The Boiled Frog
Assignment: Interactive 2: Critique the work of these two students and prepare a report of Half a page each.
• Did the author explain the business boiled frog phenomenon case in a manner that you agree or disagree with? • Are there unanswered questions? • Can you add to the posts with more value added information?
The “Boiled Frog” Phenomenon
By
Anthony Tomlin
MGT680-1402C-01
What is the boiled frog phenomenon?
In the business industry the “boiled frog” phenomenon means that if you place a frog in cold water in a pan then gradually turn up the heat the frog would not notice the temperature change until it’s too late verses a frog who is put in a pot of boiling water who immediately jumps out. In business sense this means that companies are insensitive to changing environments just like the frog who didn’t notice the temperature change until it was too late, companies who are oblivious to external and internal factors that will help them grow will eventually go boom-bust (Inquireer, 2001).
Describe how this phenomenon applies to business and specifically strategic management?
Well this phenomenon related to business and specifically strategic management because management has to keep up with the times so to speak. They have to continuously monitor and also their company’s strategic plan and constantly update its’ business practices and processes, which means that they need to be more pro-active rather than reactive to a changing environment. Management has to have the hindsight to foresee changes ahead of time and develop a strategy to incorporate expected and non-expected changes in the business environment.
Specific business/company example: how the boiled frog phenomenon is/has occurred with Sears Holding Company.
Sears has been in the news because they have been closing stores including some of their subsidiaries such as K-Mart and Land’s End stores which they acquired a few years ago. Since then Sears have been trying to expand and re-invent themselves and bring it back from the brink of bankruptcy. But one main thing will hamper that comeback is the fact that one if their main shareholders is Edward Lampert. Lampert is a billionaire who has heavily invested in Sears but lately has stopped taking IOU’s from Sears which they used for their short term debt to fund their day to day operations (Coleman-Lochner, 2014). Now that Lampert is pulling back his support for Sears, forecasting experts expect Sears’s cash flow to cease within the next nine months if they don’t find and obtain additional financing.
What reason(s) do you attribute this particular phenomenon?
Sears management was totally dependent on only one source for its’ short term cash supply (Edward Lampert), and like anything else when you only depend on one source and that source is disrupted or cut off and there is no back up source in place or available, then you or your company will eventually go out of business.
What could the business have done to avoid the effects of this phenomenon?
I believe that there were/are several things they could have done such as have an alternative source for their cash flow, they could have also liquidated some assets and converted them to cash, sell off some if its’ building assets, reduce its expenditures, scaled back on some of the expansion process, sell off some of its stock for cash, found alternative bank financing, has a shareholders meeting to let them know the financial situation and inform them that dividends will be withheld until its financial solvency issues has corrected itself.
The “Boiled Frog” Phenomenon
By
Gaukhar Makbuzova
MGT680: Strategic Management
“Boiled frog” phenomenon refers to the metaphor, which is applicable to society and business strategy as well. According to this phenomenon, if you drop a frog into scalding water, it will jump out of it based on an instinct in order to avoid the certain death. However, if you gently place a frog into normal temperature water and slowly bring the water to boil, then a frog will continue enjoying the boiling “jacuzzi” until it is dead and cooked (Ramirez, 2001).
“Boiled frog” phenomenon is becoming common in today’s business world, as organizations fail to notice the changes that are occurring in the internal and external environments (Ramirez, 2001). More precisely, the organization’s management has not only to build a plan of strategic management, but also to continually monitor it and perform changes and modifications when necessary. In addition, the organization’s management has to watch over its competitive edge by being well-informed of the strategic and marketing activities, as well as, the effect of these activities on the business’ performance. If the organization’s management fails to do these and “falls asleep”, the devastating consequences are inevitable; just like a frog that fails to realize the danger of increasing heat and dies eventually (Stubblefield, 2006).
A good example of a “boiled frog” phenomenon is Kodak. The company was found in the year 1880 and was considered to be one of the five most valuable brands in the world until the 1990’s. However, just like a boiling frog, Kodak failed to notice the changes that have been occurring over the period of 20 years, where cameras and films have been substituted for smart phones and digital technology. The company’s management was not able to adjust to these changes and new markets, as well as, to offer new and innovative products, which resulted in the bankruptcy of the company. But what Kodak could have done in order to avoid such a terrible turn of events? This question can be answered on the example of Kodak’s major competitor – Fuji. Just like Kodak, Fuji has experienced dramatic effect of the changes in the marketplace, but was able to survive and become successful by diversifying into LCD flat screen optical films and cosmetics. By finding new markets or becoming partners with the smart phone companies, Kodak could have changed its awful fate (Kodak Boils with the Frog, n. d.).
