Changes in Xerox Corporation - the Business Revival - Research Paper Example

Changes in Xerox Corporation – The Business Revival Introduction In any economic downturn, downsizing of the work force is the first strategy considered by the corporate community. ‘A majority of employers that made changes to their retirement plans in response to the economic downturn expect to keep those changes in place throughout 2010. This is among the findings in a survey released today by (Apr 12, 2010) Buck Consultants.’ (Trading Markets.com, 2010). The paper seeks to analyze the trends, issues and problems associated with the downturn in the economy, its effect on the company, the downtrend in the product lines, and the changes made by the company in tune with the environment for survival, including the changes that may be required to be implemented in the light of the experience. Background Copier Business used to be the mainstay of Xerox, and they were market leaders in copiers business. The brand Xerox hold such a sway in the market place, that photocopying is referred to as Xerox or Xeroxing and found its way to dictionaries, verb & noun. Entry of IBM into the copier business and the Japanese products such as Ricoh and Canon into the markets in the beginning of seventies and mid seventies became a threat to its monopoly in the copier market. However, a perceptible shift in the technology, consumer preferences, competition from smaller players, changes in distribution patterns, introduction of low cost printers, fax machines with copying facilities, scanners, etc., coupled with downturn in work stations business and its subsequent closure forced the company into diversification. Analysis ‘In 1988 Xerox underwent a $275 million restructuring, cutting 2,000 jobs, shrinking its electronic typewriter output, dropping its medical systems business, and creating a new marketing organization, Integrated Systems Operations, to get new technologies into the marketplace more effectively.’ (International Directory of Company Histories, 1999). It is in this scenario of downtrend, we have to understand the changes that have been taking place in Xerox to face these challenges. In line with the emergence of social media and the new trends in the society, as explained in an interview with Christa Carone, the CMO of Xerox, ‘they encourage every employee to become part of the voice of the company. They developed friendly guidelines that empower employees and encourage them to use social media on behalf of the company.’  (Francois, March 3rd, 2010). We will find in this paper that this progressive policy of the company, as in the case of social media, has been reflected in decision making as well as in formulation of the strategies, in tune with changes in the business environment, at various stages of its growth and developments in its history. Management Quality The unique feature of identifying the trends and making adjustments and readjustments with the changes in the circumstances or evolving suitable strategies to overcome the hurdles imposed by the environment, could be observed in the history of the company at various stages. The risk reward ratio in the decisions involved has been fairly in favor of the company in general, but for their adventures in totally unrelated or non-core areas with no synergy to the core business. This is on account of the fact these were ‘calculated risks’ taken in the interest, and for survival of the company. The history of the company with varied operations, different geographical areas, wide product portfolio, with a number of milestone events which coincide with the history of the technology as well as the country of US offers excellent lessons to the students of management, marketing, HRD, etc. Xerox diversified into financial services and formed Xerox Financial Services (XFS) in 1984. In the early 1990s it introduced digital color copying machine with great success, fax machines with improvements and other products. However, the worsening economic situation in US in the early 1990s and subsequent problems with X-soft division coupled with litigations in its insurance business resulted into losses for Xerox during this period. This period was very crucial in the history of Xerox, and restructuring of the business was in progress. It exited from the insurance business in a phased manner, and concentrated on its core business, which was in upswing in any way, during that period. The Document Company In 1994, in the reorganization / restructuring of the business, the company positioned itself as ‘the document company’ in the market place with an array of digital products in its arsenal and expanded portfolio of products such as printers, fax machines, and scanners. This strategy of the company resulted into faster growth. With the focus shifted on color machines, and other new product developments, the marketing mix has undergone a change drastically and the product portfolio become wider with the introduction a number of variants of the products for catering to the needs of various types of consumers such as homes, small offices, industries and businesses. The company has also increased the channels of distribution and improved the marketing network through the retailers in line with the growth. Reorganization and Restructuring The progress has never been a jolly ride for the company. Reorganization and restructuring became inevitable for any company as warranted by the changes in the business and economic environment. The swiftness in the decision making process is very important, since procrastination in decision making fritters away the energies of the enterprises. However, reorganization or restructuring process should ensure quick and seamless readjustments by the organization with the changes proposed to be implemented. The mid 1990s restructuring episode cost over 10,000 job cuts spread over 3 years according to the International Directory of Company Histories. It took control of Rank Organization during in 1997, and renamed it Xerox Limited. The saga of restructuring continued, albeit after a small gap, costing several thousands of jobs in 1998, when the company had record sales during the period. This could be viewed as a strategy of the company to meet the unforeseen exigencies in economic cycles, to keep it lean and agile to meet the challenges in future. In hind sight, the strategy paid well. According to the results of the 9th edition of the “Brand Equity Tracking Survey - Office Paper” released on Jan 14, 2010  by the Opticom International Research, Xerox ranks 1st during the year 2009 (1st in 2007) followed by HP (3rd in 2007). (Xerox.com, 2010), and the overall achievements have been satisfactory. Strategies The perspective of the business has undergone a sea change guided by various factors such as ethnic mix in the society, cultural differences, fast changing technological developments faster than the predictions of Alwyn Toffler’s in ‘Future Shock’, legal landscape, etc. In the interview with Christa Carone it also emerged ‘how Xerox transitioned from being a research lab-driven bastion for innovation to a customer-driven innovator. They still have their research centers, but even the researchers get out of the labs and participate in the periodic “dreaming with the customer” sessions that are now at the core of the Xerox innovation process.’ (Francois, March 3rd, 2010). This reflects the shift in the strategies of the company. In the word of Andy Paparozzi, chief economist of NAPL “Our industry is not simply changing, it is being redefined…creating historic opportunity for the prepared, and profound threats for the unprepared. Absolutely no one, no matter how big, how well established or how successful in the past, can afford to do business the same old way.” (Profit Accelerator 2009). Strategies are ever changing, and change is the ‘constant factor’ as it is said, in tune with the environment, external and internal. Survival hinges on adaptation. According to Profit Accelerator, a Magazine from Xerox, the targets with reference to Marketers have changed ‘from print buyers to marketing executives’, in relation to Agencies and Designers ‘from print jobs to communications programs’ and in relation to Print Providers, ‘from craftsman to partner and strategic consultant’ and the strategy in the case of Marketers, Agencies and Designers is called ‘Market Development’ and in the case of Print Providers, it is called ‘Business Development.’ The strategic partnership with all the members of the value chain has been aimed at accomplishing the core strategy of Market Development and Business Development, and the strategies have been profitably and effectively implemented which strengthened the relationships in the process. HRD Xerox believes in decentralization. Xerox brand is effectively leveraged by extending support facilities to decentralized operations in accomplishing their tasks / targets. Human Resource Management International Digest found, ‘An e-recruitment program is helping Xerox Europe to find the right people for its Xerox Concessionaire sales network, created almost 20 years ago to extend the document company’s market coverage across the continent. Now established at the major Xerox sales channel, accounting for over 50 percent of revenues, the network employs more than 6,000 sales and support staff across Europe. They work in over 600 individual businesses of all sizes and maturity – all independently run but supported by the huge Xerox infrastructure and fuelled by the global reach of the Xerox brand.’ (2004, p.33-35)  Giving responsibilities to the employees act as a motivation. Xerox provides an environment which is conducive for learning, sharing of ideas and experience, exchange of the best practices, etc. to the employees. Ramchramdas, E. stated ‘Managing by process at Xerox is accomplished by the core process champions and owners through cross organizational process owner councils. The council members are owners of the subprocesses comprising the end-to-end core process…Its members, using the the Xerox Business Architecture as the context, exchange best practices, benchmark both within Xerox divisions and with external companies, and execute coordinated process reengineering initiatives.’  Conclusion The ability of Xerox to identify the opportunities, to take risk in expanding the business through inorganic route through acquisitions and mergers or takeovers augured well for the development of the company in the long run. This is mainly due to their ability to integrate the acquired businesses through reorganization and restructuring into its fold in a seamless fashion. A classical example for its prowess in this regard is its entry into ‘Document Services’ and expanding the division through acquisition. The acquisitions offered synergy to the existing business. ‘The Xerox also gained the leading market share position in the burgeoning document outsourcing services sector through the 1997-created Document Services Group. This group offered such services as the creation of digital libraries, the design of electronic-commerce systems for Internet-based transactions, as well as professional document consulting services. In May 1998 Xerox bolstered its Document Services Group through the $413 million acquisition of XLConnect Solutions Inc. (renamed Xerox Connect)’ (International Directory of Company Histories, 1999). However, acquisitions such as financial services or insurance which were not related to its core business or provided any synergy were by and large proved to be a drag in its performance, irrespective of the intermittent good performance, perhaps in the case of financial services. The important point to be noted here is the opportunity cost of the capital involved in the process, especially at a time when the economic situation coupled with the down turn in the was precarious, such acquisitions were prodigal in nature. However, the company was in a position to revisit its strategies and got rid of the ventures in the nick of time, if not later in some of the cases. Still there are large number of subsidiaries of medium and large sizes in various countries in its fold, which might be held for strategic reasons. However, a relook at their inevitability could be considered from a long term point of view. References Francois, (March 3rd, 2010), Conversation with Christa Carone, CMO at Xerox, emergence marketing, Retrieved from  http://www.emergencemarketing.com/2010/03/03/cmo-2-0-conversation-with-christa-carone-cmo-at-xerox/ Human Resource Management International Digest, (2004) E-recruitment helps Xerox to pick the cream of the crop: Pan-European system for attracting sales personnel, Vol 12. Issue 5, Page 33 – 35, Publisher: Emerald Group Publishing Limited, Retrieved from http://emeraldinsight.com/10.1108/09670730410546567 International Directory of Company Histories, (1999) Vol. 26. St. James Press, Funding Universe, Retrieved from http://www.fundinguniverse.com/company-histories/Xerox-Corporation-Company-History.html Profit Accelerator (2009), Magazine Vol.4, Success in a challenging economy, Retrieved from http://www.xerox.com/downloads/usa/en/psg/psg_info_profitaccelerator_magazine_v4.pdf Ramchramdas, E. (1994), Xerox creates a continuous learning environment for business transformation, Vol 22, Issue 2, Page 34-38, Journal: Strategy & Leadership, Publisher: MCB UP Ltd, Retrieved from http://emeraldinsight.com/10.1108/eb054460 Trading Markets.com, (2010), Employers Planning to Maintain Retirement Changes Made During Economic Downturn: Buck Consultants Survey, Retrieved from http://www.tradingmarkets.com/news/press-release/xrx_employers-planning-to-maintain-retirement-changes-made-during-economic-downturn-buck-consultants-su-904708.html   Read More