Cisco Systems is the network vendor for many institutions – yet they now also provide products and services for home networking. At the beginning history of Cisco Systems, 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.
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?
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.
Related with problem statement, other company can gain benefit from investing e-business functionality same extent with Cisco. The infrastructure and program is in the market right now. The company just chooses the right ones are match with the requirement. However, the implementation and the execution may not same. Every company have own strategy and the infrastructure and the program must design based on that strategy.
Flexibility was as critical as functionality to Cisco e-business system. There are no system are adequate with the situation over time. There are must be some revision, adaptation and change. The flexibility also comes from decision making process. The business units have independent position to relate with cost and strategy. Because the business unit face own unit unique environment and the business unit itself know to deal with it.
Human resource was critical factor to. Other company can learn how Cisco treats the employee. With help from technology, Cisco can develop system that ease the employee works each other and made simpler the business process.
Credit: MCS Course, International Program, MM GMU