Anne Mulcahy Leading Xerox through the perfect storm

by Group 7 Abhra Chatterjee (110) Avishek Chattopadhyay (111) Firoz R V (145) Prashant Shukla (155) Dalsher Singh Dhillon (156)

Agenda

Introduction to Xerox

Insights to the case Continuing trend analysis of strategies of different leaders

Emergence of Anne Mulcahy

Possible Turnaround Strategies Zeroing on the perfect strategy Implementation of the perfect strategy Concluding Remarks

Xerox- world's leading document management technology and services enterprise

Built on the foundation of one of the most successful product launches ever In 1959 introduced the first product, 914 copier By 1970 enjoyed a 95% share of the plain-paper copier market Model corporate citizen with heavy investments in R&D Palo Alto Research Center (PARC) established in 1970 originated many technologies that launched the information revolution

Adopted a slow but exacting multi-stage process from initial research to

model introduction

Facts of the case The Perfect Storm

Experienced overwhelming success initially Breeding of anti-monopoly pressures and confrontation with several lawsuits forfeiture of patents and agreeing to license its technology Emergence of new and aggressive competitors like Canon, Minolta, Ricoh and Sharp Loss of market share coupled with unpreparedness for price competition

Unable to adapt to smaller margins and reduced profitability

Heavy expenses, shrinking market share, compounded losses, lack of revenues and weak cash flows

Strategies over time

Products of relatively inferior quality compared to its competitors

Market share in copier came down sharply from 80% to just 13% in 1982
In 1982,David T. Kearns took over as the CEO Average cost of Japanese machines was 40-50% of that of Xerox Operating cost was high Launching a program referred to as Leadership through Quality Management layers were cut Greater authority delegated to lower levels

Employees were allowed to participate in decision making

Contd.
In 1980s Xerox bought Kurzweil, Datacopy and Ventura companies that

specialized in optical character recognition, scanning and fax machines

It also diversified into financial services, insurance and investment banking Allaire succeeded Kearns as the new CEO in 1990 In 1992 Xerox entered into various tie-ups with Dell Computer Corporation and

Microsoft
Company announced a major restructuring program (3 geographically defined

organizations selling products from nine product divisions)

Eliminated 10,000 jobs and divested the insurance business. In 1997 Allaire further reorganized the nine divisions into four divisions and

forayed into new businesses such as production printing and developing retail channels.

Contd.
Thoman replaced Allaire as the CEO in April 1999 though Allaire

continued as chairman.
Thoman further consolidated four geographically oriented customer

administration centers (handled billing and collections) into three customer centers.
Customer facing order entering personnel from over 30 customer business

units were moved to the three customer centers.

Thoman continued to buy out partner stakes in overseas joint ventures

(Fujis share in Fuji Xerox)

Results
Commissions reduced significantly.

Sales representatives began losing their accounts.

Sales staff attrition increased by a considerable amount.

In a bid to find new businesses it cut prices hence lost out on margins.

Further trouble: Dominance in production printing ended with entry of Heidelburg. Financial crisis in Latin America Low Morale causing massive defections Doubtful and misclassified accounts in Mexico gave Xerox a bad name

Reasons for Downfall

Sales force failure: Reorganizing the Sales force

Failure to tap the opportunities generated through innovative product concept

Faulty accounting standards and improper balance sheet filing leading investors to lose hope and loss of creditworthiness. Reporting future cash flows of leased machines in the present financial year (1999). This increased the valuation of the company temporarily but once the company failed to live up the expectation, investors left the company

Strategic Failure attributed to two main reasons: a. failure to commercialize the technology; b. failure to protect the resulting intellectual property.

The Making of Anne Mulcahy

Graduate from Marymount College with a joint major in English and Journalism in the year 1974

Started her career in Xerox as a sales representative hounding the streets for the early years
Struck a proper work life and family balance after marrying Joe Mulcahy Promoted to Vice President for human resources in 1992 Led GMO, Xeroxs new venture in web and retail sales and launched a small office and home office (SOHO) Became COO in May 200 taking charge of internal business including operations, solutions and world wide business services

Anne Mulcahys initial efforts as a leader

Assembling her team and improving communication amongst her

executives

Extensive fact finding tours in the business, visiting employee operations and major customers Fully understand the challenges facing Xerox Provide her team with confidence that the company could survive in spite of her personal doubts Made people publicly accountable for their results, set realistic expectations despite the tremendous pressures

Three possible strategies

Implement cost cutting while continuing to fund R&D and field sales and

service, in order to restore credibility in Xerox brand.

Make deep cuts in R&D, product development, and field sales and service

in order to save the company.

Follow the recommendations of outside advisers and declare bankruptcy

and then initiate an aggressive turnaround plan.

Turn around strategy

Sale of assets (Chinese operations, Fuji Xerox)

Improve communication with employees and improve decision making

process for top management.

Stream line processes such as billing process. Cost reduction through employee involvement.

Contd.
Innovation Pushing into services Adaptive and opportunistic Layoff Outsourcing Value to customers

Results
The company generated profit of $978 million in 2005. Mulcahy became one of the worlds most respectable leaders. She was named the fifth most powerful women in the world by Forbes

magazine.

SWOT Analysis
STRENGTHS Strong brand
Strong product development capability

Distribution channels
Dominance on the copier market

WEAKNESSES Weak operating performance

Dependence on third party manufacturers

Stagnant revenues from the office segment

Opportunities
The color market Launch of carbonless paper Outsourcing revenues

Threats
Intense competition Paperless offices Economic slowdown

THANK YOU