Xerox is a public corporation founded as a document processing company which markets, services and supports a large range of products globally to make the office environment more efficient and productive. Headquartered in Norwalk, Connecticut in USA, the company came into being in the 20th century by Chester Carlson (who invented xerography) and Joseph C. Wilson. The company offers a wide range of products including photocopiers, black and white and colored printers, fax machines, projectors and other displays etc. (Adam, 2011)The corporation was leading the market in 1970s with its advanced technology and tremendous quality of products. (Xerox, n.d.)
Competition in the Industry
There are numerous factors in which Xerox faces competition. For example; endorsement of brand, research and development, innovation, quality and economies of scale. Its main competitors include Cannon, Hewlett-Packard (HP), Ricoh and IKON. Xerox’s growth over the market is fast and constant. Due to its higher concentration in the industry, large companies like Xerox can exert their power to demand their competitive desires and can afford to compete its opponents on the basis of its Research & Development rather than prices. (Moore, 2007)
In 2006, Xerox invested US$761 million in its R&D to improve its business and lower the cost for the consumers. It spent US$922 million to support its new production and gain the current market share. With investment so high, the competition becomes low. (Moore, 2007)
Due to the presence of learning economies of scale, Xerox and Cannon has advantage over HP which is struggling to attain the technology they already have due to longer presence in the market. So the rivalry among the industry is quite low. (Moore, 2007)
Potential on New Entrants in the Industry
There are very large barriers to the newcomers in the industry which relies on technology and its advancement. There are very few companies that can enter and survive the expensive market which is based on product differentiation i.e. the market of generally similar products with slight variation in technology. (Moore, 2007)
The new entrants would also face low competition among the existing companies which is another barrier in their success. The Individuals looking forward to enter the market would have to deal with the first mover advantage as well, which includes abiding the trading rules set by the US government which the existing companies already know. Then there are legal factors that include knowing the current policies of the countries you are in trade with. (Moore, 2007)
Power of Suppliers
With the market’s dependency on technology, the demand and supply of the company is highly subjected to market fluctuations and competition within the market. It is in best interest of the both the supplier and the company to relinquish any sort of hold they have on each other so they have the flexibility to expand and switch. (Moore, 2007)
The technology market has several suppliers which can produce the undifferentiated products. The presence of multiple suppliers allows the company to use more than one supplier in the industry which makes the power of suppliers considerably low. (Moore, 2007)
Power of Buyers
As far as the power of buyer is considered, it varies with the price sensitivity i.e. at more differentiated products; the company has the upper hand to exert the power on the buyer which is looking for the specific technology. Here the relative bargaining power is low. (Moore, 2007)
However, when company is in the market of highly commoditized products and personalized products, the buyer hold the majority of the shares in the power. For example, if a person is buying a printer to support his college assignments, he can compromise on the quality while opting for a cheaper substitute. Here the company has to be flexible in its prices so as not lose its consumers to its competitors. (Moore, 2007). The bargaining power of buyer goes hand in hand with the price sensitivity. It can be said that Xerox faces the moderate power of buyers in the industry.
Threat of Substitute Products
The threat of low end substitute products is always going to be existent in the document management industry. With the rapid advancement of technology, people are willing to compromise on the quality of the personalized copiers if the price is affordable. The high end substitute products which offers a large variety of services gets threatened by the other high quality products on larger demands i.e offices etc. (Moore, 2007)
As a result, the company faces the mixed threat of substitution in the market of document management.
Conclusion
Considering the market of document management, there are very few hindrances in the successful market growth of Xerox Company. With its investment in the right places, the company would always be in the market with new technology to attract and expand its clientele. However, if things go south in the document management industry in general, Xerox including other companies can easily pack up and switch their businesses due to no government regulations and little specialized equipment which would prevent them from switching otherwise. (Moore, 2007)
Bibliography
• Adam. (2011, August 05). Xerox Corporation SWOT Analysis. Retrieved from Free SWOT Analysis: http://www.freeswotanalysis.com/information-technology-swot/240-xerox-corporation-swot-analysis.html
• Moore, M. E. (2007). Xerox Corporation Valutation Report .
• Xerox. (n.d.). Retrieved from Xerox: https://www.xerox.com/en-us/about