Question 1 Outline the management control system at Xerox. What are the key elements that make the system work? During 1970s, the management system of the company was rigid and accuracy was emphasized, which compromised the management control quality and also lead to unnecessary bureaucracies. In addition, customers’ satisfactions were also neglected due to the bureaucracy occurred. Then, the company’s targets were set unrealistically by the numbers people i.e. the managers who set the goals. To make it worse, the targets made were based on inadequate data and analysis which ignores the internal and external factors of the company.
Besides, the reporting and planning process were very long and bureaucratic. Then, due to the negative factors stated, Xerox began to face some problems. They began to shaken as they were starting to lose a significant amount of share market in the industry from 96% on the year of 1970 to 45% on the year of 1980. Besides, Xerox’s original patent for the plain paper copier expired in 1970, thus, flagged a potential threats from the competitors. For example, the competitions arise from IBM, Kodak and Japanese firms that were competing for the large and small copy machine market share in the industry.
In addition, the cumbersome management process among the business divisions and inconsistencies in reporting process occurred which may lead to the problem. Maybe due to the burdensome of the management control, many good and skilled employees had left the company which lead to a higher rate of attrition problem. Due to this, several solutions have been derived by Xerox in order to overcome the drawbacks. Leadership through Quality (LTQ) has been developed in order to revitalize the company’s competitive factor for gaining the market share again. The LTQ was built upon the competitive benchmarking and employee involvement, plus the improvement within the management process among the business divisions.
In achieving the strategy’s goal which is on quality values – the company has encouraged open communication within the organization, emphasis on high quality of human capital for the organization, and to be at the state-of-the-art in the information technology. The Finance technicians have to work together with the Marketing and Technology groups in order to realize the LTQ objectives. Xerox has improved the information system management and standardized reporting formats in rectifying the problems. The Finance Executive Council (FEC) was established as the central focal point for Xerox’s finance function and decision making while working closely with the line management of Xerox (i.e. from an accounting policy group to value-added policy group).
FEC was also functioned as the development centre for the company’s financial human capital talent, and recognized them via the thinking-tank projections for policies and strategic considerations. Besides, FEC also promoted trust in the Xerox finance community via a structured discussion but under an informal atmosphere.
Question 2 What recent trends at Xerox do you see influencing the management control process? Previously, during 1970s, Xerox had a culture that emphasized on rigidity and accuracy within their system. This had led to quality compromise for the customers and long process of bureaucracy within the company. They also set unrealistic targets in regardless of the quality control, customers’ satisfaction and other related factors that would affect the company’s market share. However, in 1982, a corporate revitalization strategy was established during David Kearns’ era which was called Leadership through Quality (LTQ).
The strategy was emphasized on the involvement by the employee, competitive benchmarking for maintaining their performance standards and the quality improvement process i.e. continuously improving company’s internal processes in coping with customers’ requirements. In addition, Xerox has established several joint ventures with other companies in other regions in gaining the market shares in the region. For the access to Europe, Africa and Middle East – Xerox has made a joint venture with Rank Organization PLC, thus, forming Rank Xerox Limited and now the company is under Xerox’s full control since 1997. For the access to Japan and Asia, Xerox has made a partnership with the local firm and established Fuji Xerox (still maintained the joint venture until now).
At the same time, separate arrangements were made with the South and Central American countries. In addition, Xerox India (formerly Modi Xerox), is the joint venture company derived with Dr. Bhupenda Kumar Modi in 1983 (Xerox has obtained a majority stake in 1999). The Finance Executive Council (FEC) has evolved from being an accounting policy group to the added-value accounting group. Their role have greatly involved in formulating management decisions by working closely with the operating units. They have set their course in becoming a world-class financial operation based on their benchmark studies. In addition, the FEC has become the development centre for financial talents. The FEC has actively promoting trust within the community and shall meet quarterly for informal but thorough discussions.
Question 3 In your opinion, how important are organizational culture and individual personalities in the Xerox control process? Organizational culture and individual personalities within the company are crucial elements to determine the success and sustainability of the company itself. It is very difficult to get employee’s acceptance to change. Thus, by having a good culture within the company, the needs of changing employees’ behavior are minimized since employees’ objectives already met the company’s objectives. Thus, this is the result of goal congruence within the company.
Question 4 What happen to Xerox now? Are they still implementing the same management control system? Around the year 2000, Xerox was facing a bankruptcy threat, just shortly after Anne Mulcahy took over the post as the CEO of Xerox. In overcoming the potential debacle of Xerox, she had personally met the top 100 executives of Xerox and explained to them the company’s dire situation and to confirm the executives’ commitment. Upon from that, 98 of them had decided to stay with Xerox. Instead of the company to cut-back its research and development expenses, Anne Mulcahy had instructed to bump-up the expenses in encouraging innovation, which she believed innovation, products’ quality and customers’ satisfaction, is Xerox’s main core.
Besides, the management process has been emphasized more on face-to-face customer and partner interactions. Even the CEO herself shall personally fly to meet the customer in order to fulfill the complaint. Then, she had also motivated her employees to focus on Xerox’s customers’ complaint and to attend on them. From this, we can see that the company had emphasized on personalization in the management process and to forgo the company’s bureaucracies. In 2003, Xerox has implemented Lean Six Sigma upon the management process. Lean Six Sigma is a synergized managerial concept of Lean and Six Sigma which resulted to wastes elimination and also to reduce the defects’ threats within the line-management process.
It was built on its predecessor i.e. Leadership through Quality (LTQ), which focused on reducing wastes and to improve on management’s effectiveness. Besides, the company has encouraged working together on a multi-discipline basis for any potential project. In 2009, Ursula Burn has succeeded Anne Mulcahy as the CEO of Xerox. Upon Anne Mulcahy’s announcement to retire, the company’s market stock has been negatively affected by the former CEO’s announcement. Thus, this has led Ursula Burn to bring back the shareholders’ confidence on the company by focusing on their core competencies which are on quality and customers’ satisfaction. Besides, the company is currently is focusing on Business Process Outsourcing (BPO) which they believed to enhance the company’s core values and also to improve its competitiveness in terms of cost advantage and flexibility.