The Hp-Cisco Alliance Case Analysis

Chenming Liang

The HP-Cisco Alliance case analysis

3/29/2016

Key Challenge

        The key challenge that HP and Cisco were facing that they need to build an effective formal alliance to achieve goals and win market share. The expectation of both sides top management believed that the alliance relation can impact portability and industrial field. Although the combination of these two industry leaders could make more profits, it reveals significant problems for both sides. All level employees need to spend more effort to help alliance to understand business strategy and fit within a strange company culture; Emotion of management is easily become a trigger to weak the relationship; The structure and location limits a great benefit to promote cooperative strategy or developing products, moreover, the alliance manager have no authority is considered a major difficulty for communication; Even if HP and Cisco are in relative industry, some products or service overlap cannot be avoid by forming alliance relationship. It brings influential challenges for the two parties and they need to figure out the way to solve those problems.  

External Analysis 

        Base on the five force analysis, the cooperative strategy brings benefit for HP and Cisco to create value and against competitors. A huge barrier is created from the technology industry because its specificity. Many existing competitors have plenty of capital funding such like Apple, IBM, and Intel. They have knowledgeable employees to support products. HP provides IT infrastructure, imaging and printing devices, Cisco focus on transport data and internet service. Comparing to other business pattern, Company in IT industry need to have strong technology independent to uphold competitive advantage. It cost enormous number of money and time to enter this market for strangers. Both of HP and Cisco are widely respected technology company for many years. They already won customer loyalty and a part of market share in their familiar field. As for bargaining power of suppliers, the alliance creates more value than the individual. According to the article, “Cisco focused on alliances with industry leaders in all part of its value chain.” Cisco has many famous alliance partners included Sony. Motorola, ThruPoint and other well-known enterprise have not crating relationship with HP. It is not only expanding the supply channel for HP. But also brining effective technology support for product development. Customer support is one of the significant advantages of their cooperative strategy. Cisco is a specialist of customer service due to its products. In early years, Cisco sent 1,400 well-trained people to HP service department and achieved a good result. Also HP has sufficient sales represents for helping sold Cisco products. What’s more, the alliance discuss “What does customer want?” instead of individual interest could better accelerate relationship and formal cooperation to create value for customers through the plan. They focus on the same sales strategy could better attract buyers power. The threat of substitute products is quite a few because HP and Cisco produce minority technology products like printers, router that cannot be replaced. The number of competitors in IT industry is few but strong. HP and Cisco created competition-reducing strategy indirectly coordinates their production and price by observing other firms.    

        I believe the alliance could step forward than individual because the IT industry needs company to develop better quality and convenience products. Those two firms have chance to share business strategy and improve the value chain to provide a better product and service.

Internal Analysis             

        The main ideas of HP-Cisco alliance reflected in strategy, sales and technology. Firstly, they build core competencies in against the competition. For example, HP is a distributor for a strategic alliance partner of Cisco’s. They went through “sell to” to “sell with’ strategy. It increases capabilities to intergrade resource to achieve a desired goal. Secondly, all alliance manager’s role included developing business case and strategy for the alliance. They analyze both strengths and weakness with a strategic partner. The intangible resource is great advantages for HP-Cisco in human resource and innovation resource. HP has more number of man power could sale Cisco’s products. Cisco has well-trained specialists can help HP upgrade customer service; they are both headquarter in their own industry with advanced technology. HP becomes more strategy and Cisco is more technical driver, by deeply cooperating with each other is not duplicated for both sides.