Xerox is a multinational corporation serving the global document-processing and financial services market. The business revolves in over 130 countries by its developed, manufactured and marketed copiers, duplicators, facsimile products, scanners and other products. Xerox case study center on the document-processing activities of the company. The case discuss on the management control system and its trends that helps Xerox to overcome its obstacle s in maintaining its market share. It also looks on how Xerox have become today and are they still using the same management control system or not.
During 1970 till 1980, several problems have occurred in Xerox due to lack of appropriate management control system. The issue started when a patent for the plain paper copier have expired, thus inviting new entrant. Xerox market share dropped from 96 percent to 45 percent due to the attack of competitors that had offered a low price. The Japanese firms were selling their product at Xerox’s manufacturing cost. Next is in 1970s, Xerox emphasize on the important of accuracy and rigid system than listening to the customers. SOLUTION
The first question asked was to outline the management control system at Xerox and identify the key elements that make the system work. Based Xerox case study, prior to 1970 the management control is influenced by the analytical era where it highlights accuracy and rigid systems more than listening to the customer. At that time the company set unrealistic target, use the number of people as the controller and inadequate data analysis. Besides that, the reporting and planning process was too long and the structure is more bureaucratic and the reporting formats were not even consistent between divisions. There are few issues that arise during 1970 until 1980. First is the original patent for the plain paper copier expired that lead to new entrants enter the market. Xerox market share decrease due to competition from 96 percent to 45 percent. The issue is worsening when the Japanese firms are offering their equipment at Xerox’s manufacturing cost.
In 1982, David Kearns, the chairman derived with a solution by developing a corporate revitalization plan called ‘Leadership through Quality’ (LTQ). It was a mixed of competitive benchmarking and also employee involvement. The key elements of LTQ are employee 1
involvement and competitive benchmarking by implementing the best practice to improve performance. Another element is quality improvement process where it focuses in meeting customer requirement. Meanwhile in 1990s, Al Senter comes with his strategy to change the culture of Xerox. He emphasize that the Finance Executive Council (FEC) as the central focal point for finance function in Xerox. The FEC consist of senior Corporate Finance staff and the chief financial officers from Xerox operating organizations. Al also changed to standard reporting with informal reporting system as it complements the formal reporting, set proper goal to be aligned with the strategy imposed and highlight on the technological innovation as the key for success.
The key element for Al strategy is by having open communication, active participation and regular interaction with the line management to enhance the formal reporting with informal reporting system. Next is to have top-flight and well trained people employee and be on the cutting edge of information technology. Value added is one of the key elements that make the system work as Al said’ if we can’t add value, then we don’t belong to Xerox’. The second question asks about the recent trends in Xerox that is influencing the management control process in the company. It is stated in the case that during the analytical era of the 1970s, Xerox had a culture where accuracy and rigid systems were more important than listening to the customers. To make it worse, during this year’s some good people left the company and Xerox faced new competitors for...