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Cost Cutting: Stiking Balance between Short-term Falling Profits and Long-term Viability Example of Xerox Company

Question

The Xerox company has held a major share of the photocopier market for many years. The equipment is leased to customers and the revenue stream consists of leasing fees and service charges for maintenance. Returns on sales, assets and equity have been falling for the last several years. Customers have been switching from leasing as the cost of money has fallen, and the copiers have become a sales-oriented business. Also the growth of service centers such as Kinko has resulted in many smaller to medium organizations outsourcing their copying services and returning their leased in-house copying machines.

Xerox management is concerned about short term falling profits and long term viability. They are not certain that the usual profit improvement actions such as cost cutting will address the situation. They believe that they need a new business model. What strategic planning and analysis process and activities would you recommend so that Xerox can deliberately choose a different set of activities that will allow them to deliver customer value and regain profitability.

Summary

The question belongs to Corporate Strategy and it is about Xerox company. The photocopier company wants to develop a new strategy or business model. The company wants a model where in short term losses can be sustained, but customer satisfaction and long term profitability are the main issues.

Total Word Count 400

 

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