Tuesday, July 12, 2011

How Cisco is being beaten by rivals with SME strategies??

Cisco , once darling of stock market is in news for wrong reasons. How come a company which was considered as unbeatable has been outsmart by rivals?

I wrote about how small businesses can beat MNC's and it looks Cisco's rivals though not small businesses are using these strategies successfully to beat Cisco.

Strategies discussed were - Focus on Low Pricing, Focus on Rival's Existing Accounts, Focus on Rival's Existing Businesses, Flexibility and Faster Response Time, Focus on Services, Focus on Bundling.

Cisco has taken its dominance on its core market for granted and its focus has been on new markets. John Chambers have earlier talked about in 2008 about focusing on 30 new adjacent market each with potential of $ 1 Billion business. While the new markets have not delivered, Cisco begin loosing share in its existing markets.

Cisco's rivals have undercut pricing by over 40% in Cisco's core market. The effect is more seen in price sensitive emerging markets where Cisco is loosing its market share faster.

Innovating deals by rivals combining different solutions, services , financing is providing them competitive edge over Cisco.

The information is not in public domain but my guess is Cisco's focus might have been more on generating business from new accounts but their old accounts might be the ones tempted by low pricing and better service of rivals.

Cisco had lost its flexibility and response time with new complex organization structure created in 2007 of overlapping nine management councils, which rightly have now been reduced to three councils.

In short Cisco, who was considered unbeatable, have been beaten ( temporarily though !).

Not only SME's can beat MNC's even big companies can beat MNC's by acting like SME's and deploying above strategies !!