Exitbarriers are obstructions in the path of an organization that wantsto leave a certain market or a given industrial sector. Theseobstructions usually cost the organization financially in leaving themarket and may restrict it doing so. In case the exit barriers aresignificant, an organization can be forced to continue competing inthe market. This is because the cost of leaving the market can behigher than the cost incurred in case the organization opt tocontinue competing in the given market (Pettinger, 2013). When exitbarriers are high in a certain industry, distressed organizations donot exit. Because of exit barriers, technological progress becomesimpeded as old-fashioned technologies do not provide way to newerones. Exit barriers can also impede appropriate shifts in anorganization’s strategic posture. Unless investments become made inanticipation of their devastating power, exit barriers may sapmanagerial energies and economic resources from an organization’smore remunerative business lines as trapped assets are liquidated.
CiscoSystems is likely to exit the hardware-based group telepresence andvideo conferencing business and concentrate on UC, voice solutions,software, and social clients for all kinds of collaboration. It hasbeen noted that the organization does not make use of currenttechnology in providing most of its services to customers. Failure ofthis organization to utilize the current generation technology hasmade it difficult for the organization to provide quality services tocustomers. Grand and generic strategies can be utilized by themanagement of Cisco Systems in overcoming exit barriers. Genericstrategies usually require specific skills, firm arrangements, andresources so as to have a successful implementation for a business.Generic strategy models are the most common conceptual approach tocompetitive strategy. On the other hand, grand strategy entails astrategy that offers a basic direction for a particular strategic andfunctional tactics of a business (Lewis,2007). Some grand strategies are utilized in order for the businessto reinforce one another. Grand strategies focus on increasing salesof the existing services or products, which they provide with theexisting distribution channels, which they have in place for theirbusiness. In case the environment or the economy is unstable, thiscan increase the risk for the business. Differentiation and low costare what businesses look for, when they think of grand and genericstrategies. Grand and generic strategies are appropriate for theCisco systems because the strategies will help in achieving lowoperation cost and differentiation.
Thegrand and generic strategies can be utilized in assessing theeffectiveness of the firm’s marketing objectives. This can be doneby applying the strategies to the organization and checking outwhether the objective of differentiation and low operation cost hasbeen achieved. Managers of Cisco Systems can apply these strategiesindependently. First, they can apply the grand strategies in order tocheck whether the strategies will lead to an increased or mitigatedcost of operation. Sometimes, a grand strategy may lead to anincreased cost rather than mitigating the cost. In such a situation,the management can opt to change the strategy in order to implement astrategy that would help in the mitigation of cost. Therefore, afterutilizing the grand strategy, Cisco Systems management can assess theappropriateness of the strategy by checking the sales of the existingservices or products, which they provide with the existingdistribution channels. Since the grand strategy focuses on increasingthe sales of the existing services or products, it will be feasibleto assess the appropriateness of this strategy in case, the strategydoes not lead to an increase in the sales of existing services orproducts, then the strategy will be deemed inappropriate (Harrigan,2005). However, in case it leads to an increase in the sales of theexisting services or products, then the strategy should be deemed asappropriate. On the other hand, the generic strategy should beassessed in the organization through checking whether theorganization becomes more competitive compared to its rivals. Thestrategy would be appropriate in case it increases thecompetitiveness of the organization. Hence, the marketing objectiveswould be effective in case the strategies increase thecompetitiveness of Cisco Systems in comparison to its rivals.
CiscoSystems have perceived exit barriers linked with customer service andproduct quality. Customer service and product quality are exceedinglyvital elements in organizations that lease services and products tocustomers (Hill & Jones, 2012). Cisco Systems being one of suchorganizations, it has to ensure that it takes these elementsseriously in their business. Technology is a critical element forthis organization due to failure of this organization to adapt tothe present generation technology, the organization has not been in aposition to provide quality products due to lack of using up to datetechnology. Because of using outdated technology, the organizationhas not been in a position to offer quality products. Since customersusually match with the generation’s technology, it has beenexceedingly hard to offer the products that match with the presentgeneration. Therefore, low product quality emanating from lack ofusing the present technology has been a hindrance towards producingquality products that can match with customer preferences. This is anexit barrier that the organization faces. On the other hand, theorganization does not provide quality services to the customers sinceit does not utilize up to date technologies (Hill & Jones, 2012).This is another exit barrier that the organization faces. Besides,the organization faces economic exit barriers. The economic situationin the globe has not been stable since it changes from time to time.Sometimes, the economic situation has worsened immensely leading topoor performance of the organization. When there is an economic turndown, organizations with both strong and poor financial power areusually affected. Therefore, economic exit barrier has beenassociated with this organization. In addition, the organization alsomay face exit barriers in the future that may emanate from failure oftraining its workers.
Inovercoming exit barriers, the organization can take proactive stepsso as to augment their subsequent strategic flexibility. Competitorsmay be encouraged to retire those resources that are redundant bybuying their excess capacity and wiping it out. This will help inavoiding resale to would-be entrants. Obligations of supplying longterm customers may be satisfied through private brand manufacturingarrangements the continuing firms, which will allow downsizingcompetitors to uphold market presence for their brand. On the otherhand, perceived exit barriers related with customer service andproduct quality can be overcome by migrating the organization’sinstalled base of customers to the present generation oftechnological services or products, which they offer. Throughadapting the current generation of technology, the organization islikely to overcome this exit barrier since it will be capable ofproducing high quality products that match with the customerpreferences (Hill & Jones, 2012). Besides, through using thecurrent generation technology, it will be feasible for theorganization to provide quality services to its clients. Besides,exit barriers can be overcome through the organization havingemployee training programs these programs are critical since theycan aid in increasing the marketability of employees, which wouldotherwise invite redundancy costs the moment their jobs becomeeliminated. This is significant as it would mitigate the potential ofhaving another exit barrier.
Exitbarriers are usually a great problem to firms, especially when theexit barriers become costly than the cost of continuing with thebusiness. Sometimes, it is not easy for an organization to exit froma given market because of the cost involved in going out of themarket. For an organization that desires to exit a certain market, itis first of all critical to consider exit barriers that are present.This helps an organization in coming up with strategies that arecrucial in the mitigation or elimination of the exit barrier.Therefore, it is critical for an organization to identify exitbarriers that are present in a market since it helps to ease theproblem of exiting the market. Grand and generic strategies can beutilized by the management of an organization in overcoming exitbarriers. Generic strategies usually require specific skills, firmarrangements, and resources so as to have a successful implementationfor a business. On the other hand, grand strategies focus onincreasing sales of the existing services or products, which theyprovide with the existing distribution channels, which they have inplace for their business.
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Ireland,R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understandingbusiness strategy: Concepts and cases.Mason, OH: South-Western Cengage Learning.
Lewis,P. S. (2007). :Challenges for tomorrow`s leaders.Mason, OH: Thomson/South-Western.
Pettinger,R. (2013). OrganizationalBehaviour: Performance in Practice.London: Routledge.