Eastman Kodak Essay

857 words - 4 pages

Eastman Kodak

At one time, Eastman Kodak dominated the film industry. Unfortunately for them, Eastman Kodak did not respond to the fast paced growth in the tech industry. The innovative staff at Fuji introduced a new product that decreased Eastman Kodak’s market share by a large margin for the first time. Their market share went from $85 per share to $71 per share, which resulted in a 16% decline. Eastman Kodak’s market share continued to decrease while the technology market as a whole was increasing tremendously. The obligatory changing of the organizational architecture for Eastman Kodak was in response to the immediate ...view middle of the document...

They realized after the low production that they needed to make the lower level managers accountable. Eastman Kodak tried to implement a strategy where they could reward individuals by cutting the base salaries, but giving bonuses based on individual, units, and company objectives.
Following the changing of decision rights at Eastman Kodak, there was no significant impact on the company’s performance. This resulted in Eastman Kodak adopting the Management Annual Performance Plan, which reduced the salary of management by 10 percent and replaced with a variable bonus that could ultimately exceed their original salary by 10%. “The idea behind MAAP was that changing the performance-evaluation and reward systems would motivate managers to be more creative and industrious.” However, this did not have a large impact.
The problem that Eastman Kodak experienced was a direct result of not maintaining the proper components of architecture within the company. In order to maintain a proper balance the “three legs of the stool” must be equally changed. “The components of organizational architecture are highly independent and when changing one leg without paying careful attention to the others will usually result in a mistake.” The three components of organizational architecture are: decision-right assignment, which empowers employees; reward systems, which compensate employees effectively; and a performance evaluation system, which effectively evaluates employees to monitor overall success.
The steps that were taken to restructure the company failed to effectively balance the “three legs of the stool.” In the case of Eastman Kodak, the company did not effectively hold management accountable for its failure to deliver results. They were also considering...

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