In the wake of parent company Xerox completing its acquisition of Tektronix` colour printing and imaging division, the Xerox Channels Group (XCG) SA has restructured itself in line with global strategy and is altering its local distribution model by appointing local Tektronix distributor, Square One.
Donald Goldfain, newly appointed FD at Xerox SA, says the acquisition was finalised on the basis of a purchase price of $925 million late in December 1999 - a $25 million reduction in the amount originally announced. "After due diligence was concluded it was decided to amend the value to take a number of balance sheet adjustments into consideration."
Directly after completing the acquisition Xerox embarked on a global consolidation exercise manifested in the launch of a new division - Office Printing Business (OPB) - that merges the technology, marketing creativity and distribution channels of Tektronix and XCG.
"Apart from acknowledged leadership in colour laser printing Tektronix had also established an efficient global distribution arm. Accordingly consolidation of that operation with XCG`s global presence under the OPB banner made sense," he says.
Goldfain does, however, point out that South Africa is an anomaly in this respect. "Because Xerox SA is a 50/50 joint venture between Fintech and Xerox Corporation, the OPB model would have been quite difficult to implement here," he says.
Another factor was the success Square One has enjoyed locally - BMI-TechKnowledge gives the company over 50 percent of the colour laser market whereas the Tektronix brand enjoys only about 26 percent globally. "As XCG is relatively new to SA we felt it most efficient to reduce the scale of that operation and let distribution piggyback on the highly successful and focused Tektronix business here," says Goldfain.
Square One in currently being appointed master XCG distributor while current distributor, Siltek Distribution Dynamics (SDD), has - at its own request -scaled down its role to focus primarily on consumables. Dereck Hindry, director of SDD, says the company has an excellent working relationship with Square One vis-`a-vis the supply of consumable products for the Tektronix range and views this move as a logical extension of that.
Describing Square One as a value-added solutions provider, Steve Berryman, joint MD of the local firm, attributes its outstanding success with the Tektronix brand to a single-minded focus on providing quality and a dogged determination to maintain integrity in the channel.
"We have a reciprocal association with our resellers. They bring the relationships with their customers to the party while we provide the products as well as the installation and support expertise needed to maximise the investment in technology," he says.
Angie Samuel, divisional manager at XCG SA, says the model is suited to the company`s new structure. "We will concentrate on marketing XCG products to ensure `pull` from the market while Square One takes care of the logistics involved," she says.
Samuel notes that these developments are consistent with the global trend to bring existing Tektronix distributors into the fold. "Xerox is finding the distribution channel created by Tektronix to be effective - particularly for high-end network laser printers," he comments.
Berryman agrees: "The perpetual call for greater functionality is manifested in increasingly complex product design. This stimulates demand for specialised installation and support services which justifies the move toward value-added distribution in niche areas."
Looking ahead, Goldfain believes the stage is now set for a major upheaval in the established order of office printing. "We`ve taken the strength of the Xerox brand and fortified it with Tektronix` product line and distribution capacity - creating an office printing powerhouse that no one can match," he concludes.
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