Question

An October 25, 1999, article in BusinessWeek by D. Brady, “Why Xerox Is Struggling,” reported:
President and Chief Executive G. Richard Thoman is a big- picture guy. For the past two years, he has preached a digital revolution at the copier giant. Get down to the detail, though, and it’s clear that the revolution isn’t going as planned: In both copiers and printers, Xerox is losing ground. On October 18, the company announced lower than expected earnings and the stock price tumbled more than 13% on that day. Xerox stock is down 60% from its recent high of $ 60 in July. Xerox blamed the bad news on short- term surprises: sagging productivity in the sales force after a big reorganization as well as weakness in Brazil. But the sheer scope of bad news shocked even Thoman, who told investors in a conference call that he was “disappointed and sad about this quarter.”
Thoman took the top job in April and vowed annual earnings growth in the “mid- to- high teens.”
Beginning November 1, 1999, Xerox factories increased their hours from five eight- hour days a week to six ten- hour days a week through the end of the year. The factory managers were told to build inventories in expectation of higher sales in the fourth quarter of 1999. Fourth- quarter sales were expected to be higher because of anticipation that the new sales force reorganization would increase sales.

Required:
Offer an alternative reason(s) for Xerox’s decision to increase output in its factories.



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  • CreatedDecember 15, 2014
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