Innovative Approaches in Corporate Management

Part 1

Polaroid and Xerox have these common strategic management points:

First movers (Pioneers)

Patents

Propitious niche

Product life cycle

Market leaders

Brand Name (Customer Loyalty)

Polaroid Corporation and Xerox Corporation, being first movers, enjoyed propitious niches and were able to establish a monopoly for some period of time by establishing barriers to entry. Polaroid did this with its patent for its instant picture market, and that created an entry barrier for competitors until the expiration of the patent, which opened the door for competition. Xerox did this with its patent on photocopier Xerox Corporation, developed the first copiers in the late 60s had monopoly patent protection, giving it almost 95% market share in the 70s. However, it lacked innovation, and could not introduce new products to the market, and provide good services to customers. Competitors took advantage of this, causing Xerox to lag behind their competitors, because the competitors developed and introduced new and even better copier technology with new technology (without infringing on Xerox's patents), and also provided customers with faster delivery and better service.

Polaroid's inability to defend its niche, keep new entrants out and inability to adapt to technological innovations led to the loss of their propitious niches and significant loss in market share. Xerox, as a dominator of the copier market, experienced years of success, but started losing share price to the copying and printing giants around the world, who were taking chunks of its market share; after massive sales-force reorganization, employee morale had been destroyed. Its brand has so penetrated the American vernacular that it is also used as a noun and a verb. The company is so identified with its product that the term "Xerox machine" is often used to refer to photographic duplicators produced by other companies.

Consumers recognize the Polaroid name in an instant. The company makes instant film and cameras, digital cameras, specialty photo gear (such as lenses and filters), professional imaging equipment, and security ID-card systems.

Customer loyalty is a direct benefit of being a first mover. Many times, first movers are remembered, primarily because they did such a good job of establishing the market that they became forever associated with it. Many first movers were so good at establishing the market for the product that people use their name as the generic product.

Product life cycle is very critical to the setting of strategy in companies. Polaroid's instant camera had gone to its maturity stage and it was time to develop something new, like the digital camera, but they failed to do this. Xerox's black and white copiers had also reached its maturity stage and they should have gone into production of color copiers earlier.

Part 2

Xerox Corp. ---- Some Strategic Mistakes

"Once synonymous with corporate success and technological innovation, Xerox is now struggling with losses and a leaden stock-not to mention a reputation for fumbling high-tech opportunities". (www.businessweek.com /2001/01_10/b3722003.htm)

Xerox's downfall can be attributed to, its inability to adapt to technological changes and management failure. However, their biggest problem is internal. They failed to improve on their strengths, and also failed to turn their weaknesses into strengths. They struggled with internal communication, incentive structures, and marketing. The rapid change of the technology sector makes most of the technological companies suffer.

Xerox made a lot of strategic mistakes, ranging from failure of protecting market share from competition; having been lagged in developing products with digital technology; board irresponsibility; traumatic sales-force reorganization; inefficient service-force reorganization; serious financial problems such as heavy short term debts, built up working capital and accumulated account receivables; ineffective transition from selling high-tech products to selling high-tech solutions and services which resulted in losing the direction of the company.

With the advent of IBM into the copier field in the late 60s, Xerox decided to experiment with computers. It formed Xerox Computer Services, acquired Scientific Data Systems, and opened its Palo Alto Research Center (PARC) in California. Xerox through PARC, invented most of the technology used today, i.e., Alto, the first personal computer. Bravo, the word processor that later morphed into WordStar and Microsoft Word, Email, later the killer application for America Online, GUI, the graphical user interface Xerox let Steve Jobs steal for free, and which Microsoft then stole again to create Windows. Ethernet, the Ethernet that enabled PCs to tie into networks, and led to the growth of the Internet, and to world's most valuable company, Cisco Systems.

In order to further its project for an "architecture of information", Xerox completed several acquisitions, which unfortunately, led to a clash of cultures between its East Coast operations, and the West coast (PARC) computer people. Xerox's inability to include all employees in their strategy formulation, to implementation, kept its employees out of the strategic process, and this severely affected the company.

The failure of Xerox PARC to patent inventions such as the computer mouse and the graphic user interface resulted in other companies such as Logitech and Apple Computer, Inc., building companies based on these innovations without payments to Xerox. Even though Xerox had all the pieces in place to be a "real player" in something other than photocopying, they lacked seriously in the execution of their strategy.

Because of the development of technology and deregulations of trade barriers in global trade agreement, globalization has long been a trend in all business aspects. Competition has gone from being local to global. Finally, the environmental concern is increasingly important in people's mind. The implementation of this concern ranges from green food to paperless office (the advent of the Internet/Intranet). The environment is not stable and friendly, especially for

Part 2 Xerox Corp. ---- Some Strategic Mistakes (cont'd)

the companies in technology sector,