Strategic Analysis Of Cisco Systems Inc.

SWOT Analysis of Cisco System Inc.

Discuss about the Strategic Analysis Of Cisco Systems Inc.

Cisco Systems Inc. is an American technology based conglomerate which has its operations in multiple nations. The headquarter of the company is located in San Jose, California which is at the centre of Silicon Valley. The organization has been able to start its specialised operations with the collaboration of the various acquired subsidiaries which include, OpenDNS, WebEx, Jabber and Jasper. The main areas where the company is known to have expertise are, energy management, domain security and Internet of Things. Cisco has acquired the position of the largest networking based organization in the world. The stock of the company was added to Dow Jones Industrial Average in the year 2009 and has also been included in S&P 500 Index. Cisco Systems was established in the year 1984 by Sandy Lerner and Leonard Bosack who are computer scientists. The concept of local area network or LAN was mainly pioneered by the two founders of Cisco Systems. Cisco had also become the highest valued organization in the world within the year 2000 (Cisco 2018).

The discussion in the essay is mainly based on the analysis of environment and industry in which the organization operates. The alignment of strategies with the environment of operations of Cisco will also be discussed in the essay.

Strengths – Cisco has high brand value in the market and the company has been provided the 52^nd rank by Brand Finance. The organization has also established itself as the leader in the technology industry. The major focus of Cisco has been on the high-growth based market and designs new technologies. Cisco has also been able to acquire many other small organizations which had provided the company with an opportunity to enter the smaller markets. The financial position of the organization is strong and the profits have risen by 4.3% in the year 2014.

Weaknesses – The delay that has been experienced by the clients of Cisco Systems has proved to be a major weakness for the organization. The company also had some major issues in the supply chain and has suffered shortage on the components (Durand, Grant and Madsen 2017).

Opportunities – Cisco has huge opportunities in the field of cloud computing and increase its presence on the global platforms. The growth that has been seen in the cloud security based activities of organizations have increased the opportunity for Cisco to increase its operations in the industry.

PESTLE Analysis of Cisco System Inc.

Threats – The increase in the competition has posed a threat to the operations of Cisco Systems in the world. The organizations which have caused issues for the operations of Cisco are, Alcatel-Lucent, Amazon Web Services, Arista Networks, Arris Group, Blue Jeans Networks, Motorola Solutions, Symantec, Ubiquiti Networks. The field in which Cisco operates is highly volatile in nature. The changes that take place in the economy of the country in which the company operates can also affect its profitability (Ethiraj, Gambardella and Helfat 2018).

Threats of new entrants – The entry of new organizations in the Networking and Communication Devices industry is able to bring high levels of innovation. The new technologies that are used by organizations have created immense pressure on the profitability and operations of Cisco Systems Inc. These challenges have to be managed Cisco in an effective manner to manage the challenges.

Bargaining power of the suppliers – The raw materials are purchased from various suppliers in the organizations in Networking and Communication Devices industry. This provides a dominant position to the suppliers in the industry. The powerful suppliers are thereby able to negotiate and affect the prices that are offered by the company to the customers. This impact of the powerful suppliers is able to affect the prices that are charged by the organizations (Wheelen et al. 2017).

Bargaining power of the buyers – The buyers in different industries sometimes tend to become much more demanding in nature. Cisco Systems Inc. has been affected by the power of buyers on a long term basis. The customer base of the organization small and powerful, however the bargaining power of these buyers is high. This further leads the company to provide discounts and lower prices.

Threats from the substitute products – The products and services that are provided to the customers by Cisco have many substitutes in the current market situation. The customers thereby have many choices of products in the industry. The high levels of service orientation of the company can further help Cisco to operate in an effective manner (Dobbs 2014).

Rivalry among existing players – Cisco Systems Inc. has been provided huge competition by the other organizations which operate in the industry. The Networking and Communication Devices industry has become competitive in nature. The high levels of competition have been able to take a toll on long term profits of Cisco Systems Inc.

Porter’s Five Forces Analysis of Cisco System Inc.

Inbound logistics – The logistics of Cisco Systems Inc. are related to the ways by which innovative products are designed by the company. Small amounts of suppliers are present in the value chain who provide the raw materials to the organization.

Operations – The operations of the value chain management of Cisco Systems Inc. are based on the ways by which the products are developed, manufactured and distributed to the customers.

Outbound logistics – Maximum amounts of value chain operations of Cisco System are outsourced to different areas or countries (Meyer, Neck and Meeks 2017).  

Marketing and Sales – The sales and marketing based operations of Cisco System Inc. are based on the ways by which customers can be attracted towards the products that are offered.

Firm Infrastructure – Cisco System Inc. has an effective infrastructure which has been created with the help of abundant financial resources. The company has thereby created a strong value chain in its operations all over the world.

Human resource management – The human resource management department of Cisco has worked in a close manner with the other departments of the organization in order to create a profitable position in the market. The HRM department is thereby able to manage the value chain and the workforce of the organization in an efficient manner (Michael, Storey and Thomas 2017).

Procurement – Procurement of raw materials has played an important part in the ways by which the organization is able to create a successful relationship with the suppliers. The prices of products that are developed by Cisco System Inc. are affected by the procurement process and ability of suppliers to negotiate.

Technology – Cisco System Inc. has implemented new technologies for the purpose of providing best levels of services to the customers. The company has aimed at competing with the other technology based organizations with the help of high levels of technologies in the value chain.

Solutions to issues identified in the SWOT analysis of Cisco Systems Inc.

The major strengths of the company that have been identified in the analysis are based on the value that the brand has in the industry. The leadership of the company in the technology based sector is also an important part of the strengths of Cisco System Inc. The financial strength of the organization is also an important factor that can affect its operations in the future. The growth of potential of the company can be used for the purpose of overcoming the major weaknesses which are based on the issues that it has in the supply chain. The shortage based issues of the organization can be solved with the help of the strong financial position that it holds in the market. Cisco is also facing some major threats from the organizations like, Amazon Web services and Arista Networks (Morschett, Schramm-Klein and Zentes 2015). This threat can be mitigated by Cisco with the introduction of new products in the existing line of products of the organization. The volatility issues that are faced by Cisco in the industry can be easily solved by the shield that is created by the strong financial position of the company.

Value Chain Analysis of Cisco System Inc: Primary activities

Solutions to issues identified in the PESTLE analysis of Cisco Systems Inc.

The political issues that are faced by Cisco System are mainly based on the stability of the environment and the corruption levels in the system. Cisco System can mitigate the risk with the help of proper formation of regulations and policies. The benefits that the organization provides to the employees need to be planned in an effective manner. The economic situation in the country of operations of Cisco System can be tackled with the help of the formation of proper financial strength of the company. The organization further needs to analyse the needs and demands of customers in order to provide the best quality products. The organization can thereby be able to operate in the industry in an effective manner with the help of its loyal customer base. The new technologies that are being implemented by the competitors of Cisco System Inc. can be further used by the organization itself in order to provide the best levels of services (Stead and Stead 2014). The environmental issues need to be taken care by Cisco is order to reduce the impact of its operations on the external environment. The organization needs to include sustainability in its operations in order to stay in the market for a longer term.

Solutions to issues identified in the Porter’s Five Forces analysis of Cisco Systems Inc.

The industry in which Cisco System Inc. has its operations is highly competitive in nature. The company thereby needs to bring innovation and the different types of products in existing product line in order to compete with the new organizations in an effective manner. The economies of scale can be used in such a manner which will be helpful for the company to reduce the cost per unit of production. The number of suppliers of the organization can be increased in order to create an efficient network and reduce their power as well. Cisco can also develop the dedicated suppliers so that the organization can depend on them. The customer base of Cisco is quite small and the company needs to increase the number of customers so that is able to control the prices of the products and services (Trigeorgis and Reuer 2017). The threats that are provided by the other products in the industry can be reduced by Cisco with the improvement of the products. Cisco System needs to create a sustainable differentiation so that it is able to decrease the rates of rivalry in the technology industry. The organization can also think of collaborating with the competitors in order to reduce the levels of rivalry to some extent.

Value Chain Analysis of Cisco System Inc: Support activities

Solutions to Issues identified in the Value chain analysis of Cisco Systems Inc.

The value chain analysis of Cisco Systems Inc. has shown that the company has been able to create a successful chain of activities with the help of its financial strength and efficient workforce. The value chain based strategy of Cisco System Inc. has been implemented in an effective manner which has helped the organization to operate in a profitable way. 

The strategy that has been implemented by Cisco to create a sustainable position in the global technology industry is mainly based on the search for new technologies for improving the current range. Cisco has acquired more than 100 companies within the year 2012 and the organization is looking for more opportunities on a constant basis. The company thereby aims at innovating the products and services with the help of acquisition. Cisco has taken many risks in its operations in the industry which is based on the implementation of technologies that have not been introduced in the market. The innovation based momentum of Cisco Systems has reduced in the recent times and the revenues have also decreased.

The strategic acquisitions that are done by the organization have also become quite ineffective in nature. The company is thereby not able to bring more innovations in its operations in order to compete with the other organizations in the technology industry. This has been able to reduce the profitability of the company and revenues as well. The employee base of Cisco has also been affected by the reduction in its profitability levels. The major recommendation that can be provided to Cisco System Inc. is based on the implementation of research and development activities within the organization itself. This can be helpful for the company to create a profitable position in the market in an easier manner.

The company will be able to innovate its own products and try to provide tough competition to the others in the technology industry. Cisco can thereby try to maintain its sustainable position in the industry with the help of proper implementation of the research and development based activities within the organizational processes. Cisco System
Inc. will be able to improve the levels of profitability and revenues with the help of the implementation of high-end technologies within the organizational processes. The levels of strategic agility can be achieved by Cisco System Inc. with the help of innovation of in the existing products and services that are available. The organization can also increase its customer-centric orientation for the purpose of improving the profitability levels and revenues and further create its previous position in the industry.

References

Cisco, A. 2018. About Cisco. [online] Cisco. Available at: https://www.cisco.com/c/en/us/about.html [Accessed 28 Jul. 2018].

Dobbs, ME 2014, ‘Guidelines for applying Porter’s five forces framework: a set of industry analysis templates’, Competitiveness Review, vol. 24, no. 1, pp. 32–45.

Durand, R., Grant, R.M. and Madsen, T.L., 2017. The expanding domain of strategic management research and the quest for integration. Strategic Management Journal, 38(1), pp.4-16.

Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2018. Theory in strategic management. Strategic Management Journal, 39(6), pp.1529-1529.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic management research. The Blackwell handbook of entrepreneurship, pp.45-63.

Meyer, G.D., Neck, H.M. and Meeks, M.D., 2017. The entrepreneurship?strategic management interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.

Michael, S., Storey, D. and Thomas, H., 2017. Discovery and coordination in strategic management and entrepreneurship. Strategic entrepreneurship: Creating a new mindset, pp.45-65.

Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp. 978-3658078836). Springer.

Stead, J.G. and Stead, W.E., 2014. Sustainable strategic management. Routledge.

Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic Management Journal, 38(1), pp.42-63.

Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.

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