1 Using Kodak as an example, is organisational culture the most important cause of business failure? (40 marks)

Summary of my essay answer:

In order to determine the most significant cause of business failure it is of relative importance to consider the critical environmental factors both internally and externally which can be either within or out of the control of business managers. These factors revolve around organisational culture compared to the actions of external influences such as the economy, consumer trends, governments and competitors. Similarly, one may question what is defined as a true failure as alternative managers between firms and industries will have differing perspectives on perceived ‘failures’. In the case of Kodak, bankruptcy and a process of liquidation of the company’s assets proved to be the ultimate visual representation of failure however many would argue failure was already apparent when the firm’s customers fell dramatically in the wake of competitors actions.

To a large extent, it can be argued that Kodak’s organisation culture or the company’s beliefs and behaviours that manifested the company’s apparent complacency proved to be the primary reason as to why the business failed. The systems and structure of strategic decision making in place amongst employees meant the company was too slow to adapt to the rapidly changing external environment. Indeed, whilst it can be difficult and sometimes impossible to directly manipulate the external market, it is certainly possible to create an organisational culture that creates a structure which maximises the possibility of overcoming threats of failure. This may involve continually encouraging and rewarding innovation, high levels of productivity and competitive levels of customer service. These key areas and others like it all link with organisational culture thereby signifying the critical importance of the beliefs and behaviours of the company. Indeed, neglecting the need to offer the facility to continually innovate can very quickly translate into weaknesses in the form of an emergence of a static business model. In the case of Kodak, their static model toppled with their competitors release of a new range of digital cameras led to their inevitable demise.

On the other hand, successful business goes beyond merely considering the alignment of beliefs and behaviours of the company’s people. Achieving success also considers keystone quantitative factors such as simply ensuring the availability of sufficient cash flow within the business as well as external factors including the influence of competitors actions, government intervention and economic fluctuations. For example, the strength of a company’s organisational culture is near irrelevant if that company’s scale is already restricted with minimal resources, brand awareness and a low market positioning.

In conclusion, organisational culture is the primary cause of business failure because it represents the core of the business’ strategic direction. To a large extent, it can be argued that it forms a company’s integral structure which is necessary to ensure high levels of productivity, motivation amongst staff and innovation in order to remain competitive. Maintaining this infrastructure would prove vital in maximising the possibility of overcoming environmental threats however it must be considered that in instances when a company’s scale is very low external influences hold greater importance.