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Cisco Strategic Profile

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  • Focus on manufacturing & lead time performance
  • Transcript:
    So what do we think the world looks like a few years out, 2010, 2011, something like that? Well, first of all, we think collaborative workspaces are going to be a big darn deal. We actually think one of the trends that we're following right now is that productivity is going to move from personal productivity to team productivity. It moves from where do I do email to where do we get stuff done? So we actually see this as a real trend with kind of think SharePoint done right. SharePoint meets a Wiki, meets Unified Communications meets Web 2.0 deep customization. It really helps with timeshifting and distance-independent team collaboration. One of the things I love is I spend a lot of time focused on the mobile industry. We're all holding mobile phones. Everybody in this room has a vested interest in making sure Cisco continues to get a buck, either off desktop phones or in helping manage mobile phones as they come into being a primary way that people collaborate. And the experts are evenly divided. There's a whole bunch of people out there building one device does it all communications devices. It's going to be my phone, my e-mail, my iPod, my you name it. But there's a whole bunch of other people that are in the every device is simple, but they work together seamlessly. So there is all whole other school of thought out there that it's more like I have a very simple, razor-type mobile phone and I've got a different email device and a different iPod. But there's kind of the near-field communication, so when they're together they can all share wireless, they can all share connectivity and work together in some pretty interesting ways. And we'll talk about a couple of the things that my team's been doing around that. I don't know why it says road band. Mobile broadband is widely deployed. And, if anything, broadband is getting more complicated, not simpler. There is no convergence. There's WiFi stuff going everywhere, lots of high-bandwidth connections, WiMAX and 4G cellular are emerging with two or three different incompatible technologies. And the 700 MHz spectrum auction here in the U.S. in the next couple of months, it could be a very extremely profound thing for all communications. So is everybody kind of familiar with this that you know what I'm talking about anyway? Basically, this is where the government is getting ready to auction off some of what is currently the analog TV bands to be used as broadband over-the-air Internet, and communications stuff. What makes this particularly interesting is, number one, it's very high-bandwidth. Number two, it penetrates walls really well. So we're into a situation now where pretty much anywhere you can get a decent over-the-air television signal, you could get a high-bandwidth two-way Internet connection through the air. A very, very interesting auction. Clearly the AT&T's of the world and Verizons are weighing in, but our friends up the street at Google are talking about bidding on the spectrum. And a few other people as well. Could have a real effect on our industry. Thin clients on every device. Some devices are generic browsers, some with data caching. But it really appears that things are moving towards thin in a big way.
    Author’s Original Notes:
    1) One Time Zone, Real-time: In a global workforce people are “out of phase” because of time zone and work schedule differences. How does a global business keep time sensitive processes in continuous motion - 7x24?2) Working Moments: The lines between work hours and business hours are blurring. We are moving from the concept of contiguous “working hours” to fragmented “working moments.” How does a business support and leverage this new work-life paradigm?3) Mobility and Uniformity of Experience: Mobile workers are hopping between high, low and no bandwidth. How does a business deliver uniform, rich interaction in such a landscape?4) Valuing Quality of Experience: Rich-media delivers intimacy and subtlety that can only be communicated by the human voice, facial expressions and body language. How can a business value of “Quality of Experience” and justify the investment in rich-media?
    5) Collaborative Communities: Work is mostly organized around functional communities having varying life spans. How can a business organize, communicate and share information in globally dispersed communities / teams?
    6) Secure, Guaranteed, and Compliant: Human interaction is unstructured. Decision support information is semi-structured. Transactions are highly structured. Community collaboration blends all three. How can a business ensure that collaborative interaction is secure, delivery is guaranteed when necessary and that such interactions are auditable in an increasingly regulated world?
  • Source: Cisco’s 2007 Annual Report
  • Cisco: 23% increase; Nortel: 7% increase; Juniper: 12% increase; Avaya: 5% increase
    - Nortel
    - Core Network Switching, Wireless, and Optical Systems
    - Juniper
    - IP Router Design and Sales, Application-Specific Chip Design, Network Management Software, VPN and Firewall Devices, Support Services
    - Avaya
    - Voice and Data Integration Services, Office Phone Systems, Consulting
    Source: http://www.reuters.com/investing
  • - $2.47 billion increase of advanced technologies (IP-based phones, video systems, home networking products, security products, wireless LAN products)
    - New FCC regulations require separable security for set-top boxes
    - Other sources of net sales:
    - $915 million increase in routers
    - $524 million increase in other products (optical networking products, IP-based communications products)
    Source: Cisco’s 2007 10-K, Annual Report to Stockholders
  • He says no good
    Not enough points are presented
  • Last 2 do not go with the first 3 need to reword or get rid of
  • He says these actually look OK
  • He says these actually look OK
  • Transcript:
    Fix woirding
    So what do we think the world looks like a few years out, 2010, 2011, something like that? Well, first of all, we think collaborative workspaces are going to be a big darn deal. We actually think one of the trends that we're following right now is that productivity is going to move from personal productivity to team productivity. It moves from where do I do email to where do we get stuff done? So we actually see this as a real trend with kind of think SharePoint done right. SharePoint meets a Wiki, meets Unified Communications meets Web 2.0 deep customization. It really helps with timeshifting and distance-independent team collaboration. One of the things I love is I spend a lot of time focused on the mobile industry. We're all holding mobile phones. Everybody in this room has a vested interest in making sure Cisco continues to get a buck, either off desktop phones or in helping manage mobile phones as they come into being a primary way that people collaborate. And the experts are evenly divided. There's a whole bunch of people out there building one device does it all communications devices. It's going to be my phone, my e-mail, my iPod, my you name it. But there's a whole bunch of other people that are in the every device is simple, but they work together seamlessly. So there is all whole other school of thought out there that it's more like I have a very simple, razor-type mobile phone and I've got a different email device and a different iPod. But there's kind of the near-field communication, so when they're together they can all share wireless, they can all share connectivity and work together in some pretty interesting ways. And we'll talk about a couple of the things that my team's been doing around that. I don't know why it says road band. Mobile broadband is widely deployed. And, if anything, broadband is getting more complicated, not simpler. There is no convergence. There's WiFi stuff going everywhere, lots of high-bandwidth connections, WiMAX and 4G cellular are emerging with two or three different incompatible technologies. And the 700 MHz spectrum auction here in the U.S. in the next couple of months, it could be a very extremely profound thing for all communications. So is everybody kind of familiar with this that you know what I'm talking about anyway? Basically, this is where the government is getting ready to auction off some of what is currently the analog TV bands to be used as broadband over-the-air Internet, and communications stuff. What makes this particularly interesting is, number one, it's very high-bandwidth. Number two, it penetrates walls really well. So we're into a situation now where pretty much anywhere you can get a decent over-the-air television signal, you could get a high-bandwidth two-way Internet connection through the air. A very, very interesting auction. Clearly the AT&T's of the world and Verizons are weighing in, but our friends up the street at Google are talking about bidding on the spectrum. And a few other people as well. Could have a real effect on our industry. Thin clients on every device. Some devices are generic browsers, some with data caching. But it really appears that things are moving towards thin in a big way.
    Author’s Original Notes:
    1) One Time Zone, Real-time: In a global workforce people are “out of phase” because of time zone and work schedule differences. How does a global business keep time sensitive processes in continuous motion - 7x24?2) Working Moments: The lines between work hours and business hours are blurring. We are moving from the concept of contiguous “working hours” to fragmented “working moments.” How does a business support and leverage this new work-life paradigm?3) Mobility and Uniformity of Experience: Mobile workers are hopping between high, low and no bandwidth. How does a business deliver uniform, rich interaction in such a landscape?4) Valuing Quality of Experience: Rich-media delivers intimacy and subtlety that can only be communicated by the human voice, facial expressions and body language. How can a business value of “Quality of Experience” and justify the investment in rich-media?
    5) Collaborative Communities: Work is mostly organized around functional communities having varying life spans. How can a business organize, communicate and share information in globally dispersed communities / teams?
    6) Secure, Guaranteed, and Compliant: Human interaction is unstructured. Decision support information is semi-structured. Transactions are highly structured. Community collaboration blends all three. How can a business ensure that collaborative interaction is secure, delivery is guaranteed when necessary and that such interactions are auditable in an increasingly regulated world?
  • Some of these are trends also need to re-word titles arent worded correctly
  • this slide needs to have each competency on its own row….so need to add more rows to fit all of them
    1 arrow to right for every 2 to left
    Add one more arrow to the left to keep balance
    Product Development
  • Satisfaction isnt correct word KPI need and ‘S need to fix ideas alittle
    What are Cisco’s current KPIs?
    How do these KPIs support the recommendations?
  • Source: http://www.cisco.com
  • Transcript

    • 1. © 2006 Cisco Systems, Inc. All rights reserved. 1
    • 2. © 2006 Cisco Systems, Inc. All rights reserved. 2
    • 3. © 2006 Cisco Systems, Inc. All rights reserved. 3 Cisco Presentation Overview  Company History  Products and Services  Industry / Market Analysis  Analysis of Financial Performance Vs. Competitors  Company Focus - SWOT & Value Chain Analysis  Porter’s Five Forces  Customer Activity Cycle  Strategic Intent  Company Views on Future Outlook and Strategies  Team Assessment of Future Strategies and Core Competencies  Implications of Turning Strategy into Action  Recommendations & Conclusions  References: –Primary: Interviews, Cisco Website, and Annual Reports –Secondary: Marketwatch.com, CurrentAnalysis.com, Reuters.com, YouTube.com
    • 4. © 2006 Cisco Systems, Inc. All rights reserved. 4 Introduction to Cisco Systems, Inc  Develops and sells networking products and related communications technology based on Internet Protocol (IP)  Provides training to associates through education initiatives  Provides design, implementation, and post purchase support for network systems Source: http://newsroom.cisco.com
    • 5. © 2006 Cisco Systems, Inc. All rights reserved. 5 Quick Facts Products: Network Equipment Services: Design, Implementation, Education, and Technical Support Size: $34 Billion in Revenue 65% Market Share Industry Strength: High Issues: Sustaining Growth Shifting Customer Base History: Founded in 1984 Industry: Telecommunications Equipment
    • 6. © 2006 Cisco Systems, Inc. All rights reserved. 6 Cisco: A History of Innovation and Acquisition 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 Lerner and Bosack form a small business in San Francisco called Cisco Move H.Q. to Atherton, CA Develop & Ship Massbus Ethernet Interface System Launch first-ever multi- protocol router Lerner and Bosack form a small business in San Francisco called Cisco Move H.Q. to Atherton, CA Develop & Ship Massbus Ethernet Interface System Launch first-ever multi- protocol router Venture Funding from Sequoia Capital Venture Funding from Sequoia Capital 3 Products $27M Rev. 111 Employees 3 Products $27M Rev. 111 Employees IPO Raises $224M 251 Employees IPO Raises $224M 251 Employees Stock Splits 1st Int’l Expansion - Canada - France - England - Japan Patent: Internal Gateway Routing Protocol Stock Splits 1st Int’l Expansion - Canada - France - England - Japan Patent: Internal Gateway Routing Protocol More International Expansion - Belgium - Mexico - Hong Kong - Brazil Acquisitions Begin - Crescendo Comm. More International Expansion - Belgium - Mexico - Hong Kong - Brazil Acquisitions Begin - Crescendo Comm. Source: http://newsroom.cisco.com Decade One 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Launches Network Academy Launches Network Academy Reaches $100B in Market Capitalization - Fastest in History Over 300 Acquisitions 150 Patents Issued $18.9B in Revenue Reaches $100B in Market Capitalization - Fastest in History Over 300 Acquisitions 150 Patents Issued $18.9B in Revenue Shift in Strategy from Acquisition to Innovation Launches Wide Area Wireless Networking Launches Carrier Routing System (Mar. ’04) Continued International Expansion Shift in Strategy from Acquisition to Innovation Launches Wide Area Wireless Networking Launches Carrier Routing System (Mar. ’04) Continued International Expansion LinkSys Acquisition LinkSys Acquisition WebEx Acquisition WebEx Acquisition Scientific Atlanta Acquisition Scientific Atlanta Acquisition
    • 7. © 2006 Cisco Systems, Inc. All rights reserved. 7 2007 Executive Leadership Team Source: http://newsroom.cisco.com John T. Chambers Chairman & CEO Paul Mountford President Emerging Markets Theatre Yasuki Kurosawa President Cisco Systems KK (Japan) Chris Dedicoat President European Markets Owen Chan President Asian Pacific Theatre We are a company that will enable all of life’s experiences, both personal and business, for the future. ~ John T. Chambers
    • 8. © 2006 Cisco Systems, Inc. All rights reserved. 8 Products  Broadband Cable  Cisco Interfaces and Modules  Cisco IOS Software  Interoperability Systems  Network Management  Optical Networking  Routers  Security and VPN  Server Networking and Virtualization  Storage Networking  Switches  TelePresence  Universal Gateways and Access Servers  Video and Content Delivery  Voice and Unified Communications  Wireless Source: http://www.cisco.com/en/US/products/index.html
    • 9. © 2006 Cisco Systems, Inc. All rights reserved. 9 Routers for Small, Mid-Sized, and Large Businesses Source: http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-enterprise
    • 10. © 2006 Cisco Systems, Inc. All rights reserved. 10 Routers for Service Providers Routers for Service Providers Source: http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-sp
    • 11. © 2006 Cisco Systems, Inc. All rights reserved. 11 Switches for Small to Large Businesses Source: http://www.cisco.com/en/us/products/hw/routers/index.html
    • 12. © 2006 Cisco Systems, Inc. All rights reserved. 12 Cisco 2600 Routers and 3500 Switches Source: Team Developed (Photo taken with permission of Cisco Systems, Inc.)
    • 13. © 2006 Cisco Systems, Inc. All rights reserved. 13 Cisco 6500 Series Switch Source: Team Developed (Photo taken with permission of Cisco Systems, Inc.)
    • 14. © 2006 Cisco Systems, Inc. All rights reserved. 14 Security Solutions Adaptive Security Appliance Source: http://www.cisco.com/en/us/products/ps6120/index.html Cisco Unified 7941G IP Phone
    • 15. © 2006 Cisco Systems, Inc. All rights reserved. 15 WebEx Web Meeting Solution Source: http://www.webex.com/smb/web-meetings.html
    • 16. © 2006 Cisco Systems, Inc. All rights reserved. 16 Cisco TelePresence Source: http://www.cisco.com/en/us/products/ps7087/index.html
    • 17. © 2006 Cisco Systems, Inc. All rights reserved. 17 Services  Storage Networking Services  TelePresence Services  Unified Communications Services  Unified Contact Center Services  Voice and Unified Communications Services  Wireless Services  Wireless/Mobility Services for Service Providers  Content Networking Services  Data Center Networking Services  Developer Services  Cisco Focused Technical Support  Metro Ethernet Services  Network Management Services  Routers & Routing Systems Services  Routing & Switching Services  Security Services Source: http://www.cisco.com/en/us/products/products_services_index.html
    • 18. © 2006 Cisco Systems, Inc. All rights reserved. 18 Cisco Services Mission  Breakaway Customer Loyalty in All Segments  Extend Cisco’s Leadership in Systems / Solutions and Technology / Business Architectures  Productivity Leadership Through Innovation & Quality  Highly Profitable Service & Support Revenue Growth  #1 in Partner Services Success  #1 in Employee Loyalty  Create Innovative Business Models to Accelerate Customer & Shareholder Success in All Segments Source: http://wwwin.cisco.com/CustAdv
    • 19. © 2006 Cisco Systems, Inc. All rights reserved. 19 Industry Markets Served  Carrier Infrastructure –Switch/Routing –Ethernet –Metro Ethernet Routers  Carrier IP Telephony –Application Servers –Switching & Signaling –Transport and Endpoints  Broadband Infrastructure –Digital Loop Carrier (DLC)/Multi- Service Access Platform (MSAP) –Fiber to the Premise (FTTP) –IP Services Platforms  Optical Infrastructure –Metro Access Systems –Optical Switching Systems  Wireless –CDMA (Code-Division Multiple Access) 2000 Network –GSM (Global System for Mobile Communication) –UMTS (Universal Mobile Telecommunications Service) –Metro-Scale WiFi Infrastructure –WiMAX Infrastructure (Worldwide Interoperability for Microwave Access)  Digital Media –Content Delivery Platforms –Content Security –IPTV Middleware –Video Headend Source: http ://www.currentanalysis.com/markets/telecom-infrastructure.asp
    • 20. © 2006 Cisco Systems, Inc. All rights reserved. 20 What is WiMAXWiMAX?  WiMAX is a wireless digital communications system, also known as IEEE 802.16 – Intended for wireless metropolitan area networks  WiMAX can provide broadband wireless access: – Up to 30 miles from fixed stations – 3 - 10 miles from mobile stations  In contrast, the WiFi/802.11 wireless local area network standard is limited in most cases to only 100 - 300 feet Source: http://www.wimax.com/education
    • 21. © 2006 Cisco Systems, Inc. All rights reserved. 21 The Burning Platform  Demand vs. industry capacity down – Creates price resistance & challenges to sustaining margins  Price-focused competitors from India & China are growing – Threatening Cisco's dominance in emerging markets  Product development by competitors can outperform CISCO products and new technical standards will make them outdated  Not enough people to cover transitioning customer base  Service providers’ purchasing patterns are becoming more uneven – Accuracy in Forecasting Sales – More rigid acceptance requirements are making the sales to implementation process more complex, and cycle time is increasing – Leading to slow revenue recognition – Focus on lead time performance is required Source: Team Developed
    • 22. © 2006 Cisco Systems, Inc. All rights reserved. 22 Industry Growth 20072006200520042003 • There is continued rapid growth in the telecommunications industry • Cisco growth is inline with industry growth Source: http://www.marketwatch.com/tools/industry/focus.asp?bcind_ind=9578&bcind_sid=172&bcind_period=5yr Industry Growth Cisco Growth (Dow Jones US Telecommunications Index)
    • 23. © 2006 Cisco Systems, Inc. All rights reserved. 23 Current Industry Trends Virtual and Digital Presence Face-to-Face meetings over a network Real-time file share and shared interface environments Digital storefront, conferences, press releases, and meetings in Virtual Worlds Data Centers Network-Based data center infrastructure services Mobile Networking Improved Efficiency Enhanced Customer Experience City-Wide wireless (hotspots) Real-time asset tracking Unified Networking Data, Voice, and Video on one Network Security Total Network Security Source: Team Developed
    • 24. © 2006 Cisco Systems, Inc. All rights reserved. 24 Major Competitors in the Industry  AVAYA Voice and Data Integration Services Office Phone Systems Consulting  Juniper Networks IP Router Design and Sales Application Specific Chip Design Network Management Software VPN and Firewall Devices Support Services  Nortel Networks Core Network Switching Wireless Systems Optical Systems Source: http://www.reuters.com/investing
    • 25. © 2006 Cisco Systems, Inc. All rights reserved. 25 CISCO vs. Competitors Competitive Landscape 65%10% 4% 21% CISCO AVAYA JUNIPER NORTEL Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 24 *23% Increase in Revenue from 2006; MarketWatch.com. As a % of Revenue
    • 26. © 2006 Cisco Systems, Inc. All rights reserved. 26 Strategic Alliances – Source: http://www.cisco.com/web/partners/pr67/part_strat_alliance_category.html
    • 27. © 2006 Cisco Systems, Inc. All rights reserved. 27 Net Sales FY 2007 $34,922 Billion* 55% 21% 10% 10% 4% United States & Canada Europe Emerging Markets Asia Japan Cisco Geographic Market Sales Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 24 *23% Increase in Revenue from 2006
    • 28. © 2006 Cisco Systems, Inc. All rights reserved. 28 Primary Business Segments By Percentage of Sales RevenueBy Percentage of Sales Revenue  Products  Services  Others Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 25 Others 6% Network Hardware 79% Services 15%
    • 29. © 2006 Cisco Systems, Inc. All rights reserved. 29 Primary Business Segment: Products Routers 20% Others 6% Switches 35% Services 16% Advanced Tech. 23% Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 25 Percentage of Sales RevenuePercentage of Sales Revenue  Switches  Routers  Advanced Technologies
    • 30. © 2006 Cisco Systems, Inc. All rights reserved. 30 Primary Business Segment: Services Source: CISCO 2007 10-K, Annual Report to Stockholders, P. 25 Others 6% Switches 79% Services 16% Percentage of Sales RevenuePercentage of Sales Revenue  Services  Others
    • 31. © 2006 Cisco Systems, Inc. All rights reserved. 31 Cisco Stock Performance (5 Years)* $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 2002 2003 2004 2005 2006 2007 Cisco Systems, Inc. S&P Information Technology S&P 500 Source: CISCO 2007 10-K, Annual Report to Stockholders *Assuming investment of $100.00 in Cisco common stock on July 26, 2002 and all dividends were reinvested
    • 32. © 2006 Cisco Systems, Inc. All rights reserved. 32 Financial: Net Sales Change $34.9 $28.5 $11.4 $10.5 $2.3 $2.1 $5.1 $4.9 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Cisco Nortel Juniper Avaya Fiscal Year '07 / '06 Fiscal Year '06 / '05 Source: http://www.reuters.com/investing BillionsofUSDollars
    • 33. © 2006 Cisco Systems, Inc. All rights reserved. 33 Reasons for Net Sales Change  $1.64 billion increase of switch sales – Increased adoption of unified communications and wireless LANs  $2.47 billion increase of advanced technologies – Increased demand for HD set-top boxes – New FCC regulations Source: CISCO 2007 10-K, Annual Report to Stockholders
    • 34. © 2006 Cisco Systems, Inc. All rights reserved. 34 SWOT Analysis Strengths  Culture  Market Position  Innovation  Able to spot discontinuities & acquire Weaknesses  Not knowing when to divest  Unsustainable High Gross Margin  High Reliance on Outside Vendors  Sales Forecasting Opportunities  Emerging markets (Eastern Europe, Asia-Pacific)  Unified Communications  TelePresence  School education initiative  Healthcare IT Threats  Unseen competitor from China  Increased Competition  Uncertain Global Economy  Variability of Revenues Source: Team Developed and Brian Dal Bello, Director of Product Marketing, Cisco Systems, Inc.
    • 35. © 2006 Cisco Systems, Inc. All rights reserved. 35 Value-Chain Analysis General Admin M argin M argin HR Mgmt Tech/R&D Procurement Inbound Logistics Operations Outbound Logistics Marketing & Sales Service Collaboration, New Tech Incubation, Mergers & Acquisitions Frugality, economy of resources Adherence to Six Sigma standards - Wide variety - Broad coverage - Strong relations with distribution partners Contract manufacturers to meet production requirements while integrating lean manufacturing processes with suppliers Maintain connectivity with suppliers through logistics networks Continuing reliance on alliance partners and distributors Outsourced to Manpower/Spherion SupportActivities Primary Activities - World-Class Abilities - Efficient - Always able to meet or exceed sales quotas Source: Team Developed
    • 36. © 2006 Cisco Systems, Inc. All rights reserved. 36 Porter’s Five Forces Model Competitive Rivalry Nortel Juniper Networks Avaya Microsoft Aruba Networks (Wireless) Customer Bargaining Power Demand for more features Multiple vendor choices Customers can wait to upgrade Can afford to procrastinate Threat of New Entrants Microsoft China, Inc. Offshore Startups Threat of Substitutes Cisco has many products and services in their portfolio. If substitutes enter the market, Cisco can compete, but must closely monitor margins Vendor Bargaining Power Cisco makes up the majority of vendor revenues, therefore the threat is minimized. Source: Team Developed
    • 37. © 2006 Cisco Systems, Inc. All rights reserved. 37 Target Market Analysis  Carrier Services – Networks, Routers, Switches  Major Markets – China, India and Russia  Wireless – WiMAX – Broadband coverage to entire city  Digital Services Source: “Future of Technology,” http://www.youtube.com/watch?v=12_oEMRVuiA
    • 38. © 2006 Cisco Systems, Inc. All rights reserved. 38 Customer Activity Cycle Pre-Purchase Customer • Proof of added value • Compatible, scalable solutions Cisco • Customer proof of concept • Revenue generation forecasting based on future customer needs Purchase Customer • Flexible purchasing options • Service level agreements • System implementation support Post-Purchase Customer • Product support • Network implementation support • Continued training Cisco • Cisco networking academy program • Technical assistance center • NetPro community Source: Team Developed Cisco • Dedicated sales force sell to enterprise/ISPs • Value added resellers sell to SMBs • Mass merchandisers sell to home and small office users
    • 39. © 2006 Cisco Systems, Inc. All rights reserved. 39 Consumer Activity Cycle Pre-Purchase Consumer • Research feature and benefits • Compare to competitors • Rank warranty specifications • Assess network compatibility Cisco/Linksys • Linksys Learning Center Post-Purchase Consumer • Warranty coverage • Customer service • Training Cisco/Linksys • Rebates •Technical Support Cisco/Linksys • Marketing and Promotion • Customer awareness • Surveys Purchase Consumer • Price • Substitute Products • Quality (MTBF)Source: Team Developed
    • 40. © 2006 Cisco Systems, Inc. All rights reserved. 40 Mobile Broadband Widely Deployed • High-speed WiFi (802.11n) • High bandwidth connections • WiMAX and 4G cellular are emerging • FCC to auction off 700MHz bandwidth-2008 Thin clients on every device • Devices are generic browsers, with some data caching • Data lives in the network, fully backed up and secured One device does it all Applications, communications, Full context and identity - “digital me” Converged Technology User friendly Works together seamlessly Collaborative Workspaces • Productivity in a flat world • Time shifted, distance-independent • TelePresence /virtual meetings – greening measures Source: Internal Presentation, Cisco Systems “CTO Vision for Unified Communications”, 2006 Future Trends & Discontinuities
    • 41. © 2006 Cisco Systems, Inc. All rights reserved. 41 Future Customer Expectations Mobility Do anything anywhere Hands free devices Interactive voice recognition System Interoperability Facilitation for app-to-app communications Applications from applications Open Source as the wellspring of creativity Thin Client Technology Google leading change Customizable Users write the rules Security Complete security Transparent to users Enhanced Email Functionality More collaborative Universal access Contact management Source: Internal Presentation, Cisco Systems “CTO Vision for Unified Communications”, 2006
    • 42. © 2006 Cisco Systems, Inc. All rights reserved. 42 Future Customer Expectations Strategic Intent Model Current Competencies Targeted Future Competencies  Increasing cost  Increasing competition  Technology advancements  Backward non-compatibility  Shortage of professionals  Global Brand Management  Customer Value Management  Employee Value Management  Market Management  Mobile Networking  Cross platform compatibility  Multimedia connectivity  Wireless Connectivity  Acquisition Management  Product Lifestyle Management  Innovation Management  IT Solution Management Future Discontinuities Trends Source: Team Developed
    • 43. © 2006 Cisco Systems, Inc. All rights reserved. 43 Competencies Acquisitions Customer Support Mgmt. Innovation Mgmt. Brand & Market Mgmt. IT Solutions Mgmt. Portfolio Mgmt. Prod. Develop. Customer Expectations & Trends Relative Importance Product Support 11 1 3 0 1 3 3 0 Network Security 14 3 2 2 0 3 2 2 Revenue Generation forecasting 13 3 0 3 0 1 3 3 Implementation Support 8 0 3 1 0 3 1 0 Unified Networking 16 2 2 3 0 3 3 3 TOTAL 62 9 10 9 1 13 12 8 Consumer Expectations & Trends Training 9 0 3 0 1 3 1 1 Warranty coverage 6 1 2 0 1 1 1 0 Pricing 13 2 1 2 3 0 2 3 Mobile Networking 14 3 1 3 0 2 3 2 Quality of Service 17 2 2 3 2 2 3 3 TOTAL 59 8 9 8 7 8 10 9 17 19 17 8 21 22 17 Current Competency Validation Source: Team Developed
    • 44. © 2006 Cisco Systems, Inc. All rights reserved. 44 Current Competency Grid Low Competitors Fear High 10 8 6 4 2 4 2 6 Core 108 Customer value Contracted Corporate Low High Distinctive Core Corporate Contracted ● ● ● ●● ● ● Distinctive ● Acquisition Mgmt. ● Product Lifecycle Mgmt. ● ● Innovation Mgmt. ● Brand & Market Development ● IT Solutions Mgmt. ● Production Mgmt. ● HR Management ● Portfolio Mgmt. ● Product Development ● Source: Team Developed
    • 45. © 2006 Cisco Systems, Inc. All rights reserved. 45 Distinctive Core Corporate Contracted Acquisitions The Competency Continuum Source: Team Developed Product Lifecycle Management IT Solution Management Production Management Portfolio Management HR Management Product Development Innovation Management Brand & Market Development
    • 46. © 2006 Cisco Systems, Inc. All rights reserved. 46 Future Recommended KPI’s Return on Net Assets Return on Net Assets Employee Productivity Employee Productivity Dollar Value of Sales Dollar Value of Sales Greening Initiatives Greening Initiatives Acquisition ROI Acquisition ROI Product Quality Product Quality Inventory Turnover Rate Inventory Turnover Rate Net Payback Period Net Payback Period Time to Market Time to Market Source: Team Developed
    • 47. © 2006 Cisco Systems, Inc. All rights reserved. 47 Current Strategy and Focus of Cisco Source: Cisco 2008 Initiatives Lead the NEXT evolution wave of the internet (Web 2.0) by innovating and creating new markets, specifically: Grow 8 Advanced Technologies to produce more than $3B in sales Examples: – Mobility/Wireless – Data Center/Storage – Unified Communications – Optical – Security Develop 8 additional Emerging Technologies Examples: – Video security – TelePresence – Video media/Content Mgmt. – WAAS (Wide Area Applications Services) – IPICS (IP Interoperability and Collaboration Systems
    • 48. © 2006 Cisco Systems, Inc. All rights reserved. 48 Current Strategy and Focus of Cisco (Cont.)  Implement 18+ cross-functional investments – Collaboration amongst Cisco’s internal business councils Examples: – Retail – Legal – Manufacturing – Commercial – Service Providers – Small-to-Medium Business – Consumer
    • 49. © 2006 Cisco Systems, Inc. All rights reserved. 49 Cisco’s Future Outlook and Strategies Future Outlook  Utilize technologies such as Unified Communication and TelePresence  Technology architecture approach to enable gains o Market share o Sustainable competitive advantage o Greater share of customer IT budgets Strategies  Identify, invest and position to capture customer-driven market transitions  Constant innovation enables building, buying and collaborating with partners who also improve productivity and quality  Differentiated market approach to tie together technology business architectures  Cross-functional teamwork and initiatives to drive execution across products, value-added services, customer segments and geographic theatersSource: http://www.cisco.com/web/about/ac49/ac20/ac19/ar2007/letter_to_shareholders/index.html
    • 50. © 2006 Cisco Systems, Inc. All rights reserved. 50 Source: Team Developed  Integrate WebEx technology with TelePresence to create new functionality and additional revenue  Collaborate with potential acquisitions and promote incorporation of Web 2.0, TelePresence, and Cisco’s overall strategic direction  Lead the market in producing digital-to-analog converter boxes through Scientific Atlanta (a guaranteed and subsidized market)  Invest in R&D to develop innovative products to transform current healthcare systems (home monitoring of patients) Future Recommendations
    • 51. © 2006 Cisco Systems, Inc. All rights reserved. 51 Future Recommendations (Cont.)  Must continually press U.S. government/FCC to do more to expand network infrastructure bandwidth – New applications depending more and more on video, UC, etc. – Current broadband capabilities insufficient to handle future traffic – U.S. substantially behind other countries in delivery of broadband  Expand “Green” initiatives internally –Will cut travel expenses by 20% starting 2008  Expand “Green” investments externally –Connected Urban Development –Reduces carbon footprint of cities
    • 52. © 2006 Cisco Systems, Inc. All rights reserved. 52 Future Recommendations (Cont.)  Fully exploit WiMAX technology – Already taken initial step with acquisition of Richardson based Navini Networks – WiMAX technology will be deployed on next generation of laptops – By 2012, ABI Research predicts approx. 95 million WiMAX subscribers and 200 million mobile devices equipped with the technology Source: Team Developed
    • 53. © 2006 Cisco Systems, Inc. All rights reserved. 53 References  CISCO 2007 10-K, Annual Report to Stockholders  http://newsroom.cisco.com  http://www.cisco.com/en/US/products/index.html  http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-enterprise  http://www.cisco.com/en/us/products/hw/routers/index.html#,hide-id-trigger-g1-sp  http://www.cisco.com/en/us/products/hw/routers/index.html  http://www.cisco.com/en/us/products/ps6120/index.html  http://www.cisco.com/en/us/products/ps6513/index.html  http://www.cisco.com/en/us/products/ps7087/index.html  http://www.cisco.com/CustAdv  http://www.cisco.com/en/us/products/products_services_index.html  http://www.reuters.com/investing  http://www.wimax.com/education  “Future of Technology,” http://www.youtube.com/watch?v=12_oEMRVuiA  Cisco Internal Presentation, “CTO Vision for Unified Communications” 2006  http://www.cisco.com/web/about/ac49/ac20/ac19/ar2007/letter_to_shareholders/index.html  http://www.webex.com/smb/web-meetings.html  http://www.theregister.co.uk/2006/09/22/Cisco_goes_green  Dal Bello, Brian - Director of Product Marketing, Cisco Systems, Inc. Personal Interview. 8 October 2007  Starr, Doug - Systems Engineer, National Channels, Cisco Systems, Inc.  Team Developed Source: Team Developed
    • 54. © 2006 Cisco Systems, Inc. All rights reserved. 54

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