Xerox Case
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Xerox CaseBecause the Xerox’s Book in Time system only has competitiveness when printing volume is less than 1000 copies, it is the best choice for small size of prints. From the case, we know that Small presses usually focused on brochures, pamphlets, and the sizes of these kinds of prints usually are smaller than 1000 copies. Therefore, we can assume that small presses will use Xerox’s Book in Time system frequently. Basic on the data, there are about 39475 small presses, and Xerox is the clear leader, with a 50% share of the whole market. We can assume that 70% of the small presses and 30% of the big presses choose to buy the system. Then, we can get the result that Xerox can sell about 27791 machines in total. From Table E, we get the data that there are 231 million on-demand or short-run books, which can be remade by Xerox’s system, and the total market share of Xerox is 50%. We assume that Xerox remakes 116 million on-demand or short-run books finally, and each service center at least need to covered at a production volume of 250,000 books at 25% margin. As a result, Xerox can build 464 service centers at most, which means selling the same amount of the machines. Therefore, 464 + 27791 = 28255. Xerox can sell about 28255 machines totally.
From my perspective, direct sale is the best choice for Xerox. Firstly, Xerox already took up 50% market share, so its system can be easily accepted and bought by its old customers. Secondly, because BIT system is cheaper than IBM’s system with the same quality, it has great competiveness. More presses may change to use BIT system in the future. Finally, establishing service center means that Xerox becomes one of the presses, so Xerox has to compete with other presses include its old allies. Xerox has no first-mover advantage to enter book production business.