Xerox: repositioning and revival utilizing - Essay Example

? Xerox: repositioning and revival utilizing Information Technology   Company Overview Xerox was established as the Haloid Company and changed its name to Haloid Xerox in 1959 with the introduction of Xerox photocopiers. The pioneers of the photocopying technology their products were critically acclaimed and with continuous innovation and better copying solutions the company was able to establish itself as the market leader in the category. Very soon the name ‘Xerox’ was used not just as the brand name of the company but as the general name of the products, such was the mass appeal of Xerox and their marketing strategy was designed to promote the same idea. By 1968 Xerox achieved the highly sought after US $1 Billion mark with a target market ranging from public, private and educational sectors all over the world. It seemed that they would forever remain the leaders in the Photocopying technology. Right now the scenario is still positive for the Company, but the approach and Strategy of Xerox had to undergo a lot of changes to survive this far. According to their website, with sales approaching $23 billion, the world’s leading enterprise for business process and document management has been Xerox (NYSE: XRX) is. Its 140,000 employees serve in over 160 countries. Its technology, expertise and services enable workplaces to smoothly integrate the electronic and print media utilization in an efficient and effective way. Their portfolio consists of wide range of services and products including IT outsourcing in which they help organizations tap into the external resources available to them; Production printing offers; Consultation and restructuring of business processes to generate innovation and finally the service which echoes of their old offerings of pure photocopier technology- Document Management, a complete package to lead their customers into smarter organization and management of all their electronic, print and digital communication and documentation. The shift in Xerox’s strategy was not, however, a part of the general long term strategy the management had decided to follow. Their drastic repositioning was the direct result of a slump faced in the 1980-90s which led to a sudden loss in market share and extremely low profits. With the introduction of computing technology, new players from the international market and the rise in use of printers and other convenience printing and storing devices Xerox’s flagship product became obsolete. During the 1980s, Xerox tried to reposition itself as a provider of all technology-based office products, while this brought it back in the customer minds- the name Xerox was still intimately tied to copiers only and rebranding themselves into the market place was going to be a hard work. Conflict and opportunity- Xerox. In 2001 the situation was extremely severe for Xerox. Their declining sales led to huge losses; fourth quarter revenue in 2011 was $4.8 billion, 13 percent lower than the fourth quarter of 1999. The stock price went from $70 per share in 1999 to $5 by the mid of 2000.The company was highly leveraged at the moment and unable to meet their debt requirement needed to restructure. There were rumors of bankruptcy filing, Xerox had to take the services of private investment banking firm the Blackstone Group to advise it on how it can fix its balance sheet. The reasons for the low profitability were many: from unfeasible market conditions, slump in productivity, competitive pressures and a lack in the information technology needed to make the firm better at managing its opportunities and costs. In trying to save the company the first few steps the company took were to cut down on costs. In 2001, a statement was given by Anne M. Mulcahy, Xerox president and chief operating officer explaining that “We are aggressively implementing our cost-reduction plans, which will yield more than $1 billion in savings by the end of 2001," said. "Since the third quarter of 2000, we have taken actions that account for more than one-third of this target, including the reduction of approximately 2,000 jobs worldwide in the fourth quarter. This activity will intensify with the reduction of 4,000 jobs in the first quarter and additional reductions through the balance of the year." (Giddy) These measures were not without drawbacks, company morale was rapidly going down and they still didn’t seem to be capturing the market in computer related technology. It was the time to completely change their strategy. Hence, the focus shifted from products to services and into focusing on what their customers needed versus what the company was offering. Their workforce was not suited to deal effectively in the new world of digital document solution and their insight was that perhaps their customers weren’t so document savvy either. This led to Xerox adopting to reinvent itself as “the world’s leading document-management technology and services enterprise” (Kotler, P. et al, p56). For a company basing its services in the provision of IT related services, Xerox itself had to utilize the IT recourses available to it to gain back lost ground. The latest trends in customer targeting, customer insight identification, tapping into external resources, communicating their new positioning to their stakeholders and customers all required extensive use of technology and information management systems. It was also required to enable them to provide their services including new introductions such as storage of information and retrieval services Six Sigma-based assessment service which help to cut down client document management costs by up to 30 %. By 2006 Xerox had gained new customers as it continued to show people how to manage their money on information management and helped them understand the needs of a good information management structure. (Weinstein, 2006, p2) Knowledge and skills- what did they need to acquire? In order to restructure and rebrand itself, Xerox had to greatly make use of information technology to gain a competitive edge in the industry. Unlike a manufacturing firm their focus was not on enhancing productivity through more precise technology but on exploiting the new mediums and databases available to them to focus on generating better services for the kind of needs consumers were going to need in the digital world. Communication: Previously Xerox had designed its marketing strategy to make the brand synonymous with the product, now they needed to educate the average consumer that Xerox stood for more than copiers. In designing their strategy they made use of theories regarding the need of direct and indirect marketing and communicating with different stakeholders. For example one of the studies done show that “the use of information technology is related to change of the need for personal meetings when the use is relatively higher. Companies reporting a decreased need for personal meetings, as well as companies reporting an increased need for personal meetings are all us” (Lindh 2004) by carefully examining such analysis Xerox could come up with effective communication for rebranding itself. Research and development: In both identifying and retaining the customers as well as the needs of these customers, Xerox needed powerful analytical tools and mass databases with the information available for them to identify trends and changing environments. Available to them were technologies such as single-source data, integrated computer networks, softwares for data collection and analysis, powerful mathematical tools for statistical analysis and modeling marketing transformed marketing research ((Rust & Espinoza, 2006, p1075-76) which bring back the focus on the individual needs of the buyer and help the company become for customer centric in the services that it provides. Customer insight was something they had to keep their eyes on as their first setback had come from the kind of complacency which made them fail to notice that customers did not actually require photocopiers anymore. Information Management: For the kind of company shift Xerox needed they had to ensure that the information required to function and gauge their performance was available at levels of organization. Promoting innovation was only possible if the employees had easy access to their databases and any new insight was shared across the company. Information and knowledge management processes and systems installed would instantly revolutionize the working of the organization and lead to better decision making. The roadmap- Utilizing Technology to provide a better vision   The importance of information technology was never ignored at Xerox, even though its application might have left something to be desired. The information management center at Xerox was established in 1970s to ensure the availiblity of accurate, reliable and relevant data. In the 1990s with the rapidly changing markets and emerging new trends it became a necessity to have each and every source of data available at all regions, this led to centralization efforts for information management. In one of the organization changing decisions, Xerox decided to get into a 10-year, $3.2 Billion contract with Electronic Data systems (EDS) in 1995 in order to increase revenues, develop new technologies, and manage information technology more efficiently, (Lynda, M. & Kevin, D. 1995). This showed that the top management was extremely concerned about the performance of the company and outsourcing seemed to be one of the ways they could climb out of this slump. When their own management had been unable to properly make use of the information available to them to correctly determine the advances in technology, outsourcing this crucial task seemed to be a prudent choice. With the increase in globalization and improvement in telecommunication technologies, the outsourcing programs have become a mainstay of today’s business environment. Similarly Xerox has continued to follow its initial strategy to make use of technology skills available all over the world. In May 2011, Xerox informed its employees in its product engineering group that it was in outsourcing talks with India-based IT services firm HCL Technologies (Thibodeau, 2011) to see the viability of moving some of production capacity to their firm to enjoy the lower production costs and availability of high skilled labor. While this decision has not been very popular with local employees, it does show the focus of the management on increasing their chances of market penetration and excellent service provision by reaching out to wherever the technology is available. And it offers to direct its clients in the same direction, they can use their own success to lead companies in successful outsourcing programs. “Examples include its acquisition of the call center and business services unit of Innova Consulting in August 2011, and its acquisition of customer care specialist XL World in September 2011. Innova supports Zurich Connect, the direct-to-consumer and online insurance brand of Zurich, as part of a five-year, $32m outsourcing contract serving the Italian market” (Juniper, 2012) Metrics- how do best measure the results The company’s successes speak for themselves. Their rebranding strategy and top notch services have helped them gain new customers while continuing to delight older ones. One of its most significant client is the Lloyds Banking group (LBG) which generates annual revenues of approximately 75$m for Xerox and provided a great template for its changing strategies- the group has been a client of Xerox for over a decade during which “during which Xerox has migrated from supporting printing devices within the Scottish Widows unit to managing the production and distribution of printed material across most of the group, amounting to 110m documents per year” (Sharan, 2008). Their consultancy service fetches the brand around 25% of its revenues and in 2007 (one year after the brand really established itself) the third quarter generated $2.5 Billion in annuity revenue through service deals, an eight percent increase from 2006. This proves that not only did Xerox rebrand itself, in using the best technology available to gain customer insight it also created new opportunities for itself and the results are showing. While Xerox still has a long way to go before it can hope to achieve that market leader position it once had, it has at least gained lost ground and learned some very important lessons. Though, they still face criticism on their current strategies, which some say are too narrow or two ambitious or two focused on the concept of ‘one Xerox’ ( Juniper, 2012) to allow for strong growth. The fact remains that Xerox was able to use the resources it had to come back from the brink of bankruptcy and they are not likely to let that scenario repeat again. Biliography Giddy, I. Restructuring at Xerox [Online]. New York University, Stern School of Fiance. Avaliable at:  Weinstein, N., 2006.   Newsmaker: Breathing new life into Xerox. Cnet News Online. Available at: Xerox News Room, 2012. Stay Competitive, Profitable with Xerox’s New Business Development Resources [Online] Available at:  2006. Brand extension failures: Xerox Data Systems [Online]. Bran Failure Blog, Available at: Lindh, C., 2004. 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BUSINESS WIRE, Business Editors, April 2, 2002 Lynda, M. & Kevin, D., 1995. Xerox: Outsourcing Global Information Technology Resources. Harvard business publishing, case HBS-9195158-E. Present Soft Technology, 2010. The Impact of Information Technology on Business [Online] Available at: Thibodeau, P., 2011. Xerox plans to transfer 600 jobs to Indian outsourcer [Online]. Computer World. Available at: < http://www.computerworld.com/s/article/9217545/Xerox_plans_to_transfer_600_jobs_to_Indian_outsourcer> Saxton D. G., Hackler, D., 2007. "The Strategic Use of Information Technology by Nonprofit Organizations: Increasing Capacity and Untapped Potential." Public Administration Review 67(3): 474- 487. Xerox Newsroom, 2011. Xerox to Deliver Customer Communications Savings for Major U.K. Retail Bank [Online] Available at: http://news.xerox.com/pr/xerox/xerox-to-deliver-customer-communications-for-Lloyds-Banking-Group.aspx ARMIN, 2008. 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