Xerox Case Study Analysis

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Xerox Case Study Analysis

Xerox's "Book In Time" is a revolutionary product, presenting some new opportunities for the company. It is simply a matter of costs. The Book-in-Time equipment allows for a publishing company to produce a 300-page book for $6.90, something which could have been previously reached only for lots larger than 1,000 copies. A significant decrease in publishing costs, given the fact that these cover up to 20 % (including the paper and binding the book), would create the possibility of an increased profit margin.

Book-In-Time solution provided by Xerox is one of the most efficient solutions for publishing companies running on demand for short-run books. The advantage gained by larger publishing and printing companies that may have achieved economies of scale with large print runs would be evenly compensated with the significant cost saving short run Book-In-Time technology.

Based on the analysis of the on demand conversion potential, several long-runs can be targeted by the Book-In-Time technology. For example, subscription reference have a 100% conversion potential, downside being it just covers 1% of market share. College, University press and Professional textbooks all have a demand conversion potential of 50%. Clearly conversion potential is a key component in estimating market size for Book-In-Time technology. In this sense we can estimate market size for on demand market would be 240,000 books per year. Details enclosed in appendix – 1

At the moment, Xerox had two clear distinct options. First option is to stick with what is best at printing, copying and delivering exclusively the Book-In-Time technology. Meaning, selling Book-In-Time equipment to all those elements of the value chain t...

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...s 1 24 50% 12

Professional 7 168 50% 84

Total 26 634 37% 234.58

Appendix – II

Xerox Book-In-Time Break Even Analysis (Option of selling solution)

Component Costs 895000

Per Unit Set Up Costs 10000

Additional costs 10000

5% Sales Commission* 982000

Total Variable Costs 971000

Per Unit Contribution** 529000

Fixed Costs 1500000

Break Even Amount*** 2.93

Appendix – III

Equilibrium between Digital Printer and Book-In-Time Solution

Bookrun Lengths Short-run Digital printer Book-In-Time

Less than 25 6.9

25 6.9

50 6.9

100 11.47 6.9

250 6.9

500 3.85 6.9

100 6.9

Short-run digital and Book-In-Time offers similar cost at runs of size:

((500-400)/( 11.47 – 3.85)) * (11.47 – 6.90) = 249.34 + 100 = 349.34 or 350

***Short-run is selected as it offers lowest cost for runs more than 500

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