A key part of Apple's business strategy in the computer market has been to:
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Xerox: Adapting to the Turbulent Marketing Environment Xerox introduced the first plain-paper office copier more than 50 years ago. In the decades that followed, the company that invented photocopying flat-out dominated the industry it had created. The name Xerox became almost generic for copying (as in Xerox this for you). Through the years, Xerox fought off round after round of rivals to stay atop the fiercely competitive copier industry. Through the late 1990s, Xerox's profits and stock price were soaring. Then things went terribly wrong for Xerox. The legendary company's stock and fortunes took a stomach-churning dive. In only 18 months, Xerox lost some $38 billion in market value. Its stock price plunged from almost $70 in 1999 to under $5 by mid-2001. The once-dominant market leader found itself on the brink of bankruptcy. What happened? Blame it on change or rather on Xerox's failure to adapt to its rapidly changing marketing environment. The world was quickly going digital, but Xerox hadn't kept up. In the new digital environment, Xerox customers no longer relied on the company's flagship products' standalone copiers to share information and documents. Rather than pumping out and distributing stacks of black-and-white copies, they created digital documents and shared them electronically. Or they printed out multiple copies on their nearby networked printer. On a broader level, while Xerox was busy perfecting copy machines, customers were looking for more sophisticated document management solutions. They wanted systems that would let them scan documents in Frankfurt, weave them into colorful, customized showpieces in San Francisco, and print them on-demand in London even altering for American spelling. This left Xerox on the edge of financial disaster. We didn't have any cash and few prospects for making an, says current Xerox CEO, Ursula Burns.The one thing you wanted was good and strong leaders that were aligned and could get us through things and we didn't have that. Burns didn't realize it back then, but she would one day lead the company she began working for as a summer intern in 1981. In fact, Burns almost left the company in 2000, but her colleague and friend, Anne Mulcahy, became CEO and convinced her to stay. Burns was named a senior vice president and was then charged with cleaning the house. The Turnaround Begins Task number one: Outsource Xerox's manufacturing. An often criticized and unpopular move, outsourcing was critical to Xerox's cost-saving efforts. Burns oversaw the process in a way that preserved quality while achieving the desired cost benefits. And she did so with the blessing of Xerox's employee union by convincing the union that it was either lose some jobs or have no jobs at all. With the restructuring of manufacturing, in only four years, Xerox's workforce dropped from 100,000 employees to 55,000. Although this and other efforts returned Xerox to profitability within a few years, the bigger question still remained: What business is Xerox really in? To answer this question, Xerox renewed its focus on the customer. Xerox had always focused on copier hardware. But we were being dragged by our customers into managing large, complex business processes for them, says Burns. Before developing new products, Xerox researchers held seemingly endless customer focus groups. Sophie Vandebroek, Xerox's chief technology officer, called this dreaming with the customer. The goal, she argued, was involving [Xerox] experts who know the technology with customers who know the pain points. . . . Ultimately innovation is about delighting the customer. In the process, Xerox discovered that understanding customers is just as important as understanding technology. What Xerox learned is that customers didn't want just copiers; they wanted easier, faster, and less costly ways to share documents and information. As a result, the company had to rethink, redefine, and reinvent itself. Xerox underwent a remarkable transformation. It stopped defining itself as a copier company. In fact, it even stopped making standalone copiers. Instead, Xerox began billing itself as the world's leading document management technology and services enterprise. The company's newly minted mission was to help companies be smarter about their documents. This shift in emphasis created new customer relationships, as well as new competitors. Instead of selling copiers to equipment purchasing managers, Xerox found itself developing and selling document management systems to high-level information technology managers. Instead of competing head-on with copy machine competitors like Sharp, Canon, and Ricoh, Xerox was now squaring off against information technology companies like HP and IBM. Although it encountered many potholes along the way, the company once known as the iconic copier company became increasingly comfortable with its new identity as a document-management company. Building New Strengths Xerox's revenue, profits, and stock price began to show signs of recovery. But before it could declare its troubles over, yet another challenging environmental force arose the Great Recession. The recession severely depressed Xerox's core printing and copying equipment and services business, and the company's sales and the stock price tumbled once again. So in a major move to maintain its transition momentum, Xerox acquired Affiliated Computer Services (ACS), a $6.4 billion information technology (IT) services powerhouse with a foot in the door of seemingly every back office in the world. The expertise, capabilities, and established channels of ACS were just what Xerox needed to take its new business plan to fruition. The synergy between Xerox, ACS, and other acquired companies has resulted in a broad portfolio of customer-focused products, software, and services that help Xerox's customers manage documents and information. In fact, Xerox has introduced more than 130 innovative new products in the past four years. It now offers digital products and systems ranging from network printers and multifunction devices to color printing and publishing systems, digital presses, and book factories. It also offers an impressive array of print management consulting and outsourcing services that help businesses develop online document archives, operating in-house print shops or mailrooms, analyze how employees can most efficiently share documents and knowledge, and build Internet-based processes for personalizing direct mail, invoices, and brochures. These new products have allowed Xerox to supply solutions to clients, not just hardware. For example, Xerox has a new device for insurance company customers, a compact computer with scanning, printing, and Internet capabilities. Instead of relying on the U.S. Postal Service to transport hard copies of claims, these and related documents are scanned on-site, sorted, routed, and put immediately into a workflow system. This isn't just a fancy new gadget for the insurance companies. They are seeing real benefits. Error rates have plummeted along with processing times, and that means increases in revenues and customer satisfaction. Dreaming Beyond Its Boundaries Riding the combination of Xerox's former strengths and its new acquisitions, Burns and the Xerox team now have a utopian image of what lies ahead. They believe the tools and services they offer clients are getting smarter. It's not just processing Medicaid payments, says Stephen Hoover, director of Xerox's research facilities. It's using our social cognition research to add wellness support that helps people better manage conditions like diabetes. Hoover adds that the future may see a new generation of Xerox devices, such as those that can analyze real-time parking and traffic data for municipal customers, allowing them to help citizens locate parking spots or automatically ticket them when they are going too fast. Already, Xerox is market testing parking meters that are capable of calling 911 or taking photos when a button is pushed. Not all products such as these will hit the market, but Xerox now has a model that allows it to dream beyond its known boundaries. In another example of smarter tools for clients, Xerox will soon rollout Ignite, a software and Web-based service that turns its copiers/scanners/printers already in service at schools around the world into paper-grading machines. Previous automated grading technologies (such as Scantron) worked only on multiple-choice responses filled out on special forms. But Ignite will grade work where answers are written in by students even numeric math problems. The real revolutionary potential of Ignite, however, is not just in automated grading, but in taking the results and turning them into Web-accessible data that allow teachers to identify problem areas and make improvements to their techniques. Throughout this corporate metamorphosis, Xerox isn't focused on trying to make better copiers. Rather, it is focused on improving any process that a business or government customer needs to perform and performing it more efficiently. Xerox's new machines have learned to read and understand the documents they scan, reducing complex tasks that once took weeks down to minutes or even seconds. From now on, Xerox wants to be leading global document management and business-process technology and services, provider. With all the dazzling technologies emerging today, Burns acknowledges that the business services industry in which Xerox now operates is decidedly unsexy. But she also points out that these are processes that companies need to run their businesses. They do it as a sideline; it's not their main thing. But running these seemingly mundane business processes is now Xerox's main thing. Xerox provides these basic document and IT services to customers so that customers can focus on what matters most to their real businesses. Xerox's transition is still a work in progress. Over the last four years, the company's revenues are up 47 percent and profits have more than doubled. Its stock price, however, has struggled (it has yet to top $12), a sign that Xerox isn't doing as well as Wall Street thinks it should be. Part of the reason is that Xerox still relies to some extent on its copier and printer products for its success, even with its recent diversification strategy. And just as e-mail and desktop software killed photocopying, smartphones and tablets are killing inkjet and photo printers. But Xerox depends much less on such products than competitors such as Hewlett-Packard and Lexmark International do. Thus, experts predict, Xerox will rebound much more quickly than its rivals. Burns and crew are also confident that as Xerox continues its transition to a solutions provider, the seeds it has planted over the past few years will soon bear fruit. Xerox knows that change and renewal are ongoing and never-ending. The one thing that's predictable about business is that it's fundamentally unpredictable says the company's annual report. Macro forces such as globalization, emerging technologies, and, most recently, depressed financial markets bring new challenges every day to businesses of all sizes. The message is clear. Even the most dominant companies can be vulnerable to the often turbulent and changing marketing environment. Companies that understand and adapt well to their environments can thrive. Those that don't risk their very survival. Questions for discussion:
1. What microenvironmental factors have affected Xerox's performance since the late 1990s?
2. What macroenvironmental factors have affected Xerox's performance during that period?
3. By focusing on the business services industry, has Xerox pursued the best strategy? Why or why not?
4. What alternative strategy might Xerox have pursued following the first signs of declining revenues and profits?
5. Given Xerox's current situation, what recommendations would you make to Burns for the future of Xerox?
Background
Clothing sales have risen dramatically in recent years, thanks to several trends that appear likely to continue. It was reported that the global demand for clothing looks set to increase significantly over the coming decade as millions of people in developing countries enter the middle class and spend more on apparel. It also seems the demand for fast fashion will only continue to grow (Remy et al. 2016). This is further supported by a new research from Kurt Salmon, part of Accenture Strategy, one in eight younger consumers (18 to 24 year olds) shopping every week and buying a fashion item at least once a fortnight (Accenture 2017). Clothing production doubled from 2000 to 2014, and the number of garments purchased each year by the average consumer increased by 60 percent. Fast fashion has been a particularly hot segment and a source of enviable growth for some clothing companies (Remy et al. 2016). The process of making a piece of clothing involves multiple suppliers across the supply chain in the following processes including: farmers who grow the raw materials; ginners receive cotton from multiple growers and sell to the global market through traders; spinners use cotton from a variety of origins to produce yarn and fabric mills produce cloth. The manufacturing process begins which involves cutting, sewing, trimming, embroidery, orienting, and washing. Next, the manufacturers ship the garments wholesale to the brand that placed the orders who distributes garments globally to retail and online stores (Human Rights Watch 2017). At the end of its life, the apparel/garments may either be recycled or discarded and go to landfill. The manufacturing usually involves multiple suppliers in a very complex supply chain, which reduces transparency and visibility along the complex value chain. Brands therefore are not aware of what happen at their suppliersâ business along the supply chain. Brands also do not typically deal directly with all those suppliers, and many do not bother to dig deep into their supply chains (Gunther 2016). On the other hand, consumers are, attracted by the low cost and constantly update product ranges with new styles and designs. Consumers are buying these clothes much more often and in greater quantities, but often wearing them only a handful of times before discarding them. This fast-fashion industry and ecosystem consumes large amounts of natural resources in the production, which ultimately accelerating carbon emissions and global warming. The industry has also been linked to a number of cases of worker abuses in countries producing the garments. The workers were underpaid and exposed to unsafe and poor workplace conditions, particularly when handling materials like cotton and leather that require extensive processing (Remy et al. 2016). One example is the disaster at Rana Plaza, which is one of the deadliest accidents in the fashion industry happened on 24th April 2013. (The Economist 4th May 2013). Over 1,130 people were killed and 2,500 more were injured when the Rana Plaza factory complex collapsed in Dhaka, Bangladesh. It was reported that people crushed under those eight floors were working for dozens of familiar multinational brands and retailers. It is âone of the many negligent accidents that plague the garment industryâ (Fashion Revolution CIC 2015, p.4).
Assignment Tasks
Assume you are a newly appointed accountant in a local fashion company -RTXM Clothing Company (RTXM) - based in Melbourne, Australia. This is a private family business with 20 shareholders. Currently, the company has seven different departments, include Accounting and Finance, R&D (product design and development), Salesand Marketing, Human Resources, Information Technology, Distribution and Logistics, and Merchandising, with a total of 130 employees. Managers in each department are given the authority regarding operational decisions and their performance is measured based on the companyâs profit, and all the other employees receive the fixed salary package. The company pays taxes to Australia Taxation Office (ATO) on a regular basis. Originally, the business offered only t-shirts and jeans. As the business was trying to join the growing fast fashion industry, it expanded its product lines to include dress, trousers, shorts, hoodies & sweats, socks, shoes, and bags. The objective was to provide a wide selection of product lines in order to reach more fashion conscious consumers. A characteristic of them market is consumers are mainly attracted by low price, and frequent new styles and designs, so the company also seeks to find the suppliers with low prices. The business has retail stores in the major city across Australia and online store. Since the company expanded its product line, managers from different departments found the number of complaints received from customers have tripled. Most complaints are related to the product quality (products are either defective or damaged), items consistently out of stock, online shopping experience (delivery of wrong items and long response time to emails), and in-store experience (lack of attention from sales representatives), and some customers have posted complaints on RTXM social media. In order to enhance the overall performance, the company is considering using a range of key performance indicators in managing its performance. This is to ensure that the company keeps track of its performance and to achieve the objectives they set for the identified issues. In addition, the CEO and senior management decide to find new suppliers to improve the product quality, however, they encountered a dilemma. On the one hand, they found a supplier in Bangladesh, Super Cheap who can provide a large range of products to fit in their business expansion plan with a competitive price and all products can be supplied in a short time frame. However, after a careful investigation into this companyâs background, they found this supplier has a major issue with labor conditions throughout their supply chains, including the use of child labor, low wages, and health and safety hazards, and long working hours. In terms of the environmental aspect, Super Cheap consumes a few thousand litres of water to produce a cotton t-shirt and over ten-thousand litres to produce a pair of jeans, and wastewater discharge into the local river, and it did not take any action to solve this issue. The polluted water is no longer fit for drinking or laundry, fishes no longer exist in this river, and local residences complain that their homes are flooded by dirty water. On the other hand, RTXM has another potential supplier, called Green Fashion, who only provides limited product range with a higher price, and products can be supplied in a reasonable time frame. However, Green Fashion takes account of sustainability and makes it as part of their business, and their sustainability agenda has been presented on its website, including fashion designs that is kind to the environment, they also ethically source materials and labour, promote work-life balance of the employee in the retail business, and provide incentives to their local and outsourcing partners and their employees if their targets are met. The CEO and management of RTXM learnt that Green Fashion has very similar values and sustainability agenda. RTXM considers sustainability as part of the business. It is reported on their websites that the company wants to rethink fashion designs so that they are kind to the environment, to ethically source materials and labour, promote work-life balance of the employee in the retail business, and provide incentives to their local and outsourcing partners and their employees if their targets are met.
Required:
1. As an accountant of the company, you would like to have a better understanding of how the sustainability of the company will impact on the stakeholders. You believe the most efficient way is to identify important stakeholders. Refer to the case and identify five relevant stakeholder groups and discuss how different accounts could be used to satisfy each groupâs information requirements.
2. In order to enhance companyâs performance, the CEO thinks it might be insufficient to use profit as the only performance indicator, and is considering using a range of key performance indicators to manage the business. You believe the Balanced Scorecard is a useful performance measure framework that can be used, as it gives management an overall picture of companyâs performance. You have been asked to develop a Balanced Scorecard to assist RTXM in managing its overall companyâs performance and demonstrate how it works to the management and staff in next company meeting. You need consider ONE of the most important metrics that could be used for each of the four perspectives of performance and explain the reason why it has been selected and how it can be used to improve companyâs performance.
3. The CEO believes the company was attractive because of its previous low price strategy but has also noticed unprecedented awareness from customers on the companyâs social responsibilities. The CEO approaches you to discuss the selection of supplier, which supplier is better for companyâs strategic development. Provide an explanation to the CEO with reference to the potential costs and benefits of working with both Super Cheap and Green Fashion.
4. After your analysis above, the CEO starts realizing the importance of working with social and environmental friendly suppliers, however, still does not have a comprehensive understanding to the positive and negative impact his companyâs products might have both socially and environmentally. You decide to use the Life Cycle Analysis (LCA) for a product that the company offers to enhance their understanding. Draw the LCA, and select one or two stages of the LCA, identifying a total of four possible social and environment impacts. If the impact is detrimental either socially or environmentally, give suggestions to minimize the impact. If the impact is positive, give suggestions as to maximize the benefit. You are required to undertake some research to answer this question.
5. Subsequently the company decides to contract with the Green Fashion. Some important shareholders attempted to block this proposal. Their belief, as the owners of this company, is that the company should aim to maximize the value of their shares, however, the new business plan could significantly increase the costs and therefore reduce the profit. You are required to identify an organisation, business or industry and explain whether and how it could potentially increase the value of its shares in the long term by being accountable to its major stakeholders. You are required to undertake some research to answer this question.
Clothing sales have risen dramatically in recent years, thanks to several trends that appear likely to continue. It was reported that the global demand for clothing looks set to increase significantly over the coming decade as millions of people in developing countries enter the middle class and spend more on apparel. It also seems the demand for fast fashion will only continue to grow (Remy et al. 2016). This is further supported by a new research from Kurt Salmon, part of Accenture Strategy, one in eight younger consumers (18 to 24 year olds) shopping every week and buying a fashion item at least once a fortnight (Accenture 2017). Clothing production doubled from 2000 to 2014, and the number of garments purchased each year by the average consumer increased by 60 percent. Fast fashion has been a particularly hot segment and a source of enviable growth for some clothing companies (Remy et al. 2016).
The process of making a piece of clothing involves multiple suppliers across the supply chain in the following processes including: farmers who grow the raw materials; ginners receive cotton from multiple growers and sell to the global market through traders; spinners use cotton from a variety of origins to produce yarn and fabric mills produce cloth. The manufacturing process begins which involves cutting, sewing, trimming, embroidery, orienting, and washing. Next, the manufacturers ship the garments wholesale to the brand that placed the orders who distributes garments globally to retail and online stores (Human Rights Watch 2017). At the end of its life, the apparel/garments may either be recycled or discarded and go to landfill. The manufacturing usually involves multiple suppliers in a very complex supply chain, which reduces transparency and visibility along the complex value chain. Brands therefore are not aware of what happen at their suppliersâ business along the supply chain. Brands also do not typically deal directly with all those suppliers, and many do not bother to dig deep into their supply chains (Gunther 2016).
On the other hand, consumers are, attracted by the low cost and constantly update product ranges with new styles and designs. Consumers are buying these clothes much more often and in greater quantities, but often wearing them only a handful of times before discarding them. This fast-fashion industry and ecosystem consumes large amounts of natural resources in the production, which ultimately accelerating carbon emissions and global warming. The industry has also been linked to a number of cases of worker abuses in countries producing the garments. The workers were underpaid and exposed to unsafe and poor workplace conditions, particularly when handling materials like cotton and leather that require extensive processing (Remy et al. 2016). One example is the disaster at Rana Plaza, which is one of the deadliest accidents in the fashion industry happened on 24th April 2013. (The Economist 4th May 2013). Over 1,130 people were killed and 2,500 more were injured when the Rana Plaza factory complex collapsed in Dhaka, Bangladesh. It was reported that people crushed under those eight floors were working for dozens of familiar multinational brands and retailers. It is âone of the many negligent accidents that plague the garment industryâ (Fashion Revolution CIC 2015, p.4).
Assume you are a newly appointed accountant in a local fashion company -RTXM Clothing Company (RTXM) - based in Melbourne, Australia. This is a private family business with 20 shareholders. Currently, the company has seven different departments, include Accounting and Finance, R&D (product design and development), Salesand Marketing, Human Resources, Information Technology, Distribution and Logistics, and Merchandising, with a total of 130 employees. Managers in each department are given the authority regarding operational decisions and their performance is measured based on the companyâs profit, and all the other employees receive the fixed salary package. The company pays taxes to Australia Taxation Office (ATO) on a regular basis.
Originally, the business offered only t-shirts and jeans. As the business was trying to join the growing fast fashion industry, it expanded its product lines to include dress, trousers, shorts, hoodies & sweats, socks, shoes, and bags. The objective was to provide a wide selection of product lines in order to reach more fashion conscious consumers. A characteristic of them market is consumers are mainly attracted by low price, and frequent new styles and designs, so the company also seeks to find the suppliers with low prices. The business has retail stores in the major city across Australia and online store. Since the company expanded its product line, managers from different departments found the number of complaints received from customers have tripled. Most complaints are related to the product quality (products are either defective or damaged), items consistently out of stock, online shopping experience (delivery of wrong items and long response time to emails), and in-store experience (lack of attention from sales representatives), and some customers have posted complaints on RTXM social media.
In order to enhance the overall performance, the company is considering using a range of key performance indicators in managing its performance. This is to ensure that the company keeps track of its performance and to achieve the objectives they set for the identified issues.
In addition, the CEO and senior management decide to find new suppliers to improve the product quality, however, they encountered a dilemma. On the one hand, they found a supplier in Bangladesh, Super Cheap who can provide a large range of products to fit in their business expansion plan with a competitive price and all products can be supplied in a short time frame. However, after a careful investigation into this companyâs background, they found this supplier has a major issue with labor conditions throughout their supply chains, including the use of child labor, low wages, and health and safety hazards, and long working hours. In terms of the environmental aspect, Super Cheap consumes a few thousand litres of water to produce a cotton t-shirt and over ten-thousand litres to produce a pair of jeans, and wastewater discharge into the local river, and it did not take any action to solve this issue. The polluted water is no longer fit for drinking or laundry, fishes no longer exist in this river, and local residences complain that their homes are flooded by dirty water.
On the other hand, RTXM has another potential supplier, called Green Fashion, who only provides limited product range with a higher price, and products can be supplied in a reasonable time frame. However, Green Fashion takes account of sustainability and makes it as part of their business, and their sustainability agenda has been presented on its website, including fashion designs that is kind to the environment, they also ethically source materials and labour, promote work-life balance of the employee in the retail business, and provide incentives to their local and outsourcing partners and their employees if their targets are met. The CEO and management of RTXM learnt that Green Fashion has very similar values and sustainability agenda. RTXM considers sustainability as part of the business. It is reported on their websites that the company wants to rethink fashion designs so that they are kind to the environment, to ethically source materials and labour, promote work-life balance of the employee in the retail business, and provide incentives to their local and outsourcing partners and their employees if their targets are met.
3.The CEO believes the company was attractive because of its previous low price strategy but has also noticed unprecedented awareness from customers on the companyâs social responsibilities. The CEO approaches you to discuss the selection of supplier, which supplier is better for companyâs strategic development. Provide an explanation to the CEO with reference to the potential costs and benefits of working with both Super Cheap and Green Fashion.
Write 300 words
