Xerox Corporation - Cause of Failure Competition Essay

Xerox Corporation - Cause of Failure Competition - Essay Example These factors increased competition enhancing the need of new technological innovations and new ways to compete. "In the 1980s, Xerox Corporation's revenue share of the copier business declined from 90 percent to 43 percent as a result of increased competition from Ricoh, Sharp, and Canon in Japan and Kodak and IBM in the United States" (Contemporary Trends in Human Resources Management, n.s.). The industry of competition can be characterized as follows: "Xerox compete in the market for service of Xerox high volume copiers" (Xerox Corporation. Creative Copier services. 2004). In general, competition theory has been developed, described and analyzed by such gurus as M. Porter, C.K. Prahalad and G. Hamel, R.M. Hodgetts, H. Mitzberg, R. D'Aveni. They describe that to be effective, competition should not always be a formal process. Studies of the planning practices of actual organizations suggest that the real value of competition may be more in the future orientation of the planning process itself than in any resulting written strategic plan. The failure Xerox Corporation proves the fact that competition is not always "a safe" way to obtain a strong market position. Michael Porter contends that a corporation is most concerned with the intensity of competition within its industry. "The collective strength of these forces," he contends, "determines the ultimate profit potential in the industry, where profit potential is measured in terms of long-run return on invested capital." (Porter, 1980). The stronger each of these forces is, the more companies are limited in their ability to raise prices and earn greater profits. According to the case study "started from year 2000, Xerox's share price had fallen below $4, from a high of $64 a year earlier. Moreover, the copying and printing giants around the world were taking chunks of its market share" (Case Study: Xerox Corporation, n.d.). This failure was caused by the fact that intense competition and management strategy aimed to overcome "temporal" decline resulted in failure. A strong market position obtained by Xerox Corporation resulted in "less concern for US competitiveness" (Kato, n.d.). Globalization and international integration presents Xerox Corporation with enticing opportunities and challenges to reconfigure itself. New horizons allowed Xerox Corporation to maximize its global sales, in the belief that those that offer a global service and have a worldwide success through regional policy will be in the strongest competitive position (Xerox Corporation, 2005). Nevertheless, Xerox Corporation paid less attention to such important issues as technological changes and innovations. In his book "Competitive Advantage" Porter identifies five forces that drive competition within an industry: 1. The threat of entry by new competitors. 2. The intensity of rivalry among existing competitors. 3. Pressure from substitute products. 4. The bargaining power of buyers. 5. The bargaining power of suppliers (Porter, 1985). It is important, that a strong force can be regarded as a threat because it is likely to reduce profits. In contrast, a weak force can be viewed as an opportunity because it may allow the company to earn greater profits. In the short run, these forces act as constraints on a company's activities. In the long run, however, it may be possible for a company, through its choice of strategy, to change the strength of one or more of the forces to the company's advantage. The company states that: "We developed a comprehensive process