CISCO SYSTEMS INC.
CISCO SYSTEMS INC.
PART ONE:
INTRODUCTIO
N AND
EXTER
NAL ANALYS
IS
CISCO SYSTEMS - INTRODUCTION• Founded in 1984
• Incorporated on December 10, 1984
• Have 72,935 employees
• Surpassed 39 billion in revenue in 2008
• Corporate headquarters located in San Jose, California
• 32 factories worldwide, 30 of them are outsourced.
• Spends nearly $5.3 billion a year in R&D
CISCO SYSTEMS – INTRO – RECENT EVENTS• Video Easier to Create, Consume, Search and Share Across the
Enterprise
• Cisco Demonstrates Leadership in Virtualized, Scalable, Cloud- Ready Data Centers with Customer and Technology Milestones
• Cisco Connects Businesses to Consumers via Video
NETWORKING AND COMMUNICATION• Industry: Networking and Communication supplies and services
• Industry Consolidation – Few competitors in their main product area
• In 2006 they had 70% of the share of its core router and switch market.
Juniper Networks and Hewlitt-Packard selected as benchmarks.Cisco's Chambers ProblemCisco Competition
CISCO’S MISSION STATEMENTShape the future of the Internet by creating unprecedented
value and opportunity for our customers, employees, investors,and ecosystem partners.
VisionChanging the Way We Work, Live, Play, and Learn.
Cisco has a very bland and basic mission statement that only ranks as an “ok” (5) on the MVV evaluation.
EXTER
NAL ANALYS
IS
•R E M O T E ( S O C I E T A L ) E N V I R O N M E N T .•I N D U S T R Y ( T A S K ) E N V I R O N M E N T•A S S E S S M E N T O F C O M P E T I T I O N•M O S T C R U C I A L T H R E A T S A N D O P P O R T U N I T I E S , W I T H S C O R E .
REMOTE (SOCIETAL) ENVIRONMENT
O P P O R T U N I T I E S
• Innovation
• Product and services expansion
• Market of Airline Industry
• Reusing existing Cisco gear to act as mobile POPs
• Cloud Computing
T H R E A T S
• Economic slowdown
• Price wars
• Product substitution
• Margin erosion
• Consolidation trend
• Consumer loyalty
INDUSTRY/TASK ENVIRONMENT
O P P O R T U N I T I E S• Low supplier power, Cisco has
taken control of its supply chain
• Router and switch market share discourages new entrants
• Switching costs are high(reduce buyer power)
• Acquisitions removes some threat of startup success
• Growth in the consumer market and cloud computing
T H R E A T S• Flip Video – bargaining power of
buyers.• MSFT – Threat of new entrant
(bundle unified communications software)
• GOOG – Threat of new entrant (desktop video conferencing market)
• Vyatta – Substitute (open source hardware)
• Asterisk – Substitute (open source VoIP)
ASSESSMENT OF COMPETITION
O P P O R T U N I T I E S
• Increase competition in bottom layer switch market
• Smart Grid Technology
• Asian Market – Tata Communications
• Server growth – up 700%
• Cloud-centric software
T H R E A T S• Mirrorless SLRs are the response to
Flip video• Juniper announced data center• Juniper entered into a partnership
with IBM to handle network connectivity for the latter’s cloud computing
• 3COM emerging into markets like China
• Juniper’s high-end switches (EX) and Junos OS
• HP’s low cost switches
SUMMARY – MOST CRUCIAL OPPORTUNITIES AND THREATSO P P O R T U N I T I E S
• Increase competition in bottom layer switch market (9)
• Server growth (10)
• Cloud Computing (10)
• Smart Grid Technology (10)
• Asian Market (8)
T H R E A T S
• HP’s low cost switches (10)
• MSFT – Threat of new entrant (bundle unified communications software) (7)
• Consolidation trend (7)
• Juniper/IBM (9)
• Juniper’s data center (10)
Avg. ~ 47/5 = 9.4 Avg. ~ 43/5 = 8.6
O-T ~ 9.4 – 8.6 = .8
PART TW
O:
INTERNAL ANALYS
IS
NET INCOME TRENDS -CSCO & BENCHMARKS
2005 2006 2007 2008 2009 2010
$(2,000.00)
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
CiscoHPJuniper
Net
Inco
me
(in M
illio
ns)
Company Name 2005 2006 2007 2008 2009 2010
CISCO SYSTEMS INC $ 5,741.00 $ 5,580.00 $ 7,333.00 $ 8,052.00 $ 6,134.00 $ 7,767.00
HEWLETT-PACKARD CO $ 2,398.00 $ 6,198.00 $ 7,264.00 $ 8,329.00 $ 7,660.00 $ 8,761.00
JUNIPER NETWORKS INC $ 354.03 $(1,001.44) $ 360.83 $ 511.75 $ 117.00 $ 618.40
CSCO QUARTERLY EARNINGS VS. CONSENSUS ESTIMATES
Earnings History 10-Apr 10-Jul 10-Oct 11-Jan
EPS Est 0.39 0.42 0.4 0.35
EPS Actual 0.42 0.43 0.42 0.37
Difference 0.03 0.01 0.02 0.02
Surprise % 7.70% 2.40% 5.00% 5.70%
1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
EstimateActualDifference
REVENUE BY PRODUCT CATEGORY AND SERVICE
Routers Switches New Products Other Total Product Service0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1Q2Q3Q4
KEY INCOME STATEMENT DATA FY2010HP Cisco Juniper
Sales $ 126,033.00 $ 40,040.00 $ 4,093.27
Cost of Sales $ 92,753.00 $ 12,858.00 $ 1,200.46
Pretax Income $ 11,083.00 $ 9,415.00 $ 778.15
Basic EPS - Exclud Extra Items $ 3.78 $ 1.36 $ 1.18
Diluted EPS - Exclud Extra Items $ 3.69 $ 1.33 $ 1.15
Net Income (Loss) $ 8,761.00 $ 7,767.00 $ 618.40
KEY BALANCE SHEET DATA FY2010 HP Cisco Juniper
Cash $ 10,934.00 $ 39,861.00 $ 2,286.40
Total Current Assets $ 54,184.00 $ 51,421.00 $ 3,214.37
PP&E $ 11,763.00 $ 3,941.00 $ 493.88
Total Assets $ 124,503.00 $ 81,130.00 $ 8,467.85
Other Investments $ 4,191.00 $ 2,607.00 $ 535.18
Total Current Liabilities $ 49,403.00 $ 19,233.00 $ 1,471.98
Total Liabilities $ 83,722.00 $ 36,845.00 $ 1,859.05
Total Stockholders' Equity $ 40,449.00 $ 44,267.00 $ 6,608.80
CASH FLOW DATA FY2010 HP Cisco Juniper
Cash Flow 12mm $ 13,581.00 $ 10,064.00 $ 773.69
Dividends Paid - Cash $ 771.00 $ - $ -
Operating Activity $ 11,922.00 $ 10,173.00 $ 812.34
Investing Activity $ (11,359.00) $ (11,931.00) $ (532.75)
Financing Activity $ (2,913.00) $ 621.00 $ (72.42)
Change in Cash & Equiv $ (2,350.00) $ (1,137.00) $ 207.16
IMPORTANT FINANCIAL RATIOS FY2010 HP Cisco Juniper
Current Ratio 1.097 2.674 2.184
Quick Ratio 0.779 2.397 1.959
Net Profit Margin 6.951 19.398 15.108
Return on Assets 7.037 9.574 7.303
Return on Equity 21.659 17.546 9.357
Return on Investment 15.634 13.753 9.357
Financial Leverage 2.956 1.800 1.292
APPLYING ALTMAN’SBANKRUPTCY FORMULA
Z = 1.2*A + 1.4*B + 3.3*C + 0.6*D + 1.0*E, where;A = Working Capital / Total Assets (%)B = Retained Earnings / Total Assets (%)C = EBIT / Total Assets (%)D = Market Value of Equity / Total Liabilities (%), andE = Sales / Total Assets
“Scores below 1.81 indicate significant credit problems while scores above 3.0 indicate a healthy firm. Scores falling between 1.81 and 3.0 indicate question marks.”
2005 2006 2007 2008 2009 2010
Z Value 2.902 2.315 2.473 2.500 2.292 2.166
Z-VALUE
2005 2006 2007 2008 2009 20100
0.5
1
1.5
2
2.5
3
3.5
Upper LimitZ ValueLower Limit
INDEX OF SUSTAINABLE GROWTH
Jul05 Jul06 Jul07 Jul08 Jul09 Jul100.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
0.400
0.450
0.500
g* score
g* = [P(1-D)(1+L)] / [T-P(1-D)(1+L)], whereP = (Net Profit before Tax / Net Sales) x 100D = Target dividends / Profit after TaxL = Total Liabilities / Net WorthT = (Total Assets / Net Sales) x 100
INVENTORY TURNOVER FY2010
HP Cisco Juniper0.000
2.000
4.000
6.000
8.000
10.000
12.000
14.000
16.000
Inve
ntor
y Tu
rnov
er
CREDIT RATINGSIssuer Credit Rating Ratings Rating Date
Foreign Long-term A+ 10-Feb-06
Foreign Short-term A-1+ 31-Jan-11
Local Long-term A+ 10-Feb-06
Local Short-term A-1+ 31-Jan-11
March 9, 2011-Standard & Poor's Ratings Services said today that it assigned its 'A+' issue rating to San Jose, Calif.-based Cisco Systems Inc.'s (Cisco) three tranches of senior unsecured notes.
CISCO STOCK PRICE HISTORY
CSCO STOCK PRICE – 5 YEAR TREND
CSCO STOCK PRICE – 2 YEAR TREND
FINANCIAL SUCCESS STATEMENTIn fiscal 2010, we saw a solid return to balanced growth across
geographies, product and customer markets exemplified by Cisco reaching over $40 billion in fiscal year revenue. We focused our efforts on defining true innovation and operational excellence within our company. And we improved our position as a strategic partner to customers worldwide by showing how the network has become, in our view, the most strategic asset in communications and information technology (IT) today.
ANALYSIS O
F MARKETI
NG
POSITIO
N
CISCO LONG TERM TOTAL SALES FROM 2006-2010• 2006 = 23.38 Billion
• 2007 = 34.90 Billion
• 2008 = 39.60 Billion • 2009 = 36.10 Billion
• 2010 = 40 Billion
CISCO LONG TERM QUARTERLY SALES FROM 2006-20102006 2008
Quarter 1: 6.50 Billion Quarter 1: 9.60 BillionQuarter 2: 6.60 Billion Quarter 2: 9.60 BillionQuarter 3: 7.30 Billion Quarter 3: 9.60 BillionQuarter 4: 7.98 Billion Quarter 4: 10.40 Billion
2007 2009Quarter 1: 8.20 Billion Quarter 1: 10.30 Billion
Quarter 2: 8.40 Billion Quarter 2: 9.1 BillionQuarter 3: 8.90 Billion Quarter 3: 8.2 BillionQuarter 4: 9.40 Billion Quarter 4: 8.5 Billion
CISCO LONG TERM QUARTERLY SALES FROM 2006-2010 CONT. 2010
Quarter 1: 9.00 BillionQuarter 2: 9.80 BillionQuarter 3: 10.40 BillionQuarter 4: 10.80 Billion
SALES BY STRATEGIC BUSINESS UNITS IN QUARTER 1 AND 2 OF 2011• Strategic Business Units = divisions or groups of divisions composed
of independent product-market segments that are given primary responsibility and authority for the management of their own functional areas.
CISCOQ1 IN MILLIONS Q2 IN MILLIONSROUTERS - $1,835 ROUTERS - $1,672SWITCHES - $3,532 SWITCHES - $3,151NEW PRODUCTS - $3,104 NEW PRODUCTS - $3,202OTHER PRODUCTS - $229 OTHER PRODUCTS - $211TOTAL PRODUCT – $8,700 TOTAL PRODUCT - $8,236
MARKET SHARE OF STOCKSCompany Name
Price
Change Change %
Market Cap
CSCO Cisco Systems, Inc.
17.46
+0.07 0.42% 96.63B
JNPR Juniper Networks, Inc.
39.49
-1.05 -2.59% 21.12B
HPQ Hewlett-Packard Company
41.53
-0.24 -0.56% 89.87B
ALU Alcatel- Lucent (ADR)
5.19 -0.07 -1.33% 12.03B
MSFT Microsoft Corporation
25.34
+0.01 0.05% 212.94B
MARKETING TACTICS• Tactics = specific operating plans that detail how a strategy
is to be implemented in terms of when and where it is to be put into action.
• Timing Tactics Historically a first mover supported by being a first mover in technology. They specialize in routers, switches, wireless, security, optical networking, etc. Cisco is also considered a industry leader.
• Market Location Tactics: OffensiveCisco has always been known to take a frontal assault because they are a market leader. They go head to head with its competition.
MARKETING TACTICS• Market Location Tactics: Defensive
Cisco takes the path of raising structural barriers. They do this to block challenger’s logical avenues of attack.Some factors of Porters they use are:Offering a full line of products in every profitable market segment to close off any entry points.Keep their items reasonably priced for their most popular products and services.
CISCO SUCCESS STATEMENT• Cisco has had many success stories throughout the
years which is a large part in being a industry leader.
• Customers drive our business strategies to achieving success and excellence in everything we do, and will continue to be our key focus for developing products and services that accelerate their capability to prosper in the Internet business.
CISCO SUCCESS STATEMENT CONT. • An example of a success story is:
In 2001 the cost of direct DSL and ISDN access increased markedly. Cisco transitioned tens of thousands of teleworkers and remote office workers worldwide to remote access VPNs. To determine if additional capacity was needed, Cisco used Cisco NetFlow in conjunction with various open-source tools to characterize existing traffic and then extrapolate expected traffic. With this business intelligence, Cisco successfully transitioned 22,000 users to VPN in only three months.
MARKETING PROBLEMS• The dominance in network switches that Cisco holds is
waning. • Hewlett-Packard has been particularly aggressive in the
switching market since they have entered.
• Cisco’s video-conferencing system for living rooms has been a strange product to market.
• There is little market for such a product when consumers can video chat for free over the internet instead of paying $600 for the equipment and a $25 a month service fee.
ANALYSIS O
F
MANAGEMENT P
OSITION
CORPORATE MANAGEMENT TEAM• Frank A. Calderoni
Executive Vice President, Chief Financial Officer• John T. Chambers
Chairman and Chief Executive Officer• Mark Chandler
Senior Vice President, Legal Services, General Counsel and Secretary • Blair Christie
Chief Marketing Officer, Worldwide Government Affairs, Corporate Communications
• Wim ElfinkExecutive Vice President, Cisco Services and Chief Globalization Officer
CORPORATE MANAGEMENT TEAM CONT. • Robert W. Lloyd
Executive Vice President, Worldwide Operations
• Gary B. Moore
Executive Vice President, Chief Operating Officer
• Randy Pond
Executive Vice President, Operations, Processes and Systems
MANAGEMENT TEAM - DIVERSITY• Board – 13 members, 2 internal
• 65 Executives • 56 men• 9 women
Executive Biographies
EXECUTIVE COMPENSATION • Compensation Governance. The core of Cisco’s executive
compensation continues to be pay for performance, and the framework includes the compensation governance features discussed below:
1. Provides shareholders with the opportunity to cast advisory votes on compensation
2. Have no employment or severance agreements, special benefits, supplemental executive retirement plans, perquisites, or tax equalization.
3. CEO compensated below targets and median of the peer group of three out of the last five years.
4. Compensation Committee is solely independent directors.
TOP FIVE – 2010 COMPENSATION & TENUREJohn Chambers – $18.9 million in 2010
Name and Principal Position Fiscal Year
Salary ($) (2)
Bonus ($) (3)
Stock Awards ($) (4)
Option Awards ($) (5)
Non-Equity Incentive Plan Compensation
($) (6)
All Other Compensation
($) (7) Total
($)
John T. Chambers Chairman and Chief Executive Officer
2008
2007 $375,000
$350,096
—
$3,500,000 $650,985
— $7,122,023
$7,126,514
$3,002,802
—
$9,087
$7,677
$11,159,897
$10,984,287 Frank A. Calderoni
Executive Vice President, Chief Financial Officer (1)
2008 $447,692
— $483,727
$1,340,621 $1,052,335
$71,090 $3,395,465
Dennis D. Powell Former Executive Vice President, Chief Financial Officer (1)
2008
2007 $401,635
$425,577
—
— $458,939
$392,116 $1,464,503
$2,018,450
$673,205
$1,607,614
$7,253
$9,000
$3,005,535
$4,452,757 Wim Elfrink
Executive Vice President, Cisco Services and Chief Globalization Officer
2008 $859,605 (8)
— $871,227
$2,566,075 $1,590,750 (9)
$1,732,050 (10) $7,619,707
Richard J. Justice Executive Vice President, Worldwide Operations and Business Development
2008
2007 $750,000
$451,154
—
— $871,227
$392,116 $2,706,400
$2,470,436
$1,484,700
$2,329,875
$113,771
$18,231
$5,926,098
$5,661,812
DIRECTION OF TOP MANAGEMENT TEAM• Continue to seek to expand share of Cisco’s customers’
information technology spending.
• Focus on core networking capabilities while expanding into product markets where the network as a platform is increasing.
• Focusing primary attention include those related to the increased role of virtualization/the cloud, video, collaboration, and networked Web 2.0 technologies.
TOP MANAGEMENT PERFORMANCE INDICATORSQ U A L I T A T I V E F A C T O R S Strategic Direction (4) Implementing Strategy (5) Building Mgt. Team (4) Management Qual. (5) Succession (4) Labor Relations (4) Technology Leader (5) Board Relations (4) Investor Relations (5) Com./Gov Rel’ns (4)
Q U A N T I T A T I V E F A C T O R S Return on Assets (5) Return on Investment
(4) Return on Equity (4) Return Meas. Trends (4) Cash Flow (4) Profit Growth (4) EPS (4) Dividend Payout (4) Stock Price (4) Total Return to SH (1)
Total = 44
Total = 38
MANAGEMENT ANALYSIS• Chambers recently introduced collaborative decision making. 70%
of decisions made by groups.• 20% of senior leaders have left since the switch• 30 new businesses, 20 more to come
• Average Tenure – 11.5 years
PART TH
REE:
CURRENT STRATE
GIC
POSITIO
N
C U R R E N T C O R E C O M P E T E N C I E S D I S T I N C T I V E C O M P E T E N C I E S C O R P O R A T E - L E V E L S T R A T E G I E S
Short Term & Long-Term C O R E S B U L E V E L S T R A T E G I E S 5 C R I T I C A L P E R F O R M A N C E I N D I C A T O R S
CURRENT CORE COMPETENCIES Hardware product development Acquisitions - “Buy-the-startups” (Cisco's acquisition strategy is best-
in-world and we particularly look for acquisitions that capitalize on market disruption through new technologies and new business models.)
Collaboration Services Network Flexibility/Scaling (data center/hardware/software capacities)
and virtualization Strategic Alliances (AT&T, Dell, HP, Intel, IBM, Microsoft, Nokia, etc…)
DISTINCTIVE COMPETENCIES Acquisitions Smart-grid technology (form of routing or switching) as noted
by CEO John Chambers.
CURRENT LONG-TERM CORPORATE STRATEGIESStrategy: One Cisco
• Grow faster than the market
• Protect and extend product market leadership
• Innovate
CURRENT SHORT-TERM CORPORATE STRATEGIESInternal innovation - $5.3B+ spent on R&D annually
Acquisition – continued integration of Pari Networks, Inlet technologies, and newScale, Inc.
Enter into new markets:
• Smart Grids• Virtual healthcare• Education
• Media solutions• Sports and entertainment
MIS/INFORMATION AGE READINESS• Incredible website
• Use the products they develop
• Recently upgraded their ERP to Oracle 11i• Purchasing• Data Storage• Technical Support
About Cisco
BORDERLESS NETWORKS GROUP• Comprised of Routers and Switches
• Increased their revenue by 33% from ‘09 to ’10
• Q2 ‘FY11 Sales down $132 million
• 70% of the market share
• Improve application velocity and enhance collaboration while reducing branch IT operational expenses by up to 70 percent
16%
34%24%
7%
19%
Routers
Switches
Advanced Technologies
Others
Services
COLLABORATION GROUP• Webex and TelePresence and other VoIP technologies
• 90 percent of frequent users save at least two hours of work time per week through video collaboration
• It is possible to achieve 100% ROI in 5 years and payback periods of 21-40 months
• Reduction of 21 percent in corporate travel spending
CLOUD COMPUTING GROUPDATA CENTER AND VIRTUALIZATION
• Energy efficiency• Reduce energy costs• Optimize use of space, power, and cooling infrastructure
• Infrastructure Consolidation
• Business Continuance
• Workforce Productivity
Cloud Computing Explained
CALIFORNIA TELEMEDICINE PILOT PROJECT• Contributing $10 million of product, services and support
• Care-at-a-distance technology that combines video, audio and
medical information
• Patients will be able to view the medical exam
• Easiness of meeting
IDENTIFICATION OF SBU LEVEL STRATEGIES AND TACTICS• As mentioned earlier Cisco’s strongest market is with their
switches. • The revenue has declined 7% in the latest quarter because
they are under attack by competitors such as HP.• Cisco’s consumer products such as Linsksys routers, Flip
video cameras, etc. don’t stand a chance against Apple.• They need to market their products more efficiently and
spend more money on marketing popular products than products that serve a small niche market.
• Cisco just unveiled a new home-entertainment system in January to hopefully “reinvent the entire TV experience.”
CORPORATE SOCIAL RESPONSIBILITYKEY PERFORMANCE INDICATORS
In the Workplace
Employee Satisfaction
% of employees who agreed with 7 statements about Cisco as a place to work
200581%
200685%
200786%
Voluntary employee attrition
Total voluntary attrition as % of ending head count
4.6%
5.4% 6.9%
Health and safety
Number of nonfatal injuries and illnesses during fiscal year
129 107 93
CORPORATE SOCIAL RESPONSIBILITY KEY PERFORMANCE INDICATORS
Diversity In the workplace
Women Women as % of total employeesWomen as % of total VP positions
22%
13%
22%
14%
22.8%
15.12%
Ethnic Minorities (U.S. only)
Ethnic minorities as % of total employeesEthnic minorities as % of total VP positions
42%
17%
43%
17%
43%
15.51%
CORPORATE SOCIAL RESPONSIBILITY KEY PERFORMANCE INDICATORS
Environment
Worldwide energy consumption
Giga watt-hours (GWh)
753 856 898
Normalized worldwide energy consumption
GWh per $8n sales
30.4 30.1 25.7
Greenhouse gas emissions
1000 tons of carbon dioxide (tCO2)
312 349 311
Product recycling
Tons of equipment
n/a 4516 7102
CORPORATE SOCIAL RESPONSIBILITYKEY PERFORMANCE INDICATORS
Social
Social Investment
Total corporate wide and foundation cash and in-kind contributions
$65 Million
$115.5 Million
$116.8 Million
Employee volunteerism
Number of hours volunteered by employees
235,000
160,000
130,000
Educational output
Number of students enrolled worldwide in Cisco Networking Academy
459,723
466,935
501,019
Social and Economic investment
Number of countries Cisco currently invests programs in
n/a 165 160+
PART FO
UR:
CURRENT O
VERALL
POSITIO
N
I N T E R N A L S T R E N G T H S , W E A K N E S S E SS T R A T E G Y C H O I C E ( G R A N D S T R A T E G Y M A T R I X )O V E R A L L P R O B L E M / S U C C E S S S T A T E M E N T
Strengths:• Strong Market Position (9)• Strategic alliances (9)• Robust Balance Sheet (9)• Human Network/Smart
Grid (9)• Strong Management (8)
Weaknesses:• Lack of presence in
consumer market (8)• High pricing - cheaper
alternatives(8)• Constant re-engineering
(7)• Brand Recognition (6)• Acquisition Integration (9)
INTERNAL STRENGTHS AND WEAKNESSES
Avg. ~ 44/5 = 8.8 Avg. ~ 38/5 = 7.6
S-W ~ 8.8 – 7.6 = 1.2
SWOT MATRIX AND GRAND STRATEGIES
+10 +9 +8 +7 +6 +5 +4 +3 +2 +1 0 -1 -2 -3 -4 -5 -6 - 7 -8 -9 -10
+10
+9
+8
+7
+6
+5
+4
+3
+2
+1
-1
-2
-3
-4
-5
-6
-7
-8
-9
-10
Strengths
Threats
Opportunities
Weaknesses
Figure 6.2SWOT Matrix and Grand Strategies
Growth
DivestMaintenance
Harvest
1. Concentration
2. Horizontal Integration
3. Vertical Integration
4. Concentric Diversification
1. Concentric Diversification
2. Conglomerate Diversification
3. Joint Ventures
1. Turnaround or Retrenchment
2. Concentric Diversification
3. Divest
4. Liquidation
1. Reformulation ofConcentration
2. Horizontal Integration
3. Divest
4. LiquidateCisco – (1.2, 0.8)
GENERAL STATEMENT OF CONDITIONS• Leader in almost all of our product markets
• Strong strategic alliances with MSFT, IBM, AT&T, Dell, Intel
• All sales in all geographic locations went up
• Low market share in consumer products
• Strategy of buy, build and partner
• Strong financial position
PART 5:
STRATEGIC ASSESSM
ENT
L O N G - T E R M P R O S P E C T S A N D O P T I O N SS H O R T - T E R M P R O S P E C T S A N D O P T I O N SH O W S T R A T E G Y O P T I O N S S U P P O R T L O N G T E R M S U R V I V A L .S U M M A R Y
LONG-TERM SUCCESS – CONSUMER PRODUCT• Although Cisco has a huge line of products and
services a long -term goal would be to improve their consumer products.
• Cisco can go about that by developing brand recognition within their consumer market.
• Market different products:• http://www.theflip.com/en-us/products/design-your-ow
n.aspx
LONG-TERM SUCCESS – SMART GRID• 49% of cyber security threats to the electrical infrastructure initiate
from breaches of physical security.
• Cisco partnered with German electricity company Yello Strom to launch a smart-grid pilot project in 70 German homes and businesses.
• Eliminate blackouts and brownouts
• Promises to be a $20-billion-a-year business
LONG-TERM SUCCESS – THE HUMAN NETWORK
The Human Network - this
SHORT TERM IMPERATIVESCompany Market Opportunity
Pari Networks Network Management
Inlet Technologies Video
MOTO Development Group Consumer
Linesider Technologies Network Management
Arch Rock Corporation Smart Grid
BAMG
SUSTAINABILITY E
XERCISE
CISCO SYSTEMS
1. RESPONSES TO CDPROJECT.NET
2. OTHER RELATED GOALS & PERFORMANCEGREEN GOALS• Optimize business operations and cut costs
• Extend lifecycle / reduced power consumption• Optimized processes• Simplified architectures
• Reduce Greenhouse gas emissions• Innovative software added to the Cisco Catalyst switching
portfolio • Available for customers to download• This reduces GhG emissions, saves energy and reduces
costs
GOALS CONTINUED• Reduce energy consumption and cost
• Power management• Tracking and reporting• Infrastructure consolidation
• Comply with government directives• Recycling
• Use end-of-life programs that reduce the overall impact of the environment
• These end-of-life programs are designed to reuse or harvest the material commodities contained in the equipment collected and return those materials to the market where they are made into new products
• Create competitive differentiation • Virtual worker• Remote collaboration• Resource virtualization
3. SMART GRID
Smart Grid
4. SUPPLIER ENVIRONMENTAL RESPONSIBILITYGlobal Supplier Enrollment Package• Supplier Profile Form, EFTP Enrollment Form, Certifications,
Tax Requirements, and Supplier Diversity Policies• Certifications
• Data Usage and Protection Certificate (Certificate I)• Code of Ethics Certificate (Certification II)• Supplier Environmental Health and Safety Certificate
(Certificate III)• Supplier Diversity Policies
• Cisco believes purchasing products from small, women-owned, small disadvantaged, minority, disabled veteran, and HUBZone enterprises are key to the economic vitality of both Cisco and the community.
5. DOING ENOUGH?Yes, we think they are doing enough because:• They have produced many programs that make them
socially and ethically responsible.• Optimize operations• Reduce GHG emissions• Reduce energy consumption• Recycle • Create differentiation
• Supplier certifications and environmental requirements.
ARE THEY CHALLENGED?"Are they challenged? Absolutely. But outside
of Apple and Google, we don't see a company in the technology space that is as well positioned for growth.“
-Unknown
ANY QUESTIONS?