The history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-time inventor, made the first xerographic image in the US. Discuss how Xerox grew in 1960s.
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The history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-time inventor, made the first xerographic image in the US. Haloid later obtained all rights to Carlson’s invention and registered the ‘Xerox’ trademark in 1948. Throughout the 1960s, Xerox grew by acquiring many companies, including University Microfilms, Micro-Systems, Electro-Optical Systems, Basic Systems and Ginn and Company. In 1962, Fuji Xerox Co. Ltd. was launched as a joint venture of Xerox and Fuji Photo Film. Xerox acquired a majority stake (51.2%) in Rank Xerox in 1969. During the late 1960s and the early 1970s, Xerox diversified into the information technology business by acquiring Scientific Data Systems, Daconics and Vesetec. In the early 1980s, Xerox found itself increasingly vulnerable to intense competition from both the US and Japanese competitors. According to analysts, Xerox’s management failed to give the company strategic direction. It ignored new entrants who were consolidating their positions in the lower-end market and in niche segments. The company's operating cost was high and its products were of relatively inferior quality in comparison to its competitors. In 1982, David T. Kearns (Kearns) took over as the CEO. He discovered that the average manufacturing cost of copiers in Japanese companies was 40-50% of that of Xerox. As a result, Japanese companies were able to undercut Xerox’s prices effortlessly. Kearns quickly began emphasizing reduction of manufacturing costs and gave new thrust to quality control by launching a program that was popularly referred to as ‘Leadership Through Quality.’ As part of this quality program, Xerox implemented the benchmarking program. These initiatives played a major role in pulling Xerox out of trouble in the years to come. The company even went on to become one of the best examples of the successful implementation of benchmarking. Answer the following Questions: A. The history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-time inventor, made the first xerographic image in the US. Discuss how Xerox grew in 1960s. B. In the early 1980s, Xerox found itself increasingly vulnerable to intense competition from both the US and Japanese competitors. Discuss how Xerox became vulnerable. And also discuss the steps taken to face the intense competition.
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Explanation:
XEROX Benchmarking Full StoryBACKGROUND NOTEThe history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-timeinventor, made the first xerographic image in the US. Carlson struggled for over five years tosell the invention, as many companies did not believe there was a market for it. Finally, in 1944,the Battelle Memorial Institute in Columbus, Ohio, contracted with Carlson to refine his newprocess, which Carlson called 'electrophotography.' Three years later, The Haloid Company,maker of photographic paper, approached Battelle and obtained a license to develop andmarket a copying machine based on Carlson's technology.Haloid later obtained all rights to Carlson's invention and registered the 'Xerox' trademark in1948. Buoyed by the success of Xerox copiers, Haloid changed its name to Haloid Xerox Inc in1958, and to The Xerox Corporation in 1961. Xerox was listed on the New York Stock Exchangein 1961 and on the Chicago Stock Exchange in 1990. It is also traded on the Boston, Cincinnati,Pacific Coast, Philadelphia, London and Switzerland exchanges. The strong demand for Xerox'sproducts led the company from strength to strength and revenues soared from $37 million in1960 to $268 million in 1965.Throughout the 1960s, Xerox grew by acquiring many companies, including UniversityMicrofilms, Micro-Systems, Electro-Optical Systems, Basic Systems and Ginn and Company. In1962, Fuji Xerox Co. Ltd. was launched as a joint venture of Xerox and Fuji Photo Film. Xeroxacquired a majority stake (51.2%) in Rank Xerox in 1969. During the late 1960s and the early1970s, Xerox diversified into the information technology business by acquiring Scientific DataSystems (makers of time-sharing and scientific computers), Daconics (which made shared logicand word processing systems using minicomputers), and Vesetec (producers of electrostaticprinters and plotters).In 1969, it set up a corporate R&D facility, the Palo Alto Research Center (PARC), to developtechnology in-house. In the 1970s, Xerox focused on introducing new and more efficientmodels to retain its share of the reprographic market and cope with competition from the USand Japanese companies. While the company's revenues increased from $ 698 million in 1966to $ 4.4 billion in 1976, profits increased five-fold from $ 83 million in 1966 to $ 407 million in1977. As Xerox grew rapidly, a variety of controls and procedures were instituted and thenumber of management layers was increased during the 1970s. This, however, slowed downdecision-making and resulted in major delays in product development.In the early 1980s, Xerox found itself increasingly vulnerable to intense competition from boththe US and Japanese competitors. According to analysts, Xerox's management failed to give thecompany strategic direction. It ignored new entrants (Ricoh, Canon, and Sevin) who wereconsolidating their positions in the lower-end market and in niche segments. The company'soperating cost (and therefore, the prices of its products) was high and its products were ofrelatively inferior quality in comparison to its competitors. Xerox also suffered from its highlycentralized decision-making processes. As a result of this, return on assets fell to less than 8% and market share in copiers came down sharply from 86% in 1974 to just 17% in 1984. Between1980 and 1984, Xerox's profits decreased from $ 1.15 billion to $ 290 million.In 1982, David T. Kearns (Kearns) took over as the CEO. He discovered that the averagemanufacturing cost of copiers in Japanese companies was 40-50% of that of Xerox. As a result,Japanese companies were able to undercut Xerox's prices effortlessly. Kearns quickly beganemphasizing reduction of manufacturing costs and gave new thrust to quality control bylaunching a program that was popularly referred to as 'Leadership Through Quality.' As part ofthis quality program, Xerox implemented the benchmarking program. These initiatives played amajor role in pulling Xerox out of trouble in the years to come. The company even went on tobecome one of the best examples of the successful implementation of benchmarking.