How might these rapid, consecutive, and fundamental changes in the corporate structure both facilitate and hinder Kodak’s ability to effectively and efficiently implement its corporatelevel strategy? For many years, Kodak used the cooperative form of the multidivisional structure to implement the related-constrained diversification strategy. Following this structure, primary organizational functions such as manufacturing, customer care, and strategic planning were centralized, which allowed such expertise to be shared among Kodak’s seven product divisions. The cooperative structure worked well for Kodak as it used the related constrained strategy to compete in what for many years had been relatively stable markets.

However, innovative technologies and increased competition disrupted these markets, making the sharing of the firm’s skills and related technologies across divisions less competitively valuable.

Moreover, sharing key resources and their corresponding costs across many business units that were facing increasing levels of competition and unstable markets made it difficult for Kodak to assess the profitability of its product divisions (Consumer Imaging, Digital and Applied Imaging, Kodak Professional, Health Imaging, Document Imaging, and Entertainment Imaging) and operational divisions (Commercial and Government, Federal Government, and Worldwide Transportation).

Analysis of the external environment as well as of Kodak’s resources, capabilities, and core competencies resulted in top-level managers concluding that the firm should reduce the number of links between the business units and their products and services.

Kodak subsequently moved to a three-SBU structure in October of 2000 (see Exhibit 1). In this structure, the six product divisions were grouped into two broad customer-oriented SBUs (Consumer and Commercial). The third SBU (Global Operations) handled Kodak’s governmental contracts along with various supply chain and operational needs. The resulting structure was viewed as less than optimal by Kodak executives, who concluded that another form of SBU structure might be necessary. A new version of the SBU was implemented in 2001 (see Exhibit 2).