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Strategic Management Case Study-CISCO Essay


Introduction

CISCO is a multinational company based in the United States of America that majorly specializes in designing and selling electronic commodities, networking devices, voice as well as communication and technology services. CISCO was founded in the year 1984 by Leonard Bosack and Sandra Lerner both computer scientists of Stanford university.

At that time, Stanford University had accumulated very many independent computer networks each using different distinct computers and communication languages to communicate with each other. The networks however could not communicate with each other. After keen analysis of the problem Leonard and Sandra, being the managers of the two networks discovered that the solution to their problem was a specialized machine called a router, which could link the network together and facilitate communication.

They therefore developed the first router, which is a specialized microcomputer that sits between two networks and allows them to see each other. They realized that the device could be having commercial value so they formed the company. Routers continued to become an integral part of rapidly expanding internet and this made CISCO to experience increased sales (CISCO Brochure, 2008, p. 1).

The Case

As CISCO continues to grow, it is faced with important strategic decisions. The first in this case is the issue of adopting the e-business infrastructure where customers could buy products online as compared to using the other traditional infrastructure (CISCO Brochure, 2008, p. 3). Although this poses some cost cutting advantage to the company, it should also be looked at from the disadvantage point of view.

The major strategic question here is should CISCO continue with the e-business infrastructure? What products need to be developed? Who should develop the products? By adopting e- infrastructure, has CISCO realized any gained in terms of market reach and service provision?

The other strategic case is about the automated order processing system. Here we analyze whether it has any advantage to CISCO.and the strategic question we ask is has it simplified the ordering process for the customer or is it complex to an extent that a customer may not be willing to use it how does it compare with manual ordering procedure? What is the customer satisfaction like?

Are the electronic orders safe such that they cannot be manipulated? Finally, is the issue putting customer support functions online? Are there any advantages in terms of remaining competitive? Is it cost effective and competitive as compared to setting up a call centre to manage customer needs?

The alternative solution to the issue of e-business is opening sales outlets in different parts of the globe. This would mean additional costs to reach various customers as well as more concentration in distribution, which will result in less concentration in its core business.

With a one-product line, CISCO realized that it could not reach to the diverse needs of its online customers. It had to come up with a range of word class products, which had the features that customer, wanted satisfied. To solve the issue of product creation CISCO was faced by a major strategic decision of whether to buy or make the products (CISCO Brochure, 2008, p. 2).

On automated order processing, the alternative to this is handling the orders manually. This would mean employing more staff to handle the orders. Given the number of orders that CISCO receives it might be hard for the company to do order processing manually. It should be noted that because of CISCO’s continued growth that are very many sales orders to process and handling all of them and ensuring delivery in the shortest time possible may be a challenge.

Despite the fact that the orders are received electronically there is a challenge in that CISCO must get it right in terms of contractual commitments for the availability in time for repair parts and repair time. The alternative solution to having an online support function is by setting up a call centre this would mean employing more staff to handle customer queries. This would increase cost of employing staff as well as keeping customers waiting before they are connected to the call center.

The solution to having a diversity of products in the diverse market is by having online sales, that is e-business. This can be made by having an application where a customer can order for goods pay for them and have after sales services online. This will call for innovative products.

The main solution to this is having the product developed by a team. The team should be composed of people from various customer touch points this is in order to ensure that the product meets the unique needs of the customers. We can have a product development team comprising members from program management, product management, user experience etc who represent various customer needs.

Given the many orders that CISCO receive and given that it has to deliver these orders in time in order to remain competitive it needs to adopt automated order processing.

By adopting this CISCO has reduced costs on the order processing this is because the number of employees required is less as compared to manual order processing’s other advantage of adopting automated order processing is time savings this time saving allows employees to be productive. The third advantage is reduced cycle time that enables the firm to produce goods at a faster pace hence being able to meet increased customer demand.

To deal with customer queries, all customer complains should be logged in and customers be given online assistance in the shortest time possible. The online customer support function should be simple for the customer as well as easy to user and a keen analysis need to be done to ensure that all customer concerns are handled. Effective handling of customer concerns would not only increase their satisfaction, but would also enhance customer loyalty.

Answers to Questions

Sources of CISCO’s Competitive advantage

CISCO’s competitive advantage comes from the nature of the products it offers to its customers the products are innovative and customers have branded them as superior and secure in networks. As compared to many companies, CISCO has also placed customer services online this is a major competitive edge in that customer needs, queries and concerns can be addressed quickly immediately.

The other source of competitive edge is the fact that t CISCO uses advanced technology in development of its products the result is that the products become cheaper as compared to competitor which give the company a very strong competitive edge. The product ordering procedure is simple and online this means that customers are able to get their orders processed quickly which means customer needs are addressed to quickly (Sadler & Craig, 2003, p. 34-35).

How the implementation of an e-business infrastructure will help CISCO to create value

CISCO has benefit because it was one of the first companies to open doors to e business infrastructure. One of the most important is that it has opened itself to the global market this means it has spread itself wide geographically to reach each corner of the globe at a lesser cost as compared to setting sale points.

The use of e business infrastructure also has allowed customers to order products according to their unique requirements this has been facilitated by easy to use online ordering systems. By having, customer functions online most of customer issues can be dealt with more competitively as compared to a call centre (Orcullo, 2007, p. 78).

Evaluation Of Security Of CISCO’s Competitive Advantage

CISCO’s competitive advantage is secure to an extent that it cannot be used to the advantage of the competitor. For instance producing innovative products has taken CISCO many years and many important strategic decisions. For a competitor to reach this point it will have take time.

The other point is that CISCO has general good will from customers this has been created through been customer focused and producing quality products that meet customer specifications. The company also takes mass production as its competitive edge this helps the company to be cost effective therefore produce quality products that are pocket friendly (Porter, 1998, p. 172).

Comparison of CISCO’s Performance with That of Rivals in 2000-2002

CISCO did better than its rivals did because though its profitability declined, it was still operating above breakeven and still it was doing much in term of capital investment as compared to rivals. Once the demand revives, I expect that the performance of the company will be better than the performance of rivals. This is because the company is in the process of establishing strategies like e-infrastructure, which will boost its sales. The increase in sales as compared to falling returns can be attributed to capital investments it had made.

Strategic Management Process

The strategic management process involves making strategic decisions on how a company can place itself strategically in the market. CISCO did this by setting up an online sales point as well as having electronic order processing that operated in collaboration with an online customer function.

Strategic Analysis

Strategic analysis is the process of doing a vigorous search on the business environment within which the organization is operates in order to formulate the best strategy (Betz, 2002, p. 61). In the Case of CISCO, the analysis was done on the customer needs and the products that were being offered.

The ordering process was also analyzed to ascertain if there were any delays in processing of customer orders. CISCO analyzed the information that the customer may require before filling in an order application.

Strategic Mission

As one of the CISCO’s strategic mission, the company was keen to provide its top customers with excellent services geared towards helping the customers succeed in technological aspects of their businesses. The implementation of the e business infrastructure was and online order processing was aimed at improved customer satisfaction, reduced complexity and accuracy of orders, reduced delivery times, creased staff and partner satisfaction as well as reduced costs.

Arenas

The main areas of improvement were the e business infrastructure, the online customer support services and online order processing (CISCO Brochure, 2008, p. 3). For the e infrastructure, a team that was constituted drew membership from various customer experience points by so doing the developed products appealed to the customers. On the side of online order, processing pricing tools and lead-time tools were developed which were to guide customer to order.

Vehicles

The applications that were to guide the implementation process were creation of applications to guide the ordering process these included before order, order, after order, service and warranty and extra notification applications. Infrastructure in term of software, hardware and security features were essential. These were purchased and they included hardware and software costs.

Differentiators

CISCO’s products are innovative which makes them distinct as compared to competitor’s product. With this in mind, they placed the products online for the customers to purchase

Economic of logic

A consideration is made on the cheaper course of action and it was decided that having electronic order processing is cheaper than manual order processing and having help centre online is cheaper than setting up a call centre. Therefore, the firm can pursue these options in order to minimize its operating costs while maximizing the profit realized.

Staging

To avoid cases of duplication by competitors the course of action selected needs to kick off as fast as possible.

Competitive Advantage

A competitive advantage is defined as the core competency that a company has over the competitors (Sadler & Craig 2003, p.83). Companies acquire competitive advantage by making strategic decisions that will enable them to stay ahead of competition.

In this business world where competition is on the rise, it is hard for a company to create and maintain competitive advantage. Strategic advisors argue that acquiring competitive advantage is easier than maintaining it.

CISCO has a competitive, which is reduction of costs especially operational costs. CISCO operates an online customer service experience as compared to having a call center there are savings of call center costs plus costs of a sales force that would be required to run the operations.

In terms of external competitive advantage there has been reduced complexity and improvement in accuracy of the orders as compared to hand written orders this in return means more satisfaction to the customer which in return result to competitive advantage (Porter, 1998, p. 183).

It can be concluded that CISCO has an overall competitive advantage both internally and externally. The company has qualified human resources and the technology the company uses is quite updated. About external competitive advantage, the company has a good reputation with the customers.

The company is also looking for new ways to enhance service delivery to the customers hence the competitive advantage is likely to prosper. In addition, this would be advantageous since the firm would be able to explore existing opportunities in the market using its competitive advantage (Campbell, Stonehouse & Houston, p. 103).

CISCO is also very dynamic in its competitive advantage. The strategies adopted by the company take into consideration the changes in the business environment (Kono, 1994, p. 76). For instance, the company has considered e-infrastructure in order to keep up with the changing trends on online shopping. This is another major competitive advantage to the company.

List of References

Betz, F. (2002) Executive strategy: Strategic management and information technology, John Wiley and Sons, London.

Campbell, D., Stonehouse, G. & Houston, B. (2002) Business Strategy, Butterworth Publishers, Munich.

CISCO Brochure, (2008) Sustainable mobility: CISCO strategies for green wireless, viewed on June 26, 2011 from:

Kono, T. (1994) Changing a company’s strategy and culture, long range planning, Walter Publishers, California.

Orcullo, N. (2007) Fundamentals of strategic management, Rex Bookstore Inc., Manila.

Porter, M. (1998) Competitive advantage: Creating and sustaining superior performance with a new introduction, Simon and Schuster, London.

Sadler, P. & Craig, J. (2003) Strategic management, Kogan Page Publishers, London.

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