Cisco Case Study

free essayThis is undoubtedly true that nowadays the technology market is one of the most promising commercial spheres. Cisco is a world-leading company in investing, manufacturing, and selling networking equipment all over the globe. This company is a powerful leader of the industry and a good example of successful business that has been prosperous during all the periods and in different economic conditions. Thus, it is necessary to perform the external and internal analysis of the company in order to identify the key to its success.

What Does Cisco Do Very Well – That Is “Good for Business”

One of the most important criteria for the company is an ability to conduct the business successfully regardless of economic and political conditions that may occur on the market. Cisco manages to take as many competitive advantages from the economic decline and recession as possible. For instance, Cisco uses the downturns as an opportunity to make investments in new technologies and concentrate on the emerging markets. In addition, the company studies the needs and wants of the consumers that are considerably changing in a time of recession. Owing to this fact, the organization is getting accustomed to the changing environment.

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Another important aspect of the Cisco strategy is its frequent dealings with merging and acquisition. What is more, the company has formulated a rather aggressive strategy and posts it on its official web site: “Our acquisition strategy brings new technologies and business models to Cisco” (Introduction – acquisition n. d.). The company awaits the most suitable moment for a merger and acquisition holding. In such a way, the company manages the crisis very effectively, increases the market share, occupies new markets, and gets additional financial resources. Thus, one of the most successful sections of Cisco business is anti-crisis management as the company usually conducts it gaining huge advantages.

Three Key Developments in Cisco between 2009 and the Present (2016)

Cisco is the company of developed technologies that have brought many inventions and technological advancements to the world and consequently made it the leader of a high-technical industry. One of such inventions was MediaNet that gave an opportunity to transfer videos and various files to TVs, PCs, and mobile phones. A MediaNet is an end-to-end network invention with smart technologies and equipment that are to deliver a high-quality rich-media experiences (Cisco 3900 series integrated services routers n. d.).

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Speed application at the branch is another invention of Cisco that was designed within 2009 and 2016. Speed dial enables the smart phones users to conduct a speed dial list. Cisco Wide Area Application Services and Cisco Intelligent WAN characteristics are combined in this innovation (Products & services n. d.). In addition, blade switches that are considered to be the next generation of networking solution for HP BladeSystem environments were implemented. Hence, Cisco Company contributes to the development of the net-working and high-technology industry (Products & services n. d.).

Cisco’s Strategy at the Time of the Case Study

There are four strategies presented in the case study of Cisco, and they are concentrated on different options and directions. The first one focuses on finances, which are critically important for such high-technical industry as the one that Cisco is engaged in. Only the companies that invest in the research and development can be the leaders of the market. Moreover, the financial situation determined the level profitability of the company’s management. The second strategy of Cisco relates to the customers. The company considers the paramount importance of loyal and satisfied customers. However, the third strategy that contributes to the success of the Cisco Company takes into account the changing customers’ needs. The last strategy is connected with the future, namely investing in technologies and promising partnerships (Strategy – corporate strategy office n. d.).

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P.E.S.T.

PEST is a technique that provides the description of such external environment criteria as political, economic, social, and technical ones. Political environment is very important for the industry, because this criterion determines the measure of companies that are applicable in the industry. From the economic point of view, the Cisco environment is very expensive. However, the corporation is one of main leaders of the industry that occupy the world networks market. Consequently, this industry is very profitable for the company. Apart from this, high expenditures and significant risks also play a crucial role in the industry of high technologies.

The social environment has a moderate impact on the industry of technical products. In this sense, on the one hand, the companies of the industry are concerned with the needs and wants of the market. On the other hand, the industry is mainly dedicated to the societal development in technical sphere and improvement of the level of peoples’ lives. The technical criterion of PEST analysis is one of the most important in the network industry. It is caused by the fact that the high technological development is exactly the factor which gives enables the company to deliver high quality products and occupy the leading positions on the market.

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T.O.W.S.

T.O.W.S. is an effective analysis that gives an opportunity to compare the internal and external enviroment of the company. The main threat to the company is the high level of competition. The main company competitors are Hewlett-Packard Company, Alcatel-Lucent, and Juniper Networks.In addition, nowadays there is a considerable risk regarding the deals with open source competitors and virtualization. All of these factors pose considerable obstacles to the industry players, including Cisco.

Nevertheless, the company has many positive aspects of work and numerous opportunities. First, there is a possibility for expanding through strategic alliances and acquisitions. Second, the high-technology and network markets are constantly developing and growing. For this reason, the company may increase its market share and, consequently, its profitability. Finally, data intensive applications that are widely launched and used by many people are additional benefits for Cisco.

There is no doubt that the company’s weaknesses outweigh its strengths. Some of the weaknesses that should be minimized are the gaps in marketing sphere, namely the public relations and sales promotion. Regarding the strengths, the company is considered to be in a good competitive position which is caused by a multiple number of factors. First, the economies of scale make the business geographically effective which determines decreasing the cost of logistics and increasing the profit margin. Second, owing to the fact that the company has expanded its activities to other industries apart from the technological one, it is less susceptible to industry fluctuations. Third, the company has a rich history and a high level of goodwill which makes the company more sustainable. Due to the extensive researches and development investments, the company is an investor of the industry and thus its leader. Therefore, the company manages to find numerous strengths among its opportunities and threats in order to enjoy competitive advantages obtained from them.

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Porter’s 5 Forces Model

The analysis of 5 Porter’s Forces is another technique that describes the external environment of the company, namely the industry threat of new entrants, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and industry rivalry. Competitive rivalry is the most significant element of the Porter’s Five Forces model for the Cisco Company. In spite of the fact that the number of competitors is rather small, the competition between them is very aggressive. The main competitors of Cisco are as follows: Hewlett-Packard Company, Alcatel-Lucent and Juniper Networks.Furthermore, there are some smaller companies, but they are still the niche players of the industry. The threat of new entrants is rather low, which is caused by large expenditures on research, development, invention, and manufacturing. Moreover, high risks are more typical for the industry. Due to the unique innovations of the industry, it is rather hard to develop substitutes for the network industry. As for the bargaining power of customers, it is also low. Owing to the fact that all people need the developments of network industry and the number of companies that are producing such services is limited, the Cisco company gains the power among the service receivers. To summarize the Porter’s Five Forces model, the industry the Cisco is involved in is quite attractive and prosperous for organizing the business.

Porter’s Generic Competitive Strategies

In terms of Porter’s generic competitive strategies, it is crucial to state that the management of Cisco Company has chosen the strategy of differentiation. It is determined by the wide range of activities that implemented in the whole industry and concentration on the unique characteristics of the products or services that are provided to the customers. Taking into account the fact that the Cisco products are rather expensive, the strategy of cost leadership is not appropriate to use as a competitive strategy. On the contrary, the strategy of differentiation is the most suitable for the Cisco activities, since the company is running and representing different products on different markets.

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Conclusion

In summary, it is important to take into account the following conclusions. The strategic analysis of the Cisco Company has been conducted on the basis of the case study and additional sources of information. The organization is running in a high-technical industry of networks that is a popular, profitable, and prosperous area to work in. The bargaining power of suppliers and customers is rather low, the barriers of entrance are high, and the industry rivalry is not so intensive but rather aggressive. Moreover, the PESTLE analysis that has been developed for the industry of networks shows that the most important external environment for the industry is the technical one.

Concerning the internal analysis of the Cisco Company, it has many beneficial sides that help the company demonstrate good performance on both domestic and foreign markets. Apart from this, many opportunities guarantee company’s constant development. As for the basic strategy, Cisco has chosen the strategy of differentiation which is an efficient one to develop and implement in business.