Xerox and Fuji Xerox
We are committed to strengthening the strategic and functional coordination of Xerox and Fuji Xerox so that we will compete effectively against strong and unified global competitors. -Paul Allaire, President and CEO of Xerox Corporation -Yotaro Kobayashi, President and CEO of Fuji Xerox
Fuji Xerox, the joint venture between Xerox and Fuji Photo Film, was at a pivotal point in its 28-year history in 1990. Many considered it the most successful joint venture in history between an American and a Japanese company. Originally a sales organization for Xerox products in Japan, Fuji Xerox had evolved into a fully integrated operation with strong research, development, and manufacturing capabilities. As its sales and capabilities evolved, so did its importance within the Xerox Group: its 1989 revenues of $3.6 billion represented 22% of the Xerox Group’s worldwide revenue.1 Furthermore, Fuji Xerox supplied the rest of the Xerox Group with low- to mid-range copiers. In Japan, the home country of Xerox’s major competitors, Fuji Xerox held 22% of the installed base of copiers and 30% of revenues in the industry. Yotaro “Tony” Kobayashi, Fuji Xerox’s president and CEO, ascribed a good deal of the company’s success to the autonomy that the joint venture had enjoyed from the beginning. Fuji Xerox was not “the norm” for joint ventures, he contended, adding that “the degree to which Xerox let us run was very unusual.” Yet, paradoxically, as the company grew to represent a larger portion of Xerox’s worldwide business (Exhibit 1), this situation seemed to be changing. “We have to begin to pay more attention to what our actions mean to Xerox,” explained Kobayashi.
1The Xerox Corporation (XC) is referred to in this case simply as Xerox. The combination of Rank Xerox (RX),
Fuji Xerox (FX), and the Xerox Corporation is referred to as the Xerox Group. The revenues of Rank Xerox were consolidated into those of Xerox Corporation, but Fuji Xerox revenues were not. As described below, Xerox Corporation received 66% of RX earnings, which in turn included half of FX earnings. Research Associate Krista McQuade and Professor Benjamin Gomes-Casseres prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 1991 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685 or write Harvard Business School Publishing, Boston, MA 02163. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
Xerox and Fuji Xerox
Paul Allaire, Xerox’s president and CEO, added that Fuji Xerox’s autonomy had been an important factor not only in its own success, but also in its growing contribution to the Xerox Group: The fact that we had this strong company in Japan was of extraordinary importance when other Japanese companies started coming after us. Fuji Xerox was able to see them coming earlier, and understood their development and manufacturing techniques. We have excellent relationships with Fuji Xerox at the research, development, manufacturing, and managerial levels. Yet, because of this close relationship, there is a greater potential for conflict. If Fuji Xerox were within our organization, it would be easier, but then we would lose certain benefits. They have always had a reasonable amount of autonomy. I can’t take that away from them, and I wouldn’t want to. Over the years, Fuji Xerox saw its local competitors grow rapidly through exports. The terms of its technology licensing agreements with Xerox, however, limited Fuji Xerox’s sales to Japan and certain Far Eastern territories. As Canon, in...