INDIAN INSTITUTE OF MANAGEMENT, ROHTAK

PGP 10
Mid Term Exam (Term IV)
Sales & Distribution Management
13.07.2020
MM -

Name: Ayush Singla

Roll No: PGP10076

Marks Secured:
(In figures & words)

Question No. 1 2 3 4 5 6 7 8 9 10
Maximum Marks
Marks Scored

Examiner’s Signature
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Question-1 Analyze the case using the 5Cs framework

Answer-1-
Company-
 Cisco Started in 1984 by a Stanford University couple Len Bosack and Samdy Lerner
 Manufacturing in stating was outsourced for keeping the the focus on competencies
 For the fiscal year 2001 reported loss of nearly 1 Billion Dollar and had a comeback
in year 2003
 Customers were divided into five tiers
 Status of world’s most valuable company
 Market capitalisation exceeded 500 billion dollars
 Deals in Switching and Routing
 Network in Box simplified kit of preconfigured routers and switches

Customers
 Customers were divided into five tiers
 The top 1-100 accounts and about 25 service provider
 The next 125-10000 customers, with a collaborative channel partner
 The next 10000-100000 customers with significant channel activity and marketing
support
 The nearly 1 million small business customers
 The nearly 10 million consumer accounts served through retailer or web

Context
 In 1995 Industry Revolution taken place
 Growth of internet were inextricably intertwined
 Flood of ISPs come into existence to service the technology need of companies
 NASDAQ stock Index high as 5132 and low as 1619
 Cisco Competed in 3 big markets

Competition
 Core Corporate networking- Hewlett-Packard, Nortal, 3Com, and Huawei
Technology. Cisco share in market-70%
 Enterprise accounts and SMB-Market Share -40%
 Telecommunication- Nortel, Juniper, Siemens, Alcatel, and Lucent
 Consumer market-Netgear and D-Link

Collaboration
 Collaborations with Multiple channels
 Manufacturing was outsourced
 Indirect sales and distribution
 Firstly 6000 VAR’s worldwide than reduced
 Collaborations with system houses, telecommunications, Value added reseller, Direct
marketing Resellers, and Retailers
 Online retailers-CDW, Insight, PC Connections and Micro Warehouse
Question-2 How have Cisco’s Channels evolved from the inception of the
firm till the year in the case? Why have they evolved in that way
Answer-2
In starting Direct distribution was flowed but in the late 1990s Indirect sales and
distribution grew to almost 90%

Reasons-
Increasing market growth in 1990s
Partner add Unique value
Cost effective
Difficult to add direct sales force

Various channels
System Houses- Provide Turnkey solution
Telecommunications-Installed and maintained voice
Value added Reseller ( 30 to 35 % sale)- networking products and services
Direct marketing Resellers and Retailers- For serving small customers

Consist of 10000 strong people in marketing and sales organisation divided in to Field
marketing, Customer account management, and sale engineers

Moving towards Internet Channels

Benefit of serving consumers directly
Customer preference for a system integrator or online retailer

From Volume to Value ( Major Change)VARs

Drop sales volume requirements entirely and implemented a point system that reward levels
of a new technology, better customer service.

Reasons
To increase the customer satisfaction so that sales can be increased
Uniqueness in the Industry
Highly skilled solution provider
Some good Distributer moved to Gold

Before taking any change, Cisco should identify the proper channel alternatives
a) Types of Intermediaries Available-Agents, Dealers, Industrial distributors according
to industry requirements
b) Number of Intermediaries Available-Exclusive to Selective
As Cisco move from direct to Indirect by looking Benefit’s of change in starting
c) Terms and responsibilities- Cisco should make proper terms and conditions related to
price policy and conditions of sale so that conflicts can be managed in future
Cisco should also evaluate alternatives by the way of Economy, Control and Adaptive
Question-3 How should Cisco distribute VoIP products? Why?
(Alternatives: Through voice VARs; through data VARs; through both;
any other channel).
Answer-3 Alternatives available and Evaluation
1) Through Voice VARs
a. Firms such as Avaya, Nortel, and Siemens had advantage of relationship with
voice Channels
b. Many Companies Prefer Avaya and Nortel
c. Voice channel is more consolidated than the Data Channel
d. Channel margins were traditionally in 20% plus range, with possibility of
more
Negatives
a) Cannibalize the existing product
2) Through Data VARs
a. Internet based phone system would be cheaper than traditional phone system
b. Lower calling cost and easier to manage
c. Industry Based Phones switches accounted for 31% of all phones switches
purchased in 2004
Negatives
a) Issue of voice quality
b) Less reliable than traditional networks

Recommendation’s- Should Go for Both Voice VAR and Data VAR

1) Most of the Cisco managers feels that Voice VAR needed to be added to the mix of
Cisco
2) New VoIP technology delivered huge cost advantage for the end users
3) Demand will be Increased
4) Better management of Channels
5) Must be handed carefully and implement properly to control overall situation
6) Changes in needed to remain the market leader
7) If cannibalize would happen it can increase the market share
8) More comfortable to the customers
9) Requires after sale service

Proper Channel Design has to be followed by Cisco for taking the decision
a) Identify the customers needs which can satisfy them and then select the right channel
which can be the both Data and Voice VARs
b) Channel objectives- Cisco has to identified the channel objectives and according to
that it can select the channel. As Objectives identified by Cisco can Solved by Both
Data and Voice VARs
c) After Selection of channel, Evaluation of alternative is done as mentioned above
advantages and Negatives of selecting Voice and data VARs and final decision is to
adopt both Voice and Data.