Cisco Inc - Value Chain Analysis and Csr

VALUE CHAIN ANALYSIS AND CSR

Company: CISCO Inc.

Introduction : Need for Value Chain Analysis based CSR

In this information centric era, where all the information regarding an organization's operations are easily and comprehensively available, most of the companies have woken up to the idea of CSR. Though these companies have realized the importance of the CSR, but their efforts have mostly been unorganized and incoherent, denying the company of any competitive advantage.

Any efforts on the CSR front could broadly be justified by one of the following classes of arguments: Moral obligation, sustainability, license to operate and reputation. Though each of the argument would serve the eventual good of making an organization sensitive to the needs of the society, there is very little in the efforts based on these arguments as far as gaining competitive advantage is concerned. As Porter notes in his paper on Strategy and Society, All four schools of thought share the same weakness: They focus on the tension between business and society rather than on their interdependence. Each creates a generic rationale that is not tied to the strategy and operations

of any specific company or the places in which it operates. Consequently, none of them is sufficient

to help a company identify, prioritize, and address the social issues that matter most or the ones on which it can make the biggest impact.

So Porter suggests that instead of going for generic social issues, that may be important but are affected less by the company's operations or influence the company's long term competitive advantage, company's should opt for value chain social impacts, that are significantly affected by company's operations. I would like to analyze Cisco's value chain in order to understand the CSR opportunities among the various touch points in the value chain, and then subsequently would try to prioritize the most appropriate area of intervention.

Cisco : Introduction

Cisco Systems, Inc. (NASDAQ: CSCO) is an American multinational corporation headquartered in San Jose, California, United States,[5] that designs, manufactures, and sells networking equipment. Cisco Systems, Inc. is the worldwide leader in networking for the Internet. Today, networks are an essential part of business, education, government, and home communications. Cisco hardware, software, and service offerings are used to create the Internet solutions that make these networks possible, giving individuals, companies, and countries easy access to information anywhere, at any time. In addition, Cisco has pioneered the use of the Internet in its own business practice and offers consulting services based on its experience to help other organizations around the world.

Cisco was founded in 1984 by a small group of computer scientists from Stanford University. Since the company's inception, Cisco engineers have led in the innovation of Internet Protocol (IP)-based networking technologies. This tradition of IP innovation continues with the development of industry-leading products in the core technologies of routing and switching, along with Advanced Technologies in areas such as home networking, IP telephony, optical networking, security, storage area networking, and wireless technology. In addition to its products, Cisco provides a broad range of service offerings, including technical support and advanced services. Cisco sells its products and services, both directly through its own sales force as well as through its channel partners, to large enterprises, commercial businesses, service providers, and consumers.

As a company, Cisco operates on core values of customer focus and corporate social responsibility. They are trying to express these values through global involvement in educational, community, and philanthropic efforts.

CISCO Value chain

Cisco's value chain is the network of integrated Cisco and partner activities that creates

products and services for the customers. The value chain is demand driven, distributed, global,

and collaborative. Cisco's global network of supply chain partners supports a hybrid production model that is 95 percent outsourced. Cisco and our partners collectively manage the challenges of producing and transporting more than 35,000 components, as well as designing, fabricating, delivering, and managing the lifecycle of approximately 225 Cisco hardware product families.

As an integrated part of meeting Cisco's global commitment to its customers, it has a Customer Value Chain Management (CVCM) group that oversees the value chain activities around the world. In FY09, the organization coordinated with more than 600 suppliers across more than 34 countries to deliver more than 24.5 million network hardware products.

They believe that there core business strength is designing innovative products and bringing them to market. Hence their value chain is almost totally outsourced, right from manufacturing to testing ,shipping, return, reuse and recycle.

Hence there CSR efforts according to their value chain can broadly be divided into two categories:-

CSR at Cisco's end of operations and CSR activities at the suppliers' end.

CISCO's end of operations :-

The various stakeholders involved in their end of operations and Cisco's CSR initiatives could be summarised as follows:-

* Customers: It engages with customers as part of the everyday business operations through our sales and support services. Since 1992, they have been conducting an Annual Customer

Satisfaction Survey. Strict adherence to practises in legislation areas such as the Restriction of Hazardous Substances (RoHS) Directive and Registration, Evaluation, Authorisation

and Restriction of Chemical Substances (REACH) is exercised.

* Employees Informal engagement with employees every day through team meetings and internal communications, as well as more formally through quarterly "All Hands" meetings, annual leadership and sales meetings, and various focus groups. Annual Employee Pulse Survey helps CISCO understand satisfaction