Riskmanagement is the act of considering different aspects of a businessto determine the challenges that are posed ahead. The challenges thatmight occur in the course of the business are referred to as therisks. Such risks may be brought about by various reasons (Burke,2013). Some may be posed by the possible fall in the profitability ofthe business. Also, the failure of the organization to keep up withthe pace of the technology poses a big risk. This is because thebusiness will be subjected to competition that may not be on neutralgrounds.
Manycompanies have found themselves falling even after being at the topof the business field in the past years. The reason for the fall ofsuch companies is brought about by the failure to apply the aspectrisk management. This leaves them in a vulnerable position thatresults in their downfall. The companies take long to make a comebackor even move out of business completely.
Forthe sake of this discussion, the company to consider is the EastmanKodak company. This is a company that was involved in the photographybusiness. The company made a gradual and steady growth for manyyears. In fact, the company emerged as one of the best companies inthe world as it posted very high profits.
Thehigh profits that the company made were associated with the highdemand of the analog photographs in those past decades. Other companythat tried to get into similar business found it hard to fight withEast man Kodak as it almost enjoyed almost a monopolistic power(McNeil, et al. 2015). The company employed very many employees indifferent countries of the world. It controlled the economy of thecountries that it operated in.
Downfallof the Eastman Kodak
Yearslater, Kodak Company faced various challenges that led to thereduction in its profits. It was not until the 1980s that the companyexperienced shocks in the normal operations. During the 1980s, therecame the emergence of the digital photography which was spearheadedby other rival companies. The photography became more convenient asthe cameras had better and more features than the analog cameras. Thecameras were easy to handle and had very attractive features than theanalog cameras.
Kodakstarted to lose customers to the digital cameras. In the beginning,the company seemed not bothered by the emergence of the digitalphotography as the company was still profitable. This saw the digitalgeneration of photography finding a soft ground for the building of afirm foundation (Burke, 2013). Years later, Kodak Company started tooperate at losses, and this led to the laying off of so manyemployees that were working with the company. The layoffs weresupposed to lower the operational costs of the company to enhance acome back to profitability. The company was overtaken by the digitalcameras producing companies.
Inthe recent years, Kodak Company has tried to restructure itself inthe type of operations that it involves in. Such efforts haveincluded the introduction of health care branding as well as documentmanagement business. However, the efforts have all been in vain asthe company has not yet come back to the profitability situation itwas many years ago.
Therisk that the East man company was not able to identify is that ofthe technological advancement. The company stayed in a comfort zoneand retained the same production procedures it had used all theyears. Failure to keep up with the ever-improving technology saw thecompany lose to the rival companies that were coming up (Cagliano, etal. 2015). The company also failed to identify the changing tastes ofits customers. The main problem associated with this is the lack ofcreativity motivation in the organization. The employees were notgiven an opportunity to grow their creativity and transform it tosolving the future digital requirements. Due to the lack of training,the capability of the employees could not match the changing natureof the photography technology.
UsingRisk management to prevent such a problem
Therisk management technique could be applied to prevent such anoccurrence that lead to the downfall of Kodak Company. Riskmanagement calls for a continuous assessment of the needs of thecustomers as well as determining how to cope up with the everchanging technology. Application of the risk management techniquecould have enabled the company to have experts in place who wouldensure that the company predicts the possible future changes.
Ifthe comp-any had detected the need to have the digital photography inplace before the competitors did, it could still be on top of thebusiness. This is because, before the downfall, the company wasfinancially stable and could hence be able to finance the variousresearch projects (McNeil, et al. 2015). The main problem that hasbeen associated with Kodak is that it failed to invest heavily inresearch on what the future may hold for the business.
Thecompany could also have diversified its investments at the time thatit was earning huge profits. This could have reduced the impact oflosing the growth trend as the other investments could still supportthe company before falling. The diversification is seen not to haveworked as it came so late after Kodak was driven out of business.
Burke,R. (2013). Project management: planning and control techniques. NewJersey, USA.
Cagliano,A. C., Grimaldi, S., & Rafele, C. (2015). Choosing project riskmanagement techniques. A theoretical framework. Journalof Risk Research,18(2),232-248.
McNeil,A. J., Frey, R., & Embrechts, P. (2015). Quantitativerisk management: Concepts, techniques and tools.Princeton university press.