Cisco Systems Case Study

Table of Contents

Company Background .……………………………………………………….3

Case Study Problems .………………………………………….....................5

Solutions Considered ...…………………………………………………….12

Trade Study of Solutions ...…………………………………………………….15

Cost Benefit Analysis ...…………………………………………………….16

Competitive Forces Model .……………………………………………………...18

Value Chain .....……..…………………………………………….20

Architecture Description ...…………………………………………………….22

Recommendations ..…………………………………………………….25

Appendix ..…………………………………………………….26

References ...…………………………………………………….27  

Company Background

Two Stanford University computer scientists, Leonard Bosack and Sandra Lerner, established Cisco Systems in December, 1984. The new company marketed the internet working technology Bosack had developed while at Stanford. The following year, Stanford asked Cisco for $11 million in licensing fees arguing that Stanford held the rights to the technology since it had been developed while Bosack was a student. In 1986 Stanford ultimately accepted a settlement of $150,000 and free products and support services for one year. Also that year, Cisco became one of the first networking technology firms to develop a router, a device linking a number of local area networks (LANs). Cisco initially marketed its routers to universities, research centers, the aerospace industry, and government facilities by contacting fellow computer scientists and engineers via the Internet.

Sales reached $1.5 million in 1987 and Cisco began marketing its networking products to mainstream businesses with offices all over the United States. Although Cisco had a high rate of sales growth, the young company was still short of cash. In 1988, Bosack and Lerner received the help of venture capitalist, Donald T. Valentine. In exchange for his help, Valentine required that Bosack and Lerner surrender to him a controlling stake in the company and make him the chairperson. Valentine then