Cisco Systems: Firm Strategy and Internal Strengths.

Cisco Systems:

Firm Strategy and Internal Strengths.

Cisco Systems, the self-proclaimed "worldwide leader in networking for the Internet," has dominated similar firms in its industry. As Wall-Streets' beloved stock and an essential stock in any investor's portfolio, with over 35,566 employees worldwide and boasting revenues totaling 22.2 billion in the previous fiscal year the company aims to ensure that networks both public and private operate with maximum performance, security, and flexibility. As a result the competition is left scrambling to keep up. Like many other market leaders, Cisco Systems too, has become a victim of the current economic state that once propelled the company into the limelight. While the firm is down, it is by no means out. Cisco has shifted its strategy and has returned to cultivate the internal strengths that it leveraged in order to reclaim its market dominance. There are four core components that are the pillar of Cisco's strength, they are: organization, finance, marketing and operations.

Organization

In the latter part of 2001, Cisco Systems implemented a new corporate structure specifically designed to leverage the industry leaders' management competencies in order to add value the business. One of the major changes that took place was the ailment of like business lines and the centralization of key functional areas such as marketing and engineering. According to John Chambers, President and CEO of Cisco Systems, "At the heart of this change are our customer requirements and our clear market transition opportunity. Our line of business structure has served us very well in the past, when customer segments and product requirements were very distinct. Today, the differences have blurred between these customer segments and Cisco is in a unique position to provide the industry's broadest family of products united under a consistent architecture designed to help our customers improve productivity and profitability." One of the key reasons why Cisco Systems remains a power house in its it market is because while taking advantage of wide array of opportunities to ensure profitability and future sustainability and growth, management puts great emphasis on focus and specialization in those areas in which the firm excels. Securing technologies that will help Cisco, thru strategic alliances and partnerships enables Cisco to still lead in those areas in which it has a disadvantage by leveraging the strengths of its partners. Cutting-edge and forward thinking management initiatives are attributed to Cisco Systems' continuous commitment to recruiting and retaining world-class staff. Recently, Cisco Systems named a new Chief Development Officer and a new Chief Marketing Officer, which signifies the company's dynamic nature, and commitment to keeping products and services current by shifting management responsibilities. In sum, the predominant strengths of Cisco's organizational structure, is its readiness to adapt to market trends as well as the foresight to predict and shape such trends and flexibility to make the necessary changes within the organization to position the company to lead the industry.

Finance

Cisco Systems finance function revolves around Cisco's "e-model." Cisco's finance operations have undergone a dramatic face-lift in the past few years. In addition to cutting costs and increasing customer satisfaction the company has increased the amount of paper invoices processed. Previously, the number of invoices processed per week was 8,000 invoices, which were mostly processed manually. Now the firm can process over 40,000 invoices per week with a fraction of the staff. This increases the firms cash flow as the automation of such processes allows the firm to receive monies owed in a quick and efficient manner. The finance staff is no longer preoccupied with mundane tasks such as approving and processing invoices. More employees now focus on monitoring and analyzing critical real-time information for internal and external purposes rather than recording and analyzing historical information. Furthermore, Cisco has introduced what is known as "virtual close." Virtual close enables the firm to close its books in all locations and finalize numbers in less than one day. Another great strength of Cisco Systems is the remarkable ability to consolidate the finance functions of acquired companies successfully.

Such an accomplishment is directly attributed to the firms' abundant resources devoted to ensuring such transitions, as well as a group of 50 specialists who help to ensure smooth integration of finance functions between Cisco Systems and acquired companies. The processes outlined above could not have been possible with out Cisco System's commitment to continuous process improvement.

Marketing

Perhaps, the primary reason for Cisco Systems' successes in gaining new accounts via savvy marketing lies in the tremendous effort to market via the Internet in order to take advantages of unique opportunities offered by the World Wide Web that other media outlets lack. Cisco has cleverly used to Internet to build brand awareness, increase sales and to gain feedback on product offerings. According to an E-commerce times interview with Cisco's Jere King, he comments of the use of the Internet for marketing campaigns "In the next five years, it (the Internet) will be an expected element of every marketing mix. From a technology standpoint, there are so many exciting things happening quickly. Most exciting for marketers will be the comfort factor of customers using the technologies." Cisco marketing gurus employ many tactics in order to obtain maximum exposure on the Internet, campaigns using banner ads and e-newsletters are often used. While a large amount of resources are devoted to online campaigns, Cisco executive are aware that not everyone is comfortable with Internet nor is every product suitable to be marketed via the Internet. Cisco employs traditional marketing strategies in an exceptional manner in order to capture this segment.