Operations Management: Cisco's Response to the US-China Trade War

This report examines Cisco's response to the US-China trade war, focusing on the impact of tariffs and the company's strategic adjustments. It begins with an overview of the trade war, detailing the imposition of tariffs and the resulting impact on global trade. The report then analyzes Cisco's response, including supply chain restructuring, specifically the reduction of manufacturing in China and simplification of large-scale services. It applies operations and process concepts such as Six Sigma and Total Quality Management to evaluate Cisco's approach, emphasizing improvements in flexibility, quality, and cost reduction. The report concludes with recommendations for further supply chain improvements and emphasizes the importance of financial sustainability and customer-driven strategies in navigating the challenges of the trade war.

Running head: OPERATIONS MANAGEMENT
Operations Management
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction:...............................................................................................................................3
Description of the trade war:......................................................................................................4
Response of Cisco to the trade war:...........................................................................................7
Critical Evaluation:..................................................................................................................10
Recommendations:...................................................................................................................11
Conclusion:..............................................................................................................................12
References:...............................................................................................................................13

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Introduction:
The importance of the supply chain in the modern business context is seen be pretty
high. Ntabe et al. (2015) commented that the success of the companies in the establishment
of a stable business is substantially dependent on the capability of the managers of the
company in the effective management of their supply chain and logistics. With a precise
focus on the significantly increasing competition in the modern business world, it is evident
that majority of the companies are trying their level best to restructure their business
operations for managing the threat of competition in an efficient manner. De Sousa Jabbour
et al. (2014) highlighted an important fact with the claim that the intensity of the business
competition is increasing in a rapid manner due to the entry of increased number of new
organizations and that is forcing the established business companies in undertaking various
new strategies for the management of the competition. Other than this, the changing business
environment and the political concerns are becoming a crucial factor that have the potential to
affect the business operations of the companies. The variation in the trade relationship
between the companies has become one of the major concerns for the management of the
companies in establishing a sustainable business. Under such situation, several companies are
seen to undertake different strategies such as the product development, improvement of the
quality in their services along with the application of the low pricing for the products and
services. Other than this, an important strategy that is undertaken by considerable number of
the organizations is seen to be the reduction in the operating cost of the company. The major
focus of the companies in reducing their operational cost is seen to be based on the effective
restructuring of the supply chain and logistics operations.
The paper is focused in the elaboration of the supply chain restructuring a
multinational company named as Cisco. The company operates in the networking hardware

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and software industry. The paper discusses the impact of the recent trade war between the
United States of America and China. Along with that, the paper also discusses regarding the
restructuring strategies and activities that the company undertakes as a precautionary measure
for managing detrimental impact of the trade war in an effective manner. Other than this, the
paper includes some significant analysis based on the various process and operations
concepts in context of Cisco’s business operations with a precise focus on the corporate
social responsibility and sustainability. Other than this, the paper includes a list of crucial
recommendations for the improvement of the supply chain management and logistics inside
the company to make sure that the company be able to undertake a more sustainable approach
in executing their business operations.
Description of the trade war:
The main basis of the trade war initiated between two of the most populated business
countries, China and America is seen to be the application of the tariff rates for their
manufactured products. The concern of Donald Trump regarding the inappropriate trading
practices was pretty visible even before 2016. However, in the year 2017, United States of
America was observed to launch an investigation for the Chinese trading policies. Apart from
this, the Trump led government was observed to impose tariffs on Chinese products of worth
one billion US dollars in the year 2018 which was countered by the other part with a similar
intensity (Bbc.com 2019). Other than this, the government of United States of America is
observed to impose a tariff which is approximately more than twice of the previous tariff plan
on the Chinese products of 200 billion US dollars (Bbc.com 2019). As a counter, China
increased the tariff rates for the US manufactured goods of 60 billion US dollars within three
days (Bbc.com 2019). Apart from this, United States of America, in the year 2018, was
observed to impose a three round of tariff for the Chinese goods of more than 250 billion US
dollars (Bbc.com 2019). The main basis of this tariff coverage was observed to be the

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industrial and customer products such as the railway equipment or the handbags. As an
immediate reply, China was seen to impose a string tariff plan on US manufactured products
of 110 billion US dollars with the accusation that Unite States of America has initiated the
largest trade war in the economic history (Bbc.com 2019).
The main target of the China’s tariff imposition was the medical equipment, coal and
chemical products. Along with that, the tariff plan of China was able to target the products
that are manufactured in US districts with robust support for the Republicans. Apart from
this, Chinese government had the expertise of including the products and goods within the
tariff plan which can be easily replaced by the products, manufactured in other countries. In
spite of the increasing intensity of the fight based on the tariff plans, both the parties
participated in several dialogues. However, on the 10th of May this year, the government of
United States of America was observed to increase the tariff rates on Chinese products of 200
billion US dollars from 10% to 25% (Bbc.com 2019). However, the senior members and
delegates of Chinese government were observed to be more focused in dialogues rather than
hitting back at United States of America with increased tariff rates for their products.
However, that is seen to be ineffective in reducing the intensity of the fight based on the tariff
rates as the government of Untied States of America is seen to start the process for hitting
back China with increased tariffs on an additional 300 billion US dollar worth of Chinese
products (Bbc.com 2019).
Hence it is pretty evident that the fight between two of the largest trade loving
countries is far from getting over. Apart from the enhanced competition amongst China and
United States of America regarding the tariff plans, the declining trade relationship amongst
both the parties was also visible. However, several market researchers are able to comment
on such a psychology of both the leaders of the countries with the claim that the internal or
domestic politics has significant impact on such behaviour or mental psychology of the

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leaders while leading two of the largest trade based countries. Donald Trump and Xi Jinping,
both the leaders are observed to take part in several meetings and dialogues for the effective
management of the trade war, however, in many of the cases, the influence of the domestic
politics is seen to get better of them in deciding for the improved policies and trade deals
(Scmp.com. 2019).
With a precise focus on the impact of the trade war amongst the multinational
companies across the globe, it is evident that majority of the companies are assuming to
experience a detrimental impact on their business performances. Several business researchers
are able to highlight the fact that the business organizations will be the early victim of the
trade war that is being initiated between China and United States of America. Apart from his,
the chief of the World Trade Organization was observed to warn both the parties with the
claim that the conflict amongst the countries will lead to a global trade crisis which will be
tough to manage (Ft.com. 2019). As immediate consequences of the trade war, the stock
market is observed to face a sudden decline. Apart from this, the formation of a significantly
weak global economy is on the cards in accordance to many of the business analysts across
the globe.
As a precautionary measure of the trade war, Cisco was observed to undertake a
significant restructuring in their supply chain and logistics. For the effective management of
the detrimental impact of the trade war, the company also reduced their manufacturing in
China. With a precise focus on the transformation of the supply chain of the company, it is
visible that the company is determined in increasing the flexibility of their business
operations with the help of a significant reduction of the complexity associated with the
supply chain mechanism of the company. The main focus of the company was to put strong
emphasis on the standardization and automation throughput their supply chain mechanism to
make sure that the agility along with resiliency is stored in their business operations

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(Cisco.com. 2019). The higher authority of the company was able to identify the need of
simplifying the Cisco version of Oracle e- business Suite 11i as it was impossible for the
company to scale with the dissimilar BTS and CTO operations along with the redundant and
non- standardized processes in addition to the multiple ERP instances. The main barrier for
the managers of the company in managing the scalability was observed to be the excessively
complexity associated with the Cisco version of Oracle e- business Suite 11i
(Supplychain.cisco.com 2019). Hence the company took the decision of simplifying the large
scale services with precise focus on three different strategic objectives which were the
improvement of the country enablement, decommission of the Cisco data centre in San Jose
along with the strong integration of the Service Provider Video Technology Group
(Newsroom.cisco.com. 2019).
Apart from this, the main objective of the company in reducing their manufacturing
strength in China was observed to be pretty controlled as the chief executive of the company,
Chuck Robbins claimed that the company has efficient manufacturing facilities in 13
countries and the shifting their manufacturing from China will not affect the company and the
sales of their products in a significant manner.
Response of Cisco to the trade war:
Considering the impact of the trade war, the above mentioned activities of the
company were significant in managing the uncertainty that the trade war between China and
United States of America contributed to the business operations of the company. With a
precise focus on the business operations of the company, it is evident that the actions of the
company for the effective management of the impact of the trade war were significant in
contributing to the financial sustainability of the company. Considering the concept of the
financial sustainability, it was important for the company to make sure that the changes

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which the trade war incorporated in the company’s business operations are effectively
managed and under such situation, the senior managers of the company made a significant
decision of shifting the manufacturing from China to make sure that the impact of the fight
between China and Untied States of America regarding the increased tariff rates is minimized
in an effective manner.
Considering the concept of the Six Sigma, the response from the part of Cisco is
pretty significant. The company decided to simplify their large scale services for increasing
the flexibility of their business operations which was much needed for aligning the build- to-
stock model of Scientific Atlanta with the company’s own configure- to- order production
model (Cisco.com. 2019). The company’s aim of restructuring their production model has the
capability of improving the quality of the services of the company. Other than this, the much
required simplification of the production model of the company is crucial in improving the
business process of the company. As the main objective of the company is to simplify the
business process, the company has the scope to achieve the desired reduction in the cost
associated with their business operations.
Considering the Total Quality Management aspect of the business, the much required
simplification of the large scale services of the company plays a crucial role in increasing the
capability of the company in being customer driven. The success of the company in the
effective management of the complexity associated with the business operations is significant
in enabling the company for the identification of the customer preference in an efficient
manner. The effective identification of the customer preferences helps the company in the
design of the best seller products and services. The simplification of the business model of
the company increases the capacity in responding in a frequent manner. Other than this, the
restructuring of the supply chain management also enabled an efficient and better usage of
the resources of the company which not only increases the efficiency of the company but also

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enables the company to manage their cost in an effective manner. The improvement of the
country enablement along with the decommissioning of the data centre of the company has
the potential of increasing the success of the company in improving their processes. With the
much required simplification in the business, inclusion of the Enterprise Resource Planning,
automated and standardized end to end workflow, the company was able to achieve 43 billion
US dollars which was 85% of the total revenue of the company (Ft.com. 2019). Hence the
success of the company with the restructuring and creation of the new platform is pretty
prominent.
With a precise focus on the deming cycle, it is pretty much understandable that the
decision of cutting down the manufacturing in China has a significantly strong base. With a
precise focus on the trade war between United States and China, the managers of the
company were able to understand the fact that the products manufactured from their Chinese
plant have the possibility of getting affected by the increased tariff rates imposed by the
government of the United States (Du Toit and Vlok 2014). Under such situation, the company
decided to reduce their manufacturing in China. With the availability of the excellent
manufacturing facilities in 13 other countries, the company had a strong plan in place for the
efficient management of the impact of the trade war (Ft.com. 2019). With the minimization
of the manufacturing in China, the confidence of the chief executive of the company, Chuck
Robbins is pretty visible (Ft.com. 2019).
Other than this, the comments of Chuck Robbins regarding the cost of their action
which was to minimize the manufacturing strength in China owing to the concern of the trade
war, is pretty significant in stating the results of their observation. Chuck Robbins was
observed to comment that with the significantly efficient manufacturing strength of the
company in 13 countries, it might not be that hard for the company to manage the effect of
such action (Ft.com. 2019). The comments clearly portray the calculation of the company

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regarding the increment of the prices of the products and services with such an action and as
a consequence of the trade war where the managers of the company are able to confirm a
significantly minimal increment in the tariffs. Hence, it is pretty evident that the application
of the deming cycle provides a viable base to the restructuring of the company.
Critical Evaluation:
It is understandable that the success of the company in the effective management of
the trade war is significantly dependent on the restructuring of the supply chain of the
company along with the decision of reducing the manufacturing strength of the company in
China. Mishra and Kumar Sharma (2014) commented that the application of the six sigma
concept enables the companies to increase the quality of the products and services that they
offer to their customers. Ellis et al. (2014) claimed that the effective application of the six
sigma had the potential to place the companies in a preferable position for the improvement
of the processes and for the much required reduction in the costing associated with the
companies. The application of the concept in the initiatives of the company for the effective
management of the detrimental impact of the trade war is pretty significant in stating the
scope of achieving the much required improvement in the process and the supply chain
management of the company. With a precise understanding of the concept, it is evident that
the actions undertaken by the company, has the potential of increasing the operational
sustainability of the company (Cisco.com 2019). On the other hand, the application of the
total quality management is of great significance for the company as it enables the company
for the effective management of the impact of the trade war.
The concept of the total quality management enables the company for improving the
customer centricity which has a positive impact on the operational sustainability of the
company (Dubey, Gunasekaran and Ali 2015). The customer centricity of the company

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enabled it to design the products and services in accordance to the preferences of the
customers which increases the profit and revenue of the company and that proves to be a
major boost for the financial sustainability of the company (de Sousa Jabbour et al. 2014).
Other than this, the restructuring of the supply chain management of the company enables it
to achieve the much required continuous improvement in their business operations. Apart
from this, the application of the deming cycle shows the capability of effective planning of
the company as the managers of the company were able to make sure that they strategize their
business operations or more specifically the manufacturing in such a manner that the
increment of the prices of their products and services do not affect the customers in a
significant manner (Cisco.com 2019). This shows the influence of the concept in socially
responsible business management from the part of the company.
Recommendations:
With a precise focus on the condition of the company during the trade war and the
actions that the company undertook for the management of the impact of the trade war, some
of the important recommendations are provided below:
The company needs to stabilize the R12 platform along with the other capabilities that
are implemented by the company.
Along with that, the company needs to optimize the platform for the achievement of
the additional functionality and enhancement of the capabilities for the existing facilities.
Apart from this, the company is in need to have the capability for transforming their
large scale service procedures that are related to the supply chain of the company for the
achievement of the better efficiency.
In addition to this, it is evident that the company has an efficient workforce in other
countries for managing the impact of the cut down of the manufacturing strength in China.

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However, the shift of the manufacturing from China has the potential to put excessive
pressure on the manufacturing plants of other countries. The company is recommended to
manage the excessive work pressure in other plants in an efficient manner. Along with this,
the company needs to reduce the additional charges as that will be significant from the part of
the company in retaining the customers.
Conclusion:
On a concluding note, it is understandable that the company was affected by the large
scale service processes in their supply chain. This majorly resulted in unused resources which
have the potential to affect the efficiency of the company. Along with that, the detrimental
impact of increasing intensity of the trade war is seen to affect the business operations of the
company in a significant manner. Under such situation, the company’s decision of
simplifying their supply chain mechanism and the development of new platform improved
the sustainability of the company’s operations. On the other hand, the shift of manufacturing
from China was a crucial decision undertaken by the management of the company for
conducting their business operations like a socially responsible organization.