The Venray site director currently reports to MS through the Rank Xerox Manufacturing Operations organization. We are currently working on recommendations on how to align and transition focus factories to report to the business teams/business divisions. The Venray product array does, however, support more than one business division. There will be areas that are not included in the focus factories and that will remain reporting to MS.
Note that within the Venray site (Exhibit 1) there were functions that reported to the Venray site director as well as to organizations outside Manufacturing Support.
Performance measures were driven by the Manufacturing Support organization with Supplies and the Materials and Supply functions being driven by
1 The local currency is the functional currency for all other parts of the world.
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the respective organizations managing them as indicated on the organization chart. This responsibility will transition to the divisions in line with the reporting structure referenced above with ongoing support from MS, Supplies, Integrated Supply Chain, and Customer Operations organization. In essence, central support organizations provided services for the business divisions and sustained the performance measures as appropriate.
Questions
1. You are the Western regional sales controller, and the sales manager has asked for your help. A major California bank with over 200 branches has chosen to cancel the Xerox copier contract (annual lease revenue of over $1 million per year) due to pricing. The competition with a West Coast assembly plant has made an offer 27 percent less than yours. You can make up 5-7 percent of the difference without materially affecting your budget. If the customer is to be preserved, you need pricing help from the factory. You call the US Customer Operations controller because the loss of sales revenue will significantly affect your budget. What are the options for Xerox, and how will Sach resolve the issue?
2. The Venray plant transfers copiers to the US Customer Operations for a FOB EC port price. If the US customer price is 100 percent and the Venray transfer price is 60 percent, answer the following:
a. What currency is used to value the trade?
b. Who is responsible for hedging?
c. As the Venray controller, what is your currency exposure?
d. How does this influence your performance measures?
e. Does this system seem fair to you? What, if anything, would you change?