The weaknesses of the Xerox corporation relative to the competition include all of the following; high overhead costs as a result of Total Quality management implementation, and a fairly weak financial position. First, keeping-up a close to perfect quality index costs a lot of money. It is possible the trade-offs associated with the "100% quality concept" may be too large, thus creating a negative competitive position for Xerox. How much are customers prepared to pay for exceptional quality and service?
In addition, the financial position of Xerox is not very good. It is true that the fixed asset turnover has increased in recent years, but the total asset turnover ratio has decreased. A possible explanation to that fact is that the company has increased its inventory requirements by its product replacement concept. Profitability ratios are decreasing steadily (returns on sales, return on equity, return on investment and du pont). In addition, leverage ratios are increasing.