Suggested Solutions to Xerox Case Study

Suggested Solutions to Xerox Case Study

By:        Mohammad Afzal Afzali

To:        Co-Instructor Mohabbat Ahmadi

Date:        June 17, 2015

Summary

The wolrd’s largest corporation called Xerox just faced falling revenue in the 99, but in the next yeat that company reported loss of more than 270 Million Dollars. This company is the world’s largest photocopier company in the United States. Xerox also lost $20 billion in stock market value (from April 1999 to May 2000). Xerox cited many reasons for its bad performance including the huge reorganization effort initiated by the then CEO, Richard Thoman. In May 2000, he was replaced by his predecessor Paul Allaire, and AnneMulcahy (Mulcahy) was made COO. Xerox revealed a Turnaround Program in December 2000, which included cutting $1 billion in costs, and raising up to $4 billion through the sale of assets, exiting non-core businesses and lay-offs. Subsequently, in August 2001, Mulcahy was made CEO .Xerox continued to report losses in 2001, but it returned to profit in 2002 and continued to report profits in 2003. Overall, this case was kind of examining the things led Xerox to loss and almost to bankrupt, and it particularly examines how changing strategies can turn around the path.

Answers

1. As a board member of Xerox, would you accept Chairman Paul Allaire’s proposal to a) terminate Richard Thoman, b) return temporarily as CEO, and c) promote AnneMulcahy to COO and eventually CEO? What strengths and weaknesses does Mulcahy bring to this position?

1. It is definitely yes, because he is no longer suitable for this position
2. It is not a good option
3.  Since there is no other option, they had to select Anne to this position

Anne’s strengths:

• Vision: She had a good vision for the future of this company. She wanted the company to stand on its leg and generate revenue as soon as possible.
• Communication and listening: She was always communicating and consulting with employees of this corporation. She was also good in relations with customers and shareholders.
• She was so curious that found in the beginning that nobody was clear about the responsibilities and how serious the situation was.
• Research and development: Mulcahy refused to cut any funding of research and development. “I knew that there was victory that would be shallow if we solved a bankruptcy issue and wound up facing a technology drought down the road.” Now, she said, two thirds of Xerox revenue comes from products and services introduced within the last two years.
• And other good thing was that she could immediately learned from the mistakes

Anne’s Weaknesses:

• She wasn’t prepared for this position
• She lacked some knowledge which was necessary for a COO. For example, she wasn’t able to read a balance sheet
• Uncertainty and stress: She also admitted that during few months nobody knew what to expect and how to remedy the situation, even though she did some fantastic movement at the beginning, the only vision she had was that she is able to survive the company.

1. How effective has Mulcahy been in her first five months as chief operating officer?

• Lequidity: She was more focused on finding cash for the company other wise the couldn’t do anything to face the challenges and she made it.
• Assembling the team: A good strategy of Anne was to find out who is interested stay or leave the company. And finally found the people who were really passionate about their work and some who left the company afterwards.
• Improved communication channels: she encouraged the senior managers to communicate with each other directly discussing issues and agenda to improve productivity and team work.
• She could also visit some of the big customers to find out the challenges and decencies to find solutions for them.

1. As a member of Xerox’s executive team considering the strategic options presented on October 23, 2000, which course of action would you recommend to Mulcahy? What are the implications of each of the three options?

There were three options on desk as follows:

1. Implement cost cutting while continuing to fund R&D and field sales and service, in order to restore credibility in Xerox brand.
2. Make deep cuts in R&D, product development, and field sales and service in order to save the company.
3. Follow the recommendations of outside advisers and declare bankruptcy and then initiate an aggressive turnaround plan.

I would recommend the first option which is; “Implement asset sales of ‘live wood’ and painful cost cutting while continuing to fund R&D and field sales and service, in order to restore credibility to the Xerox brand and it’s market”.  And also do the following: 1) think creatively; 2) Layoff some employees; 3) Outsource some work; 4) value the cutomers; 5) reducing cost and 6) improving communication with staff and customers. This was the option that they also considered and won the situation.

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