Bankruptcy filing of Kodak
Whenever a big corporation files for bankruptcy, many investors question the move. After the recession, many big corporations like Lehman Brothers etc filed Chapter 11. A chapter 11 case starts when the company voluntarily files for a petition in bankruptcy court. When the company has many outstanding, it prefers to file for the case.
It was no big surprise when Eastman Kodak, 131 year old company that was founded by George Eastman filed for bankruptcy protection in 2012 under chapter 11 of US bankruptcy code in Southern District of New York. It was pioneer in introducing first automatic snapshot camera. It was the first company that provided the individuals a solution for taking their own photographs and not depends on professionals. The term ‘Kodak Moment’ became synonymous with taking pictures of precious moments and having pictures of life time of memories.
Reasons for Bankruptcy
An attempt is made to understand what lead to the financial distress in the company. The top management of Kodak could never innovate. Though they were pioneers in launching the concept of self photography, many competitors developed better products and took the market share from the company. The company thought that its customers would remain loyal to it but when new products and new technology was offered in the market, it lost its market. The company did not pay attention to the improvement in the technology. When digital cameras came into existence, Kodak did not improve its products. It was under the misconception that film based photography would still exits. Within few decades, this technology has become outdated. Today hard prints are also taken from digital camera rather than film based cameras. The companies like Sony, Nikon who offered better technology products outdid Kodak. The company that is resistant to change will always face a dead end. The company investment in various projects that were not technological advanced was lost. Many turnaround strategies were attempted. Cost cutting measures were taken but still the debt kept piling and ultimately the company filed for chapter 11. The company tried to go in for restructuring and also ventured into the digital technology. It exited from the traditional business and closed many sick units like manufacturing plants and processing labs that were without any work due to change in technology. Even the manpower was reduced by 47,000 employees. The recession of 2008 came as the final blow as the company went into negative liquidity position. (Merced, 2012).
Chapter 11 filing by Kodak
Chapter 11 filing was made on in US Bankruptcy court in lower Manhattan. The case was filed only for American branch and not for non-American subsidiaries. In the case filed, the company claimed that it had $5.1 billion in assets and the debt was $6.8 billion. The largest group of creditors was the bondholders specifically from Bank of New York Melon who were to be paid $658 million.
Procedure for filing Chapter 11 Case
The corporations, partnerships and limited liability companies can file a petition in bankruptcy court to begin Chapter 11 case. Filing of this case is voluntary and it is the debtor who takes the initiative and applies for bankruptcy relief. The case is filed in the primary place of business location. In response to this, creditors can come together and file an involuntary Chapter 11 petition against the defaulting debtor.
After filing the case, in most cases no trustee is appointed. Trustee is to be appointed by the bankruptcy court. Debtors can continue to operate its business as normal but it cannot take any major decision as the control is with the bankruptcy court.
In addition to the above things, the bankruptcy court is also involved in the following approval:
• If there is sale of any assets other than ordinary course of business
• In case any business operation is shutting down or expanding
Creditors are approached by the bankruptcy court to take input so as to take the decision as to how to proceed. Formal votes by creditors and equity holders are taken only in connection with proposed Chapter 11 plans.
Debtor has four months after Chapter 11 case is filed to propose a reorganization plan. The period can be extended up to 18 months after the petition date and even shorten the period depending on the circumstances.
Initiatives to be taken by Kodak management
The debt position of Kodak was not due to a single action or a particular project. Slowly and slowly company had created such condition. The management should be forward looking and should make long term strategy to accommodate the challenges posed by competitors and change in micro and macro environment. The top management should have taken the initiative to restructure the corporate. The adoption of new technology should be done and the digital cameras could be manufactured rather than following the old traditional cameras.
The step to be taken by the senior management would be to understand the main business problem and what are the opportunities to be taken up while restructuring. Though the management is late to take up restructuring after filing chapter 11 case, still it will be a positive step and make bring back the growth in the company.
Restructuring involves changing a company's organizational, financial and operating structure to resolve the financial and operational issues that led to shutdown or liquidation of the company. As a result of restructuring initiative, companies change contractual relationships with debt holders and creditors, shareholders, employees and other stakeholders. (Cascio, 2005)
The initiative can be taken to go in for
 Financial Restructuring to get funds to buyout the existing shareholders. This is known as leveraged buyout.
 Organizational Restructuring can be done to address the operation and reporting structure in the organization
 Portfolio restructuring can be done to identify the cash cows, dogs, stars and question mark. The company can get rid of question marks and encash the cows.
When the top management chooses to restructure, it should be with complete responsibility and the focus should be those areas of the business where the company has competitive advantage.
Remaining competitive
For any business to remain competitive, customers have to be focused. To maintain the competitive edge over the market, hard work and strategy has to be in place. The company has to focus the following areas;
 Having the knowledge about the competitor’s strategy
 Understanding the customers
 Providing innovative or differentiated products and service
 Differentiation may be attained by following given below strategies
• warranties
• technology
• features
• service
• quality/value
• dealer network
• brand image

 Aggressive marketing should be done
 Getting publicity so as to remain in limelight
 Expanding to new markets
 Employees should be motivated so they perform efficiently
Conclusion & Suggestions to Kodak
The company should learn the lesson from the episode of filing the bankruptcy case and should start planning to revive the organization. The company should plan the strategy approach of segmentation, targeting positioning (STP). When creating marketing communications plans, STP model will help the management to prioritize areas and then develop and deliver relevant messages to engage with different audiences. The diagram below shows how plans can have the flow from: Segmentation can be done using factors like demographics, psychographics, Lifestyle, belief and values, life stages etc. To target the segment, the factors are considered to evaluate the potential and commercial attractiveness of each segment are Criteria Size, Difference, Money, Accessible and Focus on different benefits. Finally, the relevant product is positioned to the prospective customer.
Kodak had lost their competitive advantage as they did not progress with time and adopt the new technology and thus were out of business. As company comes out of chapter 11, it should focus on R & D and develop new and innovative products as it has competitive advantage of being the pioneer in print camera. Concentrating on STP model, it should launch new products.

Reference
Casio, W. (2005) Strategies for Responsible Restructuring. Academy of Management Executive. 19(4): 39-50.
Kim, E., D. Nam, and J.L. Stimpert (2004) "Testing the Applicability of Porter's Generic Strategies in the Digital Age: A Study of Korean Cyber Malls." Journal of Business Strategies 21(1): 19–45.
Porter, M. E., and Heppelmann, J. E.(2014) How Smart, Connected Products Are Transforming Competition. Harvard Business Review 92(11): 64–88
Merced,M. (2012) Eastman Kodak files for Bankruptcy. The New York Times. January 19, 2012. http://dealbook.nytimes.com/2012/01/19/eastman-kodak-files-for-bankruptcy/?_r=0