Cisco Systems
Cisco Systems
Cisco Systems
Case Evidence
Cisco is a network vendor for many institutions – yet they now also provide products
and services for home networking. At the beginning history of Cisco, the corporation’s goals
were to build-up easiness in accessing the information using various electronic information
channels, especially computer, inside the Stanford campus. Along with the growth of the
firm, the management hired many talented employees. They formalized their business plan
covering four strategic goals (provide complete solution for businesses, make acquisitions a
structured process, define the industry-wide networking protocols, and form the right
strategic alliances). Based on that strategy, they want to become “e-business” leaders in their
industry.
Cisco use several distribution channels to deliver its products and services such as
personal selling, third-party distributors, resellers, service providers, and system integrators.
Since Cisco plays in the networking products, they try to provide customers with a great
possible flexibility of product or service development when designing customer’s networks.
Therefore, customers can save time and money when they want to change their existing
networks.
Cisco differentiate its customers into four major segments i.e. enterprises, service
providers, small/medium-sized businesses, and home consumers. Cisco has been rendering
networking solutions for its customers. Moreover, it also use internet and internet-related
technologies to handle business activities. Cisco build several internet initiatives for its e-
business functionality such as Cisco Connection Online (CCO), Cisco Employee Connection
(CEC), and Manufacturing Connection Online (MCO). As an addition to those initiatives, the
result is an increase in automated functions within several Cisco’s operation departments.
These e-business initiatives has brought the company to benefit a considerable flexibility in
managing the dynamic of the organization.
Main Problem/Issue
1. Can other corporations benefit from investing in e-business functionality to the same
extent that Cisco has?
2. What can other corporations learn from Cisco’s approach to guiding the e-business
transformation?
Analysis
In Corporate-level strategy, Cisco totally committed to one industry which is
computer networking industry. Cisco’s key core competence is computer networking know-
how. It used this competency to produce simple bridges and routers. Since then, the company
has used this competency to provide variety product (such as optical switches, software and
even service) that enable the sharing of information across disparate network. For instance,
Cisco manages complete information technology solution for business. Cisco also adopting
innovative techniques and technology to service customer and streamline its own business
process with efficiently and effectively. Because that, Cisco achieved average growth rate
over 40 percent a year, acquired more than 70 companies to further develop and expand its
market presence. Another thing is Cisco save more than $800 million a year from re-
inventing in e-business.
Based on Boston Consulting Group (BCG)’s the portfolio matrix model, Cisco fall in
Winners category with high level industry attractiveness and string business strength. IT
industry now on is attractive industry. Especially with the boost widespread of internet make
the demand of networking hardware and software increasing rapidly. Cisco also has strong
business strength. It looks on Cisco achievement that mention above.
According to Porter’s Five Forces Model, in Cisco condition, the forces are weak.
Cisco is main player that witch one initiate the standard of hardware and software. It causes
higher entry barrier, limited number of competitor and substituted product. Because there are
limited number of player, the power of supplier and customer are weak too.
The purposes of E-business initiative by Cisco are to maximizing customer
satisfaction and minimizing the cost. In early stage, the information just only about company
and product information. Later on, when it was integrated into sophisticated and costly ERP
system, customers were able to access more information like manual, FAQ and up-to-date
information. It brings more customer satisfaction to achieve customer loyalty. To minimize
the cost, integrating system between Cisco and its supplier is a perfect move. It allows Cisco
implemented Just-In-Time process that saves cost and time.
Employee of Cisco will do everything possible to support the customer. With
delegated authority for IT expenditures to individual business unit, would support customers
and directly increase sale. Cisco has long history with maximizing customer satisfaction. It’s
begun with extended telephone support hours, using information technology to provide much
information to customer and provided customer-training programs.
Cisco realize that with its large market share, have large burden to support large
number of customer. With electronic dissemination of knowledge could ease that burden. It is
significant move from Cisco to educated customer and builds customer loyalty.