The very first step that the Xerox had to take was to enhance and change the corporate culture, which usually is very difficult and time consuming, since the process involves changing the perceptions of the people in the organization. David Kearns decided that this "corporate culture turnaround strategy" was to be achieved by extensive training. A company motto was established, "the better the quality, the lower the overall costs." In 1983, Xerox implemented a "Quality through Leadership" program, which had three main objectives. First to improve profits as reflected in higher returns on assets. Second, to improve customer satisfaction, and third, to improve market share. David Kearns first believed that these three objectives were of equal importance. However, soon it was recognized that the objectives were in conflicting nature, and they could only be achieved on the expense of one other. Therefore, one particular objective was ranked as most important to improve customer satisfaction.
The cost of the implemented program was enormous, $125 million, and over 4 million hours of man hours of work. However, the results of the program were positive. Customer satisfaction increased by 40% and customer complaints decreased by 60%. Promotions were based on criteria not related to quality. By 1989, 75% of Xerox workers participate in the drive for perfect quality, and over 7,000 quality improvement teams were formed. Company expenditure designated for training was increased to 2.5%-3.0% of the annual revenues. In the total quality control (TQC) concept, employees are empowered to take responsibility for quality.
In addition, Xerox closely examined companies such as American Express, American Hospital Supply and L.L. Beam in the purpose to learn how to increase efficiency. This process is known as competitive bench marking which is the "continuous process of measuring products, services, and practices against the company's toughest competitors or those companies renowned as industry leaders." This kind of strategy forces the corporation to examine and effectively respond to changes in the competitive environment.
Furthermore, since it is difficult to control the quality standards of several suppliers (Xerox had 5000), Mr. Kearns decided to cut down the number of suppliers to 300. This action made it possible for the corporation to gain more control over the quality of inputs and to reduce costs.
Did Xerox satisfy the ten elements from implementing a TQM program?
Total Quality Management (TQM) is viewed as a new organizational culture and way of thinking. There are ten essential elements of implementing total quality management. First, the organization has to define "quality". Company personnel should have a clear definition of what quality means in the job, department, and throughout the company. I believe that Xerox did satisfy this element. Xerox was able to "empowering employees to take responsibility for quality." Effective reward systems, and extensive training made this possible.
The second element in TQM is to develop a customer orientation, which emphasizes that quality is what the customer says it is. Xerox did fulfill this element. Employees were directly involved in the sales process, and became directly responsible for keeping customers satisfied. In the Xerox organization, "Employees are closest to the customer".
Third, TQM requires focus on the company's business processes. Processes in all functional areas of an organization should be closely examined, and the organization should look for ways to improve them. Again, Xerox did closely examine its functional areas, such as manufacturing processes. By better utilizing assets, including the employees, Xerox was able to increase its return on assets. Defect free products rose to 99.95 percent. The fourth element which is to develop customer and supplier partnerships. This view suggests suppliers are partners in meeting customer needs, and customers are partners by providing input so the company and suppliers can meet customer product expectations.
Fifth, an organization must take a preventive approach. The management should be rewarded for being prevention oriented and seeking to eliminate non value-added work. The organization must be proactive. Sixth, the organization has to adopt an error-free attitude. Instill an attitude that "good enough" is not good enough anymore. Xerox clearly fulfilled this requirement, since it reached a nearly perfect quality index, and that David Kearns still emphasized a 100 percent fault free products.
Seventh, a company that is in the process of implementing a TQM program should "get the facts first." TQM companies should make decisions based on facts, not on opinions. Xerox fulfilled this requirement, since the company was turned into an information company, as opposed to a copier company. Xerox was one of the first companies to conclude that the "Industrial age" is over and the "Information Age" has begun. Furthermore, research and development staff was reorganized and trained.
Eight, a TQM company should encourage every manager and employee to participate. Xerox was able to fulfill this element. Employees were included in more management decisions. Line workers and other personnel was involved and were given the opportunity to provide input in finding ways of improving production and service through quality improvement teams. The ninth element is to create an atmosphere of total involvement. TQM cannot be achieved unless all areas of the organization apply quality concepts simultaneously. Xerox fulfilled this requirement as well. All functional departments in the organization were involved, and Finally, TQM companies should strive for continuous improvement. Quality is not only a one-time program of competitive response, for it creates a new standard to measure up to. Improving quality is not only good for the profitability of the business, but it is a necessity for long term survival of the corporation. Xerox is clearly planning on preserving its TQM approach, and it is a vital part of the company's long term strategy.
Problems in the 1970's
Xerox dominated the document processing industry before the middle of the 1970's. The company anticipated that no one single competitor would be able to penetrate the industry. Xerox believed that the barriers to entry were high, and that most Xerox customers would continue to be loyal towards the company. The company did simply not take the competition seriously. They underestimated the power of the competition, especially high potential Japanese manufacturers.
In addition, Xerox was not worried that the Japanese started to penetrate the international copier market in the early 1970's with their low-cost copiers, since Xerox believed that "low cost mean low quality." They believed that their products were untouchable since they were superior in quality and technology. They believed that "the Japanese products posed no threat, because their products were seen as cheap, unreliable, and of laughable quality."
What Xerox did not anticipate was the Japanese were able to catch up in the international market place, and that they were able to keep costs low, but the products were of good quality. In addition, Xerox did not respond to the plain paper copiers which the Japanese introduced in 1974. Furthermore, the Japanese were able to produce their products more effectively than Xerox, and the parts used in production were less complex, mass produced, more reliable, and easier to fix than Xerox products. In addition, the Japanese were able to sell their products instead of leasing them, which released tied-up capital. Xerox suddenly had to realize that the company was being out produced and under priced.
Xerox's key success factors
The key success factors to Xerox successful strategy turnaround are very much employee related. First, increased involvement of employees has directly increased customer satisfaction. Employees are now directly responsible for keeping customers happy and satisfied. Also, since "employees are the closest to the customer", so they know the best how to please the customer. Furthermore, employees are involved in more management decisions. A large emphasis is placed on employee participation. In addition, plenty of money was spent on employee training. I believe that the funds spent on training paid off good returns. A large emphasis was based on changing the corporate attitude regarding the concept of quality, This massive cultural change was accomplished by the training programs. A new slogan was developed, "the better the quality the lower the overall costs."
In addition, the new customer supplier relationship which was created aided in the process of improving the quality standards of component products. It is logical that it is impossible to produce a superior quality product, when components do not meet required quality standards of the company. Also, by better utilizing assets, including the employees, Xerox was able to increase returns on assets (fixed assets) by almost 300 percent.
Furthermore, by reorganizing the organization (particularly in the research and development staff and the marketing force), with the objective of viewing new product lines as systems in the organization. Also, Xerox was one of the first major corporations that recognized the need to move from a purely product-line oriented company (copier company) to an information company. Computer information networks such as Ethernet and other office communications networks made it easier for divisions and people in the organization to communicate with each other. One of the major problems that corporations face today are problems and interference in communication channels.
Examples of strategic and operational controls
There are numerous examples of Strategic controls in the Xerox case.
First, employees are Operational control systems guide, monitor, and evaluate progress i
The very first step that the Xerox had to take was to enhance and change the corporate culture, which usually is very difficult and time consuming, since the process involves changing the perceptions of the people in the organization. David Kearns decided that this "corporate culture turnaround strategy" was to be achieved by extensive training. A company motto was established, "the better the quality, the lower the overall costs." In 1983, Xerox implemented a "Quality through Leadership" program, which had three main objectives. First to improve profits as reflected in higher returns on assets. Second, to improve customer satisfaction, and third, to improve market share. David Kearns first believed that these three objectives were of equal importance. However, soon it was recognized that the objectives were in conflicting nature, and they could only be achieved on the expense of one other. Therefore, one particular objective was ranked as most important to improve customer satisfaction.The cost of the implemented program was enormous, $125 million, and over 4 million hours of man hours of work. However, the results of the program were positive. Customer satisfaction increased by 40% and customer complaints decreased by 60%. Promotions were based on criteria not related to quality. By 1989, 75% of Xerox workers participate in the drive for perfect quality, and over 7,000 quality improvement teams were formed. Company expenditure designated for training was increased to 2.5%-3.0% of the annual revenues. In the total quality control (TQC) concept, employees are empowered to take responsibility for quality.In addition, Xerox closely examined companies such as American Express, American Hospital Supply and L.L. Beam in the purpose to learn how to increase efficiency. This process is known as competitive bench marking which is the "continuous process of measuring products, services, and practices against the company's toughest competitors or those companies renowned as industry leaders." This kind of strategy forces the corporation to examine and effectively respond to changes in the competitive environment.Furthermore, since it is difficult to control the quality standards of several suppliers (Xerox had 5000), Mr. Kearns decided to cut down the number of suppliers to 300. This action made it possible for the corporation to gain more control over the quality of inputs and to reduce costs.Did Xerox satisfy the ten elements from implementing a TQM program?Total Quality Management (TQM) is viewed as a new organizational culture and way of thinking. There are ten essential elements of implementing total quality management. First, the organization has to define "quality". Company personnel should have a clear definition of what quality means in the job, department, and throughout the company. I believe that Xerox did satisfy this element. Xerox was able to "empowering employees to take responsibility for quality." Effective reward systems, and extensive training made this possible.The second element in TQM is to develop a customer orientation, which emphasizes that quality is what the customer says it is. Xerox did fulfill this element. Employees were directly involved in the sales process, and became directly responsible for keeping customers satisfied. In the Xerox organization, "Employees are closest to the customer".Third, TQM requires focus on the company's business processes. Processes in all functional areas of an organization should be closely examined, and the organization should look for ways to improve them. Again, Xerox did closely examine its functional areas, such as manufacturing processes. By better utilizing assets, including the employees, Xerox was able to increase its return on assets. Defect free products rose to 99.95 percent. The fourth element which is to develop customer and supplier partnerships. This view suggests suppliers are partners in meeting customer needs, and customers are partners by providing input so the company and suppliers can meet customer product expectations.Fifth, an organization must take a preventive approach. The management should be rewarded for being prevention oriented and seeking to eliminate non value-added work. The organization must be proactive. Sixth, the organization has to adopt an error-free attitude. Instill an attitude that "good enough" is not good enough anymore. Xerox clearly fulfilled this requirement, since it reached a nearly perfect quality index, and that David Kearns still emphasized a 100 percent fault free products.Seventh, a company that is in the process of implementing a TQM program should "get the facts first." TQM companies should make decisions based on facts, not on opinions. Xerox fulfilled this requirement, since the company was turned into an information company, as opposed to a copier company. Xerox was one of the first companies to conclude that the "Industrial age" is over and the "Information Age" has begun. Furthermore, research and development staff was reorganized and trained.Eight, a TQM company should encourage every manager and employee to participate. Xerox was able to fulfill this element. Employees were included in more management decisions. Line workers and other personnel was involved and were given the opportunity to provide input in finding ways of improving production and service through quality improvement teams. The ninth element is to create an atmosphere of total involvement. TQM cannot be achieved unless all areas of the organization apply quality concepts simultaneously. Xerox fulfilled this requirement as well. All functional departments in the organization were involved, and Finally, TQM companies should strive for continuous improvement. Quality is not only a one-time program of competitive response, for it creates a new standard to measure up to. Improving quality is not only good for the profitability of the business, but it is a necessity for long term survival of the corporation. Xerox is clearly planning on preserving its TQM approach, and it is a vital part of the company's long term strategy.
Problems in the 1970's
Xerox dominated the document processing industry before the middle of the 1970's. The company anticipated that no one single competitor would be able to penetrate the industry. Xerox believed that the barriers to entry were high, and that most Xerox customers would continue to be loyal towards the company. The company did simply not take the competition seriously. They underestimated the power of the competition, especially high potential Japanese manufacturers.
In addition, Xerox was not worried that the Japanese started to penetrate the international copier market in the early 1970's with their low-cost copiers, since Xerox believed that "low cost mean low quality." They believed that their products were untouchable since they were superior in quality and technology. They believed that "the Japanese products posed no threat, because their products were seen as cheap, unreliable, and of laughable quality."
What Xerox did not anticipate was the Japanese were able to catch up in the international market place, and that they were able to keep costs low, but the products were of good quality. In addition, Xerox did not respond to the plain paper copiers which the Japanese introduced in 1974. Furthermore, the Japanese were able to produce their products more effectively than Xerox, and the parts used in production were less complex, mass produced, more reliable, and easier to fix than Xerox products. In addition, the Japanese were able to sell their products instead of leasing them, which released tied-up capital. Xerox suddenly had to realize that the company was being out produced and under priced.
Xerox's key success factors
The key success factors to Xerox successful strategy turnaround are very much employee related. First, increased involvement of employees has directly increased customer satisfaction. Employees are now directly responsible for keeping customers happy and satisfied. Also, since "employees are the closest to the customer", so they know the best how to please the customer. Furthermore, employees are involved in more management decisions. A large emphasis is placed on employee participation. In addition, plenty of money was spent on employee training. I believe that the funds spent on training paid off good returns. A large emphasis was based on changing the corporate attitude regarding the concept of quality, This massive cultural change was accomplished by the training programs. A new slogan was developed, "the better the quality the lower the overall costs."
In addition, the new customer supplier relationship which was created aided in the process of improving the quality standards of component products. It is logical that it is impossible to produce a superior quality product, when components do not meet required quality standards of the company. Also, by better utilizing assets, including the employees, Xerox was able to increase returns on assets (fixed assets) by almost 300 percent.
Furthermore, by reorganizing the organization (particularly in the research and development staff and the marketing force), with the objective of viewing new product lines as systems in the organization. Also, Xerox was one of the first major corporations that recognized the need to move from a purely product-line oriented company (copier company) to an information company. Computer information networks such as Ethernet and other office communications networks made it easier for divisions and people in the organization to communicate with each other. One of the major problems that corporations face today are problems and interference in communication channels.
Examples of strategic and operational controls
There are numerous examples of Strategic controls in the Xerox case.
First, employees are Operational control systems guide, monitor, and evaluate progress i
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