Cisco Systems is a large networking company founded in 1984 that generates over $40 billion in annual revenue. It has a dominant position in routers and switches with over 70% market share. However, competition from HP, Juniper, and others poses threats. Cisco's strengths include its strategic partnerships and acquisitions strategy, while weaknesses include lack of brand recognition in consumer markets and high prices. In the long term, Cisco aims to improve its position in consumer products and capitalize on opportunities in smart grid technology and cloud computing.

1. Cisco Systems Inc.

2. Part One: Introduction and External Analysis

3. Cisco Systems - IntroductionFounded in 1984

4. Incorporated on December 10, 1984

5. Have 72,935 employees

6. Surpassed 39 billion in revenue in 2008

7. Corporate headquarters located in San Jose, California

8. 32 factories worldwide, 30 of them are outsourced.

9. Spends nearly $5.3 billion a year in R&DCisco Systems – Intro – Recent EventsVideo Easier to Create, Consume, Search and Share Across the Enterprise

10. Cisco Demonstrates Leadership in Virtualized, Scalable, Cloud- Ready Data Centers with Customer and Technology Milestones

11. Cisco Connects Businesses to Consumers via VideoNetworking and CommunicationIndustry: Networking and Communication supplies and services

12. Industry Consolidation – Few competitors in their main product area

13. In 2006 they had 70% of the share of its core router and switch market.Juniper Networks and Hewlitt-Packard selected as benchmarks.Cisco's Chambers ProblemCisco Competition

14. Cisco’s Mission StatementShape the future of the Internet by creating unprecedentedvalue and opportunity for our customers, employees, investors,and ecosystem partners.VisionChanging the Way We Work, Live, Play, and Learn.Cisco has a very bland and basic mission statement that only ranks as an “ok” (5) on the MVV evaluation.

15. External AnalysisRemote (Societal) Environment.

16. Industry (Task) Environment

17. Assessment of Competition

18. Most Crucial Threats and Opportunities, with score.Remote (societal) EnvironMentOpportunities Innovation

19. Product and services expansion

20. Market of Airline Industry

21. Reusing existing Cisco gear to act as mobile POPs

22. Cloud ComputingThreatsEconomic slowdown

23. Price wars

24. Product substitution

25. Margin erosion

26. Consolidation trend

27. Consumer loyaltyIndustry/Task EnvironmentOpportunitiesLow supplier power, Cisco has taken control of its supply chain

28. Router and switch market share discourages new entrants

29. Switching costs are high(reduce buyer power)

30. Acquisitions removes some threat of startup success

31. Growth in the consumer market and cloud computingThreatsFlip Video – bargaining power of buyers.

32. MSFT – Threat of new entrant (bundle unified communications software)

33. GOOG – Threat of new entrant (desktop video conferencing market)

34. Vyatta – Substitute (open source hardware)

35. Asterisk – Substitute (open source VoIP)Assessment of CompetitionOpportunitiesIncrease competition in bottom layer switch market

36. Smart Grid Technology

37. Asian Market – Tata Communications

38. Server growth – up 700%

39. Cloud-centric softwareThreatsMirrorless SLRs are the response to Flip video

40. Juniper announced data center

41. Juniper entered into a partnership with IBM to handle network connectivity for the latter’s cloud computing

42. 3COM emerging into markets like China

43. Juniper’s high-end switches (EX) and Junos OS

44. HP’s low cost switchesSummary – Most Crucial Opportunities and ThreatsOpportunitiesIncrease competition in bottom layer switch market (9)

45. Server growth (10)

46. Cloud Computing (10)

47. Smart Grid Technology (10)

48. Asian Market (8)ThreatsHP’s low cost switches (10)

49. MSFT – Threat of new entrant (bundle unified communications software) (7)

50. Consolidation trend (7)

51. Juniper/IBM (9)

52. Juniper’s data center (10)Avg. ~ 47/5 = 9.4Avg. ~ 43/5 = 8.6O-T ~ 9.4 – 8.6 = .8

53. Part Two: Internal Analysis

54. Net Income Trends -CSCO & Benchmarks

55. CSCO Quarterly Earnings vs. Consensus Estimates

56. Revenue by product category and service

57. Key Income Statement Data FY2010

58. Key Balance Sheet Data FY2010

59. Cash flow Data fy2010

60. Important Financial Ratios FY2010

61. Applying Altman’sBankruptcy FormulaZ = 1.2*A + 1.4*B + 3.3*C + 0.6*D + 1.0*E, where;A = Working Capital / Total Assets (%)B = Retained Earnings / Total Assets (%)C = EBIT / Total Assets (%)D = Market Value of Equity / Total Liabilities (%), andE = Sales / Total Assets“Scores below 1.81 indicate significant credit problems while scores above 3.0 indicate a healthy firm. Scores falling between 1.81 and 3.0 indicate question marks.”

62. Z-Value

63. Index of Sustainable Growthg* = [P(1-D)(1+L)] / [T-P(1-D)(1+L)], whereP = (Net Profit before Tax / Net Sales) x 100D = Target dividends / Profit after TaxL = Total Liabilities / Net WorthT = (Total Assets / Net Sales) x 100

64. Inventory Turnover FY2010

65. Credit RatingsMarch 9, 2011-Standard & Poor's Ratings Services said today that it assigned its 'A+' issue rating to San Jose, Calif.-based Cisco Systems Inc.'s (Cisco) three tranches of senior unsecured notes.

66. Cisco Stock Price History

67. CSCO Stock Price – 5 year trend

68. CSCO Stock Price – 2 year Trend

69. Financial success StatementIn fiscal 2010, we saw a solid return to balanced growth across geographies, product and customer markets exemplified by Cisco reaching over $40 billion in fiscal year revenue. We focused our efforts on defining true innovation and operational excellence within our company. And we improved our position as a strategic partner to customers worldwide by showing how the network has become, in our view, the most strategic asset in communications and information technology (IT) today.

70. ANALYSIS OF MARKETING POSITION

71. Cisco long term Total sales From 2006-20102006 = 23.38 Billion

72. 2007 = 34.90 Billion

73. 2008 = 39.60 Billion

74. 2009 = 36.10 Billion

75. 2010 = 40 BillionCisco long term Quarterly sales from 2006-20102006 2008 Quarter 1: 6.50 Billion Quarter 1: 9.60 Billion Quarter 2: 6.60 Billion Quarter 2: 9.60 Billion Quarter 3: 7.30 Billion Quarter 3: 9.60 Billion Quarter 4: 7.98 Billion Quarter 4: 10.40 Billion2007 2009 Quarter 1: 8.20 Billion Quarter 1: 10.30 Billion Quarter 2: 8.40 Billion Quarter 2: 9.1 Billion Quarter 3: 8.90 Billion Quarter 3: 8.2 Billion Quarter 4: 9.40 Billion Quarter 4: 8.5 Billion

76. Cisco Long Term Quarterly Sales from 2006-2010 cont. 2010 Quarter 1: 9.00 Billion Quarter 2: 9.80 Billion Quarter 3: 10.40 Billion Quarter 4: 10.80 Billion

77. Sales by strategic business units in quarter 1 and 2 of 2011Strategic Business Units = divisions or groups of divisions composed of independent product-market segments that are given primary responsibility and authority for the management of their own functional areas. CISCOQ1 IN MILLIONS Q2 IN MILLIONSROUTERS - $1,835 ROUTERS - $1,672SWITCHES - $3,532 SWITCHES - $3,151NEW PRODUCTS - $3,104 NEW PRODUCTS - $3,202OTHER PRODUCTS - $229 OTHER PRODUCTS - $211TOTAL PRODUCT – $8,700 TOTAL PRODUCT - $8,236

78. Market Share of stocks

79. Marketing TacticsTactics = specific operating plans that detail how a strategy is to be implemented in terms of when and where it is to be put into action.

80. Timing Tactics Historically a first mover supported by being a first mover in technology. They specialize in routers, switches, wireless, security, optical networking, etc. Cisco is also considered a industry leader.Market Location Tactics: Offensive Cisco has always been known to take a frontal assault because they are a market leader. They go head to head with its competition.

81. Marketing TacticsMarket Location Tactics: Defensive Cisco takes the path of raising structural barriers. They do this to block challenger’s logical avenues of attack. Some factors of Porters they use are: Offering a full line of products in every profitable market segment to close off any entry points. Keep their items reasonably priced for their most popular products and services.

82. Cisco Success statementCisco has had many success stories throughout the years which is a large part in being a industry leader.

83. Customers drive our business strategies to achieving success and excellence in everything we do, and will continue to be our key focus for developing products and services that accelerate their capability to prosper in the Internet business.Cisco success statement cont. An example of a success story is: In 2001 the cost of direct DSL and ISDN access increased markedly. Cisco transitioned tens of thousands of teleworkers and remote office workers worldwide to remote access VPNs. To determine if additional capacity was needed, Cisco used Cisco NetFlow in conjunction with various open-source tools to characterize existing traffic and then extrapolate expected traffic. With this business intelligence, Cisco successfully transitioned 22,000 users to VPN in only three months.