Cisco Systems, Inc.: Collaborating on New Product Introduction

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1. What are the challenges faced by Cisco in introducing a major product like Viking? 1-1Time to market pressure There is only one year for Cisco to launch the Viking product to market with low cost. Otherwise, the market share might loss. However, it is about 3 to 5 years for Cisco to launch a high-end product. To meet such tighten schedule, it’s imperative for Cisco team to perform a very collaborative operation and concurrent engineering in whole supply chain and NPI phase 1-2Cost pressure Bandwidth prices were constantly falling and customer expected continuous improvements in price-performance on their equipment. The competitor keeps intensive discount on price. Cisco had to implement most cost effective-supply chain at launch and product design. 1-3Technical complexity handling in contract manufacturing The product router contained about 300,000 components, about 30 times more than in a small business router. How to successfully launch such a high complexity product in a low cost contract manufacturer like Foxconn requires Cisco monitor and cooperate with CM carefully. -4Continuous cost down pressure from emerging market Cisco needed to ensure that router would be attractive to service profiders worldwide. Emerging markets were the fastest-growing part of Cisco’s business, which need lower cost. 2. In selecting Foxconn and involving it from the start (instead of doing a production launch in the US first before transferring production to China), what were the potential risks and values to Cisco? Potential risk: -Technical risk-Foxconn didn’t produce such complex product which may fail in fulfillment Cisco’s requirement in product quality and reliability. Foxconn has no experience on produce such complex product like Viking, which require Cisco spend lots of efforts, time and resource to develop with learning curve without guarantee on success. -Foxconn failure in manufacturing qualified product to meet Cisco’s requirement will cause Cisco lose market share intensively,

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