Course Code: ECO-531 Course Title: Managerial Economics

Course Instructor: Mr. Deepak Pandey Class/Section: MBA/Q1959

Academic Task No.: CA-2 Academic Task Title: Case Study

Date of Allotment: December, 2019 Date of submission: 17th January, 2020

Student’s Roll no: A19, A23, A27, A29 Student’s Reg. no: 11914815, 11911378,
jjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjjj 11906832, 11907870

Submitted by:
o Kritika Singh
o Ruchi
o Albin Anto Philip
o Akhina D

Evaluator’s comments:

Evaluator’s Signature and Date:

Marks Obtained: _______________ Max. Marks: ______________

 PEER RATING

NAME REG. No. ROLL No. RATING

KRITIKA SINGH 11914815 A19 10

RUCHI 11911378 A23 10

ALBIN ANTO 11906832 A27 7

PHILIP

AKHINA D 11907870 A29 10

 INTRODUCTION

Xerox Corporation was the first company to manufacture xerographic plain paper copier in
1959, based on patented photographic technology. The company’s product lines includes
copiers, printers, digital print production presses, and the software and systems support
required for document production. Their xerographic copier was so popular that their brand
name became generic term for photocopying.

Until 1970 Xerox had no completion & enjoyed the state of monopoly over photographic
printing market. Due to this, they did not made any efforts to reduce manufacturing costs,
improve quality or increase customer satisfaction. Even when in 1970s Japanese firms started
to take over the lower segment of the market with better product at cheaper price they did not
bothered thinking that their target segment was high & middle end of the market.

But by 1980s Japanese competitors started challenging Xerox’s market share in higher end
market as well by introducing less expensive, smaller machine that broke down less often &
provided better service experience.

By the end of 1970s, Xerox started implementing its steps to regain its market share. With the
help of Fuji Xerox (its Japanese subsidiary) it build a strong response which involved
reorganisation and integration of development and production and an ambitious companywide
quality control efforts. Constant benchmarking was used to test progress in the quality control
program and customer satisfaction In 1990s, Xerox has recast itself as a digital document and
solution company that combines hardware, software and consulting packages. It is always
necessary to refine the competitiveness as per the change of the market with constant alertness
& innovation.
 PROBLEMS & THEIR SOLUTIONS

1) Xerox underestimated the Japanese firm & did not considered them to
be a threat
In the beginning, Xerox had monopoly over photographic printing market, they did not
paid any attention to the fact that Japanese firms are entering the market with similar
products at much lower prices.

But in mid-1970s, Japanese products emerged as an even more dangerous threat. The
Japanese strategy was to capture the low end of the market and move up. By 1980,
Japanese competitor, Canon Inc., was challenging Xerox's market share in higher-end
printing machines. But in late 1970s Xerox began reorganizing, making market share its
goal and learning some lessons about quality control and low-end copiers from its
Japanese subsidiary.

2) Xerox only targeted mid & high end customers & ignored the lower
segment of the market
One big reason of Xerox losing its monopoly in photographic printing market was that it
only concentrated on the middle & high end customers & ignored the lower segment of
the market. Reason being that the profit margins in the middle & higher segment was much
higher in comparison to the lower segment.
But when Japanese competitors entered into the market, they started offering a better
quality products at much lower prices & by doing so they not only attracted the lower
segment by offering cost effective printers but also the middle & the higher segment by
offering them an innovative & a better quality product.
After losing its leadership in photographic printing market, Xerox realized its mistake &
collaborated with a Japanese firm Fuji in order to produce a cost effective machines so that
they can cater every segment of the market.
3) Xerox made no efforts to reduce their manufacturing cost or improve the
quality of their products nor did they paid attention towards customer
satisfaction
Until 1970, Xerox had no competition, thus they didn’t made any efforts to reduce
manufacturing costs or to improve the quality of their product. Xerox machines were big
and complex and averaged three breakdowns per month. Whereas, the Japanese firm Ricoh
Company, Ltd., introduced a less expensive, smaller machine that broke down less often.
After losing its market shares to Japanese competitors, Xerox directed its attention towards
the product quality & cost effectiveness of their machines.

First, Xerox directed attention to working and factory conditions. Lifts were installed at
each work station at its plants. Changes were made, too, so that completed parts would
flow smoothly to assembly areas. Workers were given daily reports on the quality of
products they were working on. Employees were given extra training in quality techniques.

By taking such drastic actions Xerox regained its leadership in all segments of the market,
by the second half of the 1990s.
 CONCEPTS INVOLVED

 Monopoly:
 No. of Sellers: One
 Nature of Product: Unique
 No. of Buyers: Many
 Entry & Exit barriers: Very high

Monopoly is that form of market structure in which a single firm sells a product for which
there is no close substitutes.

Since Xerox was the first company to introduce photographic printing machine, thus it
enjoyed monopoly over photographic printing market until 1970 i.e. before the entry of
Japanese Company.

 Competitive benchmarking:
Competitive benchmarking is a process of comparing your company to that of your
competitors on the basis of set collection of matrix. It helps the company to compare its
performances to that of its peers or competitors.
Xerox started a competitive benchmarking mission to compare its relative production
efficiency & product quality to that of Japanese firms. There after they found out that
Japanese competitors were producing high quality coping machine at a far lower cost.
 CONCLUSION

After analysing the above case study it is clear that remaining competitive in today’s
globalized world requires the firm to constantly redefine its market & core competency with
constant alertness to the competition while continuously innovating.

As Xerox did not adopted the new technologies it lost its market due to rise of new competitors.
The early adoption would have saved Xerox & helped it maintain its market share. It is
necessary to refine the competitiveness as per the change of the market with constant alertness
& innovation.
 REFERENCES

 Dominick Salvatore, Siddhartha K. Rastogi (n.d.) Managerial Economics, Principles &

Worldwide Application, Eighth edn., : Oxford Higher Education.
 The MIT Commission on Industrial Productivity, Made in America (Cambridge, Mass.:
The MIT Press, 1989),pp. 270-277; “Japan Is Tough ,But Xerox Prevails”, The New York
Times (September 3, 1992), D1
 “Downfall of Xerox”, Business Week (March 5,2001), pp. 82-92
 https://www.britannica.com/topic/Xerox-Corporation
 https://moneymorning.com/2013/03/25/buy-sell-or-hold-can-xerox-survive-in-a-
paperless-world/
 https://www.referenceforbusiness.com/history2/26/Xerox-Corporation.html