final xerox by bacn+2
TRANSCRIPT
Xerox Case Analysis
Chace Estes,Benjamin Fieman, Greg Holt, Anthony Khors, Jasmine Olikh &
Natalie-Rosanna Rebot
Political
Transition in 2001
Both administrations placed a high priority on education and encouraged reading by increasing federal funding for libraries
Economic: GDP
Economy was strong during most of the Clinton years, but began to decline during his last year and again after 9/11. Economy was again robust during most of the Bush years, but again began to decline towards the end of his second term.
Social
• Shifting demographics led to higher enrollment in schools and colleges.
• Emphasis on education, reading
Technology
• Late 90s saw the dot com bubble inflate and burst
• Rise of the internet enabled consumers to buy anything online. Online Shopping became huge.
Value Chain of Book Industry
Printing Industry Analysis
• 323117 Books Printing• This U.S. industry comprises establishments
primarily engaged in printing or printing and binding books and pamphlets without publishing.
Printing Industry Analysis
Printing Industry Analysis
Publishing Industry Analysis
• 511130 Book Publishers • This industry comprises establishments known
as book publishers. Establishments in this industry carry out design, editing, and marketing activities necessary for producing and distributing books. These establishments may publish books in print, electronic, or audio form.
Book Publishing Industry Analysis
Size & Profit Margins
Industry Size Profit MarginAuthor N/A 10-15%
Printing $20B 6-7%
Publishing $23.1B 5%
Retailing (Specialty Retailers) $34.9B 3-5%
Book Value Chain (with Wholesaler)
Author Printer Publisher Wholesaler Retailer Customer
Price paid by customer$25
10 to 15% royalty
Opportunity cost
5% (60 cents)$23.1 Billion Sales48% to trade ($12)20% manufacturing20% author30% overhead25% costs of book returns
$20 billion industry$500-$750k capital + $5k overhead
1 to 2% Net margin$5 more thanpurchase price16% unit share
3 to 5%Net margin
$0.6
$5.75
$12
Profit
Value Added
$3
$2
$0.15
$5.65
$3.15
$0.5
$17$0.34
$4.66
$1
$7Lease costsOverhead
Book Value Chain (without Wholesaler)
Author Printer Publisher Retailer Customer
Price paid by customer$25
10 to 15% royalty
Opportunity cost
5% (60 cents)
$23.1 Billion Sales48% to trade ($12)20% manufacturing20% author30% overhead25% costs of book returns
$20 billion industry$500-$750k capital + $5k overhead
3 to 5%Net margin
$4.6
$5.75
$16
Profit
Value Added
$3
$2
$0.15
$5.65
$3.15
$0.5
$2
$7 Lease costsOverhead
Question 5• The publishing houses and printers with run lengths of 1000 and below
would be able to leverage the Xerox Book-in-Time printing platform.
• As a General Manager of Xerox BIT, I would sell this technology to those seeking to produce run lengths of 1000 and below. The pitch would reiterate the cost efficiency, flexibility, low set-up time and “on demand” benefits of the Xerox BIT.
• There would be a demand for about 25,000 such machines given current market conditions. These machines would ideally be sold to printers who wish to have “on demand” printing for low run lengths.
Amazon• Amazon eliminates the “middleman” in the value
chain and essentially takes over the job of the retailer.
• Amazon provides both economies of scale and economies of scope. This is due to the fact that such a large entity will have a great deal of bargaining power. Moreover, middleman markup charges are eliminated from the value chain and the end consumers are able to enjoy cheaper prices and better discounts.
Amazon in the Value Chain
Authors
Printers
Publishers Wholesalers
Amazon
Customers
Wholesalers
Amazon