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1.

0 Introduction:

The development of The Delta Model has generated a significant amount of research and thinking into
the drivers of sustainable profitability for businesses and corporations both from the early efforts that led
to the formulation of the core concepts to the considerable amount of follow on research spawned by the
publication of this new approach to formulating business strategy.

It represents more integrated strategy framework to win in the 21st century globalization war. This
assignment will lead us to the exploration and implementation of Delta Model (Figure 1) and Strategy
Maps framework in one chosen company, Cisco Inc. as one of the success and consistent fortune 500.

2.0 Company Background:

Cisco has been at the heart of many historic changes in technology, and that continues to be true today.
Now, at a time when the technology industry is going through a period of dramatic change, company is
the market leader in multiple areas, such as routing and switching, unified communications, wireless and
security. The company helped catalyze the industry's move toward IP and, now that it is fully underway,
the company is at the center of fundamental changes in the way the world communicates

Cisco was founded in 1984 by a small group of computer scientists from Stanford University. Since the
company's inception, Cisco engineers have been leaders in the development of Internet Protocol (IP)-
based networking technologies. This tradition of innovation continues with industry-leading products
and solutions. Cisco has a shrewd liability to spot this potential in their respective fields and then
relentlessly pursue the attainment, consolidation, anti extension of system lock-in. Cisco 1998 had
created $100 billion of market value in excess of the debit equity investment, analyst call Cisco as Wall
Street darling. Cisco with annual revenues of more than $11 billion. Further, Cisco is pressing
aggressively on M&A, their partners, including retaining the talented employees as well as focus on
technological innovations.

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Fig-1: Integrated Strategic Framework -The Delta Model

Business Improvement Architecture Examples

Source: Hax, A C, & Wilde, D L II, (2001), ‘The Delta Project: Discovering New Sources of Profitability in A
Networked Economy’, Palgrave, New York, P-259

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3.0 Strategic Options - The Triangle Business Model:

According to author there are three distinct strategic options that reflect new sources of profitability, best
product, total customer solutions, and system lock-in, (Hax & Wilde, 2001). Author believes that a firm
owes itself to it customers, they are the ultimate repository of all the firm’s activities. At the heart of
management and, certainly, at the heart of strategy, resides the customer. Cisco has to serve the customer
in a distinctive way, if company expects to enjoy superior performance. The name of the game is to
attract, to satisfy, and to retain the customer.

The triangle should capture the essence of how the Cisco competes and serves customers in its relevant
marketplace to achieve customer bonding continuum. Further, the emergence of the network economy
changing the entire value chain of technology and placing the network squarely at the center of
innovation, in addition, Cisco strategic option builds based on proprietary standards positioning as we
can see in Fig-2.

Fig-2: The Delta Model of Strategic Positioning

Total Customer Solution

Source: Hax, A C, & Wilde, D L II (2001), ‘The Delta Project: Discovering New Sources of Profitability in a
Networked Economy’, Palgrave, New York, P-31

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Cisco is the innovators of the data transfer technology through IP (Internet protocol) networking
communication, today from ATM (Asynchronous Transfer mode) to satellite communication to
Terrestrial communications (Cable TV), is run by IP protocol, this become the industry standard, they
are also interoperable of system lock-in operating systems, such as windows Xp, Linux, Unix, Sun
Solaris, Symbian Os.

Proprietary are at the extreme of the bonding continuum. Cisco represents the fulfillment of the most
demanding objectives. In addition, the customer drawn to Cisco product because of extensive network of
third party complementors that are design to work with Cisco product. In other words Cisco product
fuels the operating systems as a complete product.

4.0 Company Mission & Vision:
The guiding principles of Cisco, with a company vision, which is ‘changing the way the world works,
lives, plays and learns’. To accomplish this without mission is purposeless, therefore, company mission
is ‘to shape the future of the Internet by creating value for Cisco shareholders, customers, partners and
employees’. Further, to help keep the company aligned, in 3-5 year goals, and explode those down into
one year initiatives. Because staying focused on these initiatives as a team is so important to company
success, Cisco corporate goals and initiatives are part of each employee's badge. Cisco can change the
world. As we all know, there will be bumps along the way but Cisco have tremendous momentum as a
company and together Cisco will leverage both the good times and the tough times to continue be
industry leader. With good execution, Cisco will achieve break away strategy and truly change the way
people work, live, play and learn - and have fun doing it. (Company website, 2006).

Company core competencies are to provide cutting edge customize technology, given the sense of
treating every customer and partners individually and satisfying it. Moreover Cisco products are
certified hacker’s free product and technological editors choice, this has been sustainable and consistent
in Cisco since company was found in 1984, to make this happened Cisco create the sense of utter
corporate culture of innovation and team work, they call it ‘Cisco nationalism with different races’.
Furthermore, the Internet Revolution is about knowledge and how that knowledge is applied. It's about
economies of skill and empowerment. At Cisco, empowerment is part of the culture, and Cisco believes
in empowering down to all levels of the organization. However, empowerment only works if you have
two things - if you know where we're going, and you have the data to make good decisions (Fahey,
1999). Further, sound features of Cisco’s corporate culture as followed. in (fig-3).

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Fig-3 Cisco Culture
Sustainability
Maintaining Cisco's culture is one of the most important areas of focus for Cisco leaders in the organization and the one that company employees, personally,
feel passionately about. It is Cisco unwavering focus on customer success, quality team and stretch goals that has made Cisco what it is today - the Internet
technology and business leader in the industry. To keep culture front of mind for everyone in the organization.
Quality Team
Maintaining the quality of the team is critical to Cisco's success. Cisco must continue to recruit the top 5 to 10 percent in the industry and manage out the
bottom 5 percent. Cisco need to do an even better job than firm have in the past of managing performance. A strong, high quality team will help Cisco
maintain the leadership position and ensure that Cisco remains one of the best places to work.
No Technology Religion
Time and time again, companies fall in love with technology and ask their customers to use it. But that's not always best for customers. Because customer
satisfaction is our number one priority therefore, Cisco employees to actively listen, share and explore to ensure to provide the best solutions to meet the
customers' needs. Moving forward, this will be one of our highest priorities.
Stretch Goals/Continuous Improvement (Cisco CEO, John T.Chambers)
If I ask you to do something 10% better, what are you going to do? You're going to work a little harder. If I ask you to do something 50% better, you're going
to have to do it differently. I believe in setting stretch goals that always make us do things differently, and get 10 times the results. The belief in stretch goals
is founded on a belief that to be the very best, you must continually strive to work smarter and achieve increasing levels of efficiency and productivity.
Teamwork
Teamwork brings good people and good skills together in ways that help Cisco continue raising success. For the speed at which Cisco works, and will
continue to work to maintain the leadership position, teamwork is critical. But as with everything we do, there's always room for improvement especially in
this area. (John T.Chambers, Remarks, I have some teams who are great at teamwork, and others who need to improve. Those teams who work well across
the company will be rewarded).
Fun
One of the reasons employees stay at a company is because they are working for a higher purpose. Cisco Employees are excited to come to work every day
because they believe we have a great team that is truly going to help change the way the world works, lives, plays, and learns. As we build our company to
last, (Chambers, I want Cisco to be the place where you want to retire, and one day will tell your grandchildren about. So let's work together as a team, and
have fun doing it).
Trust/Integrity/Giving Back
Cisco was founded in an environment of open communication, empowerment, integrity and trust. These values remain at the forefront of company culture
and business decisions. Organization, must maintain the commitment to these values and continue building a culture that understands what is acceptable and
what is not. (Chambers, We will never compromise on issues of integrity. My goal is to continue promoting a culture that not only produces results but also
ensures that Cisco is recognized as one of the most generous companies in the world. For years, we have given to communities around the world on a local,
national and international level to help people learn to help themselves).
Drive Change
Cisco, must measure against both companies internal goals and against how well that execute on the opportunities in the market. One of the keys to Cisco
success has been the ability to listen to the customers and react quickly and effectively to meet their needs. Only by continuing to drive change in the
industry.

4.1 Industry Structure:
Michael Porter postulates that there are five forces (Fig-4, following page) those typical shape industry
structures, which are intensity of rivalry among current competitors in the industry, threat of new
entrants, threat of substitutes, power of suppliers, and power of customers
Fig-4: Porter’s Five Forces

Competitive Analysis
Forces
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The main fierce rival of Cisco is Nortel connectivity penetrating aggressively to south east Asia
market, however Nortel is focusing more to VOIP (Voice over internet protocol) and providing
the switching base phone to companies, but since Cisco is also providing customize VOIP
The Rivalry technology, it become potential rival for Cisco.
among Existing
Firms
Huawei Technology a Chinese base company aggressively pursuing the market in Asia and
Europe region, marketing Routers and switches half the price of Cisco, making Huawei a
ultimate rival for Cisco.
The Router industry is considered as a capital-intensive business, which required a large sum of
money to operate efficiently and effectively. Thus, it implies that the barrier to entry in this
Threat of New industry is high. However, since Cisco successfully create proprietary standard in market. The
Entrants new entrants potentially flourish copy Cisco formula and enter the industry. Example of new
entrants is Huawei Technology. Imitating Cisco technology and market it as if their own.

As number of companies grows the market become saturated, Cisco have to face buyer bargain
power, and particularly low end products like Lan and Wan , small home switches, customer
tend to be price sensitive and certainly want to look for cheapest price available in market, the
underlying reason might be that customer generally are not well technological versed or in other
words they are end users, particularly Asians where bargain power of buyers are high , they will
Bargaining go for price not the quality in the first place.
Power of Buyers
At the moment, the customers are less potential to switching to other brands, because Cisco is
still the market leader and innovator of WLAN, MAN, LAN, AP, Routers, Switches, Hubs,
Uplinks, and Bridges. However, linked to others competitive forces, rivalry and threat of new
entrants, the buyers will high potentially switching to others alternatives, except Cisco is
strongly differentiated the product and service, which is already, began diversifying.
Until now there is highly unlikely that Cisco being substituted to other product, however
Threat of substituted services can be questionable, like Huawei and Nortel connectivity are pressing hard
Substitute for total customer solution strategic model, there fore Cisco have to follow the pursuit and
Product or provide and design and strategic model based of customer needs and provide the individualized
Service customer solutions, this will give Cisco as leading edge from other companies that they already
are the innovator with customer services , a mix of best product with total customer solutions.

Cisco do in-house supply activity, however, Cisco also have suppliers like Intel for special
product IC (Integrated circuits), therefore Cisco have to maintain good relationship with Intel
and continue to buy components from Intel, because there are only two companies exist making
computer and networking components (AMD) and (Intel), the bargain power of suppliers are
greater.

In 5 years India will also manufacture IC’s for computer and network components, as if their
Bargaining own product, therefore, Cisco has to keep an eye on this development as well for other external
Power of factors, such as market trends, pricing, and competition.
Suppliers
Since Cisco does Most of supply chain supply activity in-house, the company has to maintain
the strong corporate culture and retain the loyalty from employees, retention of employees
become major focus of their redefining strategy, hence Cisco have to offer share options and
compensatory package to employees. Thus, Cisco reliance to others will be less, which also the
edge to other companies.

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In the early 1980’s, Stanford University had accumulated many separate computer networks, each using
different machines and different electronic languages. Leonard Bosack and Sandra Lerner with its
brilliant innovation, they manage to hook-up those computers in one platform to connect the computers
(Router), and saw the opportunity and realizing that interoperable router might have commercial value,
which help formed a company name Cisco. Further, in the 80’s there were hardly any competitors. Cisco
went to public in 1990 with annual sales of $70 Million, by 2000 Cisco evolved as dominant supplier of
routers, switches, uplinks and hubs with annual sales excess of $19 billion, no debt and a return on
invested capital of around 22% (Hill and Jones, 2004).

When Cisco becomes a mature router industry, the competition was almost non-existent. Further,
company success had significantly changed the dynamics of the router commerce. Cisco became the
pioneer of router technology. However, its success greatly intensified the need of other companies to
compete and companies begin to emerge mainly Lucent Technology, Huawei Technology, Nortel
Connectivity (Fig-5) and penetrating the market, as potential threat , the companies was start selling
their product with same Cisco invented IP protocols, as low cost products. Bargain power of buyers
starting to take their toll and threat of substitute of product became ultimate for Cisco. Cisco initiates to
comprehend their strategy and redefining their model strategies with their market need and dynamics of
the company to change.
Fig-5 Main Competitors in Network Industry

No Company Product Technology
Lucent Routers and Switches Tl base 10/100 Mbps Lan management
1 Routers, uplink
Technology Cat3,5,5e
Routers, Hubs,
Huawei Routers and Switches Tl base 10/100 Mbps Lan management
2 Uplinks,
Technology Cat3,5,5e
Switches
Access Point , Routers and Switches Tl base 10/100 Mbps Lan management
3 Gateway
Bridges Cat3,5,5e
Routers and Switches Tl base 10/100 Mbps Lan management
4 DEC Routers
Cat3,5,5e
Routers and Switches Tl base 10/100 Mbps Lan management
5 IBM Switches
Cat3,5,5e
Routers and Switches Tl base 10/100 Mbps Lan management
6 Netgear Routers
Cat3,5,5e
Routers and Switches Tl base 10/100 Mbps Lan management
7 Juniper Access Point
Cat3,5,5e, Access points: 1.2 GHz Ap
Routers, Hubs,
Routers and Switches Tl base 10/100 Mbps Lan management
Nortel and Uplinks,
8 Cat3, 5,5e, Access points: 1.2 GHz Ap, optical carrier 3 to 12
3COM Switches, Access
(Fiber Optics).
points, OC3
Routers, Blue Routers and Switches Tl base 10/100 Mbps Lan management
9 Hp
tooth Cat3,5,5e

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Cisco’s showcase product is the routers, where they dominate exchange customers and partners use
Cisco router so that they can communicate more reliably with the other routes that pervasively occupy
the nodes of the internet backbone. Further (See fig-6). Cisco identifies its revenues as coming from 5
sectors, defined below. Revenue in FY05:

Fig-6 Product statement percentage wise
Product Percentage
Routers 41 %
Switches 25%
Advance Technologies IP telephony, home networking, optical
20%
Networking, security, storage networking, wireless
Other’s, (network management software, access products excluding
14%
wireless LAN, other miscellaneous services)

Source: Cisco (2006), ‘Company Website’ Viewed at 15/0/06 , www.cisco.com/index.html/company_fy06_fy_05%u20.pdf

Fig-8 Cisco SWOT Analysis

Cisco Opportunities Cisco Strengths
The company is positioned well overall, as IP-based networks that Financial strength: the company is debt-free and has about $21
form the backbone of the Internet expand and drive productivity. billion cash in the bank. It is generating at least $4 billion per year
One of the key concepts of networking is Metcalf's Law, which says in free cash flow (FY05) and is anticipated to generate $5 billion in
that the value of the network equals the SQUARE of the number of FY2006. Not just does it give the company the ability to fund
users (Boyd, 2003). critical areas such as R&D or marketing, but it gives it strength to
acquire technology with lower venture capital funding in the
Howard Charney, Company employee in a presentation to Korean market. It also enabled the company to buy back $2 billion in
customers of Cisco, notes that U.S. non-farm productivity has been common stock during FYQ5. (Strategic paper, 2005).
growing at an average rate of 3% per year since 1995 (when the
Internet and browsers became widely used) -- more than double the Core competency (TCP/IP) Transfer control protocol / Internet
1.4% of the previous 20 years. protocol: Cisco started out as a bridge/router company, basically
providing switches for networks. It built its core competencies in
As India grows to be informational super power, as Indian firms the late 80s/early 90s as token ring/Ethernet really gave way to
business grows Cisco product pose great opportunity, according to TCP/IP-over-Ethernet (some might say TCP/IP over ANY
iQ magazine ‘Businesses in India between 50 to 999 employees transport).
spent more than $2.9 Billion on information technology products
and their services in 2005, (iQ, 2005). Cisco's core customer base has been the early adopters of TCP/IP
(education and government), as well as large corporations with
China is also a immense market place for Cisco, with FDI well over extensive networks.
$51 billion annually and every major company is gearing to china, Flatter management, shared vision/ideas employee culture,
companies like GE, Ford, BMW, EMC, the list goes on, and all camaraderie and informality of Cisco culture that guided positively
MNC needs an cost effective communication and network solutions. the behavior of employees.
Which Cisco can certainly provide their proprietary standard
product and services. Successfully in expand the market into far flung of Asian continent
regional headquarter in Malaysia. Cisco sought an acquisition with
Cisco Just Sign the MOU with number of countries including Linksys, the company provides products largely sold through retail
Pakistan, $5.6 billion project which help maintain CNIC (Computer to small businesses and homes

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National Card) and MRP (Machine readable passports) with
(NADRA (National authority of Data base and Registration
Authenticity)) (Pakistan Economist,2006).
The company itself is seeking to identify 12 advanced technologies
that could generate $1 billion per year if markets develop.
According to CEO Chambers, six have been identified and are in
the Advanced Technology revenue group (IP telephony, home
networking, optical networking, security, storage networking,
wireless).

Asian Crises during 1997, companies were pulling from Asia,
however Cisco were developing their strategic alliance with number
of local companies specially in Singapore and Malaysia, hence after
though times Cisco built image of loyalty and brand among Asian
Countries, present an opportunity to become top technological
MNC in Asian countries.

Cisco Weaknesses
As is often the case, strengths are also potential weaknesses. The Cisco Threats:
high gross margins are not believed to be sustainable, even by
management. With the acquisition of Linksys, average gross China counterfeit and particularly Huawei technology as violator of
margins declined by 1% because consumer products typically have Cisco patents (Cisco Vs Huawei- case is still underway at
gross margins in the 30-40% range (Boyd,2003). international courts) , pose great danger, Cisco in china is facing
some immense challenges, China internet users are growing to 5%
annually, therefore , This untapped market is filled by counterfeit
Analyst Alex Henderson is among the analysts who fear Dell's entry network products and software’s. China is not alone in this
into this business, using low-cost off-the-shelf components: inadequate intellectual property protection other Asian countries are
(ZD/NET, 2000) following this pattern.

Short-term, spending on IT infrastructure continues to suffer. Book- Uncertain global economy , variability of revenues
to-bill for the most-recent quarter remained below, Cisco noted
during the earnings call that customers often say, "I wish my Product gross margins may not be sustainable other factors include
business was as good as the economic numbers indicate." Turmoil among the ISPs. Including increased competition may
weaken their ability to fund capital equipment spending

The company has done some vertical integration, including Potential acquisition of Juniper by a major strategic partner, such as
purchasing chip-maker Seagull Semiconductor in 2000, but is IBM., presents clear threat to Cisco Juniper Networks, which
reliant on outside vendors who may be capacity-limited during outsourcers all of its manufacturing, (in contrast to Cisco), is able to
periods of high demand. build a lower-cost operating model, particularly in the high-speed
network arena.

Low-cost hardware entries in the Wireless LAN market further
eroding Linksys margins.

Continued sluggish spending in IT infrastructure. Delays in
development of new market areas, such as voice-over-IP, which has
been delayed in implementation due to regulatory, product and
logistical issues.

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5.0 Business Strategic Agenda:

5.1 Cisco Financial Objectives.

 To increase net profit expected to minimum 20%.
 Keep maintaining the sales growth of minimum 30 % annually with increase in sales volume to
40%.

 Keep maintaining the highest profit margins in the industry, but improve on yield and load factor at
minimum 2%.

 To increase earnings per share up to 5%.

5.2 Cisco Strategic Objectives:

• Lead Cisco entry into key market.
• Invest in strategic technologies and partners.
• Partner with business units – a strategic advisor
• Talent Management.

Source: Scheinman, D (2004), ‘Corporate Development at Cisco’ Senior Vice President, Dan Scheinman Viewed
at 14/07/06 http://eco.cisco1.com/login/insight/Corporate_development_at_cisco.

• Evaluating the Options

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Source: Scheinman, D (2004), ‘Corporate Development at Cisco’ Senior Vice President, Dan Scheinman Viewed
at 14/07/06 http://eco.cisco1.com/login/insight/Corporate_development_at_cisco.

• Acquisition Strategy:

Source: Scheinman, D (2004), ‘Corporate Development at Cisco’ Senior Vice President, Dan Scheinman Viewed
at 14/07/06 http://eco.cisco1.com/login/insight/Corporate_development_at_cisco.

6.0 Cisco Strategic Agenda

Strategic Organizational Business
Performance
Thrust Structure Processes

Supported by : Assignment of Detecting activities that Performance indicators;
• Business Segmentation Responsibilities and cut across organizational time-driven events
•The Triangle Authorities units requiring horizontal
•The Mission Statement coordination

Source: Hax, A C, & Wilde, D L II (2001), ‘The Delta Project: Discovering New Sources of Profitability in A
Networked Economy’, Palgrave, New York.

Strategic agenda is the expansion of mission statement, whereby their key objective lies in their talent
management and employee retention strategic management. Furthermore, Cisco competes in a dynamic
industry where technologies, products and markets are in a continuous state of change. It thus has to
develop a talent management programme to grow and develop its key employees in globally and
successfully manage and run the businesses. Cisco develops and grooms in-house talent to ensure
continuity in its key business lines, stretches their potential through assignments and task forces, as well
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as put them through a rigorous training programme to hone and develop their skill levels. Furthermore,
Cisco itself has followed an aggressive growth-by-acquisition strategy, gobbling up small technology
outfits that provide superlative solutions in the product-market areas in which it seeks future dominance.
Rather than waste valuable time developing in-house solutions in all areas, Cisco selectively acquires
technology-rich companies that can then be supplemented with its extensive and sophisticated marketing
and support network. Although the acquisition costs to Cisco might not be significant on a per-deal
basis, speedy implementation and integration of these deals within the Cisco framework increase the
chances of non-linear returns in attractive product-markets. In addition, Cisco is an active partner of
large players like Microsoft, EDS, Peoplesoft, HP, and many other industry leaders on projects of joint
strategic interest and importance. These projects typically involve more substantial R&D investment and
aim to avoid expensive duplication through the development of mutually acceptable and industry
standards. Thus, Cisco plays both ends of the spectrum, enabling it to chart and push the broad vision for
an emerging industry, and also carry out detailed implementation in specific solution areas. Its critical
competence therefore is in bringing new technologies to market in an extremely short time-span,
through collaborative R&D, or the acquisition of R&D.

While most companies immediately cut costs and people from newly acquired company, Cisco adheres
to what it calls the “Mario rule”- named after SVP Mario Mazzola, CEO of Crescendo when it bought
by Cisco and Mario remain a CEO shows that Cisco care about talented employee as their organizational
tangible strategic assets, and to create a culture of innovation, ideas and passion of Cisco boundary less
nationalism. (Besanko and Shanley, 2000).Fig-9 describe Cisco Organizational process M&A
Framework
Fig-9 M&A Framework
Organizational Process es
M&A Framewor k

Strategy Strategy

Strategic thrust Strategic thrust
of The firm of the acquired
company

Resources Processes& Resources Processes
values & values

Normative Normative
claims claims

Conflictory, creative process

Strategy

New Strategic Thrust

Resources 2003 Processes
& values

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Source: Penning J, M, (2003), ‘Framework of Strategic Thrust (Product-Market Focus), with hardware levers such as
structure, control and incentive systems, and software such as people mix and culture’ Viewed at 18/07/06
http://www-anagement.wharton.upenn.edu/pennings/coursedocuments/SMI/SMI(Class%207)HermesandCISCO.ppt#13

M&A are seen differently by Cisco they not just merely acquire company to speed growth or swell
market share. They routinely employ acquisitions intellectual assets and next-generation products. “Most
people forget that in high-tech acquisition, you really acquiring only people” say Cisco CEO Chamber.
“That’s why so many of them fail. At what we pay, $500,000 to $2 Million an employee, we are not
acquiring current market share. We are acquiring futures”. (Company website, 2006). For Cisco it is
important to know what business model it generated for every strategic thrust. Ultimately, each
individual of strategic thrust has to be properly monitored with performance indicator. All the strategic
agenda process shows in following fig-10.

Fig-10 Cisco Strategic Agenda Process

Organizational Units

Key
1. Key role in formulation and implementation B. Business Model
2. Important role of support and concurrence OE. Operational Effectiveness
CT. Customer targeting
1 Identifies ‘Champion’, who takes leadership for strategic execution I. Innovation

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7.0 Adaptive Process

Trough its business processes, Cisco needs to develop flexibility and responsiveness to the ever-
changing business environment. The adaptive process (fig-11) provides the framework with its critical
process: Operational effectiveness, customer targeting and innovation in the mechanism of adapt to
environment.

Fig-11: The Adaptive Process: Linkage Strategy with Execution

Business Model
Source: Hax, A C, &
Wilde, D L II, (2001),
‘The Delta Project:
Discovering New
Sources of Innovation Operational Effectiveness
Profitability in A
Networked
Economy’, Palgrave,
New York, P-259
Customer Targeting

7.1
Operational Effectiveness

Cisco has been an innovator company, this image has enabled the company to reap major efficiency
gains, while providing its customers with superior point-of-sales and after-sales services and support.
Cisco was one of the first companies to move much of its sales effort onto the internet, the company
began to experiment with online sales. It design and develop the program to walk customers through out
the process of ordering equipment online. The critical feature of this program helps customers to order
exactly the right mix of equipment, thereby avoiding any ordering mistakes and delivery process is 24/7
365 a days with swift and responsive manner. Therefore, Operational effectiveness strategy also plays
important role to support infrastructure and efficiency for customer access using IT innovation. Since
Cisco run their all core operations in-house, company needs to focus on product quality as well, creating
an environment and trained employees as future enablers. Since Cisco, using internet on-line system
rather than third parties such as network retailers and whole sellers, they also established new system,
which is also interrelated with customer targeting strategy, such as solution technology system. It consist
of two internal programs, EP (Enterprise Marketing) and CP (Commercial Marketing), where, CP enable
Cisco to B2C consumers and EP enables B2B customers as partners. Most of B2C business process
handles by BPO (Business processing outsourcing) companies, In Malaysia, (Teledirect Telecommerce),
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a Singapore base outsourcing company support’s, distribute and sales over internet and telemarketing as
awareness programme of Cisco’s B2C customer products, such and home and small office routers, hubs,
LAN (Local areas network), WAN (Wide area network) and WLAN (Wireless Local area network)
switches. However Cisco provide services and after sales services to B2C customers. Thus, it helps
streamlining the Cisco’s floated operation handling. Ultimately, Cisco can put more time and money to
their future product innovation strategy and generate more revenue from others marketing strategies,
rallying around from efficient operation system.

7.2 Customer Targeting:
Quality and performance are judged by customers. Thus, Cisco must take into account all product and
service features and characteristics that contribute value to customers and lead to customer satisfaction,
preference, referral and loyalty. Being customer driven has both current and future components and
understanding of today’s customer desires and anticipating future customer desires and marketplace
offerings. (Kaplan & Norton, 2004). Further, value and satisfactions may be influenced by many factors
throughout the customer’s overall purchase, ownership, and service experiences. These factors include
the company’s relationship with customers that help build trust, confidence, and loyalty.
In this model, strategic direction is not formed by an insular group of top-executives, but by the
companies leading customers. It’s as outside-in approach as apposed to inside-out. In Cisco the customer
is the strategy. (Thomas, 2004).

Cisco, address not only the product and service characteristics that meet basic customer requirements,
but also include features and characteristics that differentiate them from competing offerings. Such
differentiation may be based upon new or modified offerings, combinations of product and service
offerings, customization of offerings, rapid response and special relationships. In Cisco’s customers are
their strategic partners. Cisco is eager to make partners Succeufull, for example ISP’s (internet service
providers) to provide them cutting edge solutions and undeniable future technology with highly
customize technical security features, a good example can be ISP in Malaysia Jaring Sdn Bhd, Cisco
provide solutions product as well as knowledge of the product, including training program which cost
Cisco millions. Jaring is now sole provider of optical carrier12 (OC12), tracerouting of ATM network in
Malaysian banks such as Public bank and www.maybank2u.com. Boeing is also a good example of
Cisco strategic customer targeting. Boeing informed Cisco that their future network needs were unlikely
to be satisfied. Cisco quickly responds to solve the problem, in very short span of period, Cisco develop
the customize switch access points to solve the Boeing problem, which require acquisition with
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Crescendo Communication. Cisco craft the customer value and highly satisfy the company, Boeing as
loyal customer only deal with Cisco in big future generation projects, like radio routing and from flight
to control room IP protocol, for boeing this innovation is cost effective, saves $2.8 billion a year. (iQ,
2005).

Out of all major partners, Indofood is also a strategic partner of Cisco, Indofood own the world’s biggest
floor mill in Bogasari. Recently company’s entire network was under attack by crackers and hackers
who manage to penetrate the main server of Indofood using rouge modulators de-modulators,
(Un-detectable), and it was Cisco who inform Indofood that the main server of company was under
attacked, a routinely maintenance of Cisco, Indonesia employees, Cisco again quickly respond and
provide Indofood a PiX firewall technology, a combination of both hardware and software which
facilitate Indofood network as self detector, a highly customize artificial intelligent firewall, which can
detect every in-bound and outbound data which transfer through network and filter it automatically and
logged it to the database and e-mail every workstation of Indofood or in other words PiX firewall runs
under less monitoring by company employees.

7.3 Innovation
To be outstanding and adaptive in innovation as Cisco’s core competencies, company must drive their
value as future with their ingenious marketed as well as customized products, innovation comes with
people therefore innovation is directly proportional to innovation, thus, facilitating talent management
programs for talent attraction and retention. This remains an ever-present and essential concern for
Cisco. In addition it’s increasingly vital to ensure total talent commitment. Aligning the individual's
expectation to the organization’s desired result increases talent involvement and enables them to thrive
fruitfully. Hence, Cisco, must be adaptive and Aligning Cisco’s business strategy with talent
management, including, Cisco must outlining various processes used to identify talent such as CCNA,
CCNP and CCNI , Cisco certification which would be the key essence of Cisco’s talent management
model, to be adaptive Cisco must accelerate the development programmes to build up talent.

To interconnect the innovation adaptive strategy with customer targeting, a good example would be the
partnership between Cisco and Microsoft Inc. which resulted in a new technology with embracing
adaptive innovation to make network more intelligent. The mix product software (design in C++
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language) and hardware (Cisco router), lets network knows immediately a user’s identify and location
and to respond differently to each one accordingly. This innovative mindset of Cisco as well as the
strategic partnership with Microsoft allows both companies to expand this market together more rapidly.
This shows vis-à-vis novelty of adaptive strategy and complementing Microsoft network platform to
handle the data of Apple and NetWare operating systems in one platform and Cisco router capability to
connect different operating systems with their high speed data transfer mode.

8.0 Strategic Map:
Using the Kaplan and Norton’s Strategic Maps framework to analyze how well Cisco strategies and
actions linked to product innovation and product leadership. By utilizing the strategy maps, Cisco
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business strategy will be evaluated from four different perspectives: financial, customers, internal
processes, and learning and growth perspectives and all of these perspectives are interrelated to one
another. This Strategy Map of Cisco is a visual representation of the cause-and-effect relationships
among the components of an organization’s strategy, is as big an insight to executives as the value
proposition including outstanding performance. The Integrated Strategy Map of Cisco organization
shows in fig-12.
Fig-12 Strategic Map of Cisco

Long-Term Shareholder Value

Productivity Strategy Revenue Growth Strategy
Financial Revenues Revenues from
Perspective from new secondary
customers prodcut services
Lower Cost of entry level products
Revenues from third party Access
to customers

Complementors
End-user customers

Offer broad Provide
Provide a Provide Convinient Offer easy to use
selection and Provide
Customer widely used innovation on distribution platform and
convenient Large customer
standard a stable channel standard
Perspective access platform
bees

Manage Manage Manage Customer Manage Social and
Innovation
Operations Complementors Relationship Regulatory processes
Develop & Increase
Provide service and Create
enhance breadth Defend
Re du c e n ew c c u s tom e r

Reliable benefit to complementors Awareness Proprietary
Access and application Proprietary
standard of standard Position , IP
easy to use
s ea r c h c o s t

Influence Innovator
Complementors switching Lower
investment in Improve
Provide costs of potential functionality Expand use of
proprietary products existing and customers
capacity for while Standard
Internal proprietary potential switching
maintaining Communications
customers cost
Perspective product and Attract retain new backward , through Govt
service compatibility licensing
complementaors

Human Capital Informational Capital Organization Capital
Learning Develop Skill that Enhance the
Expand knowledge of
Provide Convinent
proprietary product and standard , platform for customers Deliver benefit to
and Growth customer behavior customers and
CCNA, CCNP, CCIE and complementaros
Perspective Complementors

Source: Kaplan. R, S & Norton. D, P, (2004), ‘Strategy Maps: Converting Intangible Assets into Tangible Outcomes’,
Harvard Business School, Boston.

8.1 Aggregate and Granular Metrics:
Aggregate metrics is the overall scorecard of business performance, turn our attention to the outputs as
the key indicators of success for the business, known as granular metrics. (Hax & Wilde, 2001), Cisco

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emphasizes on Acquiring the company with more or less similar to Cisco corporate culture of
innovation , providing customize service quality to customer (Partners) and product leadership company
wants to be first-to-market with their innovation and enhanced features and functionalities of the
products, gain the proprietor-ship position. By being first, they can command high prices from early
adopters who most value the unique functionality of the products. Cisco also capture the high market
share in situation characterized by large switching costs or that, in both case as company’s credibility
can be enabled to defend their first-mover advantage without price cutting. However many dot-com fails
of this because of this first mover advantage. The classic example is wal-mart going e-sales, fails to
recognize the customer needs in retailing sector.

eBay although its business model is successful but there is big disadvantage of this model, such as
customers who choose to buy or sell products on an auction service on eBay loose access to product.
Cisco is the same case of this disadvantage, particularly in Asian countries, because their mindset is to
touch and feel the product. Therefore, this skeptical Asian market, Cisco would try to plug in Acquisition
with local companies for convenient distribution channel strategy and formulate fresh strategic thrust
and try to understand the culture of the Asian countries as how they react when it comes to buying the
high end products. Furthermore, Cisco must develop the talent management program to develop
employee skill, and relate with performance management as companies performance review is based on
MBO (management by object) by individual employees. Thus, SHRM plays pivtol role for Cisco
growth. Cisco has cross-functional team and they put a performance review committee for collective
strategic thrust.

Cisco as complementors provide a key source of sustainability for system lock-in, by providing
customize products and services that require customers and partners to use the company’s proprietary
product and standard. To successed in implementing the strategy, Cisco must develop a capability to
influence the customers and lay network industry standards through their unequivocal innovation means
in network business that drive the truly works with Cisco way. Furthermore, to create awareness, Cisco
must offer their proprietary products by offering networking supporting equipment such as routers, and
switches to college and elementary schools. Young people, who would be most comfortable with the
technology became familiar with Cisco’s product and then selected them for use in their jobs after
graduation. Cisco also generating talent as well as awareness from the early years of young graduates.

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Cisco must protect its proprietary precut from imitation and use by competitors and from unauthorized
use by customer, complementors and suppliers. Therefore, Cisco require strong legal protection to
prevent competitors from copying the product and Cisco’s core technology, and construct the mass
programme awareness to customer not using imitated products, through community reach bulletin. Cisco
must robustly protect and enforce the uniqueness it offers so that Cisco can continue enjoy the benefits
from successful proprietorship standard. Further, Cisco must enforce contracts and penalize violators to
ensure that customers, partners do not deviate from the violate the rule of exchange. To help curb this
problem Cisco must innovate the software and coding which is very difficult to reproduce, as they done
that in the past and certainly Cisco can do it now.

Cisco Corporate culture is highly customer and complementor- centric. Cisco key to success is providing
exceptional services responsiveness so that the customers and complementors always perceive that a
switch to an alternative provider would be fraught with uncertainties, create a loyalty and retention of
customer. Further, Cisco culture should be persistent for all the employees.

8.2 Experimentation and feedback:
The experiment and feedback is the process of the generating tasks to test the assumptions and learn
about the market (Hax & Wilde, 2001). In network industry it relate with innovating the products and
market it and try to build and proprietorship or complementing the system lock in product as their core
technologies, and also market reaction and indicators of the product, the easiest way is gallop poll.

Conducting regular customer opinion surveys to monitor the quality of its product/services and write any
feedback in guest support of Cisco website. The survey result will analyzed by the key personnel in the
organization. In addition, the market research department also conducts regular focus group studies to
predict future customer requirement for service quality improvement based on its customer feedback.
Moreover, to supplement the customer feedback, Cisco must focus on product reliability and trying to
make it better product developmental customization strategy, and thus to deliver benefit to customer and
complementors

Cisco must expand knowledge and customer behavior, develop customer skills and tools to support, in
order to enhance the proprietary standards to customers and completers and augment the certifications
program through procurement center such as CCNA.( Cisco certification Network Administration)

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CCNP (Cisco certification Network Protocols) and CCIE (Cisco certification Internet experts), and hire
as Cisco certified managers.

9.0 Conclusion:
In talent hungry Silicon Valley, Cisco must measures the success of every acquisition first by employee
retention, then by new product development, and finally ROI. The company has been phenomenally
successful at holding onto the intellectual assets it buys, Cisco overall turnover among acquired
employees is just 3% a year globally (Robinson and Pearce, 2005). Furthermore, Cisco must focus on
beyond the box strategies to improve a company’s products, services, and processes and create new
value for the company’s stakeholders and creating the intangible value perspective among customer, in
order to attract satisfy and retain, including company has to sustain their proprietor standards, while
digging more how to maintain closer relationship with its customer

‘Changing the way the world works, lives, plays and learns’, to accomplish companies vision, Cisco’s
Innovation capability is important for key product and service processes and for support processes.
Cisco must structure in such a way that innovation becomes part of the culture and daily work. To
comprehend all this fundamentals of Cisco and preferring the Delta Model which was developed to
fulfill the today’s networked complex environment puzzle with putting all the pieces of strategic options,
comprehensive execution process, metrics, and adaptations for deep-seated answer that emphasize on
“Customer Bonding”.

“All I’ve done since I got here is focus on one word innovation.”
– CEO Cisco John T.Chambers.

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