Xerox Analysis Essay Example

sales, and ongoing customer care for service. By focusing on R as the primary link in this value chain, Xerox was able to achieve a financial turnaround - from $94m in 2001 to $978m in 2005. This shift in strategy manifested in Xerox moving away from being product-oriented to becoming service-oriented, which allowed them to recognize that services were driving their industry more than products. The insights gained through their value chain allowed them to rework both their business model and corporate strategy, with specific focus on their black and white printing services which became the cash cow of the document industry. To actively represent these services, Xerox tasked its sales force accordingly. ("Anne" 16; "True" 5)Xerox decided to allocate resources towards creating a service market for their "New Business of Printing" and focusing primarily on document services, due to the significant role that services played in their value chain. This was highlighted in "True" 5.

According to researchers, the use and applicability of value chains can lead to effective strategies. Although value chains do not introduce new knowledge to businesses, they offer a distinct understanding of familiar processes and procedures (Kaplinsky 142). By comprehending component-level details and having a holistic grasp of the market, Xerox successfully redefined its business model and corporate strategies using these principles. This conceptual understanding allows Xerox to have a competitive edge and adapt quickly in an ever-changing business climate. In addition, creating a value chain for Xerox can potentially lead to new and alternative value chains that can be incorporated into the company or linked with pre-existing ones.

According to source "A" (page 10), it is possible to generate

a fresh opportunity by linking a fresh value chain with an existing one.This article explores Xerox's recent expansion into the digital technology solutions market for traditional printing companies, which enhances its core strengths in printing and document management. Xerox had a successful financial year in 2005 and is expected to continue this trend in 2006. In fact, Xerox earned $978 million or 94 cents per share outstanding in 2005, representing a 9% increase from the previous reporting period ("True" 5). While being reliant on intangible services may make Xerox vulnerable to market instability as a tech company, its strong financial position should allow it to weather any potential downturns.Xerox successfully redefined its value chain and allocated resources to key profit centers, resulting in a reduction of debt from $10 billion to $7.3 billion and operating cash flows of $1.4 billion (source: "True" 5). The company's effective management of operations is evident through significant revenue generated from existing intellectual capital, as demonstrated by a return on assets of 1 in 2005 - calculated as revenues of $15,071 million divided by average total assets of $8,736 million (*measures the effectiveness of assets used to produce profits).

Xerox's profit margins and gross margins are both strong, but not outstanding. The company is still working on reducing its debt and improving efficiency, following its near bankruptcy in 2001. In 2005, Xerox's net profit was $978 million, which represented a profit margin of 0.13 (or 13%).

In terms of operational improvement, Xerox still has room to grow. However, the company's business model and corporate strategy seem sufficient to facilitate such improvement. This can be seen in the Gross Profit %Gross

margin2005 Gross profit1461 / Sales7400 = Gross margin %0.19 figure from "True" 55.