The Gayle Pohl Central Michigan University, Schofield Barracks,

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The Xerox Movement
IPC 560
Communication and Change
Joe D. Phearse
Instructor: Dr. Gayle Pohl
Central Michigan University, Schofield Barracks, Hi 96857
The Xerox Movement
Xerox from its inception has always been regarded as an organization that thrives on innovation and diversification. The introduction of the their xerographic office copier in 1959 is seen as one the main technological advancements in the 20th Century. Even as late as the 1990’s Xerox has been boldly reinventing itself from a predominantly black and white, light lens copier company to a digital, color and document solutions company. Even the release of their third quarter results for 2001 in October, showed despite a 5% drop in revenue, the organization still looks forward to improving its overall strategy by revealing a new turnaround program “Our actions are centered on improved cash flow and profitability – and at the same time strengthening our strategic core”- Mark Bernstein- Interim CEO “This plan provides Xerox with a strong financial foundation, to build on the unique strength inherent in our brand, market position, technology, people and leadership team” – Anne Mulcahy-Chairman ; Chief Operating Office.

Mission Statement
Xerox Mission Statement – “Our strategic intent is to help people find better ways to do great work – by constantly leading in a document technologies, products and services that improve our customers’ work processes and business results. Xerox operates under the guidance of six core values:
1.We succeed though satisfied customers
2.We value and empower employees
3.We deliver quality and excellence in all we do.

4.We provide superior return to our shareholders
5.We use technology to deliver market leadership
6.We behave responsibly as a corporate citizen.
Xerox, with 78,900 employees worldwide and revenues in excess of $17 billion, is the global leader in the document management business, offering the widest array of innovative document solutions, services and systems -including color and black and white printers, digital presses, multifunction devices and digital copiers – designed for offices and production printing environments. It also offers supplies, software, and support.
Xerox and their need to become innovative, Xerox had enjoyed what could be almost described as a monopoly when they introduced their xerographic office copier in 1959. The Company pinpointed markets where it would capture the high profit margins and concentrated its sales on these markets. Xerox removed itself from the low-end business focusing its attention on the middle-volume markets and high-volume markets, with development of a product to meet these markets. The Company grew at a prodigious rate but with a problem of becoming “internally oriented”, in the sense that with no competitors of any notable size, it depended on its own standards and its own internal competition as a means to quantify performance and achievement. But Xerox reliance on its own monopoly was to be its own debasement. With the eventual removal of its monopoly in 1973, there was a surge from other corporations to challenge them for the markets. Xerox was always a corporation who relied on producing innovative products, but this diversification was often to no effect. In 1969, Xerox diversified after acquiring the Scientific Data Systems Company, which manufactured mainframe computers. This particular venture backfired as the minicomputer was introduced and the requirement for the larger mainframe computers lessened. A newly formed office products divisions introduced a word processor and a workstation, each of which failed to take off for different reasons. In the interim Japanese competitors established a solid position within the low-volume markets and turned its attention to the more profitable medium & high volume markets. By the start of the 80’s, Xerox was losing significant market share to its Japanese competitors. Not only were the Japanese products excellent, they were sold cheaper than Xerox could manufacture them. Xerox market share dropped from nearly 100% in the 60s to below 50% in 1980. It was this threat that changed the way Xerox was to focus in the future. For a long time, Western Companies rationalized Japans success to low labor costs, the Japanese work ethic, lifetime employment and other factors. Japan had simply developed vastly superior products, practices and processes. Xerox had to look outside its particular functions to identify the best competitors and how they did certain things, be it cost, quality or product reliability. The work for the 1980’s

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COUNTRY expansion into new markets you must first

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Culture, Social, and Demographics:
When examining any company and their possible expansion into new markets you must first examine the culture, social, and demographic issues impacting foreign businesses. The Colombian culture has begun to show a bias towards American products as recently as 1998. As written in Carol Casper’s New York Times article, ‘There is a lot of interest in U.S. concepts and products…’; in not only Colombia but also all of Latin America. The interest has caused more American firms to begin to see these developing attitudes and expand their businesses into Latin America. For Xerox to also take part in this expansion they would be able to take advantage of the new interest.
Colombians, although, are not welcoming these companies with open arms. There is an interest in the U.S. businesses but as Dianna Jean Schemo reports; it is not uncommon to be threatened by the cartels of Colombia. These cartels want in on the inflow of money and will get involved in kidnappings and murderer if they see it necessary. In 1996, the last year these figures are available, the Federal Bureau of Investigation reported 19,645 homicides while in Colombia there were 26,627. For the fear of being on the wrong end of such instances American businesses need to be extra careful when trying to penetrate the Colombian marketplace. Xerox would not be as impacted by the threat of cartel interference. The cartels become more involved with restaurants and oil companies that have developed in Colombia. They have not developed any interest in the technology industry as of yet.

Colombia has a population of 37 million Spanish-speaking people. The annual growth rate is 1.7% and 95% of the population is Roman Catholic. In the urban areas a 93% literacy rate was found, as opposed to a 67% literacy rate in rural areas. This is due to the fact that only five years of primary school are offered in rural areas. This information regarding the population is encouraging. Although the rural population’s literacy rate is low, the urban rate is quite high for a Latin American country. This rate leads me to believe that for Xerox to expand in this market with its technology/communication equipment would not be a problem. The majority of the targeted population where Xerox would be selling their products could understand the benefits of their product and would want to purchase Xerox products.
Political/Governmental Concerns:
Colombia has both political and economic stability that is uncommon to Latin American countries. Colombia also enjoys low inflation as compared to other South American countries. The government of Colombia is a unitary republic, made up of an executive branch, National Congress, and Constitutional Court.
The government creates economic and social development plans annually. The executive branch of the government is responsible for forming the plans in detail. There is a trade barrier that must be registered with Incomex (official foreign trade institution). Payments of invisible imports such as acquisition of technology must be paid to them. The interaction of the government with economic and social issues will help Xerox to expand into this country. By Colombia having an Americanized government system in place that has become stable, it will greatly help foreign countries to become interested and to invest in this nation.

Colombia tries to also maintain and encourage foreign investment. The regulatory climate consists of National Planning Department, Central Bank, Ministry of Mines and Energy, Banking Superintendency, and Securities Superintendency. Foreign investment is permitted in all economic activities except those related to defenses or national security, and dangerous refuse. This lack of restrictions enables Xerox to freely move in and establish itself in Colombia.

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Restrictions on goods imported to Colombia are minimal. The process involves preparing a pro forma invoice, effecting an import registration at Incomex, shipping the goods with a final invoice, clearing customs, and remittance of payment on the currency of the exporter or in U.S. dollars through an authorized exchange intermediary. Again the lack of restrictions would allow Xerox to enter the Colombian market with few barriers.
Macroeconomic issues :
In Colombia there are macroeconomic conditions that could impact Xerox and our decision to expand to the country. Since 1995 Colombia’s GDP growth percent has plummeted. In 1995 it was 5.7, down to 2.1 in 1996 and in 1997 it fell further to 2.0. This trend is quite alarming for not only Xerox but also other countries that wish to expand their market to Colombia.

Colombia also has an unemployment, which has steadily risen since 1995. The unemployment rate was 9.5% in 1995 then 11.3% in 1996 and finally 12.2% in 1997. This happened while the labor force rose in these years by 366,000. This will help us to be able to find workers but whether or not they are capable employees in the technology industry is yet to be seen. If the employment has occurred in the agriculture rather then in the urban area there is a better chance that the unemployed could be illiterate.

Advertising is also an interesting subject. At least 50% of programmed advertising broad cast on television must have local content. It is also required to have use of a Colombian trademark in order to exercise trademark protection in Colombia. These policies seem antiquated as compared to those of the United States and should definitely be addressed. As a company Xerox must determine whether they can get a Colombian trademark first and then whether they can advertise while involving local content. Advertising is a key part of our success in Colombia so these factors are of key importance.

Exchange Rates:
The Colombian Peso has remained relatively stable in the past few years. This historic stability has been highlighted recently by a strengthening of the U.S. dollar as compared to the Colombian Peso. At the end of March 1998 the period principal exchange rate was 1,358.03 Colombian Pesos equal $1. This number has consistently been increasing since early 1997. This is appealing for us as a potential investor. With our U.S. dollars we can get more Colombian Pesos for our money. From past data it only seems that this trend will only continue so investment with regards to exchange rate issues is promising.

Firm’s Current Financial Condition :
As Xerox we have developed from the ‘Copier Company’; to the ‘Document Company’;. This conversion has taken us into newer and expanded markets. At year-end of 1998 our revenue was $19.4 billion. Of this revenue the United States accounted for $10.1 billion, Europe and other countries accounted for $5.8 billion and Latin America and Canada accounted for $3.5 billion. These numbers show the international interest that Xerox has pursued recently. In this pursuit, however, Xerox has maintained its strategic intent in being the leader in the global document market, and providing document solutions that enhance our customers’ business productivity. We plan on doing this by providing global document solutions that bring together our leading-edge technology, the widest array of digital hardware in the industry, sophisticated software, services, teams of industry-focused sales representatives and consultants, and a growing network of indirect sales channels.

Demand conditions:
Current Competitors in the Industry:
Production Costs for the Industry:
Tariffs and Trade Restrictions specific to the Industry :
Xerox is forced to deal with Colombia’s trade restrictions if we want to expand to this country. Colombia imposes a 7% tax on products other than foods and basic medications, along with a tax on income unless it stays in Colombia. The blunt of Colombian restrictions on imports, however, lies on the agricultural end. Due to this Xerox after registering with the government can receive relatively little resistance from the Colombian government to invest in the country.

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