introduction

Kodak was founded in 1880.By the mid-1970s it accounted for 90% of film and 85% of camera sales in the US. In the 1980s it was one of the ten most valuable brands in the world.

At the advent of the digital camera, in 1990-ish, the chances were that Kodak were going to be in trouble because existing incumbents have a terrible track record of adopting new technologies.

Kodak even invented the digital camera in 1975.They kept quiet about it. In 1981 their head of market intelligence put out a report saying that while digital cameras had the potential to replace film, Kodak had 10 years before it’d take off and so to prepare for it.

In fact, it was the mid-1990s when digital cameras took off. By then Kodak had done next to nothing — even though they knew this was coming. Kodak only became serious about digital cameras in the early 2000’s. By then it was way too little, way too late.

Effects of Need Issue

Need issue acted as one of the significant contributors to the failure of Kodak. For the improvement of the company, decision making is a must. For making a decision, the company should decide to decide. That is what is meant in this need issue. In Kodak scene, one reason for the failure of the company is related to need issue. Every one of the organizations failed to decide when there should have been a decision. That was the decision for innovations. They needed to stay with the technology, which they used to make digital cameras. They were the best to deliver the digital cameras to the world until the other organizations made a breakthrough innovation in that field.

Obliviousness is the approach that can be taken under this need issue for Kodak. Because the company had not taken any decision at all. They wanted to sell the cameras they built to the customers only to make revenue in the current stage of selling products. They did not want to have a look on the future for deciding what will happen if another company overcome the Kodak organization. It is like, if the profitable customers walk and ask exactly what the Kodak Company produces, the company will sell Kodak cameras. Other companies came and took the place which Kodak had in their customers’ hearts. Kodak even did not know about that and finally they had to leave the competition in the business world. Following details provide why this company was being oblivious at that moment. Kodak did not have a cost driver reason for being oblivious because they make enough revenue and profit in that era. Hence, they did not need to fight for survival. Then what reasoned for this? It was the perceived value. Kodak thought, it was enough to build the same product even for the hundred years from then. They had a belief that there would not need any other possibilities to grow or enhance the cameras because at the era their cameras were the best.

Recommendations to Overcome Need Issue

If Kodak would have been alert to the risks hazards come in the future, they could have been still in the competition of the business industry. The risk of competitors is a well-known factor in any kind of business. Because of that, every company, even Kodak should have had a plan for risks and hazards. If the top management fails to make a decision, it is wise to give the opportunity to make the decisions to another party of people who are experts in making decisions on behalf of the company.

Effects of Investment Issue

According to Avi Dan, Kodak did not fail because it missed the digital age. In 1975 they first invented the digital camera. But instead of marketing the new technology, the company held back for fear of hurting its lucrative film business, even after digital products were reshaping the market.

According to our point of view this is the instance where Investment Issue arised. Kodak has successfully invested their material resources including time, effort and energy in inventing the digital camera. But they failed in investing on their emotional resources due to their fear in hurting its lucrative film business. This resulted in long term outcomes. When the digital products entered the market Kodak was not able to compete with their competitors such as Canon, Nikon, Sony etc. Therefore Kodak eventually lost most of their market share within 10 years’ time.

Recommendations to Overcome Investment Issue

Even Though Kodak afraid to enter in to the digital age, with the threatening new products entering Kodak’s market they could have understood the risk of their decision of not entering in to the digital age. If they wanted to remain their established brand name instead of producing digital products with the same brand name they could have introduced a new brand. This would probably reduced that decision risk.