High Cost Xerox Essay Example | Topics and Well Written Essays - 1750 words

elevated approach Xerox - Essay ExampleAccording to Slatter, there are half dozen major sources of cost outrage which can lead to a firm having to charge higher prices than its competitors.Let us analyze and apply the six factors illustrated by Slatter, to the Xerox corporation to get a better picture of the negative consequences of high oer head costsDue to staggering assets and international ventures that this long standing company had accumulated all over the past few decades, Xeroxs cash position had become tenuous. Its liquidity had deteriorated to the point where capital markets froze Xerox out. property is king in an economy in recession. like in 2000,and Xerox was crippled with assets without cash flow. High overhead costs piled up due managements obsession with expensive quality control measures during a slightly weak financial position. A perfect quality index while being admirable ,costs a lot of money. The trade-offs associated with 100% quality proved to be too l arge , take Xerox to increase its set scheme ,thus creating a negative competitive position. Some international and even local markets were non impulsive to pay the price for quality especially when Japanese low cost ,high quality products began invading the market. Xeroxs biggest flunk proved to be its financial situation, and specifically the heavy debt and the low profitability.The organization was too large leading to huge over head costs.Unlike its competitors who were concentrating on more advanced and diversified technology, Xerox employees were living in the past inspite of Xeroxs attempts at diversification.They still were focused on being a copier company sooner than a profitable documentation company or a modern information technology company. This resulted in loss of direction .Like all giant companies, it was difficult for talented innovators and entrepreneurs to survive, and instead the mediocrity had taken over and threatened the company from the inside. The once thriving copier division was still too influential and vetoed some other innovative projects .(Johan Olsson,january 1996). This made Xerox have weak credibility on the IT-business side lending it a less sophisticated image than its competition.2. Absolute cost disadvantages which result from competitors controlling strategic variable not available to the firm itself Let us take the example of the Japanese company decree,which proved to be Xeroxs biggest and cleverest opponent. As a late entrant in the copier market, Canon was forced to concentrate on niches where Xerox was weak. One of these was the low end, which Canon attacked with a series of progressively smaller machines, culminating, in 1982, with the plunge of the personal copier. Copiers were notorious for breaking down, a propensity Xerox exploited by charging for service calls. Canon realized that to be successful, a personal copier would not only have to be cheap, it would in addition have to be virtually service free . Canons revolutionary solution was to include all the key components - drum, charger,