Cisco Strategic Audit Report
Cisco Strategic Audit Report
Prepared by Presented to
Shady Sayed Nasr Dr. Saneya El Galaly
Mohamed Abdelaziz Mohamed Ali
Mahmoud Zein
Saif sony
Table of content
1. Company Overview
2. Vision, Mission
3. Financial position and stock price
4. Products & Competitors
5. Key success factors
6. PESTL Analysis
7. Issues priority matrix
8. SWOT analysis of Cisco systems: -
a. Internal factors (Strength & Weakness)
b. IFAS Matrix
c. External Factors (Opportunities & threats)
d. EFAS Matrix
9. SFAS
10. TOWS Analysis
11. Porter's Five Forces
12. BCG Matrix
13. Internal & External Matrix
14. Ground strategy matrix
15. Space matrix
16. Strategic Alternatives & Recommended Strategy
17. Action plan
18. Evaluation & Control.
Company overview :
An American multinational technology conglomerate headquartered in San Jose,
California, in the center of Silicon Valley. Cisco develops, manufactures and sells networking
hardware, telecommunications equipment and other high-technology services and
products. Through its numerous acquired subsidiaries, such as OpenDNS, WebEx, Jabber
and Jasper, Cisco specializes into specific tech markets, such as Internet of
Things (IoT), domain security and energy management.
Cisco Systems was founded in December 1984 by Leonard Bosack and Sandy Lerner,
two Stanford University computer scientists. They pioneered the concept of a local area
network (LAN) being used to connect geographically disparate computers over a
multiprotocol router system. By the time the company went public in 1990, Cisco had a
market capitalization of $224 million. By the end of the dot-com bubble in the year 2000,
Cisco had a more than $500 billion market capitalization.
1984–1995: Origins and initial growth
1996–2005: Internet and silicon intelligence
2006–2012: The Human Network
2012-Present day:
On July 23, 2013, Cisco Systems announced a definitive agreement to acquire Sourcefire for
$2.7 billion. On August 14, 2013, Cisco Systems announced it would cut 4,000 jobs from its
workforce, which was roughly 6%, starting in 2014. At the end of 2013, Cisco announced poor
revenue due to depressed sales in emerging markets, caused by economic uncertainty and
by fears of the National Security Agencyplanting backdoors in its products.
In April 2014, Cisco announced funding for early-stage firms to focus on the Internet of
Things. The investment fund was allocated to investments in IoT accelerators and startups
such as The Alchemist Accelerator, Ayla Networks and EVRYTHNG. Later that year, the
company announced it was laying off another 6,000 workers or 8% of its global workforce,
as part of a second restructuring. On November 4, 2014, Cisco announced an investment
in Stratoscale.
On May 4, 2015, Cisco announced CEO and Chairman John Chambers would step down as
CEO on July 26, 2015, but remain chairman. Chuck Robbins, senior vice president of
worldwide sales & operations and 17-year Cisco veteran, was announced as the next CEO. On
July 23, 2015, Cisco announced the divesture of its television set-top-box and cable
modem business to Technicolor SA for $600 million, a division originally formed by Cisco's
$6.9 billion purchase of Scientific Atlanta. The deal came as part of Cisco's gradual exit from
the consumer market, and as part of an effort by Cisco's new leadership to focus on cloud-
based products in enterprise segments. Cisco indicated that it would still collaborate with
Technicolor on video products. On November 19, 2015, Cisco, alongside ARM
Holdings, Dell, Intel, Microsoft and Princeton University, founded the OpenFog Consortium,
to promote interests and development in fog computing.
In January 2016, Cisco invested in VeloCloud, a software-defined WAN (SD-WAN) start-up
with a cloud offering for configuring and optimizing branch office networks. Cisco
contributed to VeloCloud's $27 million Series C round, led by March Capital Partners.
In February 2017, Cisco launched a cloud-based secure internet gateway, called Cisco
Umbrella, to provide safe internet access to users who don't use their corporate networks
or VPNs to connect to remote data centers. Immediately after reporting their fourth quarter
earnings for 2017, Cisco's price-per-share value jumped by over 7%, while its Earnings per
share Ratio increased from 60 to 61 cents per share, due in part to Cisco's outperformance
of analyst expectations. In September 2017, Chambers announced that he would step down
from the executive chairman role at the end of his term on the board in December 2017. On
December 11, 2017, Robbins was elected to succeed Chambers as executive chairman while
retaining his role as CEO, and Chambers was given the title of "Chairman Emeritus."
On May 1, 2018, Cisco Systems agreed to buy AI-driven business intelligence startup
Accompany for $270 million. As of June 2018, Cisco Systems ranked 444th on Forbes Global
2000 list, with $221.3 billion market cap
Cisco acquisitions:-
Cisco seeks acquisitions where there is not only a strong business case but also a shared
business and technological vision, and where compatibility of core values and culture foster
an environment for success.
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12 12 12
9 9 10 10
8 7 7
6 6 5 5 6 6 6 6 6
3 4 4
1 2 1
3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9
1 99 1 99 1 99 1 99 1 99 1 99 1 99 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 00 2 01 2 01 2 01 2 01 2 01 2 01 2 01 2 01 2 01 2 01
Cisco focus on acquisitions Strategy to bring new technologies and business model to cisco
( cisco acquired about 205) and Cisco segments acquisitions into three categories: market
acceleration, market expansion, and new market entry. The benefits ( including great talent
and technology, mature products and solutions
Vision: -
Changing the Way We Work, Live, Play, and Learn
Mission: -
Shape the future of the Internet by creating unprecedented value and opportunity for our
customers, employees, investors, and ecosystem partners.
Enterprise networks:
Products in this category are Cisco's range of routers, switches, wireless systems,
security systems, WAN acceleration hardware, energy and building management systems
and media aware network equipment.
Collaboration
IP video and phones, TelePresence, HealthPresence, unified communications, call
center systems, enterprise social networks and Mobile applications,
Datacenter and Virtualization
unified computing, unified fabric, data centre switching, storage networking and cloud
computing services.
Small businesses
Routers and switches
The machines that route and redirect packets across a network, including those for networks of smart
meters.
Wireless
Indoor Wi-Fi Access points, Wireless Controller
Home user
"Home user" refers to individuals or families who require networking services in the home.[9]
Broadband
Broadband refers to cable modems.
Flip Video
With the acquisition of Pure Digital Technologies, Cisco began to sell a line of video-recording devices called
"Flip Video" that had been Pure Digital's only line of products. This line of products was not as popular as
Cisco had thought it would have been, and on April 12, 2011, Cisco announced they were discontinuing
all Flip camera production. Cisco's product line, video conferencing for the home, also proved to be a short-
lived bid for the consumer multimedia market and sales were discontinued.
Cisco UCS C-Series Rack Servers (C460 M4, C240 M4, C220 M4, C480 M5, C240 M5, C220 M5), [15]
Cisco UCS Fabric Interconnects (6200 series, 6300 series),
VPN/Remote Connectivity
Cisco AnyConnect Secure Mobility Client
Cisco Systems VPN Client, for connecting to virtual private networks
Clean Access Agent, Cisco NAC Appliance
Other
Cisco Active Network Abstraction
Cisco Fabric Manager
Data Center Management and Automation—Cisco Intelligent Automation
Cisco Tidal Enterprise Scheduler, a job scheduler
CiscoView
CiscoWorks Network management software
Cisco Eos, a software platform
Packet Tracer, didactic network simulator
Cisco Network Magic Pro
Cisco Security Manager
Cisco Security Device Manager (SDM)
Cisco Security Prime Device Manager
Cisco Prime Infrastructure
Competitors: -
In 2015 Cisco’s penetration rate in routers, switches, HW firewalls, and WiFi equipment was
still as high as 80.5%. Since then, it has dropped by at least 2 percentage points every year.
The penetration rate in networking equipment by HPE, inclusive of Aruba Networks, has also
declined annually since 2012 (38.8% in 2012, compared with 38.1% in 2018). The penetration
rate of the number four player, Fortinet, rose to 6.5% during the same period. As a result,
Dell EMC dropped out of the top four for the first time.
Switches
When we zoom in on the various types of networking equipment, it turns out that half
(54.5%) of all switches are Cisco switches, and 30.2% are HPE/Aruba switches. Avaya rounds
off the top 3 with 7.5%. All other brands do not exceed 2%.
Routers
The same two players dominate the router market as well,
with Cisco as the undisputed market leader (76.4% of all
routers) and HPE/Aruba in second place (14.3%). Juniper (3%)
is the only other player that scores above 1%.
Hardware firewalls
Hardware firewalls are the least encountered elements among
the inventoried network components. The picture here is more
diverse. Cisco tops the list once again (32.2%), with Fortinet in
second place for the first time (15.7%), at the expense of Juniper
whose share of hardware firewalls has dropped from 21.2% in
2013 to 9.8% in 2018. Dell EMC (8.8%), Palo Alto Networks (7.6%),
Sophos (5.5%), Check Point (4.8%), Watchguard (4.0%),
Barracuda (2.7%) and Zyxel (1.9%) round off the top 10.
WiFi
Cisco is also number one when it comes to WiFi equipment, with
52.5% of the installed wireless equipment in the Netherlands.
Aerohive has registered a sharp increase in market share since
last year (from 4.6% to 10.7%) to occupy third place, with
HPE/Aruba (17.5%) at number two, thanks to the good
performance of the Aruba Networks component. Juniper’s
market has nosedived from 10.6% to 2.2%.
Industry overview
• According to the International Data Corporation (IDC) Worldwide Quarterly Cloud IT
Infrastructure Tracker, vendor revenue from sales of infrastructure products (server,
enterprise storage, and Ethernet switch) for cloud IT, including public and private
cloud, grew 48.4% year over year in the second quarter of 2018 (2Q18)
Top Companies, Worldwide Cloud IT Infrastructure Vendor Revenue, Market Share, and
Year-Over-Year Growth, Q2 2018(Revenues are in Millions)
2. HPE/New
H3C $1,665 10.8% $1,389 13.3% 19.8%
Group**
Worldwide mobile app revenues in 2015, 2016 and 2020 (in billion U.S. dollars)
This statistic presents information on the projected mobile app revenues from 2015 to 2020.
In 2015, global mobile app revenues amounted to 69.7 billion U.S. dollars. In 2020, mobile
apps are projected to generate 188.9 billion U.S. dollars in revenues via app stores and in-
app advertising.
Data protection as-a-service market is expected to grow from USD 7.6 billion in 2017 to USD
28.2 billion by 2023, at a compound annual growth rate (CAGR) of 24.53% during the forecast
period. Growing concerns related to critical business data loss and the changing governance,
risk, and compliance regulations for data storage in organisations drive the demand for data
protection as-a service market.
Global Cloud Network Security Market: Growth, Trends, and Forecast (2018-2023)
The Cloud Network Security Software Market was valued at USD 6,587.2 million in 2017, and
is expected to reach USD 14,450.5 million by 2023, at a CAGR of 14.2% over the forecast
period (2018-2023).
PESTLE analysis:
Political Factors that Impact Cisco Systems, Inc.
Political factors play a significant role in determining the factors that can impact Cisco Systems, Inc.'s
long term profitability in a certain country or market. Cisco Systems, Inc. is operating in Networking
& Communication Devices in more than dozen countries and expose itself to different types of
political environment and political system risks. The achieve success in such a dynamic Networking &
Communication Devices industry across various countries is to diversify the systematic risks of
political environment. Cisco Systems, Inc. can closely analyze the following factors before entering or
investing in a certain market-
Political stability and importance of Networking & Communication Devices sector in the country's
economy.
Type of economic system in countries of operation – what type of economic system there is and how
stable it is.
A firm should not only do technological analysis of the industry but also the speed at which
technology disrupts that industry. Slow speed will give more time while fast speed of technological
disruption may give a firm little time to cope and be profitable. Technology analysis involves
understanding the following impacts -
Before entering new markets or starting a new business in existing market the firm should carefully
evaluate the environmental standards that are required to operate in those markets. Some of the
environmental factors that a firm should consider beforehand are -
Weather
Climate change
Laws regulating environment pollution
Air and water pollution regulations in Networking & Communication Devices industry
Recycling
Waste management in Technology sector
Attitudes toward “green” or ecological products
Endangered species
Attitudes toward and support for renewable energy
Anti-trust law in Networking & Communication Devices industry and overall in the country.
Discrimination law
Copyright, patents / Intellectual property law
Consumer protection and e-commerce
Employment law
Health and safety law
Data Protection
SWOT Analysis
Strengths of Cisco Systems
Distribution and Reach: Cisco Systems has a large number of outlets in almost every state,
supported by a strong distribution network that makes sure that its products are available
easily to a large number of customers in a timely manner.
Cost Structure: Cisco Systems’s low cost structure helps it produce at a low cost and sell its
products at a low price, making it affordable for its customers.
Dealer Community: Cisco Systems has a strong relationship with its dealers that not only
provide them with supplies but also focus on promoting the company's products and
training.
Financial Position: Cisco Systems has a strong financial position with consecutive profits in
the past 5 years, along with accumulated profit reserves that can be used to finance future
capital expenditures.
Cisco Systems has a large asset base, which provides it with better solvency.
Return on Capital Expenditure: Cisco Systems has been successfully able to generate positive
returns on the capital expenditure it has incurred on various projects in the past.
Automation: of various stages of production has allowed the more efficient use of resources
and reducing costs. It also allows for consistency in quality of its products and provides the
ability to scale up and scale down production as per the demand in the market
Internal Weaknesses 0
Increasing adaptability of
0.15 4 0.6
cloud security solutions
• Comparative advantages
0.1 2 0.2
of host country
Threats
Intense Competition 0.1 5 0.5
Uncertain global
0.1 3 0.3
economy
Infrastructure quality in
Networking in hosting 0.05 2 0.1
countries
TOWS matrix
Strengths Weaknesses
1. Internet users are increasing Increase marketing to attract Finance ownership of the property
around the world. E- consumers to spend (S1, S3, O3). through low interest rate to
commerce is also growing Use its presence on social media increase the proportion of owned
with the increase in internet for marketing and to attract property to rented property (W1,
usage. customer towards its website O5).
2. Social media users are (S5, O2, O3). Increase payrolls, provide incentive
increasing worldwide. Develop environmentally friendly packages and benefits to
3. Household income is products through innovation, at a employees to reduce turnover and
increasing and so is the low cost so that they could be improve work morale. This could
consumer spending. Inflation sold at a low price (S2, S4, O4). be possible as costs are low
in the economy is expected Market products at low prices by currently. (W3, O3)
to remain low. offering discounts. This would
4. Growth in environmentally help increase sales in volumes
friendly products and and is feasible due to low
services. Government is inflation and cost (S2, O3).
offering subsidies on these.
5. Interest rates are low, which
provides an investment
opportunity for large
projects.
1. There is a threat of new Use a strong distribution network Increase spending on research and
entrants coming into the to reach out to customers and development to enable Cisco
market. fight off new entrants into the Systems to better compete with
2. The exchange rate has been market (S1, T1). competition (W2, T4).
devalued. Use its strong financial position Provide incentives, increase
3. Fuel price has risen in recent to invest in intellectual property engagement, or provide a better
years making inputs rights. This would help compete work environment to retain talent.
expensive. with increasing competition in This will ensure that employees
4. Competition within the the market (S3, T4). don’t leave and join competitors
industry is increasing. Use its innovative teams to find (W3, T4).
5. More substitute products are cheaper alternatives to fuel so
now available. that these could be used, thereby
reducing costs (S4, O3).
Functional strategy
• Operation Strategy:
• Operations in developing countries.
• Implementation phase to create CISCO Academy.
• Financial Strategy:
• Utilize part from out annual revenue to create the subsidiaries in the
developed countries and to establish CISCO Academy.
• HR Strategy:
• the structure of the new subsidiaries and the manpower needs.
• the best calibers in the market to CISCO Academy.
• In house implementation for the Training and development function.
• Marketing strategy:
• Conduct market research to open new markets worldwide.
• Procurement strategy:
• Conduct long term deals with the suppliers to offer the company with its
needs with the best price.
• Prepare a new supplier list.
• Logistics Strategy:
• Prepare the transportation strategy to transport the material and products.
Action plan:
Goal Objective Action plan Time frame
Establish Promote the global 1-Prepare for a big Within three year
CISCO branding and became market campaign for
Academy the source of the Academy by
innovation ideas in the marketing team.
industry.
2-Hire qualified
professors from CISCO
retired staff.
6- https://www.businesswire.com/news/home/20181218005415/en/Global-Cloud-
Network-Security-Market-Growth-Trends
7- http://fernfortuniversity.com/term-papers/pestel/nyse4/3455-cisco-systems--
inc-.php
8- https://www.smartprofile.io/analytics-papers/ciscos-share-in-networking-
equipment-continues-to-decline/
9- https://www.essay48.com/term-paper/12661-Cisco-Systems-Swot-Analysis