Fuji Xerox began as a 50/50 joint venture between Fuji Photo Film and Rank Xerox in 1962. Over time, Fuji Xerox strengthened its technical capabilities through R&D and product development, becoming an important manufacturing and sales partner for Xerox in Asia. By the 1990s, Fuji Xerox supplied most of Xerox's low and mid-volume copiers globally and the companies established strategic partnerships to collaborate on new products and markets in response to competition from Canon.

1. XeroxandFujiXerox
Group No 8
Ruchi Sao 13PGP048 Geeta Hansdah 13PGP079
Trisha Gajbhiye 13PGP116 Bhavana Ziradkar 13PGP118
Sai Shilpa 13PGP125

2. Xerox’s
International
Expansion
Funded by Haloid Corporation in 1946.
Renamed as Xerox Corporation in 1961 with the introduction of 914 copier in 1959.
50/50 JV with Rank Organization of Britain in 1956 with 66% of profits of Rank Xerox.
By 60s, established subsidiaries in Mexico, Italy, Germany, France & Australia.
In 1964, right to market xerographic products in the Western hemisphere.
Refused xerography licenses to Japanese firms on the grounds of commercially immature technology.
Out of 27 companies, Fuji Photo Film (FPF) was chosen for partnership in Japan.
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3. Establishment
of Fuji Xerox
 Fuji Xerox- 50/50 JV between FPF & RX in 1962.
 Disapproved by Japanese Govt. as solely a sales company ,
hence later became a contracting partner with Rank Xerox
with exclusive patents in Japan.
 Exclusive rights to FX to sell in Japan, Indonesia, South Korea,
the Philippines, Taiwan, Thailand & Indochina.
 FX paid royalty of 5% on revenues from the sales plus 50% of
its profit to RX.
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4. Development
of Fuji Xerox’s
Capabilities
 Xerox machines were disassembled & studied to determine
the equipment & supplies necessary for production.
 3 FPF engineers spent two months touring Xerox & RX
production facilities.
 Imported machines were sold first, then assembled products
finally the domestic production of copiers.
 Expansion of product line – faster version of 914 & a smaller
desktop model, 2400 (in 1967).
 Establishment of sales subsidiaries throughout FX’s licensed
territory.
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5. Contd…
 By late 1960s, FX’s market declined due to :
 Threat from substitute technologies- electrostatic copier from
Ricoh.
 Scheduled expiration of Xerox’s core patents between 1968 &
1973
 Transfer of FPF copier plants to FX in 1971 along with
construction of a 160,000 sq.-foot manufacturing &
engineering facility by FX.
 Addition of 1% in the share of Xerox from RX to an increased
51% control of the JV-making it a subsidiary of Xerox.
 Xerox received 66% of RX’s profit & 33% of FX’s profit.
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6. The Rise of
Fuji Xerox
• FPF engineers began modifying Xerox designs to the needs of
the local market.
• Fuji Xerox managers wanted to go beyond adaptation to develop
their own products.
• They envisioned a high-performance, inexpensive, compact
machine that could copy books.
To strengthen Fuji Xerox:
• Transfer of production facilities to Fuji Xerox
• Direct relationship between Fuji Xerox and Xerox
The continued strengthening of Fuji Xerox technical capabilities
lead to:
By the late 60's, the Fuji Xerox development group had produced
four experimental copiers, each with projected manufacturing
costs approximately half of those of the smallest Xerox machine.

7. "It's small, but
it's a Xerox!“
In 1970, developers at Fuji Xerox took a working prototype to Rank
Xerox, London.
• Slow (5 copies per minute or c.p.m.)
• Substantially smaller
• Lighter
• Great performance
In comparison to Xerox’s other models this machine was :
This demonstration boosted the technical reputation of Fuji Xerox. For
the first time, Xerox allowed Fuji Xerox to have a small budget for
R&D.
In 1973, Fuji Xerox introduced the FX2200, the world's smallest copier,
with the slogan, "It's small, but it's a Xerox!"

8. Competitors
 In 1970, Canon was the 1st Japanese company to enter the
PPC (Plain Paper Copier) market for lower end.
 These machines were developed in-house and did not
infringe on any Xerox patent.
 In 1972, Canon introduced copiers with liquid toner.
 Liquid toner copiers were smaller, less expensive than Xerox.
 By 1975, eleven companies viz. Minolta, Copia, Sharp, Toshiba
etc. entered the PPC industry in the Japanese market.
In terms of copiers
installed in Japan
Fuji Xerox Ricoh Canon Konica
In terms of copy volumes
Fuji Xerox Ricoh Canon Konica

9. Declaration of
independence
 In 1975, the company launched its Total Quality Control
program.
 The focal point of the campaign was the development
of dantotsu, "Absolute No. 1 Product."
 The marketing and engineering departments were given a
seemingly impossible task:
To develop a compact, 40 c.p.m. machine, to be manufactured
at half the cost of comparable machines and with half the
number of parts of previous models, and to do it in two years.
• Two years later, the FX3500 was ready.
• By 1979, the FX3500 had broken the Japanese record for
annual sales of copiers sold in one year.
• In 1980, Fuji Xerox won the Japanese Government's
prestigious Deming Prize, awarded annually to a company
achieving outstanding quality for its effort to develop the
FX3500.

10. Independence
born out of
necessity
 The FX3500 project came after Xerox had canceled a series of
low- to mid-volume copiers on which Fuji Xerox was
depending.
 Code-named SAM, Moses, Mohawk, Elf, Peter, Paul and Mary,
each was cancelled in mid-development, even though Fuji
Xerox needed models of this type in its product line.
“As long as I am responsible for the survival of
this company, I can no longer be totally
dependent on you for developing products. We
are going to have to develop our own."
- Tony Kobayashi

11. Xerox’s Lost Decade

12. New
Competition
Prior to 1970, Xerox had a virtual monopoly because of its xerography
patents.
By 1975, 20 PPC manufacturers operated worldwide.
The manufacturers included:
• Reprographic companies : Xerox, Ricoh, Copyer, A.B. Dick, AM and 3M
• Paper companies : Dennison, Nashua and Saxon
• Equipment companies : IBM, SCM, Litton and Pitney Bowes
• Photographic equipment companies : Canon, Konica, Kodak and Minolta
• Consumer electronics companies : Sharp and Toshiba
Savin had licensed Ricoh to manufacture machines with liquid-toner
technology.
These machines were introduced in 1975 and were instant success.
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13. Contd…
Many Japanese competitors entered US targeting low end of the market.
IBM and Eastman Kodak entered market and targeted the mid and high
volume segments.
IBM introduced Copier 1 in 1970, Copier 2 in 1972 and Copier 3 in 1976.
With introduction of Copier 2 IBM began to take away market share from
Xerox.
Eastman Kodak introduced high-end Ektaprint 100 copier in 1975.
Ektaprint series was well accepted by market and gained reputation for
highest-quality image reproduction.
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14. Xerox’s
Stagnation
 In 1971, Xerox developed first super high speed colour
copier.
 Xerox’s mid-volume 4000 and 3100 series failed due to
reliability problems.
 In 1978, Rank Xerox purchased 25000 Fuji Xerox’s FX2202
copier machines.
 Xerox Corporation refused to purchase Fuji Xerox’s machines.
 Rank Xerox formulated defensive marketing strategy
grabbing the opportunity of late entry of Kodak in Europe.
 Because of Rank Xerox’s success with FX products, Xerox
began to import FX2202 and later FX2300 and FX2350.
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15. Courtroom
Battles
 Xerox was involved in a series of courtroom battles in 1970s.
 Xerox sued IBM for patent infringement for Copier 1 in 1970
and IBM countersued.
 Xerox won some of the suits and firms settled on agreement
of exchange of patents and $25million payment to Xerox.
 Two American firms, SCM Corporation and Van Dyk Research
sued Xerox for alleged antitrust violation in 1973 and 1975
respectively.
 Both the companies lost their suits in 1978-1979.
 In 1973, Federal Trade Commission (FTC) initiated action
against Xerox charging that the firm controlled 95% of plain
paper copier industry.
 FTC charged action against Xerox stating pricing, leasing and
patent licensing practices violated the Sherman Antitrust Act.
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16. Contd…
 In 1975, Xerox settled out of court by signing consent decree
with the FTC.
 Xerox agreed to license more than 1700 past and future
patents for 10 years.
 Competitors were permitted
 to license up to 3 patents free of royalties,
 to pay 0.5% revenues on next 3 and
 to license additional patents royalty free
 Xerox also agreed to forgive past patent infringements, to
cease offering package-pricing plans on machines and
supplies.
 Kodak, IBM, Canon, Ricoh and other Japanese firms secured
Xerox licenses under this arrangement.
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17. Adjusting the
relationship
Original
agreement
adjusted in 1976
and 1983.
Interim
agreements to
adjust policies on
procurement and
third party
relations.
Royalty structure
on xerographic
sales was revised
and set to
decline annually
between 1983
and 1993.
Fuji Xerox would
receive a
manufacturing
license fee from
1983.
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18. Turning
around Xerox
Development of the
10 series, new family
of copiers.
Xerox’s Leadership
through Quality
program, 1981.
Importing from Fuji
Xerox and learning
their production
practices.
Diversify out of
copiers by acquiring
financial services
companies.
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19. Xerox and Fuji
Xerox in the
1990’s
Canon’s continued to gain market share and
dominated the low end laser printers.
Canon introduced twice as many products as
Xerox with lesser R&D costs.
Canon was planning to enter the mid and high
volume copiers which were Xerox’s forte.
Xerox and Fuji Xerox’s became critical to competing
with Canon.
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The Canon
challenge

20. Change of Scenario after 1980’s
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Sr. Parameter Scenario
1 Revenues FX grew at a faster rate than Xerox
2 Financial contribution Net earnings of Xerox grew from 5% to
22% from 1981 to 1988
3 Low end copiers FX was the source to Xerox and Rank Xerox
4 Sales contribution by FX Grew from $32 million to $620 million
(1980-1988)
5 Heavy investment in R&D
by FX in 1980
Lead to production of many low end
models which were exported to or
manufactured by Xerox or Rank Xerox
6 Number of models sold in
Japan
Only few were designed by Xerox
Contd.

21. Contd.
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• 30% of low
volume models
sold by Xerox
and Rank Xerox
were from FX1980
• 94% of low
volume models
sold by Xerox
and Rank Xerox
were from FX
1987
• 100% of mid and
high volume
copiers sold by
Xerox and Rank
Xerox were from
FX
1989

22. Contd.
Canon growth
FX contribution to
Xerox and Rank
Xerox
Intensified the necessity
to cooperate on research,
product development,
manufacturing and
planning
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23. Strategy
Summits
Objective to make top management come together and discuss issues
that affected them jointly
It included people from all lines- copiers, printers and systems and
would be held twice a year
• Corporate research group- Benefited both FX (good at
development and hardware design)and Xerox (excellent in basic
research and software capabilities)
• Developmental and manufacturing organization -harder to
implement in both
• Marketing organization - extremely different as they operated in
different territory
FX’s organizational structure resemblance with that of Xerox’s
Company launched joint products where collaboration was high and
thus eliminating overlapping activities
Functional collaboration through exchange of personal, lead to trust
and coordination build up
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24. Codestiny III
task force
Objective – To develop a framework for cooperation between the
two companies in 1990
Consisted of top planners from each company
FX Issues to be discussed
• They wanted enter worldwide low end market
• Expansion in Asia- knock down kits from FX to Britian to Asia for
sale & Rank Xerox and FX possessing different marketing
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25. What role did FX play in
Xerox’s global strategy?
How did that role change in
the 1990’s and beyond (after
the case period)?
Question 1
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26. A manufacturing and marketing unit for the Asian market
Transfer of production facilities to Fuji Xerox.
R&D partnership.
TQC initiator.
Competitor watchdog.
“It’s small, but it’s a Xerox”.
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What role did
FX play in
Xerox’s global
strategy?

27. Change in
role after
1990
Expansion of Fuji Xerox to Asia-Pacific market.
Established Xerox International Partners to sell low-end printers in North America and
Europe.
R&D partner for Xerox Corporation.
Acquired China/Hong Kong Operations from Xerox Corporation in 2000.
75% share held by Fuji Photo Film and 25% share by Xerox.
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28. Was FX a successful joint
venture in 1990?
How do you measure its
performance?
Question 2
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29. Performance
measures
Revenues -FX grew at a faster rate than Xerox
Financial contribution- Net earnings of Xerox grew from 5% to 22%
from 1981 to 1988
Low end copiers- FX was the source to Xerox and Rank Xerox
Sales contribution by FX- Grew from $32 million to $620 million (1980-
1988)
• Increased Market research and competitive benchmarking
• JIT manufacturing to decrease cost
• Faster product development
• Development of state of art technology
• A devotion to quality in all areas
The leadership Through Quality program enabled in achieving goals
10 series developed by FX helped Xerox win back market share
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30. What were the key
success factors in this
alliance? What were the
changes after 1990?
Question 3
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31. Key Success
Factors in the
alliance
 The trust built up between the companies.
 Continuous rising capabilities of Xerox Group’s competitors,
particularly Canon, thereby leading to their growth.
 50-50 ownership structure between Xerox and FX.
 Total Quality Control Program initiated in both the firms.
 Development of the 10 series by FX helped Xerox gain its market
share thereby strengthening the alliance.
 Flexibility in the contract agreement between both the firms.
 Effective collaboration and sharing of technology between the
firms.
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32. Changes after
1990
1990
• Acquires management and property rights of four Asia-Pacific countries from Rank Xerox.
1991
• Jointly with Xerox Corporation, establishes Xerox International Partners to sell low-end printers in North
America and Europe.
1998
• Acquires full ownership of Fuji Xerox Korea Co., Ltd.
2000
• Acquires China/Hong Kong Operations from Xerox Corporation.
2001
• Consolidated to Fuji Photo Film Group with equity increase to 75% owned by Fuji Photo Film and 25%
by Xerox Corporation.
2006
• With the establishment of FUJIFILM Holdings Corporation; FX becomes affiliated with the new company.
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33. Refer Exhibit 11 – select
one option for
reorganization for each
functional area and explain
why it is better than the
other options.
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Question 4

34. Functional
area-
Marketing
• 2 separate companies with some coordination on business
direction and strategy & no geographic constraints
Independent and overlapping
• Concentrate effort on licenced territory with multinational
business as required
• Target market and territories differ hence FX and XC marketing
should be different
Independent and Separate
• Same as before but with overlapping activities
Separate with exceptions
• Worldwide and exclusive responsibility for products or product
ranges manufactured under special licenses
Coordinated global product mandates
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35. Functional
area-
Research
• Each pursues own interest and becomes self sufficient
Independent
• Coordinated group research program of XC & FX, with both self-
sufficiency and overlap
• As both Xerox and FX have expertise in different areas hence its
should be coordinated effort for maximization of opportunity
Coordinated
• Single research organization without overlap
Joint
• Separate organizations operating on exclusive projects
Complementary
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36. Functional
area-
Development
and
Manufacturing
• Each development and manufacturing organization supplies its
own marketing organization
Independent
• Assign development roles to each organization, with no overlap
allowed in development project
Complementary without overlap
• Same as B but with overlap in development projects
Complementary with overlap
• Single development and manufacturing organization with
individual projects targeted to needs of separate marketing
organizations
• With minimum cost as compared to other option catering to
individual market needs
Joint
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37. Thank you
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