Hewlett-Packard and Cisco Systems Essay Example

such action could create conflict for the Cisco alliance. Further, as the case states on page eight, "the company rarely makes s much money selling someone else's products as it does selling its own.

" Therefore if there is a pressing need to increase revenue in the near term for stakeholder peace of mind, then neglecting to sell alliance products could be one solution. Yet, such a solution would lower the rate of return on the strategic alliance investment.Given the increasing demand placed on firms by equity shareholders and the increasingly competitive marketplace, the challenge of meeting strategic vs. tactical goals could be an insurmountable obstacle for the alliance. The second challenge facing Mr.

Heal and Mr. Thomas is the issue of product overlap. On page six of the case, we learn that when choosing an alliance partner, Cisco's fifth rule reads "there should be minimal product/service overlap. Cisco's rule-of-thumb was that a portfolio overlap of more than 20% of revenue or a direct distribution channel conflict made it difficult to be strategic.Given the time of this case (2002), 70% of Cisco's revenue resulted from the sale of routers and switches (Page 2). Therefore it is safe to say that Cisco's desire was to sell their networking equipment and IP telephony devices primarily alongside HP servers (Enterprise Systems) and other services (Exhibit 11).

However, Cisco was already strategically aligned with both Sun Microsystems and IBM in 2002 (Exhibit 10) and both firms were selling enterprise level servers and storage at that time.Therefore by adding a strategic alliance with HP, it appears that spent over $3 billion in R&D in 2002 (Exhibit 2) and that Cisco

"tended to partner with (or acquire) smaller technology companies" (Page 2), it seems inevitable that Cisco will reach a point whereby the firm breaks the product overlap rule. Perhaps Cisco acquires a firm that builds network storage devices or the Cisco R&D epartment develops a breakthrough in the area of Fibre channel switches that Cisco can combine with storage devices developed by a recently acquired firm.Regardless, the challenge is that Cisco's product overlap rule could be a significant issue, especially given facts such as Moore's law and that both firms are located in Silicon Valley whereby acquiring cutting edge engineering talent is relatively easy. Therefore Mr.

Heal and Mr. Thomas will need to develop a Joint business plan whereby both firms can leverage the alliance without impeding on creativity, future evelopment, or current product offerings.A third challenge facing Mr. Heal and Mr.

 Thomas is the issue of a sales force that is properly setup to accommodate the strategic alliance. On page six of the case, we learn that the HP-Microsoft and IBM-Cisco alliances both utilized dedicated sales staff. We also learn that in Europe, "HP used a specialized, dedicated sales force for selling HP services bundled with Cisco products. " (Page 6) In fact, Elias Stephan, who was then HP services group's global alliance director, noted that "In Europe, the relationship with the field is much better.Page 6) If both HP and Cisco were used to utilizing dedicated sales staff with strategic alliances, what incentive was there for both firms to break the trend when dealing with an HP-Cisco alliance? Page eight of the case begins to outline some of the challenges that the HP-Cisco alliance

had already faced concerning the sale of Joint products.

For example, we learn that at HP, Cisco products did not count towards a sales representative's quota and this resulted in a decline in sales of Cisco equipment by HP sales representatives.Further, if HP or Cisco sales staff had to master not only their parent ompany product line, but also the product line of the strategic alliance partner, then the sales representative's Job has Just become more complex. If the sale of strategic alliance partner products only yields a bonus and do not positively impact the sales representative's quota then it would appear that the strategic alliance partner's products would not be a priority.On page nine of the case, Mr. Thomas outlines the issues facing the sales staff when there is a problem with a Joint customer, a sales issue needs to be escalated, or when there is product overlap.

In addition, on page nine Mr. Stephan from HP noted hat all aspects of the sales model for each target market needed to be outlined completely for the alliance to be successful. For the strategic alliance to be successful, the challenge to be met is to create a new sales model that will enable both the sales representatives to be successful and for the HP-Cisco strategic alliance to realize revenue goals.Given that other alliances for both firms utilize dedicated sales staff, one would expect creation of a sales model that does use dedicated sales staff to be a challenge.

If a dedicated HP-Cisco sales force will not be utilized, then Mr. Thomas and Mr. Heal must create a long-term high-trust relationship between the sales staff of both

firms. In doing so, both sales forces will see each other as partners and recognize the greater value that both firms staff does not support will not lead to a valuable strategic alliance.

An additional challenge facing Mr. Heal and Mr. Thomas is the complex nature of their positions. Mr. Heal and Mr.

Thomas are essentially partners in the creation ofa new business titled HP-Cisco Strategic Alliance. On page four of the case we learn that alliance managers were responsible for creating a viable strategy to leverage the ssets of both partners, develop aspects of sales to sell Joint products, communicate strategies to executives, communicate strategies to alliance team members and to motivate all of those involved in the alliance.For Mr. Heal and Mr. Thomas, both managers must not only develop a strategy for the strategic alliance, but also successfully implement the strategy.

To do so, both managers will have to understand the internal and external opportunities and threats facing both firms. In addition, both managers must be excellent at obtaining the support of senior level executives in order to implement successfully. Given that about 25% of the time, we need executive team help getting BIJ (Business Unit) heads to do what needs to be done,"(Page 4) it is clear that Mr. Thomas and Mr. Heal must be capable of building strong relationships with senior staff members.

Both alliance managers must also be able to successfully think of how the components of both firms will successfully work together to create a successful alliance. For example, both alliance managers must understand how the business units and sales force in their parent firm will function to support the alliance. However, both managers

must also understand how the systems and processes in heir parent firm will operate with the systems and processes in the partner firm.Therefore both Mr. Heal and Mr.

Thomas must ensure that they can successfully think about the alliance from a general systems theory point of view. Given that the alliance managers have no formal authority over the business units or the sales force (Page 7), both Mr. Heal and Mr. Thomas must continue their ability to win friends and influence key figures in both organizations. On page ten of the case, we learn that Mr.

Heal and Mr. Thomas both had Jobs that were considered "very demanding, time-consuming, and sensitive.As alliance managers, Mr. Thomas and Mr. Heal will have to develop trusting relationships both in their parent firm and with key personnel in the partner firm. Such relationships could require substantial periods of time to build.

In addition, once such relationships are built, both alliance managers will have to strategically utilize the relationships to implement the strategic alliance strategy. On page eleven of the case, Mr. Heal notes the importance of approaching key influencers and successfully influencing key personnel to gain access to the true "power players" within the firm.