During this group presentation, we will discuss the importance of effective managerial decision making and the approach that Eastman Kodak has taken to transition their company into a more competitive market. The first thing we need to know that is there are seven steps that should be taken in an effective decision making process. They are in the following order: Identifying opportunities and diagnosing problems, Identifying objectives, Generating alternatives, Evaluating alternatives, Reaching decisions, Choosing implementation strategies, and Monitoring and Evaluating those decisions. When Kodak realized that they must capitalize on being more innovative and cost competitive, they hired a new CEO in October of 1993. His name was George Fisher. His philosophy on how to turn the company around focused more on the opportunities facing the company rather than coming in doing extensive cost cutting.
This approach is the first step in effective decision making and it must be done in order to identify the objectives ahead, generate alternatives to those objectives, and to reach decisions and strategies. Fisher quickly realized that Kodak was rapidly falling behind in the digital technologies market. This realization caused Fisher to develop new product lines, increase technology, and capture the market of what the people want. Kodak switched from strictly being a film industry to more of an imaging industry in hopes that they could become more competitive with the likes of Fuji, Canon, and Hewlett Packard. These were just a few objectives that Fisher hoped to accomplish in the next couple of years at Kodak.
As part of the decision making process that would make these objectives happen, Fisher believed that it would take effective decision making to be most effective. Two of his major complaints when taking over were that decision making was too slow and that the people were afraid to take risks. He attributed this to Kodak's old management style. He believed that managers should be responsible and be held responsible for the decisions they made. As an example to everyone, he tried to make himself more accessible and personable. He started eating in the company cafe and answering employees emails personally.
So during this time, Fisher himself was trying to stress to his top management that effective managerial decision making is among one of the key things that the company must be efficient at if it wants to achieve its goals. For example, Fisher was hired and within one year the company had already introduced several different product lines. Kodak had created one-stop photo print centers where customers could make copies and enlargements straight from their photos. This was a big success. It was becoming very apparent that George Fisher and Kodak were introducing technology as the centerpiece of their new strategy. One of the next steps in decision making is generating alternatives if the initial plan does not work out successfully.
George Fisher realized this when he had no choice but to cut 4, 000 jobs in 1995 and 3, 900 jobs in early 1997 in order to free up money to cut costs. Kodak was feeling pressure from Fuji Film and had to act in order to maintain, as well as increase, their market share in the United States. Upon evaluating these alternatives, Fisher decided that Kodak needed to cut even more jobs (around 20, 000) by the end of the year in order to cut costs by $1 billion. After these alternatives were decided upon, strategies were implemented. This is a very important step in the decision making process. In order to be successful in implementing a strategy, you must first become sensitive to those who may be affected by the decision and second, you must give proper planning and consideration to the resources necessary to carry out the decision.
The recent strategic move by Fisher was to reduce the 1998 research and development budget of $1 billion by $100 to $150 million in order to recoup costs and keep competing with Fuji Film. This plan is currently being monitored and evaluated, which is the last step in the effective managerial decision making matrix.