Ikon's office Solutions Environmental Analysis

IKON's Office Solutions Environmental Analysis

IKON integrates imaging systems and services to help businesses manage document workflow and increase efficiency. In the next 10 years, success factors that are going to be critical to the business include building solid growth initiatives to expand market reach, developing a highly responsive and cost efficient infrastructure, and achieving greater financial flexibility to ensure the return value to the shareholders and respond more aggressively to new market opportunities. The changes that IKON will go through within the next 10 years to come will ensure that the product and services provided are flexible, services-centric and customer-focused. To this end, the company continues to emphasize key growth areas such as professional services, outsourcing and color and production equipment.

Remote Environment

IKON's access to equipment, parts and supplies depends upon its relationships with, and its ability to purchase equipment on competitive terms from its principal vendors, Canon, Ricoh, Hewlett-Packard and Ocй. IKON has not and does not currently enter into long-term supply contracts with these vendors, and they do not have any current plans to do so in the future. These vendors are not required to use IKON to distribute their equipment and are free to change the prices and other terms at which they sell to the company. In addition, IKON competes with the direct selling efforts of these vendors. Significant deterioration in relationships with, or in the financial condition of these significant vendors could have an adverse impact on IKON's ability to sell and lease equipment as well as its ability to provide effective service and technical support. If one of these vendors terminated or significantly curtailed its relationship with IKON, or if one of these vendors ceased operations, IKON would be forced to expand its relationship with other vendors, seek out new relationships with other vendors or risk a loss in market share due to diminished product offerings and availability.

Industry Environment

To develop a highly responsive and cost efficient infrastructure, IKON focuses in maximizing the efficiency of the organization through a streamlined infrastructure, comprehensive information technology system, process improvements, and effective asset management. In efforts to streamline their infrastructure, a continuous implementation of e-IKON initiative, a process and systems software solution that integrates more than forty of the forty-five Oracle E-Business modules in the U.S. Current e-IKON activity is focused on optimizing supply chain and customer care support, which are two areas of the company that management believes have the most opportunity in terms of productivity and potential costs savings.

Operating Environment

IKON's ability to improve its profit margins is largely dependent on the success of its initiatives to streamline its infrastructure and drive operational efficiencies across IKON as mentioned above. Beginning in fiscal 1999, IKON created the largest operating units, IKON North America (INA) and IKON Europe (IE), by integrating business services, outsourcing and captive finance subsidiaries (www.ikon.com). The company maintained focus on their strategic priorities such as operational leverage, optimizing core sales and service capabilities in areas such as national accounts and color, and expansion into profitable adjacencies such as professional services. IKON's national account business continues to be successful. Color revenues increased year over year, strengthening prospects for future service and supply revenues. Also, IKON launched Enterprise Services' new integrated solutions portfolio of document management services that will allow to address the specific business problems and document challenges customers are facing in both office and production environments (www.biz.yahoo.com). IKON Office Solutions stands by their equipment which enables the organization to offer complete, end-to-end solutions addressing every phase of the document management lifecycle.

Long Term Objectives

This year marked a strategic milestone for IKON as they commenced the transition out of the lease financing business in North America as part of a new strategic alliance with GE Commercial