Anne Mulcahy – Leading Xerox through the
Abhra Chatterjee (110)
Avishek Chattopadhyay (111)
Firoz R V (145)
Prashant Shukla (155)
Dalsher Singh Dhillon (156)
Introduction to Xerox
Insights to the case
Continuing trend – analysis of strategies of different leaders
Emergence of Anne Mulcahy
Possible Turnaround Strategies
Zeroing on the perfect strategy
Implementation of the perfect strategy
Xerox- world's leading document management
technology and services enterprise
• Built on the foundation of one of the most successful product launches ever
• In 1959 introduced the first product, 914 copier
• By 1970 enjoyed a 95% share of the plain-paper copier market
• Model corporate citizen with heavy investments in R&D
• Palo Alto Research Center (PARC) established in 1970 originated many
technologies that launched the information revolution
• Adopted a slow but exacting multi-stage process from initial research to
Facts of the case – The Perfect Storm
• Experienced overwhelming success initially
• Breeding of anti-monopoly pressures and confrontation with several lawsuits –
forfeiture of patents and agreeing to license its technology
• Emergence of new and aggressive competitors like Canon, Minolta, Ricoh and
• Loss of market share coupled with unpreparedness for price competition
• Unable to adapt to smaller margins and reduced profitability
• Heavy expenses, shrinking market share, compounded losses, lack of revenues
and weak cash flows
Strategies over time
Products of relatively inferior quality compared to its competitors
Market share in copier came down sharply from 80% to just 13% in 1982
In 1982,David T. Kearns took over as the CEO
Average cost of Japanese machines was 40-50% of that of Xerox
Operating cost was high
Launching a program referred to as ‘Leadership through Quality’
Management layers were cut
Greater authority delegated to lower levels
Employees were allowed to participate in decision making
In 1980’s Xerox bought Kurzweil, Datacopy and Ventura companies that
specialized in optical character recognition, scanning and fax machines
It also diversified into financial services, insurance and investment banking
Allaire succeeded Kearns as the new CEO in 1990
In 1992 Xerox entered into various tie-ups with Dell Computer Corporation and
Company announced a major restructuring program (3 geographically defined
organizations selling products from nine product divisions)
Eliminated 10,000 jobs and divested the insurance business.
In 1997 Allaire further reorganized the nine divisions into four divisions and
forayed into new businesses such as production printing and developing retail
Thoman replaced Allaire as the CEO in April 1999 though Allaire
continued as chairman.
Thoman further consolidated four geographically oriented customer
administration centers (handled billing and collections) into three customer
Customer facing order entering personnel from over 30 customer business
units were moved to the three customer centers.
Thoman continued to buy out partner stakes in overseas joint ventures
(Fuji’s share in Fuji Xerox)
Commissions reduced significantly.
Sales representatives began losing their accounts.
Sales staff attrition increased by a considerable amount.
In a bid to find new businesses it cut prices hence lost out on margins.
Dominance in production printing ended with entry of Heidelburg.
Financial crisis in Latin America
Low Morale causing massive defections
Doubtful and misclassified accounts in Mexico gave Xerox a bad name
Reasons for Downfall
• Sales force failure: Reorganizing the Sales force
• Failure to tap the opportunities generated through innovative product concept
• Faulty accounting standards and improper balance sheet filing leading investors
to lose hope and loss of creditworthiness.
• Reporting future cash flows of leased machines in the present financial year
(1999). This increased the valuation of the company temporarily but once the
company failed to live up the expectation, investors left the company
Strategic Failure attributed to two main reasons:
a. failure to commercialize the technology;
b. failure to protect the resulting intellectual property.
The Making of Anne Mulcahy
• Graduate from Marymount College with a joint major in English and
Journalism in the year 1974
• Started her career in Xerox as a sales representative hounding the streets for the
• Struck a proper work life and family balance after marrying Joe Mulcahy
• Promoted to Vice President for human resources in 1992
• Led GMO, Xerox’s new venture in web and retail sales and launched a small
office and home office (SOHO)
• Became COO in May 200 taking charge of internal business including
operations, solutions and world wide business services
Anne Mulcahy’s initial efforts as a leader
• Assembling her team and improving communication amongst her
• Extensive fact finding tours in the business, visiting employee operations
and major customers
• Fully understand the challenges facing Xerox
• Provide her team with confidence that the company could survive in spite
of her personal doubts
• Made people publicly accountable for their results, set realistic expectations
despite the tremendous pressures
Three possible strategies
Implement cost cutting while continuing to fund R&D and field sales and
service, in order to restore credibility in Xerox brand.
Make deep cuts in R&D, product development, and field sales and service
in order to save the company.
Follow the recommendations of outside advisers and declare bankruptcy
and then initiate an aggressive turnaround plan.
Turn around strategy
Sale of assets (Chinese operations, Fuji Xerox)
Improve communication with employees and improve decision making
process for top management.
Stream line processes such as billing process.
Cost reduction through employee involvement.
• Pushing into services
• Adaptive and opportunistic
• Value to customers
The company generated profit of $978 million in 2005.
Mulcahy became one of the world’s most respectable leaders.
She was named the fifth most powerful women in the world by Forbes
Strong product development capability
Dominance on the copier market
Weak operating performance
Dependence on third party manufacturers
Stagnant revenues from the office segment
The color market
Launch of carbonless paper