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Synopsis (I)
Many of the international alliances being formed today are still too young for us to evaluate their full impact. The case of Xerox and Fuji Xerox gives us a unique opportunity to trace the evolution of such an alliance over a long period of time. We can learn a lot from this experience, and try both to avoid Xerox’s mistakes and copy Xerox’s success.

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While this case is about a particular type of alliance—a separate enterprise owned by Xerox and Fuji Photo Film— it also contains elements of other types of alliance. The relationship between Xerox and Fuji Xerox, for example, is itself managed through a series of technology and marketing contracts, organizational
While Xerox executives clearly recognize this role.

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Measures of the success

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i. Using financial measures of performance, we find that Fuji Xerox grew rapidly, but that it did not contribute much cash to Xerox”

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Its revenues grew from less that 5% of Xerox’s in the 1970s to over 30% in the late 1980s(exhibit 1); A 20% p.a. growth during 1980-1985, compared to 4% p.a. for Xerox (exhibit 5 and 7); Its profit grow frm about 10% of Xerox’s to about 30% between 1981 and 1990 (exhibit 5 and 7). Note that not all this profit stream goes to Xerox. The latter is entitled to 2/3 of Rank Xerox’s 50% share, I.e. to 1/3 of Fuji Xerox’s earnings.
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But because Fuji Xerox only paid out in dividends about 14-19% of its annual earnings, the total amount of cash repatriated to Xerox during 1971-1989 was little more than $50 million. (Derived from exhibit 7: 1/3 of the total dividends paid out). This payout ration represented 1-2% of Fuji Xerox’s equity. Note that, unlike Xerox, which regularly paid out between 50% and 80% of its earnings, Fuji Photo Film was accustomed to this pattern, as its own dividends to shareholders represented no more than 3-4% of earnings.
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ii. Using market and technology measures, we can get a sense of the rise in