1. Designing Channels of Distribution/ 2.
Cisco Systems: Managing the Go-to-Market Evolution Description: With the collapse of the dot-com market and related shrinkage in the high-tech industry, Cisco took a dip in its sales and profits in 2001. Coming back from the recession, Cisco had to manage and evolve its go-to-market strategy and redesign it in keeping with its new business strategy. The case describes those changes and poses new channel management challenges in light of Cisco's entry into new markets and technologies Problem: shrinkage in the high-tech industry/ keep up the pace with changes. Alternatives: should it enter new markets & technologies. New management challenges. Old structure vs re-structure Study questions: 1)Analyze Cisco’s Marketing Strategy in 1995, 2001, and 2005. 2)How have Cisco’s channels evolved over this period and why in that way? 3)What grade would you give Cisco for managing channel evolution? Good or bad? Why? 4) Against the background of your answers to 1) and 2) what marketing strategy should Cisco deploy for the VoIP products? 5)Which channels do you recommend, voice VARs? Data VARs? both? 4)Cisco’s broad product line requires multiple channels. What are your reactions to the “Pyramid” model advanced in Figure A of the case? What is the core concept of the model? What are the implications of this model for the future?
MARKETING MANAGEMENT. Cisco Systems: Managing the Go-to Market Evolution. Cisco Systems is a world wild leading company in the switches and router market. It was established in 1984 by a Stanford University couple, IT administrators Len Bosack and Sandy Lerner. Ina short period after founding, it became one of the most successful companies in high technology industry. In Cisco, manufacturing of its switches and router was outsourced, the company focused on core competencies: product design and development. Indirect sales and distribution through resellers became the major sales channel in the end of 1990s, its “value-added reseller” (VAR) was the most successful indirect sales channel strategy at that time. In later 1990s, Cisco had ever been the world’s most valuable company, its market capitalization exceeded $500 billion in 2000,
.and sales reached $18 billion. Cisco competes on layer 2 onwards in the switches and routers market. Core. Nearly all transactions that aredone over the Internet are carried through Cisco. using a model that describes the processes of purchasing a product or a service from Cisco Systems. (Cisco Systems [Online]: John Chambers QA) According to the Cisco's press release. With the telecom and dot-com crash in 2001. With the explosion of the Internet in 1990s. In 1997 Cisco Systems was structured to three specific customer groups. The shrunken market made Cisco’s management completely review and revamp its go-to market strategy. The switch directs data only to the destination for which it is intended. It is important to understand what the situation was in Cisco Systems before the restructure. It sells its products in approximately 115 countries and employs as many as 38. commercial and service provider were all building separate networks thus having unique product requirements. Cisco achieved great success in the high tech industry. We will also look at the old structure from customers' point of view. Introduction to Cisco Systems. Market and Products: Cisco’s major products are switches and routers. Cisco Systems is a worldwide provider in networking for the Internet. Routers are the devices which connect networks to other networks in a widearea network (WAN). Past Organisational Structure. Cisco’s business was greatly affected.000 employees world-wide. Cisco Systems' produces Internet and computer accessories of a great range to various sectors thus making it a significant company. Cisco mainly competed in three big markets: 1. from basic connectivity to highend. $1 billion loss was reported in 2001. multilayer intelligent service switching solutions. A switch is used to connect workstations within a local-area network (LAN). Switches and routers are classified along a layer 1 to layer 7 continuum in technical point of view. according to the customer needs at the time. and increases the efficiency of networks by reducing traffic and the number of “collisions” of data headed in opposite directions. Description of the Problem. The three consumer groups: enterprise. in order to fully understand the problems that occurred later on. What were the problems of the Cisco systems' past organisational structure and why/was the restructuring needed? These are some of the questions we will try to answer to in this chapter.founded by scientists from Stanford University in 1984. the company was also organised to exploit two major new market opportunities at that time: "the service provider migration to IP services and the adoption of IP products by small and medium-
. The Cisco Systems.
This situation implied a market need for optical (Sonet/SDH) routers that leveraged the existing infrastructure while enabling a transition to multi-service networks: the market needed a product capable of simultaneously transporting circuit-based traffic and routing IP (Internet Protocol) traffic. However. and video. Cisco’s service provider customers agreed that network convergence would ultimately improve cost effectiveness and allow them to expand their service offerings. vice president of business development at Cisco Systems. the company rapidly developed into the world’s greatest manufacturer of internet routers and was/is a foremost provider of commercial communication network devices. A brief search for potential acquisition targets had failed to identify any attractive companies – none of Cisco Systems. Should Cisco develop the product internally. voice. should Cisco build its own external venture – or just acquire somebody outright? NETWORKING OPPORTUNITY: PIPELINKS For the previous two years. most service providers were saddled with huge investments in their existing circuit-based voice networks. 1997.1 Discussions with representatives from Cisco’s Service Provider Line of Business (SPLOB) indicated that developing optical routers internally was not a viable option. Inc. The aim of this case study report is to create an understanding of Cisco’s historical international business activities as well as explore their recent and current developments in international business management. He was considering a set of strategic questions that he had faced many times since joining Cisco’s business development group in 1994.
. Established in the 1980’s. was in his office in San Jose at Cisco’s headquarters on June 27.sized businesses through channel distribution." CISCO SYSTEMS: A NOVEL ENTREPRENEURIAL VENTURES APPROACH TO STRUCTURING
Mike Volpi. International Business Case Study Executive Summary Cisco Systems is a global market leader and innovator of computer communications and networking solutions. or should they pursue external talent that was more familiar with the technology and market segment? If the external route was the best strategy to get the right product to market on time. Cisco had been preaching about the promise of a multiservice network – a single network capable of transporting data. Volpi’s colleagues had recently identified a new networking opportunity in optical routers. and Volpi wondered how Cisco should pursue the opportunity.
. information and knowledge. systems. The implementation of an Enterprise Resource Planning (ERP) system would be perfect to suit a business' need for integration of skills. The report concludes with an outline of strategies Cisco may employ in future. service providers and small / mediumsized. is one of the world’s leading suppliers of communications and computer networking products. which reside within the firm. Inc.. The international business serves three main market segments: large organizations. Managing change in the International Business and Managing Human Resources on a global scale. Contents 1 Background 4 6
2 Recent Development of Cisco’s International Business 3.3 Corporate Social Responsibility 10 12
4. these issues include Corporate Social Responsibility. detailing both short term and long term plans and objectives that are all possible opportunities that the company could pursue. The report will also address three relevant issues of the organisational internationalisation process and how they relate specifically to Cisco. information and knowledge to the highest efficiency level possible.5 Managing Human Resources on a global scale 13 4 Future strategy for Cisco 5 References 18 15
Background Cisco Systems. and services. Utilisation of and control over these factors will aid companies in acquiring and maintaining competitive advantages over others operating in the same competitive IT market.2 New Management of Cisco
3 Issues of Cisco’s Internationalisation Process 10 4.4 Managing change in International Business
4.1 Acquisitions 6 7
3. Introduction To be successful in today's competitive and continuous evolving information technology (IT) market companies must be able to utilise their skills.The ‘Recent Development’ section details both Cisco’s main strategy of Acquisitions and how the company has operated under and coped with new management. The implementation of an ERP system will increase the speed with which information flows through the company.
as it would not be able to support Cisco's anticipated growth in core transaction processing. 2008). but every company with an expanding network needed them..5 billion charge for unsold inventory and a stock price that dropped by 83 percent. redesigning routers and switches to have fewer and more interchangeable parts. Its products weren’t sexy. which resulted in a $2. 1998). Cisco cut expenses 17 percent and became profitable again. Their hardware. things are much different. Cisco has nearly 60. By 1993 the company's new CIO. Cisco’s revenues are six times larger than the combined revenues of its top eleven competitors. that supported their core transaction processing.Is this essay helpful? Join OPPapers to read more and access more than 600. "Cisco was founded in 1984 by a small group of computer scientists from Stanford University.000 employees. by laying off 10.
This case study will discuss the implementation of an ERP system within Cisco's business environment. recognised that the company's significant growth perspectives would require the company to change their UNIX-based software package. So Cisco became the fastest-growing and most valuable company in the world (on the basis of its stock price and total market capitalization).000 employees who work in 450 offices in 96
. at any time" (Cisco. That is. However.. The company soon became a dominant player in the markets in which it operated.
Cisco started in 1984 as the plumbers of the Internet by making the switches and routers that direct data traffic over corporate networks and then later.
This paper will continue first with explaining the most important elements in the process through which Cisco decided to choose for an ERP.000 just like it!
GET BETTER GRADES as a result of the integration of all of an organisation's information system computing (Davenport. and service offerings are used to create the Internet solutions that make networks possible-providing easy access to information anywhere. software. and reducing its fifty product lines to forty. the Internet. Nearly a decade later. until the technology crash of 2001. Pete Solvik.
And. where competitors catch up with and replace the leading firms in their industries on a regular basis. especially in high-tech.. But as you and your board know from experience..
. 75 percent of our revenues already come from routers and switches. three-quarters of which comes from routers and switches (i. and it’s unlikely that we could. the company pulls in $40 billion a year in revenue. there’s no guarantee that this success will last..countries.e. “plumbing”) with 65 percent gross profit margins. How should Cisco grow? Build or buy? Well.