Monday, December 6, 2010

Research Paper on CISCO

Research Paper on CISCO System

Cisco Systems was founded in 1984 by a group of computer scientists, Leonard Bosack and Sandy Learner, a husband and wife team, both from Stanford University. Together, they designed a new networking device that made it easier for computers to exchange and share data. Their plan was to integrate this technology into local area and wide area networks. Cisco's original customers were universities, the aerospace industry and government agencies. Today, Cisco Systems has expanded its target market to large enterprises, service providers (SP) and small to medium businesses. In 1986, the company shipped its first multi-protocol router, which generated revenue of $1.5 million in 1987. By 1998, the company had invested in part of Asia. Cisco was the largest networking company in China achieving a year on year revenue growth of over 100% for two consecutive years. In addition, Cisco transformed itself, by using its own technology, into a leading example of a globally networked business.

Current Performance

Cisco Systems Inc. (CSCO), the Nasdaq's most active stock, sells 39 cents to $16.18, erasing earlier gains. Lehtman Brothers said, "Cisco, the world's largest maker of gear that powers the Internet, may benefit from a possible pickup in spending on information technology by large corporations in March. "With unease ahead of the second-quarter reporting season technology stocks were likely to remain soggy with little headway made by networking giant Cisco System in Europe on Tuesday March 26, 2002". Reuters.

Today, Cisco Systems is the world's leading supplier of data networking equipment and software for the Internet. Its products include routers, switches, access equipment and network management software that allow data communication among geographically dispersed computer networks. Cisco has emerged as one of the most admired companies in the world. Currently, Cisco Systems is showing signs of stabilization. As of March 26, 2002, Cisco's stock price is $16.82 with an average rank for risk. Furthermore, it has a three star rating in the S&P 500 index. The company has earned strong ratings growth (B+), profitability (A-) and financial health despite the volatility of the market. Cisco is currently in a strong position to overcome financial difficulty (S&P Stock reports: Since 1998, Cisco stock has had market fluctuations. The company's price per share was at its lowest in 1999, averaging $14. The highest price was in 2000 when Cisco's shares went soaring up to about $60. This year, Cisco's stock has declined to nearly $17 per share. However, analysts predict that because of Cisco's revenues, strategies and innovations, the company will continue recovering and regain the valuable stock price it once had (S&P Stock reports:

Net sales for the second quarter of fiscal 2002 were $4.8 billion, a sequential increase of 8% from the 4.4 billion in net sales for 1st quarter of fiscal year 2002. This compares to $6.7 billion in net sales for the same period last year, a decrease of 29%. Pro forma net income was $664 million or $0.09 per share for the 2nd quarter of fiscal year 2002 compared with pro forma net income of #332 million or $0.04 per share for the 1st quarter of fiscal 2002 and $1.3 billion or $0.18 per share for the 2nd quarter of fiscal 2001.


The first Chairman of the Board was John P. Morgridge, who established a culture at Cisco that stressed frugality and rapid, ongoing innovation. A year after Cisco's IPO, he hired John T. Chambers as Senior Vice-President of Worldwide Operations. Mr. Chambers had been President and CEO of Cisco System Inc. since 1994. He led the company through a period of huge business expansion in the face of strong competition. Mr. Chambers' personal and corporate business philosophy remained customer-oriented. For instance, Cisco's primary mission is to "deliver end-to-end, Web-enabled and E-business enterprise solutions that improve a company's ability to compete or gain competitive advantage in their markets." In 1992, Cisco expanded its mission and assured that it would "deliver a high level of customer satisfaction and customer centric approaches to problem solving." (


Due to the slowing US economy and a weakened telecommunications demand, recent results have reflected a significant change in Cisco's revenue and earnings momentum. However, Cisco believes it is well positioned and can complete many of its desired objectives. The company focus is on providing its customers with the best service and product available.


Therefore, to continue serving their customers, offering the latest technology, and achieving profitability, Cisco has established the following objectives:
1) Making Cisco's integrity high;
2) Helping customers increase their competitive advantage and profitability via their networks;
3) Continuing to improve Days Sales Outstanding, which is the average time an invoice remains outstanding prior to payment;
4) Create mutually beneficial relationships with customers and partners enabling both parties to operate more efficiently and respond to market changes more quickly;
5) Promptly deliver high-speed data, voice, video, and business services over broadband cable and the Internet.

Company Resources

Over the last decade, Cisco has enjoyed enormous growth in the marketplace, expanding from a small, startup company to an industry leader with over $22 billion in revenue. They supply about 75% of routers around the world. This is a very impressive take on a very tough market. The company has grown thanks to vital resources such as Financing, Marketing, Research and Development, Human Resource Management and Information Systems. The company has carefully studied and enhanced these resources to run the most efficient company possible.

Their most important resource for expansion is their financing department. The company has a long history of careful risk-taking and solid execution in the financial market. They have successfully produced the best or second best product in 21 different market areas. In order to take control of such vital markets, it takes aggressive and profitable investments. Although the company has been extremely profitable, they do recognize that fiscal year 2001 was different and more difficult than any other year in their history. Cisco had to deal with these challenges by reducing capital spending as well as its workforce and inventory. However, the company realizes this economic difficulty and is committed to being decisive and addressing issues quickly. So, Cisco has moved quickly to focus on their customers and on areas they can influence and control such as market-share gains, growth opportunities in emerging markets, profit contribution, IP technology and product leadership.

For fiscal year 2002 quarter ending 1/26/2002, the company reported net income gains of $660 million, an increase compared with net income loss of $268 million in fiscal year 2002 quarter ending 10/27/2001. They have a separate accounting standard that is not accepted by GAAP, but they find that this more accurately reports their financial information. They call this Pro-forma income. Their Pro-forma income was $664 million for fiscal year 2002 quarter ending 01/26/02, compared with Pro-forma income of $332 billion fiscal year 2001 quarter ending 10/27/2001.

One strategy that has helped Cisco grow is mergers and acquisitions. The company has successfully taken over about 50 companies in the last couple of years alone. Regarding the company's purchases and acquisitions in 2001 and 2002, the actual results to date have been consistent, in all material respects, to the ones the company had forecasted before the acquisition. This shows that Cisco has done a great job of researching and making extensive studies that have succeeded. Their acquisitions have also created much goodwill through the purchase of intangible assets. The assumptions made by the company before the acquisition primarily consisted of an expected completion date for the in-process projects, estimated costs to complete the projects and revenue and projected expenses. Amortization of goodwill and purchased intangible assets included in operating expenses was $136 million for fiscal year 2002 ending 2nd quarter, compared with $1.05 billion in fiscal year 2001. Amortization of goodwill and purchased intangible assets primarily relates to various purchase acquisitions. In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS142). SFAS142 requires goodwill to be tested for impairment under certain circumstances and written off when impaired rather than being amortized over a specified time period. This can have a very big impact on their financial statements and on their operations.

Cisco's financial strategy is to keep away from debt. They have done so successfully by having their long-term debt to equity ratio at zero. This has greatly benefited the company, as it does not have any interest expense. They also keep a large sum of cash available that helps them cope with the struggling economy. This also helps them to stay solvent and to be able to cope with any surprising events such as September 11, 2001. Another strategy the company uses is to re-invest their monies aggressively to increase their return on investment. Net losses realized on investments were $858 million in fiscal year 2002, compared with gains of $190 million in fiscal year 2001. The decrease was primarily due to the market price volatility of the company's publicly traded equity investments.

The primary resource the company has is their human resource strategy. The company's main strategy is to put their employees at the top. At Cisco, they realize that the employees are their number one assets, so they spend massive capital and resources to hire and keep their employees. Apart from offering all types of employee benefit plans, they also offer them extensive training. They make sure that their employees have a certain amount of training per year. Depending on the employee's level of experience, the trainings usually range in the 80-hour per year range of continuous education. They do this to make sure their employees are up to date on all new technologies so they can further develop new or enhance current technologies. The company also encourages leave of absence if needed by the employee. Cisco prefers to give their employees time off rather than have employees with their minds on other matters. They even offer financial planning so their employees can make the most of their salary; savings plan and 401K planning are among the services Cisco offers. The starting professional at Cisco starts at $53,500 out of college. Even their administrative employees make $41,500. This shows that they reward their employees with higher salaries than other corporations.

Just one of the many accomplishments the company has is that they are number three in Fortune's top 100 companies to work for. This is a very prestigious award. Apart from all of the great benefits the company offers, Fortune Magazine found that the company paid sixteen million dollars for a nursery for its employees. This nursery care for up to 400 kids and is even equipped with web cams so that the employees can watch their kids while they work.

The company should work on one of their deficiencies, which is that only 25% of their employees are women. This might be a key problem area as they might possibly get into lawsuits because of the large gap between males and females. However, the company does have a good ratio of minorities at 38% and voluntary turnover is very low at 6%. This shows the high quality of work life that the company dedicates to their employees.

Cisco does not particularly spend much on mass marketing. Their marketing strategy mainly focuses on making the best web site possible to market and sell their products. They do this because 85% of their sales are through the Internet. As a result, they do not need an aggressive marketing campaign as most of their customers simply log on and purchase on their web site.

Cisco's ability to address these opportunities stems from their expertise in the Internet and its lingua franca - the Internet Protocol (IP). Their superior technology lets them advance into these areas. These new applications and business models require an investment in infrastructure to create the right conditions for wide-scale business and consumer use. Cisco calls these "tornado" markets, which can be described as a rapid uptake of cutting-edge products to larger markets.

Cisco also occasionally goes into joint marketing ventures with other companies. In 1993, Cisco and Microsoft Corporation announced they would go into a strategic marketing agreement designed to offer large customers the most comprehensive "desktop-to-enterprise" network computing and communication solution on the market. This was part of Microsoft's Solution Provider program. The two companies went on to promote a solution that combined the Windows NT Advanced Server with a remote access, integrated PC-based router card from Cisco. This joint marketing campaign was very successful and helped propel Cisco to the forefront of the Internet market.

Cisco also stays ahead of the wave of innovation through a combination of world-class engineering resources, partnerships and the technology they acquire. This hybrid allows Cisco to be innovative with new applications, business models, and infrastructures that will give them the competitive edge. Over the years, Cisco's innovative spirit has resulted in the development of key Internet technologies such as IPv6, quality-of-service (QoS) over IP, Multi-protocol Label Switching (MPLS), Dynamic Packet Transport (DPT), and data-over-cable technologies. They have an award given to their top team of engineers called the Pioneer Technology Award program, which recognizes the contributions of the teams that drive the development of innovative products and core technologies to a new level of excellence. This is just one of the creative ways the company promotes and encourages research and development. As a result of Cisco's initiative towards Research and Development, this year, the company spent 17.6% of their revenues on Research and Development. In comparison, Lucent Technologies, their largest competitor, spent 11.2% of their revenues on Research and Development


Cisco's commitment to IP (Internet Protocol) technology and product leadership is shown through their broad solutions for next generation networks. They pursue the majority of their product development with internal efforts, acquisitions, and partnerships. Cisco uses these as insertion points in new markets. To obtain the latest technologies, Cisco has acquired many companies such as StrataCom, Ceremont Corp, Monterey Networks and Purcelli Systems. All of these companies are the top makers of high speed ATM and Frame Relay Switching Technologies. Cisco's partnerships include IBM, Oracle, Hewlett Packard and Microsoft. The alliance with these companies is created to accomplish growth and market share.

The firm's internal focus on improved operation is balanced with a willingness to invest in emerging growth market opportunities. While many of Cisco's competitors are retrenching, the company is taking calculated risks on innovation. For example, the company is taking on the IP telephony and security markets, both of which have the potential to be billion-dollar businesses for Cisco. Not many companies are willing to try new markets. But, Cisco's formulated strategy to endeavor new innovation can earn them $40 billion by 2004.

Cisco also began an initiative to reshape its culture by taking on new projects. The firm's current corporate philanthropy focuses on fairness, integrity and returning to the community. The Nobel/Cisco Internet Initiative focuses on how to exchange technology and innovation across the board. It will also help the Internet infrastructure by maintaining the Nobel Library.

The Community Fellowships Pilot programs, employees affected by job cutbacks, help non-profit groups use technology to deliver services to these employees more efficiently. Cisco's on site childcare is an employer sponsored childcare facility. Parents can watch their children through IPTV (Internet Protocol TV) and can track them with a network system that is within the daycare.


Cisco has many policies for all types of processes to help them abide by the rules and regulations of the government or governments. At the same time, the company gives its shareholders and customers added security against illegal transactions. Cisco has focused mainly on and enforced policies and regulations in financial business transactions and Internet (Website) usage.

Cisco's capital transaction processing groups have been making a lot of changes over the past few months to better serve customers and partners. Many policies have been implemented to provide great customer service and accurate lease documentation. For example, Cisco has to make sure a transaction can be financed before making commitments and requires customers to sign Capital Lease Documentation before equipment orders or services can be financed to ensure that no fraud will be committed against the firm or it's partners.

The most important policy that Cisco focuses on is its Internet accessibility. Thousands of users utilize Cisco's website for various purposes. For this reason, the firm has implemented policies for it's website and forums that defines what users are responsible for. Cisco's forums are intended for discussion of business and technical issues. They are not provided for customer service inquiries, questioning Cisco business decisions or asking about unreleased products. This requires the participants in forums and the users of the Website to cooperate fully and to meet each other's expectations for appropriate behavior. Use of any interactive areas of Cisco's Website constitutes acceptance of these legal terms and conditions.

In providing its community forums, it is Cisco's intention to maintain an informative and valuable service that meets the needs of its users and is free from verbal abuse, violations of privacy and other harmful activities. Cisco prohibits posting of threatening, libelous, defamatory, obscene, pornographic, or other material that would violate any law. There will be no posting of any information that may infringe upon or violate any third party's intellectual property rights (public or private). No material can be posted or sent that contain any viruses, Trojan horses, worms, time bombs, cancel bots or other computer programming routines that are intended to damage, detrimentally interfere with, intercept or expropriate any system, data or personal information, or which is materially false, misleading or inaccurate. Cisco forums are not to be used as a solicitation for business. (

Cisco welcomes users participation in their online communities. However, in so participating, the user is solely responsible for their content or other information they distribute, post, include, [link to] or otherwise upload to the Website. The user agrees that Cisco is only acting as a venue and that Cisco has no liability related to the content of any forum posting or any other user-created content on its Website. The user should assume that everything hosted on the Website is the intellectual property of Cisco and their suppliers. All rights to this information are reserved. All reproduction, total or partial, of the contents of the Website by any means whatsoever and without the written consent of Cisco is illegal.

Cisco and their suppliers do not guarantee continuous or uninterrupted access to the website or any forum and make no warranty as to the operation, functionality, or availability of the website, or that the website will be error-free, or that defects will be corrected. Any action or proceeding arising from or relating to these terms and conditions must be brought in a federal court and the user must irrevocably submit to the jurisdiction. Cisco will treat any feedback or suggestions the user provide them as non-confidential and non-proprietary. Thus, the user must not submit confidential or proprietary information to the firm unless they have mutually agreed with it in writing. Both Cisco and the user will be cooperative with each other.

Corporate Structure

At present, Cisco Systems has a centralized corporate structure and is organized on the basis of functions and geography. All orders come from the corporate headquarters in San Jose, California, but regional managers are empowered to make important, relevant business decisions. Cisco Systems is present in over 72 countries around the world, including England, Australia, and Belgium. With such a large and diverse reach, Cisco Systems headquarters must always be in constant communication with their regional mangers. This is one reason how Cisco Systems always manages to stay one step ahead of the competition and pride itself at being an innovative company. Cisco Systems is organized on a functional and geographic basis. They split the company into USA and International sections. Then, they are structured functionally: finance, marketing, operational, corporate, etc. This system works best for Cisco because they have global products, meaning that a product you might purchase in Texas will be the same exact product in China. Cisco does not need to worry about manufacturing their products differently for different regions of the world. This fact allows them greater efficiency and marketability.

The corporate structure, which Cisco Systems operates, is clearly understood by everyone in the corporation. Cisco makes it a point that every employee is knowledgeable about the corporate structure of the company. Also, Cisco makes it a point to make sure that its structure is consistent with current corporate objectives, strategies, policies, and programs, as well as with the firm's international operations. Cisco's domestic and international public policy agendas are in line with their global objectives, which consist of the following: empowering citizens, investing in knowledge, promoting innovation and accelerating the deployment of broadband. Cisco's International Government Affairs role is to track pertinent legislation and rules and be available for heads of state, members of legislature, regulators, ministers and their staffs. Cisco looks forward to being available for listening to, consulting with, and advising governments on the impact of the Internet Economy.

Different corporations apply different strategies when it comes to corporate structure. The strategy that they take depends on what is more cost efficient and strategically viable for them. Within this high tech industry, companies also take different approaches to corporate structure. When looking at one of Cisco Systems' main competitors, Lucent Technologies, one can see many similarities. Both companies are centralized with empowerment roles in different regions and both companies have a functional breakdown of their activities. This might be one reason why these two giants are the leaders in their industry.

Corporate Culture

The collection of believes, expectations, and values learned and started by corporation's members and transmitted from one generation of employees to another is called corporate culture defined by the book. The culture generally reflects on the values of the originator and the firm's operation. One of the main contributors is John Chambers, CEO and President since 1994, who corporate the Cisco Systems' surrounding. John Chambers united his personal philosophy with Cisco Systems' corporate culture. He believed that "the two things that get companies into trouble is that they get too far away from their customers and too far away from their employees." The establishment of Cisco's culture stressed rapidly together with the outlook of its vision and mission statement.

The mission statement of Cisco's is to shape the future of the Internet by creating extraordinary values and opportunities for employees, customers and partners. John Chamber dedicated himself to Cisco System to put customers and employees first. The company's philosophy is to pay close attention to customer's request of all technological alternatives to provide options for customers. Cisco, is one of the companies that focuses primary on the concerns with the quality products and service where it affects their loyalty to customers. Furthermore, this philosophy aids Cisco is opportunity to be ahead of its competitors and gain the trust of their customer's confidence. Cisco is also adaptable to changes in economy as well as technological advances. As it is stated, Cisco knows their strategies are extremely important to be successful.

The future growth of Cisco System doesn't lie within the United States; however, it expanding to oversea markets. The outlook of corporate culture intertwines with the company's outlook towards growth aspirations, innovation, productivity, and customer loyalty. Accordingly, the customer satisfaction and technology innovation, Cisco Systems becomes the worldwide leader in network infrastructure.

Cisco provides many charitable projects throughout the United States and across the world. The making of Cisco's employees calls for a well diversity skilled employee. Cisco's employee consists of well-trained employees, which allows them work in various countries. The consistent involvement of Cisco's operation by its working forces is part of its corporate culture. Thus, Cisco to take consideration of diverse cultures where they operate and provide the leadership in helping companies foreign adjustment to the "culture shock" of transferring to another country. Cisco is dedicated in trying to ease the work of the employees. Therefore, with this reason, Cisco Systems has become a leader of technological advances.


Cisco Systems concentrates mostly to provide customers with the latest technology and service solutions as mentioned before. One of the biggest strengths of Cisco Systems is their culture and their employees. The company itself provides the ability for changes in technology similar to environmental changes with quick reactions. John Chambers retort with "good teamwork requires a single point of decision-making to effectively share resources and allocate them to profitable growth areas". Furthermore, Cisco provides assistance for their employees with training and certification if interested. Allowing the employees to empower themselves and at the same moment to be efficient in the work place. For example, to facilitate their employees work performance, Cisco creates an intranet website to allow them to fulfill their task more proficiently is called the Cisco Employee Connection (CEC). This website can be asses by all the Cisco employees with similar information simultaneously through networking regardless of location. The primary mechanism decreases the company's communication cost and time to market.

Similarly, the relationship between Cisco's employees and its partners and suppliers are equivalent to one another. For instance, Cisco has a Partner-Initiated Customer Access (PICA) program. This program PICA provides the partner to help their customers with "real time" access to the latest software releases. At the same time, the program is contributing assistance to Cisco and its partners to expand their customer satisfaction and loyalty. In addition, the beginning of global network companies, Cisco relies successfully on their partnership with suppliers. For that reason, the company creates the Cisco Supplier Connection (CSC). With this program it enables the suppliers and manufactures to dial Cisco Systems' to allow them to use this connection to reduce in order for the fulfillment cycle. Within the suppliers, they could assemble the parts needed from stock and shipments are shipped to the customers. Therefore, Cisco has gained real time access to supplier's information and the experienced lower business cost in the processing orders.

Moreover, the company developed the "Eleven technology" group to replace the line of business structure formed in August of 2001 by Centralization in Engineering. These customer requirements are profitable opportunities in the future. The Eleven technology groups focuses mainly on technology areas are access, aggregation, Technologies Division, Internet switching and service, Ethernet access, network management services, optical, core routing, storage, voice, and wireless. Cisco is the only company that meets these demands across the customer segments with additional network requirements. It provides the company's awareness with today's customers of their product to a more business divisions. Additionally, they want the network to be seamless and to have a transparent integration in Internet, extranets, and intranets.

Cisco is known as the innovative leader for powerful range of intranet and Internet products, for instance, primarily routers, switches, and related services. As of today, the company is one of the leaders of Internet networking leaders of the world. Since the beginning, Cisco has become rough; however, Cisco has maintains and manages the engineers to prominent in advancing the development of IP. It is the basic language to communicate over the Internet and in private networks. Still Cisco is continuing to improve its products and technology to raise the market target to be the best Internet solution ever. These new technologies that the company is currently working on include the following: advanced routing and switching, voice and video over IP, optical networking, wireless, storage networking, security, and content networking. With Cisco's commitment to its customers by helping their organizations of all sizes becomes more responsive and the maintenance is more competitive in the new era of Internet economy.

Nevertheless, Cisco provides a wide range of variety of products to its customers. Recently, the company considers as one of the products leaders in its industry. Consistent with the company, their objectives is to make the world a safer and more secure place for business networks. The dominant supplier for this network switches and routers are planned for an introduction to the market as a new security product called SAFE Blueprint for IP telephony. It is designed to be enhanced versions of the PIX 506 and 515 firewall platforms increase firewall throughput two-and-a-half times. According to the it's own lab reports, while the new 6.2 software version of Cisco's PIX operating system enables highly scaleable VPN deployments. It is a good think how Cisco introduces this product to the market because since the businesses worldwide have lost around $2 trillion last year because of security breeches, virus attacks and related downtime. Further, Cisco and Internet Security Systems sell the most intrusion-detection systems each around 25% of the market. The effort of Safe blueprint for IP telephony is intended to make the company a full service provider for business security needs.

Yet, Cisco at its beginning has had substantial growth that led the company containing a competitive advantage. While today, the company has control three-fourth of its global market to put Cisco at an envious position to its competitors. The company has already expanded its office through out the 72 countries employing approximately 37 thousands workers. Furthermore, the intentions of Cisco is growing as well as improving its products and technology for the next generation. Even though the company's consistency is well globally, it faced with decline in its earnings as well. There are many factors to cause this declination in its profits however; the introduction of the new products will increase the rapid growth and acquisition of the company this year.


Cisco is a networking provider, but they have recently upgraded to becoming a service provider. By becoming a service provider Cisco would be able to provide its customers with many different services. They will be able to offer their products and services such as the Internet to their customers. The only disadvantage to this is that they will have to implement the system making them open to problems that may occur during the implementation.

In order to provide its customers with better service Cisco has developed an integrated product service. The only disadvantage to this is that its leaves them vulnerable to hackers. Many believe that the problem with having a single vendor product line is that if a hacker does penetrate through to the company's security than they will be able to get through the entire system.

The company has recently switched from a structure business to a more centralized one. This may be an advantage in the long run, but currently it may hurt them due to the changing of executives and management. Many employees may have a hard time adapting to these changes in polices and procedures.

With today's economy Cisco systems must learn to adapt to the changing market that we are facing. The current market is at an all time low, but it is slowly increasing which makes Cisco vulnerable to competition and the other external factors.


Recently unemployment has quickly risen making the present economy hard to adapt to. With the pressure of meeting expectations for each quarter many companies just like Cisco have been forced to implement job cuts. The United States GDP has fallen in the past year as well. More and more people are not spending their money and it's tended to tighten up the entire economy. With the increase of gas prices many corporations just like Cisco have had an increase in operations of their products. The majority of these costs come from suppliers delivering materials and products to potential buyers and customers. With this increase in gasoline prices Cisco has been directly affected on materials, and products being not only shipped but also manufactured for the company.


Recently Cisco has introduced many new products to the industry and they are constantly working on developing other products. For example some of the new technology that they have introduced include: The Cisco 1721 Modular Access Router. The Cisco 1721 router is a modular access router with an integrated 10/100 Fast Ethernet port and two WAN Interface Card (WIC) slots that support a wide array of WAN access technologies. The Cisco 1721 router is an enhanced version of the highly successful Cisco 1720 router providing higher-performance, additional functionality, and increased memory capacity over the Cisco 1720 at the same price. It also supports standards-based IEEE 802.1Q VLAN routing that enables enterprises to route between multiple VLANs for added security in an internal network. Targeted at enterprise small-branch-offices and small- and medium-businesses, the Cisco 1721 provides business-class security and DSL, and the flexibility and versatility required to meet their customers changing network requirements. Cisco was also pleased to announce the new Catalyst 4006 Supervisor Engine III. Which delivers an extensive feature set including enhanced control of converged voice, video and data networks for Enterprise and Metro Ethernet customers.

Cisco Systems also announced a new extension to the; Cisco 7300 Series Internet Router with the delivery of the T3 line card, OC-12 line card, and new IOS and PXF-accelerated feature enhancements. The Six-port T3 Line Card provides the interface density necessary for cost-effective deployment of the Cisco 7300 as a network edge aggregation router in tier 2 and 3 service provider POPs.

Opportunities & Threats in the Industry

At the present time Cisco is the leader within the industry. However while the economy is in a recession, competition such as Juniper Networks can create fierce competition and may force price wars within the industry. By being the largest corporation within the industry Cisco is vulnerable to the smaller corporations having less costs associated with running a business.

Rivalry amongst competition within the industry has an everlasting effect on Cisco systems. The two main competitors amongst Cisco are Lucent Technologies and Nortel Company. Even though these companies are not equal in size or market share they still pose threats to the company. In order for companies to gain a competitive advantage from their competitors, they must create value for the customer. This value can range from quality of the product to providing selected services to the customer. For these reasons Cisco is trying to create better customer service. The company is focusing on helping its service-provider sector in an effort to increase that part of the business.

Cisco has also actively supplemented internal development efforts with partnerships, strategic investments, and acquisitions to offer their customers a broad range of solutions in networking for the Internet.

Their strategic alliances are designed to help deliver a customer-centric, total solutions approach to solving problems, exploiting business opportunity, and creating sustainable competitive advantage for their customers. Their shared commitment to deliver solutions and services, encompassing products, applications, systems integration, and best practices, will help make their customers successful as globally networked organizations in the new economy.


To summarize in a nutshell where Cisco stands, it is important to look at some of their strategic factors. The reason that Cisco has been able to do so well and be in a position where they are the industry leader is because of the superb management that has been the core of Cisco. The upper management has been able to determine where the opportunities lie, and they have been able to exploit those. Not only have they exploited the opportunities but also, they have been able to remain there on the top and continue to beat off the competition. Due to this superior position that they have established for themselves, Cisco was thus able to institute excellent strategies to grow and expand. This has enabled them to be the leader in Networking for the Internet. Recently, Cisco has also started moving into small business and consumer fields as well. This will enable them to further grow and get a larger market share.

Alternative Strategies

There are a few possible avenues that Cisco can explore in order to better themselves and to ensure that they stay on top. The first recommendation that we as a group would give to Cisco is to pursue a no change strategy. There is an old saying that goes "If it isn't broken, don't fix it". Right now, the way things stand, Cisco is in a very stable position, with a stable market share. They continue to see their profits increase, and they have not been seriously threatened by any competitor lately. They are and industry leader and they continue to be the number one producer of routers and switches. It might seem a risky adventure to some people for Cisco to go out and try spending money on other things, if there is no certainty that it will pay off.

Just like there's a saying "If it isn't broken, don't fix it", there is also a saying "The taller they are, the harder they fall". This is why we suggest that Cisco should also look into pursuing an expand strategy. Cisco being the industry giant that they are, they, cannot afford to take a hit and fall. It would be disastrous if Cisco allowed its competition to catch up to them, and to have themselves lose the solid ground that they currently hold. There are still huge market segments that could be explored, and Cisco needs to take advantage of these opportunities. Asia is still a big market, with which Cisco has only started to flirt with recently. With more then a third of the worlds population being concentrated on that continent, Cisco needs to make sure to that they put their foot in the door and be able to capitalize on the initial market share. They should look into building a relationship with the Chinese government, which would enable Cisco to get preferential treatment there. For now there is really no limit as to how far Cisco can expand.

The last alternative that Cisco should look into, and the one that our group recommends is to pursue a diversify strategy. What we mean by this is that Cisco should try to diversify by engaging in new markets within the industry. With the IT-Computer industry expanding ever so quickly, there are plenty of opportunities that Cisco could pursue. Cisco should invest into opening up a new division of the company that could start making such things as Personal Hand Held Computers. Or Cisco could also go into the telecommunication market and start producing cell phones. Cisco already has the name recognition, and this is something that can back them up. People know Cisco and people trust in Cisco. The name "Cisco" brings quality assurance behind it. This is why we believe that Cisco would be successful in pursuing their strategy of industry diversification. The possibilities are endless and if Cisco continues with their smart finance management, they would find themselves capable of not only expanding, but also at successfully doing the expansion and profiting.


The most important question everyone would like to know is "Will Cisco be able to stay on top". In the topsy-turvy world of business that we live in today, nothing can be said for sure. But one thing, which is a fact, is that Cisco has been able put themselves on top of the game, and stay one step ahead of everyone else. For this reason, Cisco needs to continue doing what they do best, and also look for ways to expand and not stay complacent.

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