Cisco Systems' Ability to Stay on Top

Cisco’s Ability To Handle Internal and External Factors

Should managers of today’s corporations be concerned about the factors that can affect their company’s bottom line? Managers of today’s corporations must be aware of and responsive to factors that can affect their company’s bottom line. The growth and success of an organization is proportional to its ability to handle internal and external factors such as rapid change, globalization, innovation, . Cisco Systems is a model in handling these factors.

Cisco’s management responds to the rapidly changing environment by keeping lots of cash on hand, being customer-centered, focusing on their core business by engaging in strategic partnering, and maintaining a nearly 100% internet-based customer support, training and order fulfillment system.

Positive cash flow is another key strategy employed by CEO John Chambers in the response to rapid changes in the industry, especially in the case of would-be competition. Cisco has faced serious challenges from competitors in some part of their primary market about every two years (Meta Group, 2001). Every time Cisco has faced a cha

This Growth does not come without any challenges challenges. Through the years, Cisco has had to make some adjustments. One of the factors affecting their e-business is the customer. Customers are becoming more sophisticated, requiring more personalized and innovative products delivered at their convenience. According to Sue Bostrom, vice president of the Cisco Systems Internet Business Solutions Group, the Internet has also expanded the very definition of the word ‘customer,’ so that it now includes employees, distributors, suppliers, business partners, and shareholders. She says, “As a result of these changes, a company’s competitive position in the Internet economy depends on its ability to deliver customized, relevant, highly responsive service to every participant in these networks of economic relationships” (www.cisco.com).

Cisco Systems, Inc. has been a pioneer in moving the business process to the Internet. since its creation. It has embraced the Internet for sales, service, and supply chain automation. This reliance on utilization of the Internet and e-business has propelled the company into one of the most successful technology companies in America. Even with the recession of the past five years, Cisco has managed to stay the course. Cisco executives say driving e-business deeper into the company is central to its recovery. The company saved $1.5 billion last year through increased operational efficiency and cost avoidance (www.cisco.com).

The challenge for executives is to identify and analyze business processes and customer needs, then look at solutions that will impact both positively. What comes through is clear: old business models - the ones that worked so well for previous generations - no longer keep organizations productive or competitive. The networked enterprise is swiftly becoming business necessity (Moos, 2003).

Globalization is the new frontier of business – all businesses must be able to adapt to the increased competition that comes with it. Dessler stated in his text, Management Theory, Practice and Application, that, "globalization is nothing more than the extension of a firm’s sales or manufacturing to new markets abroad" (p. 33). In theory, one could say the more coverage a business has in the world market, the more business it will do. However, businesses need to be able to communicate globally. Cisco Systems has been able to acknowledge this need by providing Internet Protocol (IP) telephones to businesses all over the world. In an August 7, 2002 press release, Cisco Systems announced the shipment of its one-millionth IP telephone in less than two years. During August of 2000 to July 2002, Cisco increased its IP telephony customer base from approximately 1,000 to over 5,000 enterprises worldwide and has been shipping on average over 2,000 IP telephones each business day (Lopez 2003). Cisco Systems is controlling a segment that services businesses with the tools need for the g

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