***NEED TO KNOW HOW TO CITE APA REFERENCES***
***Each question MINIMUM 200 word count
**At least 2 APA style reference (I included the text reference under the cases)
Each Complete assignment should contain at least one outside, academic source that is used for support in answering the case. An “outside, academic source” means that it is not a source that comes from the assigned reading (that’s next) and the “academic” part means it comes from a peer-reviewed journal.
Case 10: Skoda Auto—2011
A favorite subject of jokes in the Czech Republic (formerly Czechoslovakia) has historically been the Skoda—the first car ever produced in Eastern Europe. Before Volkswagen took over the company in 1999, people would often ask, “Have you heard the one about.”
“How do you double the value of a Skoda? Fill it with gasoline.”
“What do you call a Skoda convertible? A dumpster.” “Why does the Skoda have a heated rear window? To keep your hands warm when you are pushing it.” Despite a bad reputation throughout the twentieth century, Skoda produced 762,600 vehicles in 2010, the most ever in a single year for them and up 10.3 percent over 2009. The company has set a target of growth that would provide for a projected 40 percent growth in sales by 2018. In the past, European markets have formed the main focus of the company’s business, but Skoda is now targeting China, India and Russia as sites for growth in the future. The company has local operations in all three of these countries which produce vehicles for the local market as well as for export. Skoda is the largest employer in the Czech Republic with 24,714 full-time employees. Headquartered in Milada Boleslav in the Czech Republic, Skoda’s manufacturing plant there is an impressive structure of glass and steel, which was designed by the famous architect Dr. Gunter Henn and based on the concept presented in Professor Hans-
Joachim Warnecke’s 1990 work, The Fractal Factory Skoda is not without problems. The global automobile industry has become intensely competitive with Toyota, Nissan, and Honda attacking worldwide. General Motors and Ford Motor are regrouping, and Chinese auto firms are expanding globally. A serious problem for all automobile companies in the near future is the slowdown of economic growth in Europe and specifically in the countries of the Euro-zone. Overall economic growth in Europe is not anticipated to be over 1 percent in the next few years.
In the short-term outlook, price volatility is expected to occur without a clearly defined trend.
Prices of raw materials are expected to increase—especially for such inputs as aluminum, copper and nickel. This growing price of raw materials is likely to dampen demand for cars. A positive trend is expected to continue in the markets of strategic importance such as China and India.
Skoda’s management is faced with decisions of whether to continue building assembly plants outside the Czech Republic and whether Skoda automobiles should be exported to the United States.
The small business that eventually became Skoda Automobile Company was formed in
1895 when Vaclav Laurin, a mechanic, and Vaclav Klement, a bookseller, joined together to manufacture the Slavia bicycle in the town of Milada Boleslav, Czechoslovakia, about 40 miles northeast of Prague. Four years later, the company began producing motorcycles and had a total workforce of 68 people. In 1901, the company started using its motorcycle parts in the production of motor vehicles with four wheels and a 2-cylinder engine. When the Nazis marched into Czechoslovakia in 1939, Hitler grabbed Skoda Auto and made it an armaments factory that was a part of the Hermann Goering Werke. He also ordered Skoda to move the steering wheel of its autos to the left side, where it has remained ever since. As soon as World War II was over, the company was nationalized by the Soviets, who had taken over the country, and renamed it AZNP Skoda. Under the Soviets, Skoda gained a monopoly status as the only Czech passenger car manufacturer, and this is when the jokes really began as the quality of the automobile began to slide. After 1960, Skoda began producing cars for the mass market that had little style and often looked like a metal box. As poor as their quality was, the Skoda was still ahead of its Eastern European counterparts such as Trabant, Wartburg, and Lada. The name “Skoda” in the Czech language means “a shame,” and the company in the 40 years of the Soviet regime lived up to its name. The oldest car company in Central Europe fell greatly in both quality and prestige. Because of a lack of innovation, its models became outdated, its factories became inefficient and its workers were not well trained. When consumers were forced to purchase automobiles from Soviet companies and were prevented from purchasing goods outside the region, there was no real incentive to produce a competitive automobile. Likewise, workers who were guaranteed “lifetime employment” by the government were not motivated to produce quality products in order to keep their jobs. On November 17, 1989, a student rally for freedom began at Wenceslas Square in Prague, and within two weeks the Communist government had relinquished power to the government in what would later be referred to as a “Velvet Revolution.” In 1993, Czechoslovakia split into two parts—the Czech Republic and Slovakia. The Czech Republic began to put into place laws to encourage privatization of national assets and the development of new entrepreneurial enterprises. The privatization of national companies took place by three means: A sale of the assets to outside owners (often companies from other countries); a management-employee buyout; and voucher privatization in which citizens were given vouchers for a minimal price that they could use to purchase the stock of national companies that were being privatized. After the Velvet Revolution in Czechoslovakia in 1989, a Republic was formed, and Vaclav Havel was elected president. The government immediately began to seek a buyer for Skoda as a part of its privatization of national assets. That buyer was found, and on April 16, 1991,
Skoda became the fourth brand of the Volkswagen Group after VW, Audi, and Seat (the
Spanish subsidiary). Volkswagen bought a 70 percent interest in the company, and the Czech government retained a 30 percent interest. In 2000, Volkswagen bought out the remaining 30 percent interest from the Czech government. The new infusion of capital and emphasis on research and development from Volkswagen brought forth such popular models as the smaller Felicia, the larger middle class model Octavia, and the latest products—the Superb sedan and the roomy Roomster. These models began to take market share from other car manufacturers in the Western European small car market. In 2011, the new Yeti was introduced. The company describes this SUV as possessing off road capabilities with the comfort and spaciousness of a mid-size sedan. The new Octavia Green E Line concept car introduced in 2010 is an electric car with a constant power of 85 kilowatts. It goes from 0 to 100 kilowatts per hour in 12 seconds and has a top speed of 135 kilowatts per hour. This is an innovation to the traditional Octavia model, which has been around for a number of years. Skoda progressed so well improving the efficiency and attractiveness of its cars that in 2010 Skoda brand vehicles received the following honors: Yeti—Car of the Year or SUV of the year in Czech Republic, Sweden, Finland, Belgium, United Kingdom, Germany, Poland, Slovak
Republic and Greece. Octavia—Fleet Car of the Year in Czech Republic, Best Family Car in the
United Kingdom, Auto Best in Germany, Internet Car of the Year in Poland, and Eco Car of the
Year for the Octavia Green Line in Finland.
Volkswagen: The Parent Company
With cars named for climate patterns, insects, and small mammals, Volkswagen (VW) is currently the number one carmaker in Europe. Along with Golf (Gulf Stream reference) and the New Beetle, VW’s annual production of more than 7 million cars, trucks, and vans includes such models as Passat (trade wind), Jetta (jet stream), Rabbit, and Fox. VW also owns a number of luxury automobile manufacturers such as Audi, Lamborghini, Bentley, and Bugatti. Other brands include SEAT (family cars from Spain) and Skoda (family cars from the Czech Republic). Late in 2009, VW acquired a 49.9 percent stake in Porsche for about 4 billion Euros (almost $6 billion) as the first step in combining the two into an integrated car company. The company has suggested that it is not immune to the problems facing other large automobile manufacturers such as high production costs, products with inflated sticker prices, and deteriorating quality. Volkswagen’s global markets have also suffered during the recession which began in 2008; however, the company rebounded in 2010 with revenue increasing from 150,754 million Euros in 2009 to 168,134 million Euros in 2010. The gross profit margin went from 12.9 percent in 2009 to 16.9 percent in 2010. Initially, the company had a dominant position in China; however, that position had been threatened by General Motors. With its two Chinese joint ventures, Shanghai Volkswagen and FAW-Volkswagen, the VW Group announced a very strong performance in 2011 with 2.26 million vehicles delivered to customers in mainland China and Hong Kong. This was up from 1.92 million sales in 2010—a 17.7 percent increase in sales. For the first time, the VW Skoda sold over 200,000 cars in a single market. With 220,100 units, China is the most important market for the Czech carmaker. Bentley sold 1,780 cars in mainland China and Hong Kong, and Lamborghini sold 403 cars in 2011. Audi secured its position as China’s premium segment leader, and China became Audi’s largest sales market worldwide in 2011. Locally-built vehicles had an excellent year with a total of 252,000 deliveries—representing a growth of 29.3 percent over the past year. While celebrating its tenth successful year in India, the Volkswagen Group was able to accomplish a 109.3 percent growth in sales from January to December, 2011, over the preceding year. The three brands—Audi, Skoda, and Volkswagen—together delivered a total of 111,623 vehicles to customers in 2011 compared to 53,341 cars in 2010.
In 2011, General Motors regained its title as the world’s top-selling automaker less than three years after its 2009 taxpayer funded bankruptcy under the Obama Administration. However, Volkswagen finished the year in second place with 8.16 million vehicles sold.
Economic Status of the Czech Republic
Dr. Jaroslav Halik, Professor at the Prague School of Economics, suggested the initial situation in the Czech Republic after the fall of Communism was that the country had many problems moving into a free market because of the heritage of the former Communist Society from 1948 until 1989. Some of these problems were low quality products that could not compete in Western markets; the lack of incentives to produce high-quality products because employees had been assured of “lifetime employment” which restrained motivation; old and obsolete factory equipment; an economically and ecologically unsuitable structure of production; a monopolistic banking system that would take years to privatize; very little private money available in the Czech Republic to buy nationalized companies; an insufficient infrastructure; lack of development of managerial skills that would support the free market operation of businesses; a high degree of state ownership of businesses; a high concentration of production with very few SMEs (small and medium sized enterprises); prices set by the government on the basis of cost; and a high degree of domestic products as opposed to imports from other parts of the world.On the other hand, Dr. Havlik suggested there were some factors inherent in the Czech Republic that were not present in other Eastern European countries. These were as follows: A good financial position relative to other Eastern European countries; a stable market of consumer goods; a low rate of inflation; efficient agricultural market; a highly-skilled labor force; close contacts with Western Europe; and a good standard of living. In addition, wage rates in the Czech Republic were lower than other closely-related Eastern European countries such as Poland and Hungary and certainly much lower than the wage rates of more developed economies. (See Table 1,
Growth of the Czech economy was set to continue in 2012. However, the rate of growth was expected to slow slightly. GDP was to be driven in particular by household consumption and capital goods spending. The inflation rate was to stay low but was expected to begin rising in the coming years. The Czech currency and the Euro were weakening against the U.S. dollar because of the economic crisis in the Euro-zone.
Status of the Company in 2011
As indicated in Exhibit 1, Skoda’s 2010 revenues and net income were 220,005 million and
10,586 million Czech crowns respectively, up 15 percent and 56 percent from 2009. (The
2011 exchange rate was 18 Czech crowns to $1.00.) Skoda’s 2010 balance sheet is provided in
Skoda, under the umbrella of Volkswagen, developed the following mission statement which reveals much about the strategy of the company: “Three basic values of the Skoda brand are:
—We continuously seek innovative technical solutions and new ways in which to care for and approach the customers that are most important for us. Our conduct toward the customers is above board, and we respect their desires and needs.
—We develop automobiles that are aesthetically and technically of high standard and always constitute an attractive offer for our customers not only in terms of design or technical parameters but also the wide range of offered services.
—We are following the steps of founders of our company Messrs. Laurin and Klement. We are enthusiastically working on the further development of our vehicles; we identify ourselves with our products.”
Skoda follows a German model for its corporate governance. That model utilizes members of the Board of Directors as members of senior management of the company. In accordance with its Articles of Association, the General Meeting (the sole shareholder—Volkswagen) elects and recalls members of the Board of Directors and decides how they will be compensated for their work. The Board of Directors, in turn, elects and recalls its Chairman. As the Company’s statutory body, the Board of Directors runs the Company’s operations and acts in its name. The Board has six members, each with a term of office of three years, and multiple terms are possible. Each of the six members of the Board of Directors runs one of the Company’s six departments. Matters related to Company management are decided by all members of the Board. (See Exhibit 3 labeled “Skoda Board of Directors/Senior Management” for a list of the present Board of Directors who guide the company.)
Dealership network one of the key goals of the company in 2010 was to sustain the stability of the dealership network, its adaptation to new conditions in the automotive sector, and preparation for an anticipated growth phase. The procedure used to accomplish this was mapping out relevant distribution routes and then planning and implementation in specific markets. In addition to quantitative expansion of the sales and service network, support for a qualitative improvement of partners’ services was provided in line with the “Human Touch” program. The program’s main pillars are customer friendly approach of the personnel and a concept of individualized customer service.
Car sales to fleet customers
A total of 188,900 vehicles were sold to fleet customers in 2010, representing an increase of 42.6 percent over similar sales in 2009. This result shows the increasing importance of excellent products at low total ownership cost in the fleet market. In total, 127,200 vehicles were sold in Western Europe and 50,900 in Central Europe. More than 10,700 vehicles were sold to the largest markets of Eastern Europe, notably Russia and Ukraine. Germany remained the brand’s major market in this segment in 2010, accounting for 28 percent of annual fleet sales followed by the Czech Republic, Poland, the United Kingdom and Spain.
Skoda established the Skoda Auto School of Economics in 2000 as the first company-operated university in the Czech Republic. Skoda decided to hire highly-proficient university professors to teach in the school, and the university was subsequently fully accredited for awarding degrees. In the several years since its inception, the number of applicants for the school has grown to the point that demand has outstripped supply. The three-and-a-half year Bachelor Programme allows students to work in the plant to earn credit for their studies in management, and the first students enrolled in the school graduated in 2004. Beginning in 2006, the University began offering a master’s degree in management. Approximately one-half of the graduates of the bachelor’s program have found jobs working for the company or its suppliers. A total of 895 students enrolled in bachelor’s and master’s programs at Skoda Auto University in 2010. Of these, more than 100 Skoda Auto employees were engaged in a combined form of study. In the same period, 37 students graduated with a master’s degree and 103 with a bachelor’s degree. In addition, a master’s program in English was launched in 2010 designed for applicants from around the world.
A key part of the integrated management system at Skoda is the quality management system. The company is subjected to audit for compliance with the international ISO 9001:2000 standard. In the autumn of 2006, TUV NORD carried out the second audit of this system. The result was a renewal of the certificate which was granted in 2004. This certificate documents that Skoda has introduced and uses a quality management system in the areas of development, production, sales, and service and that the system used complies with the ISO standard.
Corporate health care at Skoda provides not only the statutory job-related medical care including first aid, but also organizes health prevention programs, provides physical therapy and medical care and cooperates in creating healthy working conditions. A unique preventive measure in terms of the number of participants is annual flu immunization. In cooperation with trade unions, reconditioning spa treatments are organized for selected employee groups with the aim of improving their health. These activities bring positive results evidenced by the long term low sickness rate in the Company. The average employee attendance rate in 2010 did not fall below 97.4 percent.
Production and sales
Skoda by 2011 had become the largest employer in the Czech
Republic with 24,700 full-time employees. Of the 762,600 cars sold by Skoda in 2010, Western European customers bought 43.7 percent; Eastern European customers bought 9.7 percent; Central European customers bought 15.8 percent; and Asia and overseas bought 30.8 percent of the total. Not surprising, the Asian markets were fast approaching the number of cars bought by Western Europe. The company now has production facilities in the Czech Republic, India, China, Russia, the Slovak Republic, Ukraine and Kazakhstan. The Skoda Annual Report for 2010 recognized the following automobile trends for the coming years in the countries in which they operate:
Since the consensus of many experts is that India will be the fastest-growing automobile market worldwide for the next few years, Skoda has focused much of their attention in that country. Even in the midst of the 2009 economic crisis, sales in India rose 16 percent. With an annual volume of around 1.4 million vehicles, the Indian market is still relatively small but forecasts estimate car sales will rise sharply in the coming years. Skoda operates in this country through its subsidiary, Skoda Auto India, in Aurangabad. Their operations began there in 2001. The current production volume is around 18,800 vehicles per year. Skoda automobiles are also built in Chakan. In 2010, the 25,000th Skoda Fabia ever built in India rolled off the assembly line in that town. The introduction of Skoda’s first car in India, the Skoda Octavia in 2001, wrote the first chapter in the company’s Indian success story. The subsequent model, available in India under the name Skoda Laura is currently building on that success. Since Skoda entered India, they have sold more than 100,000 vehicles in that country.
In May of 2006, an agreement was signed for a joint manufacturing plant for the Volkswagen and Skoda Auto brands in Kaluga, Russia. Although the Russian market was hit hard by the financial crisis in 2009, the automobile market in that country bounced back in 2010. After the number of new vehicles sold halved from 2008 to 2009, manufacturers reported strong growth again in 2010. Skoda Auto benefitted from the market recovery and was able to increase sales in the largest Eastern European market by more than 38 percent. Before the economic and financial crisis came to an end, Skoda Auto began complete production of the Skoda Octavia in Kaluga which signaled the company’s confidence in the future development of the market. In April of 2010, Kaluga also began full cycle production of the Skoda Fabia. Jurgen Stackmann, a Member of the Board of Management who is responsible for Sales and Marketing explained: “The Russian market is one of Skoda’s key markets. We are striving for future stable growth in this country.”
Parnell, J.A. (2014). Strategic Management: Theory and Practice (4th ed,). Los Angeles: Sage Publications, Inc.
Case 7: Kodak’s Challenge:
Surviving the Disruptive “Winds
On June 1, 2006, the house lights dimmed at the
Wall Street Journal’s
All Things Digital conference. On the large screens flanking the stage, a film called the
Winds of Change started. In the film, a dignified white-haired spokesman standing in front of sentimental images of puppies, babies, balloons and birthday parties began talking about the “golden days” at Kodak—the days of the “Kodak moment” in photography. Signaling a shift in the tone of the film, the spokesman looked straight into the camera and said, “Gets ya misty, doesn’t it? Yep, they shoveled on the schmaltz pretty thick—but that kinda crap doesn’t work anymore.” Now people wanted everything to be digital, the speaker stressed, becoming more frenzied as he spoke about digital photography and Kodak’s role in it. The viewing audience chortled when the speaker intoned,
You thought they (Kodak) were just hiding out waiting for this “digital thing” to blow over didn’t you? Oh, sure. For a while they were like, “ohhh, there’s no way digital’s going to catch on” But now Kodak’s back!With swelling enthusiasm, the spokesman extolled Kodak’s research and development in digital photography, ending by pulling at his hair and exclaiming, “You were a Kodak moment
once and by God, you’ll be one again...only this time its digital. Whooo-yeah!” The spokesman appeared somewhat startled by his own outburst and sheepishly walked off stage as the film ended and the lights came up. Wall Street Journal columnist, Kara Swisher then welcomed Kodak CEO Antonio Perez to the stage to the audience’s vigorous applause and cheers. Paul Simon’s song “Kodachrome” played as Perez took the stage. Swisher began her interview saying, “That was a really funny movie. I liked that film!” Her first question, however, was not so approving. “What happened,” she asked as Perez settled into his chair, “What from your perspective happened at Kodak--because it was one of the greatest brands in history?”
Perez responded without hesitation, saying:
“First of all there was this notion that came out of incredible success. The notion was that maybe if Kodak doesn’t move into digital—the imaging world will never move into digital.” “They (Kodak) were running a business with gross margins between 60–70% and those things are hard to let go. Especially when you are confronting a business model that is going to give you, if you are lucky, something around 30%. So that means that you have to change the whole company. From the way you design, to the way you manufacture, to the way you distribute, you know the whole thing. It is very tough.” “So Kodak is very late to the digital space. But Kodak was not late in investing in digital. Kodak was very rich. Kodak hired very good people and those people were actually doing the right things. In the last fifteen years, Kodak developed one of the most impressive IP (intellectual property) portfolios—in digital capture, image processing, pixel technology and all sorts of things...color management, you name it. Actually a leader in all of those spaces. Now, why didn’t they commercialize that? I don’t know.” Referencing Kodak’s transition from traditional photography to digital, Swisher asked, “So, how did you get the film people out—because it’s a film company?” Perez described his approach saying, basically, the model that I used when I visited the factories was looking at the audience and say, and “How many [of you] have a digital camera At that time it was about 60%, and I would say, well, you are the problem we have. We either move to digital—we either do this transformation effectively—or this company basically will cease to exist. There is nothing else. There is no time to argue about it this is over. We are already very late
but we do have the tools that we need to make this happen. Eight months after the All Things Digital Conference, Kodak held its annual strategy meeting in New York City. Antonio Perez announced that Kodak had successfully completed a four-year $3.4 billion transformation and was poised for growth over the next four years (2008–2011). Investors, however, did not share Perez’s view of the firm. Kodak’s share price fell to a 30-year low following the strategy meeting amid skepticism about Kodak’s future strategy. Pointing out that Canon had surpassed Kodak in sales of digital cameras and that Kodak’s EasyShare Gallery faced tough competition from services like Shutterfly and Snapfish, analysts wondered whether Kodak had turned the corner. Other investors argued that the Kodak brand still had appeal for consumers and that the company’s transformation would take time. Speculation about a possible breakup of the company or mergers with other technology companies appeared in the financial press. Had Kodak successfully adapted to the challenges of the digital space? Were there other strategies that Kodak should pursue?
Kodak’s Digital Strategy in 2003
Any evaluation of Kodak’s transformation needed to begin with a review of Kodak’s history in digital photography. Despite employing the engineer who invented the first digital camera (patented in 1978) and holding more than 1,000 digital-imaging patents, Kodak did not introduce a digital camera to consumers until 2001. Kodak’s moves paralleled those at many companies whose comfortable business models were threatened by rapid changes in information technology. When asked whether Kodak had moved into digital photography soon enough, then Kodak CEO Daniel Carp replied, “I saw my first digital camera inside Kodak in 1982. Today, we’re arguably one of the top three providers of digital cameras in the U.S. So we did the right thing. At the same time, we shouldn’t have walked away from the historical film businesses before they turned down, because it would have destroyed value.” under slumping economic and competitive market conditions, Kodak faced tough pressure from its existing competitors as well as from new rivals in the area of digital photography—a $385 billion industry composed of devices (digital cameras and personal data assistants (PDAs)), infrastructure (online networks and delivery systems for images), services and media (software, film and paper) enabling people to access, analyze and print images. Although Kodak had invested $4 billion into digital research and related technologies since the early 1990’s and spent many years perfecting its digital cameras, Kodak’s status as an iconic brand was threatened by the technological shift away from its cash-cow business of traditional film and film processing. In July 2003, Kodak reported flat sales and a 60 percent drop in second-quarter profits.
Since January 1, 2000, when Carp took over as chief executive of Kodak, the company’s revenues and net income had declined, its shares had dropped by 66%, and Standard & Poor’s (S&P) had cut Kodak’s credit rating by five grades. Kodak had reduced its workforce by 49% since 1989, cutting 7,300 employees in 2002 alone. Plans were announced to eliminate up to 6,000 jobs in 2003 to stem future losses, cutting Kodak’s traditional photography divisions in Rochester, New York, to fewer workers than the firm had employed during the Great Depression. Kodak’s balance sheets for 2000 to 2007 are presented in Table 1. Income statements for the same period are presented in Table 2. When announcing the latest rounds of workforce reductions in July 2003, Carp expressed his perspective on Kodak’s challenges saying, “I think we’re at the point where we have to get on with reality. The consumer traditional business is going to begin a slow decline, though it’s not going to fall off a cliff.” Kodak found itself saddled with assets and employees that were no longer relevant in the world of digital photography. Traditional photography involved factories where film, paper and
Building implosions were another symbol of the firm’s makeover. Kodak had shed more than 100 buildings since the 1990’s, imploding three massive buildings during the summer of 2007 that had formerly housed manufacturing processes for the firm’s film, paper and other chemical-based products. As the rubble of the old chemical plants was cleared, Kodak executives gave presentations for technology stock analysts praising Kodak’s successful turnaround. The presentations were entitled “A New Kodak Emerges” and emphasized the end of Kodak’s restructuring program, the creation of high margin businesses such as consumer inkjet printers and camera sensors and Kodak’s expected return to sustainable profitability. According to company executives, Kodak had a clear advantage in the digital space due to its specialized knowledge of materials science (the result of the firm’s 100-plus years of experience in traditional photography) and digital image science (through the firm’s strong intellectual property in digital technologies). However, stock analysts remained skeptical of the success of Kodak’s transformation, continuing to question the competitive success of the inkjet strategy and Kodak’s value proposition for camera sensors. Analysts further questioned the adequacy of Kodak’s spending for research and development given the number of major initiatives they were pursuing. In 2007, Kodak spent 5.19% of sales or $536 million on research and development while Canon spent $3.351 billion or 8.22% of sales on a more singular research agenda. Many of the business segments in which Kodak operated, persistently asking Frank Sklarsky, Kodak’s chief financial officer, “So, where are you making your money? I just want to know. It isn’t clear...”
The stock analysts’ continued unease over Kodak’s future was reflected in their stock recommendations with ten of eleven key analysts rating the shares as either neutral or as “sells.”
Despite the Kodak officers’ assertion of successful transformation, there was open speculation in the press about the possibility of a breakup of Kodak or mergers with either Xerox or Hewlett Packard. Perez dismissed the notion of a merger with HP saying, “I don’t have any comments about that. All those rumors—there are many other rumors too. I wouldn’t pay much attention.” Other rumors included mergers with Dell, a leveraged buyout by a private equity firm or billionaire investor Warren Buffet’s interest in Kodak as an investment. When questioned about the possibility of a breakup, Perez retorted, “They don’t know anything about the company. Why would you do that? I don’t see any good financial reason to do that.” Were the “winds of change” continuing to blow for Kodak? Was Kodak’s transformation successful or were there other changes needed? Was it time for Kodak to merge or pursue a breakup? Or was a leveraged buyout Kodak’s best option for remaining independent? Kodak ultimately succumbed to a shortage of cash and filed for Chapter 11 bankruptcy protection in January 2012. The restructuring sought as part of the bankruptcy proceedings gave the firm another opportunity to revive the business. Only time will tell if Kodak will be successful.
Parnell, J.A. (2014). Strategic Management: Theory and Practice (4th ed,). Los Angeles: Sage Publications, Inc.
In a narrative format, discuss the key facts and critical issues presented in the case.
1. Define in detail the industry in which Skoda operates. Identify Skoda's key competitors and discuss each briefly.
2. How have changes in the political and economic environments affected the industry, specifically Skoda, over the years?
Suppose you have been hired as a consultant for Skoda. Provide specific recommendations for addressing the ongoing political and economic concerns.
Political/Legal & Economic Environments
Conduct research on the Internet to bring the case up to date. In a narrative format, discuss the key facts and critical issues presented in the case and in Internet sources.
1. Define the industry in which Kodak operates.
Who are Kodak's key competitors? Discuss each briefly.
2. How have changes in the social and technological environments affected the industry, specifically Kodak, over the years?
What specific steps should Kodak take to address these social and technological changes? Provide extensive support.
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