Strategic Issues faced by Cisco systems
International strategic management is a process under which an organization conducts various activities to expand its operations across the international borders in other parts of the world. It involves strategic planning used to frame and implement policies and procedures in the organization related to the expansion of business in other countries (Li and Reuer 2022). Cisco Systems is an American multinational organization that manufactures and sells telecommunications equipment, networking hardware products, and other high technology products and services. Cisco systems specialize in the tech markets of domain security, video conferencing and internet of things that are expanded in other countries for the smooth functioning of the organizational framework (Fauzi et al. 2022). Cisco systems are capable of streaming strategies to expand its business operations in other countries with effective human resources management. This report will analyze some significant theories of internationalization, such as coordination and foreign operations used by Cisco systems to solve the issues due to the international presence of business operations. This report also discusses the various international marketing theories and models applied to increase the global presence of the Cisco systems organization. Along with that the strategic issues and barriers that Cisco systems face in the international management of business operations will also be discussed. Moreover, the strategic issues are demonstrated with the help of international management theories and models for easily understanding the behavior of the issues. Lastly, adequate recommendations are made in the form of solutions to the issues mentioned in the discussion for Cisco systems. The identified solutions are according to the situations faced by Cisco systems across the international borders while setting up the business in other parts of the world. Hence, the report can represent the business activities of Cisco Systems concerning strategic international management with the help of proper theories and models used in this domain.
The Cisco system faces some significant strategic problems in the international strategic management of its business operations. The problems faced by resources slow down the growth and development of the organization and affect the business activities conducted. The strategic issues that are faced by Cisco systems are as follows:
- Competition in the technological equipment
Cisco systems deal in the technological equipment of switches and routers globally and there is tough competition in this industry. The major competitors of Cisco systems are Arista networks, checkpoint software and Juniper networks. The data about the market suggest that the market share of Cisco systems fell from 59% to 56% in recent years due to the competition in the industry by the other organizations (Khanagha et al. 2022). As the demand for equipment provided by Cisco Systems is increasing globally, the competition in the industry is also increasing at a rapid rate. The issue of competition in the industry also increases the business risk for Cisco systems, affecting the company’s profit earning. The competitors of Cisco systems, such as checkpoint software, are making alliances with the major investors in this industry and can gain the investment of large amounts to expand the business in the other countries of the world (Fauzi et al. 2022). It is creating a problem for Cisco systems to expand its operations due to a lack of funds and available resources (Kretschmer et al. 2022).
- A rise in cloud networking
Competition in the industry
Another challenge that Cisco systems have faced in recent years is the rise in the activities of cloud networking by the competitors and by other industries in the world (Vasconcelos et al. 2022). The issue for Cisco systems in cloud networking is that it involves a larger use of software instead of hardware. It is also known as software-defined networking, uses hardware for conducting the activities, and IT results in a more cost-efficient method. The rise in the issues of the cloud networking activities is increasing the production cost of Cisco systems, minimizing the industry’s profit share (Peng 2022). Moreover, Cisco systems cannot protect the consumers’ data that are availing of the services through the cloud networking systems as it is a complex process. It creates a challenge for Cisco systems. It has to modify the policies in procedures to be implemented in the organization to expand the business in different areas of the world. The efforts implemented by Cisco systems for improving the cloud networking system of the organization require more time and affect the performance of the business activities conducted across the international borders of the world (Khachaturyan and Klicheva 2022).
- Issues in the security management
As cyber security case is rising worldwide, it is creating an issue for Cisco systems to run its operations and protect the consumers’ data most efficiently (Fauzi et al. 2022). Due to the issue of cyber security, all the organizations involved in the information technology activities are improving their existing security system (Katal and Sethi 2022). For this purpose, Cisco sustenance is adopting the most technologically advanced equipment in providing services to the consumers and spending a large number of funds on the research and development of the organization. The security issue is majorly due to the storage of data of the consumers while availing the services courses by a third-party vendor. It increases the risk of data protection of the consumers used to authenticate the business activities of Cisco systems all over the world (Diaz, Guerra and Diaz 2022). Moreover, data storage with the third-party vendor increases data breaching cases in the organization, and frequently the consumers’ accounts are hacked.
The mentioned issues faced by Cisco systems are analyzed and evaluated with the help of some significant models and theories of strategic international management. The analysis of the strategic issues helps to recommend some effective solutions to the problems and expand the Cisco system’s business operations in other parts of the world. The analysis and interpretation of the issues are as follows:
- Competition in the industry (Porter Model)
The competition that the other organizations give in the same industry worldwide forces the Cisco system to modify the existing organizational framework to increase the effectiveness of the business activities. According to the Porters five forces model, the competition in the same industry by the other organizations weakens the performance of a single organization (Chikan et al. 2022). For example, the competition provided by Huawei and Dell technology vehicles the performance of Cisco systems in the industry. Moreover, the model suggests that as the number of competitors in the same industry increases, it reduces the power of a company established earlier in the industry (Fauzi et al. 2022). The cost of goods and services offered to the customers in the market is also affected due to the higher competition in the same industry. The industry’s competition also provides a larger number of options to the customers to buy production services from the companies in the market. It reduces a particular company’s business activities and makes it difficult for that company to survive in the market in the longer run (Schweinsberg, Sharpley and Darcy 2022). The technological equipment that Cisco Systems is manufacturing is mostly networking hardware, and all the telecommunications equipment is used worldwide.
- Security issues in Cisco Systems
Cloud Networking Issues
Cisco systems face many security issues while conducting business activities across international borders, such as breaching data and hacking the customers’ accounts. As the customer reach and the expansion of Cisco systems are increasing globally, the cases of security bridges are also rising at a rapid rate (Fernandez et al. 2022). For this purpose, Cisco Systems is planning to lower d security bridge in the organization and provide high security to all the customers availing of the company’s production services. The theory of internationalization that includes a centralized hub and integration system is used to demonstrate the issue of security in Cisco systems (Fauzi et al. 2022). The centralized hub is a concept under which all the data protection methods and techniques are controlled from the company’s headquarters to create the most secure organizational network. Due to the increase in India’s internationalization activities globally, the demand for a centralized hub is increasing to provide high security to the data collected from the customers of Cisco systems (Tsai, Lin and Cheng 2022). In the method of the centralized hub in the international strategic management, most of the company’s key assets are controlled and supplied by the headquarters of Cisco systems. It helps create a closed network and protect the consumers’ data of Cisco systems.
Moreover, the centralized hub method helps create tight and strict control over the company’s policies in procedures of security. On the other hand, the concept of an integrity network under the international strategic management is a framework under which the company independently handles the customers’ information (Katal and Sethi 2022). For example, Cisco systems are present in other parts of the world, due to which the information is handled individually by all the locations of the company. In the integrity network under the strategic international management of Cisco systems, there is a large flow of information on production services among the individual units of the organization (Welch et al. 2022). Moreover, in the organization’s decision-making process, while framing policies for a security breach, the individual feedback of employees is considered by the top management in the headquarters of Cisco systems.
Figure 1: Centralized hub and Integration network
Source: https://ieeexplore.ieee.org/abstract/document/9748562/
- Issues of cultural values across the international borders
While conducting the expansion activities into other countries in the world, Cisco Systems faces the issue of adapting the region’s cultural values to strengthen the relationship with the customers (Ligorio, Venturelli and Caputo 2022). The business operations of Cisco Systems are to be conducted according to the cultural values of different regions in the world, and the policies and procedures are framed accordingly. The cultural model of queen and Cameron is demonstrated to understand the role of cultural values in this strategic international management of Cisco Systems.
Figure 2: Quinn & Cameron Cultural Model
Source: https://www.sciencedirect.com/science/article/pii/S0040162521008787
The model talks about four important elements for identifying and analyzing the culture of a region where the company is expanding its business operations. The elements in the model include hierarchy, market, clan and adhocracy. In the hierarchy domain, the organization works on the internal cultural values that play a major role in framing the policies and procedures for the expansion activities (Elnagar et al. 2022). The term clan represents the attributes of teamwork and collaboration among the organization’s employees to successfully conduct the activities with maximum effectiveness. The democracy focuses on the outward factors used in the expansion activities, such as flexibility and responsiveness of the company while making crucial decisions. Lastly, the market domain focuses on the external factors that affect the organization’s business operations. It is used to improve the organization’s performance and prioritize the organization’s responsibilities to complete the process of expansion (Scaliza et al. 2022). The cultural model of queen and Cameron helps to focus on the organization’s flexibility and responsiveness, and control the activities to create stability across all the locations in the world.
Cyber Security Risks
For all these strategic issues that Cisco Systems face, there are some suitable recommendations and solutions. The solutions are implemented in the organization to enhance the business activities’ performance and maximize the profit in the industry. The solutions and recommendations are as follows:
- Resource-based view
To solve the issue of competition that other companies in the same industry give, Cisco Systems must conduct the resource-based view mentioned in the Werner Feltz model (Fauzi et al. 2022). The model suggests that the organization should look into the internal matters and should analyze the organization’s competitive advantage instead of focusing on the external environmental factors (Hagen et al. 2022). Moreover, the model demonstrates the activities used to maximize existing resources in the organization instead of acquiring new resources from the external environment. For example, Cisco Systems showed improved the current technology used to manufacture telecommunication equipment instead of purchasing new technology and wasting a large amount of money on it.
Figure 3: Resource Based View Model
Source: https://www.sciencedirect.com/science/article/pii/S0264275121004479
The available resources within the organization play a major role in enhancing the organization’s performance and creating goodwill in the industry. The resource-based view includes tangible and intangible resources available to the organization that is analyzed for further modifications (Bhandari, Ranta and Salo 2022). The organization’s tangible assets include land, technological equipment, and capital involved in manufacturing products and services offered in the market to the consumers.
On the other hand, the organization’s intangible assets include intellectual property, goodwill of the company, and trademarks available to them (Chaudhuri, Subramanian and Dora 2022). According to the model, Cisco Systems need to evaluate the present condition of tangible and intangible assets available within the organization. Cisco Systems need to improve the present organizational framework’s condition and implement major reforms to enhance the performance of the business activities conducted across the international borders.
- Cooperative alliance with international organizations
To maintain healthy relations with the international suppliers and customers, Cisco Systems need to maintain a cooperative alliance with the international organizations. It is used to ease the expansion of business across international borders. It reduces the workload of the top management while framing the policies and procedures for international strategic management (Klabbers 2022). The cooperative alliance strategy under the international management of business activities involves franchising, licensing, marketing and other management services. The elements under the cooperative alliance theory are important for the smooth flow of business activities in the organization and for improving the organization’s performance in the industry (Kaurova, Shinkareva and Maloletko 2022).
Moreover the cooperative alliance can be bilateral or multilateral depending on the organizations that are following the cooperative alliance theory in the industry (Fauzi et al. 2022). The organizational structure that is followed under the cooperative alliance theory is also termed a collaborative arrangement among the organizations controlled centrally by the headquarters in the other locations of the world (Sobolev et al. 2022). In recent years, it has been observed that in cooperative alliances, one of the organization is a foreign company, and the other is a local organization working jointly on the business projects. For example, Cisco Systems, while expanding its business operations in other countries, creates a cooperative alliance with a local organization to overcome the challenges of cultural values and political factors (Kaurova, Shinkareva and Maloletko 2022).
Analysis of Strategic Issues
It also helps the employees of Cisco Systems to adapt to the different cultures of the other locations in the world where the organization is expanding and establishing its business activities the region.
- Value chain analysis
Cisco Systems needs to conduct value chain analysis activities while expanding its business operations in other countries of the world (Epedse and Wang 2022). Value chain analysis is a process used in the organization to identify and analyze the internal activities to reduce the cost of production and increase the uniqueness of the products and services.
Figure 4: Value Chain Analysis Model
Source: https://www.sciencedirect.com/science/article/pii/S0264275121004479
The major purpose of value chain analysis is to identify the most valuable activities in the form and improve the industry’s competitive advantage. The firm’s internal activities include logistics, operations, marketing, technology, and human resource management (Johansen et al. 2022). For example, the value chain analysis in the Cisco Systems can identify the technology used to conduct the business activities and helps to increase the value of technology in reducing the cost of production services offered in the market. The value chain analysis helps reduce the cost of production of goods and services and avoids wastage in the production process. Moreover, it maximizes the profit earned by Cisco Systems in the industry and creates brand awareness among the people.
Conclusion
From the above discussion about the strategic international management of Cisco Systems, it is concluded that there are variously internal and external factors involved in the expansion of the business across the international borders. The strategic problems faced by the Cisco system while expanding its business operations and establishing it in other parts of the world is immense. The strategic problems include competition in the technological equipment, a rise in the activities of cloud networking and issues in the security management of Cisco Systems. The increase in the production of technological equipment by the competitors of the Cisco system raises concerns for the organization to sustain itself in the market. Moreover, the rise in cloud networking activities in the industry is increasing the security management issues that are creating a barrier for Cisco Systems to expand its business operations in other nations of the world. The report also demonstrates the analysis of the strategic management issues that Cisco Systems face worldwide. The analysis is conducted using various theories and models of strategic international management such as Porter value chain analysis, cooperative alliance theory, and internationalization theories. The security issues in this Cisco system are analyzed and resolved by applying the theory of a centralized hub that helps monitor and control the business operations from the company’s headquarters. There is also a discussion about the issues in the cultural values phased by Cisco Systems in other countries while expanding its business operations. For this purpose, the model that Cameron and Quinn provide includes elements such as hierarchy, clan, market and adhocracy. All the four elements in the model are used to increase the flexibility and responsiveness of Cisco Systems while making crucial decisions. Lastly, some significant recommendations and solutions are mentioned that are useful for enhancing the Cisco system’s performance and maximizing its profit in the industry. The recommendations are based on the theory of cooperative alliance with international organizations and value chain analysis. Maintaining cooperative alliances helps strengthen Cisco Systems’ performance in other parts of the world and increases the business presence in a particular area. Moreover, the value chain analysis increases the value of existing resources available with Cisco Systems and makes some significant modifications to the organization’s internal activities. It helps to adapt the cultural values of other nations were Cisco Systems is planning to expand and establish its business operations.
Porter’s Five Forces Model
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