Major elements of mega-environment that impacted Xerox
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Published: Mon, 5 Dec 2016
Xerox Corporation is one of the world’s leaders in process and document management using the latest technology. Nevertheless, Xerox cannot avoid challenges from the mega-environment also known as the general environment. The mega-environment consists of several factors such as economic, legal-political and technological factors.
The economy has a big impact towards Xerox. Even though Xerox is from the United States of America (USA), not only the US economy affects Xerox but the global economy too especially in nations which Xerox operates in. This is because now, the world is borderless. A change in one country’s economy affects other countries as well. The Y2K scare severely influenced Xerox as consumers became pessimistic thinking that all computers and storage devices will cease functioning because the year was recorded in two digits. In 2001, the high interest rates caused a recession which had badly affected Xerox to the extent that it was close to bankruptcy. The company recorded a loss of $344 million in two years alone (Daneman, 2010). Hoffmann (2009) states that Xerox have laid off at least 20,000 workers in 2001. The financial meltdown not too long ago has also impacted Xerox. According to Digital Trends (2008), the company will lay off 3000 employees to support the organization in the midst of the worsening economy. Reasons given by Anne Mulcahy, the ex-CEO and Chairman of Xerox, include to minimise their cost and to increase flexibility by having operational improvement throughout Xerox (Digital Trends, 2008).
Xerox has also faced legal issues as the legal-political dimension also affects Xerox. Xerox faced ethical issues in the past concerning its accounts. It did not provide its investors the company’s actual operational performance (Mokhiber, 2002). Some accounting information was distorted and regulations were not followed. This went against the generally accepted accounting principles which landed Xerox into trouble (Mokhiber, 2002). Xerox, which Affiliated Computer Services, Inc. (ACS) is part of the company, was charged with unreasonable labour practices. According to Communications Workers of America (CWA, 2010), there was no warning given by ACS/Xerox when they dismissed fourteen EZ Pass employees who are union activist. Nevertheless, it was not long when they got their jobs back as Xerox was faced with protesters who dispute the management actions (CWA, 2010). Thus, it is of utmost important that Xerox be highly ethical.
Besides, technology plays a crucial role in the development of Xerox. In fact, technology is the core of Xerox. Without it, there will not be any Xerox. Beginning as a photocopier business, it soon developed into a graphic processing firm (Bartol and Martin, 1998). Then in 1970, the Palo Alto Research Centre (PARC) was established for innovation, research and development (Xerox, 2010a). Experts and specialists in related fields were brought together to create new technologies which greatly contributed to the technology advancement of today. In fact in 1995, Xerox actually expected the booming of the handheld device industry in the next decade. Xerox became the pioneer in developing the touch-screen technology for palm-sized gadgets and this technology was soon patented (Xerox, 2010a). According to Bartol and Martin (1998), Xerox entered the digital imaging sector by introducing the DocuTech. With this machine, documents are able to be produced electronically from computers. Soon, Xerox developed DocuSP which is able to tie digital printers to some computer hardware (Bartol and Martin, 1998). Thus, technology basically defines Xerox and its achievement.
(b) Explain clearly how the major elements make up the task environment of Xerox.
Xerox is also affected by several elements from the task environment. Components of the task environment include competitors, suppliers as well as the labour market.
Competitors of Xerox are those corporations which operate in the same industry as Xerox and cater to the same group of customers. The industry Xerox is in mainly deals with office products and production equipment. According to Bartol and Martin (1998), one of Xerox’s tough competitors, Canon, from Japan was able to acquire a large proportion of market share in the low-end market. The public would most probably have cameras in their mind when one talks about Canon. In fact, office equipment generates as much as 77% of Canon’s total revenue while cameras only generate 13% (Holstein, 2002). Canon then took over the low-end market with Xerox withdrawing from the market giving reasons that they want to focus on the higher-end market instead (Holstein, 2002). Besides, Canon is entering the high-end market which had been Xerox stronghold. Holstein (2002) states that Canon’s laser copier market share in U.S. greatly increased in 1998 while Xerox’s market share dramatically decreased. Furthermore, Xerox also faced competition from Ricoh. Ricoh began to introduce cheaper, smaller and more efficient machines (Funding Universe, n.d.). This definitely appeals to consumers as these machines are not only cheaper but more convenient. Ricoh’s plan was to get hold of the low-end market then proceed up (Funding Universe, n.d.). Thus, Xerox faces a lot of competitive pressure on a global stage.
Suppliers are most definitely important for Xerox. Without suppliers, Xerox cannot operate as they cannot produce all their products and equipment. Xerox suppliers provide the company with materials needed for the production. Xerox is also lauded for its Supplier Diversity Program. Xerox has reputable relationships and partnerships with women, minority as well as service-disabled veterans businesses (Xerox, 2010b). Having a range of diverse suppliers shows that Xerox supports the whole community and does not practice discrimination. According to Xerox (2010b), the company get its suppliers to subcontract produced parts and assemblies. Besides, Fuji Xerox, its Japanese affiliate, with its business partners began to recognise the importance of social corporate responsibility in sourcing goods (Fuji Xerox, 2010). The companies looked into the issue and effects towards the environment and human rights (Fuji Xerox, 2010).
The labour market is also important to Xerox. With companies like Xerox, employees are expected to be computer-literate and to be continuously innovative (Daft, 2010). However, the labour market is influenced by several parties such as labour unions and employees association (Daft, 2010). In 2008, Xerox stated that agreements concerning early retirements and medical benefits made after 1995 will no longer be valid in 2010 (West, 2009). According to West (2009), members of the Association of Retired Xerox Employees (ARXE) did a peaceful protest as they wanted to voice their concerns at the Annual Stockholders meeting. In 1980, over a hundred thousand of Xerox employees were trained in the Leadership through Quality program (Bartol and Martin, 1998). The employees addressed environmental issues and focused on quality improvements (Future 500, 2010). Xerox managed to save cost thus increasing its profit. Therefore, Xerox must pay close attention to all factors of the task environment as they affect the company in various ways.
(c) Discuss the organizational cultures at Xerox during the McCullough and Kearns eras.
Both Peter McCullough and David Kearns were prominent individuals in Xerox. Each of them impacted Xerox differently during different times. Both CEOs projected different organisational cultures in Xerox. According to The Times 100 (2010), organisational culture is the way things are seen and done. The culture summarises what is good and has been a success in the past (The Times 100, 2010). Nevertheless, there can be a ‘culture shift’ when new managers replace the old ones like Kearns taking over as CEO of Xerox from McCullough which may change the organisation’s culture (The Times 100, 2010).
In 1968, McCullough became the CEO of Xerox (Bartol and Martin, 1998). According to Rao (2007), McCullough greatly understood the importance and the necessity of new inventive technology. He had much confidence in research and development which resulted in the establishment of PARC. He focused a lot on innovation and development of new ideas. Thus, an entrepreneurial culture at his time. McCullough also increased the levels of the hierarchy in Xerox to manage the company’s growth (Bartol and Martin, 1998). However, he overdid it which resulted in red tape. The elements of culture during the McCullough era points Xerox as a mix of Apollo and Athena organisation. There is an integration of role and task culture because McCullough emphasised on innovation while making Xerox more organised and bureaucratic as well. The red tape greatly affected Xerox’s product development. Furthermore, McCullough unwillingness to import a low-volume copy machine earlier from its affiliate, Fuji Xerox, resulted in competitors taking control of a large proportion of the low-end market (Bartol and Martin, 1998).
Then, Kearns took over as CEO in 1982 to 1990. When Kearns took control of Xerox, he was determined to change the corporate culture and place customer satisfaction as the company’s top priority (ReoCites, 1996). He also focused a lot on keeping the cost low, paying more attention to customers and maintaining a high quality (Bartol and Martin, 1998). According to Bartol and Martin (1998), the company’s structure became flatter as layers of management were reduced. Thus, there is more employee empowerment as decision-making is pushed to the lower levels. Employees also began focusing more on quality and customer service after going through the Leadership through Quality program (Bartol and Martin, 1998). This is in line with Kearns’ vision. He concentrated on customer satisfaction more than profits or market share. He’s judgment paid off when buyer satisfaction went up by 40% while complaints fell by 60% after the program was implemented (ReoCites, 1996). These are great improvements as this will indirectly increase the profits. Although both CEOs portrayed a slightly different culture, they were important in building Xerox. Failures and missteps of both parties are taken as learning experiences while successes and achievements are recognised and remembered.
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