(Spellings?) Janina Bachhaus, Bastian Sagild, George Staruch, Dave Moreno, Samantha Zildjian.
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Transcript of (Spellings?) Janina Bachhaus, Bastian Sagild, George Staruch, Dave Moreno, Samantha Zildjian.
![Page 1: (Spellings?) Janina Bachhaus, Bastian Sagild, George Staruch, Dave Moreno, Samantha Zildjian.](https://reader030.fdocuments.in/reader030/viewer/2022032703/56649f515503460f94c7414d/html5/thumbnails/1.jpg)
(Spellings?) Janina Bachhaus, Bastian Sagild, George Staruch, Dave Moreno, Samantha Zildjian
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Issues
• VCO/Series 80 & VCO/Series 20 are becoming outdated and will soon be obsolete
• VCO/Series 4K has ramped up faster than expected and Manchester facility may lack capacity to produce
• If phase out of Manchester plant risks losing valuable employees
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Solution
• Migrate customers from VCO 80 & 20 series to VCO/4K
• Outsource both 4K and Alpha with final tests and assembly at California facility
• Transform Manchester facility into R&D and prototyping hub
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Cisco Background
• Founded in 1984 – Leonard Bosack and Sandy Lerner• 1990— became public• 1998— #1 and #2 in almost all markets they
competed. • Markets ______________• Manufacturing Strategy: heavily dependent on
outsourcing with limited investments in brick & mortar for scalability – 25% of Cisco’s revenue and 50% of its unit volume
manufactured and shipped out of external factories
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Cisco Core Competencies
• Have a broad product line, offering its customers “end-to-end” solutions
• Strategy: using acquisitions & partnerships to gain access to new technologies and intellectual resources– 30% of revenues from acquisition & development;
“A &D”
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Opportunity
• Degradation of telecommunications industry causing service providers to enter into a fierce competitive race to develop & deliver enhanced services
• Acquisition of Summa Four for $116 million and 210 employees
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The Acquisition Process
Minimize Expedite
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Summa Four Background
• Service Provider• Leading provider of open programmable digital
switching systems, sold primarily to telecommunications service providers worldwide
• Based in Manchester, NH – a fairly remote location
• Strong culture accustomed to “informal processes” & high energy atmosphere of a small company
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Summa Four Current OfferingsVC
O/S
erie
s 80
VCO
/Ser
ies
20
Same functionality as VCO/Series 80, but offers smaller footprint and rack-mountable design which makes it suitable for turnkey integration and other application systems
2,048 timeslots
Not Fully-NEBS Compliant
VCO
/4K World’s highest
density open-programmable switch
4,096 timeslots
Fully-NEBS Compliant
High-density open programmable switch used for application development, highly distributed implementations, and scalable transport deployments in both wired and wireless networks
2,048 timeslots
Fully-NEBS Compliant
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• Industry’s first standards-based open programmable switch• Set to launch in 1 year• Key reason why acquisition is attractive • Opportunity to be market leader• Has potential to make other switches
obsolete
Project Alpha
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Does Summa Four Fit?
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Integration Steps
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Phasing Out 80 &20VCO/Series 80
• Appeals to smaller companies that can save cost and rely on the flexibility from lack of standards
• Slow phase out in anticipation of Alpha• Keep for a period of 12 months for small cost sensitive firms• Offer extensive training and PR for Alpha at these locations to
encourage upgrading
VCO/Series 20
• Rapid phase out of the outdated model• 6 month period• Offer a rebate program to encourage tradeins and increase
loyalty through transition
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80 & 20 Production Plans
• Leave Series 20 & Series 80 at Manchester plant until their eventual phase out
• Sell off excess machinery uneccessary for prototyping for $____
• Sanmia currently contracted to do sub-assembly on the 4K
• Sanmia to also handle the production, fulfillment and after-sale support of Summa Four’s mature products.
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Manchester Plant Allocation
• The plant is clean, orderly, and efficient—much better than many other plants Cisco acquires
• By keeping the Manchester plant, eliminate risk of losing top employees– 65 development engineers & 23 manufacturing employees– The engineers and patents are effectively what Cisco is paying
for• Streamline Plant and focus on Project Alpha
– Mitigate risk of losing engineers through improved compensation and continued autonomy
– Encourage & expedite Project Alpha (6 months)– Build foundations for an extensive East coast presence
• Requires investment into the Autotest system
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Outsourcing 4K
• VCO/Series 4K is Summa’s newest, most advanced product which has ramped up faster than expected
• If popular in the market, Manchester facility lacks the capacity to produce – and Cisco would have to invest in both machinery and employees
• By outsourcing, Cisco avoids plant investments
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• Outsource Alpha to Cisco’s main CA facility• 3 CA plants have excess capacity and Auto test infrastructure in
place• Summa Four has moved more and more toward outsourcing with
each product generation, which fits with Cisco’s business model. • They currently outsource most of piece part assembly Eventual
outsourcing of board level testing
Outsourcing Alpha
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RisksSeries 4K•Can not predict product life span•Demand uncertainty affects production
capacity needed
Supplier Risk
•250 suppliers – 85 new to Cisco •200 parts sole sourced •Pricing & continuity of supply risk
Shut down of Manchester plant•Could mean losing valuable employees
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Risk MitigationOutsource 4K•Capacity to ramp up•Avoid investment in physical plant
expansion if life span proves shorter than anticipated
Reduce Supplier Risk•Identify opportunity to consolidate parts &
vendors for 4K & Alpha
Maintain Manchester facility•Retain employees•Keep company culture that has proved
effective•Transform into R&D hub
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NPV
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Plan Summary
• Outsource 4K & Alpha to CA facilities• Summa Four to leverage Cisco’s powerful sales
organization and distribution channels for 4K & Alpha– 2-5 X the ramp up for volume sales– Convert to Cisco’s forecasting method within 30 days– Determine product life spans
• Leave 20 & 80 Series at Manchester plant for eventual phase out
• Continued R&D and prototyping efforts in NH
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Questions?