Cisco Case Study
Question 1. What type(s) of growth pattern has Cisco followed, intensive, integrative or diversification growth? 2. What is their SWOT analysis like?
For a company to identify and effectively utilize its growth opportunities every organization must assess its strategic planning gap and identify how it can fill that gap. The three stages of identifying opportunities are; identifying opportunities to achieve further growth within current businesses, identifying opportunities to build or acquire businesses that are related to current businesses and identifying opportunities to add attractive businesses unrelated to current business As seen in the case, Cisco has gone through all of these stages growth over the years to achieve its successes.
In 1991, Cisco opened international branches in London and France and continued to open many more international branches since then. These new branches offered customers in these new locations with the same products that Cisco offered to customers in its parent branch market. This is a clear example of an intensive growth strategy using a market-development approach. Cisco assessed its products and found or developed new markets for it thereby increasing its geographical market and increasing its revenues.
Cisco also used integrative growth strategies; a growth strategy where a company increases its sales and profits through backward, forward, or horizontal integration within its industry. Cisco went on to acquire and successfully integrated 49 companies into its core business in the 1990’s; increasing its market share and its market capitalization to $582 billion or $82 per share, making it the most valuable company in the world.
The acquisition of Linksys in 2003 was Cisco’s employing a diversification strategy. Here, Cisco undertook a diversification strategy by going beyond its core business of mass producing routers and switches to trying to change how consumers communicate and view television. Through this
For a company to identify and effectively utilize its growth opportunities every organization must assess its strategic planning gap and identify how it can fill that gap. The three stages of identifying opportunities are; identifying opportunities to achieve further growth within current businesses, identifying opportunities to build or acquire businesses that are related to current businesses and identifying opportunities to add attractive businesses unrelated to current business As seen in the case, Cisco has gone through all of these stages growth over the years to achieve its successes.
In 1991, Cisco opened international branches in London and France and continued to open many more international branches since then. These new branches offered customers in these new locations with the same products that Cisco offered to customers in its parent branch market. This is a clear example of an intensive growth strategy using a market-development approach. Cisco assessed its products and found or developed new markets for it thereby increasing its geographical market and increasing its revenues.
Cisco also used integrative growth strategies; a growth strategy where a company increases its sales and profits through backward, forward, or horizontal integration within its industry. Cisco went on to acquire and successfully integrated 49 companies into its core business in the 1990’s; increasing its market share and its market capitalization to $582 billion or $82 per share, making it the most valuable company in the world.
The acquisition of Linksys in 2003 was Cisco’s employing a diversification strategy. Here, Cisco undertook a diversification strategy by going beyond its core business of mass producing routers and switches to trying to change how consumers communicate and view television. Through this
Links: s in 2003 was Cisco’s employing a diversification strategy. Here, Cisco undertook a diversification strategy by going beyond its core business of mass producing routers and switches to trying to change how consumers communicate and view television. Through this acquisition, Cisco was able to enter into the consumer market and offered its customers devices such as home-networking equipment, video on demand services and other entertainment solutions. In order to achieve all these successes, Cisco had to undertake a thorough assessment of its strengths, weaknesses, opportunities and threats in a SWOT analysis. This technique is based on the assumption that an organization’s strategy will be most effective if there is a good fit between its internal resources (strengths and weaknesses) and its external situation (opportunities and threats). Strengths are characteristics of the business that give it an advantage over others whereas, Weaknesses are characteristics that place the business at a disadvantage relative to others. Opportunities are elements that the business could exploit to its advantage. Threats are elements in the environment that could cause trouble for the business. In conducting a SWOT analysis it is important to ask and answer questions that generate meaningful information for each category in order to make the analysis useful and to help the company find its competitive advantage. A SWOT analysis for Cisco would look as shown below; Location of Factor | Type of Factor | | Favorable | Unfavorable | Internal | Strengths * Strong financial performance * High brand recognition /image * International reach | Weaknesses * Supply chain issues which may lead to delays in order fulfillment. * High prices | External | Opportunities * Growth in the consumer markets * Increasing spending on IT infrastructure worldwide * Innovation | Threats * Increasing competition * Price centered competition from competitors in Asia * Risk of inventory obsolescence due to rapid technological advances |