Ask Business Economics Expert

Analysis of shifts in the demand curve.

The Xerox Corporation's share of U.S. copier revenues was close to 100 percent in 1970. According to a McKinsey consultant who worked with Xerox,

I can remember as late as 1975 looking at internal Xerox reports showing that market share was a word they had never heard of. They did not have any formal market share information. It had always been 100 percent. Right then, some people started to accumulate some information and the Japanese weren't even listed...The whole company, in terms of competition, was focused n IBM at that time. Everybody was convinced that if they were going to have any competition, it was going to come from IBM. When IBM came out with its first product, a shudder went through Xerox. Later, it was Kodak. Xerox totally missed the fundamental strategy of the Japanese, which was going in at the low end of the market and working up, going for the soft underbelly.

By 1980, Xerox's market share had fallen to 46 percent. One reason was the appearance of a number of low-priced copiers that were introduced in the late 1970s. Perhaps the most successful was the Savin 750, which was introduced in 1975. It had about a third of the parts and a third of the weight of conventional Xerox machines. It cost Ricoh, the Japanese firm that produced it, about $500 to $600 to build, and was sold to Savin for about $1600. Savin in turn sold it to the customer for $4,995. Xerox's comparable copier, the model 3100, sold for about $12,000. The Savin 750 averaged 17,000 copies between failures and took less than 30 minutes to repair. Xerox machines averaged 6,000 to 10,000 copies between failures and took up to twice as long to repair.

The following graph illustrates the revenues and costs of Xerox's model 3100:

1895_demand curve.jpg

(a) Elucidate effect do you think the appearance of the Savin 750 had on the demand curve for Xerox's model 3100?

(b) In response to the Savin 750, Xerox slashed price. Was this the rational thing to do? (use a diagram to illustrate your answer.)

(c) If the two machines sold for the same price, was the Savin 750 likely to outsell the Xerox 3100?

(d) Did the market structure of the copier industry change in the 1970s? if so, how?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M918033

Have any Question?


Related Questions in Business Economics

Standards drive instruction therefore how do standards

Standards "drive instruction," therefore, how do standards influence curriculum planning?

Explain how the application of the pdca cycle can support a

Explain how the application of the PDCA cycle can support a competitive strategy of low cost leadership.

Ford motors expects a new hybrid-engine project to produce

Ford Motors expects a new? Hybrid-engine project to produce incremental cash flows of $ 95 million each year and expects these to grow at 4?% each year. The upfront project costs are? $900 million and? Ford's weighted av ...

A five-year bond with a yield of 11 continuously compounded

A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bond's price? b) What is the bond's duration? c) Use the duration to calculate the effect on the bo ...

Image manufacturing is an electronics manufacturer and

IMAGE Manufacturing is an electronics manufacturer and retailer. Its main products are Ultrabook computers, PCs and calculators. The current price of the Ultrabook is $ 600, the PC is $700 and the calculator is $30. This ...

According to kulish what is about the design of the euro

According to Kulish, what is about the design of the euro currency that lessens its appeal compared to prior national currencies?

How has the value of the euro changed compared to other

How has the value of the Euro changed, compared to other countries, over the past 10 years (since the Great Recession began)?

In lecture we discussed why the production possibilities

In lecture we discussed why the production possibilities frontier (the boundary of the production possibilities set) is bowed 'outwards'. When might the production possibilities set be bowed 'inwards'? Give an example of ...

In 2013 gallup conducted a poll and found a 95 confidence

In 2013, Gallup conducted a poll and found a 95% confidence interval of the proportion of Americans who believe it is the government's responsibility for health care. Give the statistical interpretation. I do not underst ...

The standard deviation of the number of video game as

The standard deviation of the number of video game A's outcomes is 0.5479, while the standard deviation of the number of video game B's outcomes is 0.2498. Which game would you be likely to choose if you wanted players t ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As