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 Caselet 1 (15 Marks):

The history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-time
inventor, made the first xerographic image in the US. Haloid later obtained all rights to Carlson’s
invention and registered the ‘Xerox’ trademark in 1948.

Throughout the 1960s, Xerox grew by acquiring many companies, including University Microfilms,
Micro-Systems, Electro-Optical Systems, Basic Systems and Ginn and Company. In 1962, Fuji Xerox
Co. Ltd. was launched as a joint venture of Xerox and Fuji Photo Film. Xerox acquired a majority
stake (51.2%) in Rank Xerox in 1969. During the late 1960s and the early 1970s, Xerox diversified
into the information technology business by acquiring Scientific Data Systems, Daconics and
Vesetec.

In the early 1980s, Xerox found itself increasingly vulnerable to intense competition from both the
US and Japanese competitors. According to analysts, Xerox’s management failed to give the
company strategic direction. It ignored new entrants who were consolidating their positions in the
lower-end market and in niche segments. The company's operating cost was high and its products
were of relatively inferior quality in comparison to its competitors.

In 1982, David T. Kearns (Kearns) took over as the CEO. He discovered that the average
manufacturing cost of copiers in Japanese companies was 40-50% of that of Xerox. As a result,
Japanese companies were able to undercut Xerox’s prices effortlessly. Kearns quickly began
emphasizing reduction of manufacturing costs and gave new thrust to quality control by launching
a program that was popularly referred to as ‘Leadership Through Quality.’ As part of this quality
program, Xerox implemented the benchmarking program. These initiatives played a major role in
pulling Xerox out of trouble in the years to come. The company even went on to become one of
the best examples of the successful implementation of benchmarking.

Answer the following Questions:

A. The history of Xerox goes back to 1938, when Chester Carlson, a patent attorney and part-time
inventor, made the first xerographic image in the US. Discuss how Xerox grew in 1960s. (5 Marks)

B. In the early 1980s, Xerox found itself increasingly vulnerable to intense competition from both
the US and Japanese competitors. Discuss how Xerox became vulnerable. And also discuss the
steps taken to face the intense competition. (10 Marks)

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 Caselet 2 (15 Marks):

In a tight economy, there is general recognition that ‘business as usual’ won’t cut it and managers
need to find ways to get by with less of everything. Declaring which costs to cut is just as
important as determining how much to cut. Cutting across the board is never the right. A better
approach is to attack the problem by grouping functions, departments and projects into one of the
following four categories:
  Select areas where cost cutting will not stop recovery or affect critical
current programs. Cut these sharply or eliminate them entirely.

 Select activities that must be retained but can be delayed or cut back into
an inactive state for four to six months.

 Determine where money can be spent more effectively in areas that can’t
be cut back.

 Finally consider investing in new or existing projects that can benefit the
cost control program and be of continuing value in a recovery.

The best single tool for cost control, in good times or bad, is still the budget performance report. It
is important that the budget is credible and the line items are understood to know which budget
items are affected when the company is committed to spending money. It is necessary to get the
details from the accounting department to help understand why the budget or cost objective was
exceeded. Manage the budget line by line, not in total. Subordinates should be held accountable
for the specific elements of the budget that they control. If they don’t have responsibility for
separately reported cost centers, find some other ways to get them to relate to budget
performance as a cost control tool.

Answer the following Questions:

A. Cutting across the board is never the right approach. Discuss the better approach. (7 Marks)

B. Discuss the best single tool for cost control. (8 Marks)

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 Section 2: Applied Theory (20 Marks)

Answer any One Question:

 1. A management audit acts as a tool of control, examines the conditions and

provides a diagnosis of deficiencies along with recommendations for correcting
them. In this context, discuss the different types of management audits.

(Or)

2. The organizational structure refers to the role-responsibility relationships of individuals as an

organization along with their pre-defined interaction patterns. Discuss the various types of
organizational structures.

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