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Cisco Systems

Group Members:

Mr. Prathmesh Kaneri (ec) Mr. Amith Mohan(ec) Mr. Dharmit Gandhi (ec) Mr. Ayush Abrol (ec) Mr. Safat Mahmood (ec09512)


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Table of Contents
Summary of Responsibilities............................................................................................................... 2 Individual Member 1 Contribution: Dharmit Gandhi...................................................................... 3 Individual Member 2 Contribution: Ayush Abrol ............................................................................ 3 Individual Member 3 Contribution: Prathmesh Kaneri .................................................................... 3 Individual Member 4 Contribution: Amith Mohan .......................................................................... 3 Individual Member 5 Contribution: Safat Mahmood ...................................................................... 3 Introduction ....................................................................................................................................... 3 External Analysis ................................................................................................................................ 4 Strategic Analysis............................................................................................................................... 9 Marketing Plans............................................................................................................................... 17 Conclusion ....................................................................................................................................... 22 References ....................................................................................................................................... 24

Summary of Responsibilities
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Individual Member 1 Contribution: Dharmit Gandhi

Dharmit Gandhi wrote the Introduction section and a part of External Analysis
<The work should also be referenced to the appropriate place in the document, i.e. section and page number>

Individual Member 2 Contribution: Ayush Abrol

<Each piece of work that has been completed by the student should be indicated on this page> <The work should also be referenced to the appropriate place in the document, i.e. section and page number>

Individual Member 3 Contribution: Prathmesh Kaneri

<Each piece of work that has been completed by the student should be indicated on this page> <The work should also be referenced to the appropriate place in the document, i.e. section and page number>

Individual Member 4 Contribution: Amith Mohan

<Each piece of work that has been completed by the student should be indicated on this page> <The work should also be referenced to the appropriate place in the document, i.e. section and page number>

Individual Member 5 Contribution: Safat Mahmood

Safat Mahmood wrote the conclusion section and did background research on
marketing plans. <The work should also be referenced to the appropriate place in the document, i.e. section and page number>



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Cisco currently competes in the networking and communications equipment markets, providing products and services for transporting data, voice, and video traffic across intranets, extranets, and the Internet. These markets are characterized by rapid change, converging technologies, and a migration to networking and communications solutions that offer relative advantages. These market factors represent both an opportunity and a competitive threat to the company. Cisco competes with numerous vendors in each product category. Also, the identity and composition of competitors may change as the company increases its activity in the New Products markets. As the company continues to expand globally, new competition in different geographic regions arises. In particular, price-focused competition from competitors in Asia, especially from China is anticipated. Insert graph showing share prices over the past 18 months here

External Analysis
Internal Analysis - How has Cisco done over the past 18 months?
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In response to current market conditions, Cisco is in the throes of a companywide transition away from the switches and routers that form the bedrock of its business toward new markets to fuel future growth -- and the shift is affecting Cisco's revenue. The transition is broader and more profound than just a product line overhaul, and the company is struggling with new competitors, customers, pricing strategies and profit pressures. In fact, reinventing itself means Cisco has been forced to scale back its growth ambitions, cutting its 12% to 17% annual growth targets to more modest 9% to 11% in fiscal 2011. "The 12% to 17% growth target is causing them to be much more aggressive in targeting new markets to sell into that they are taking their eye off the ball," says Zeus Kerravala of the Yankee Group, referring to Cisco's plan to address 30 or more market adjacencies. "Why wouldn't they stick to the stuff they do well and move into 10 markets instead of 30? You can't continually grow at 17% when you're a $40 billion company." For the first time in company history, revenue in Cisco's core routing and switching markets has been overtaken by sales of new products and associated services in data center, virtualization, video, collaboration and mobility. Insert graph here showing the change of revenue from routing and switching markets "As customers continue to transition from traditional router and switch products to Cisco's next-generation products and services, the company will need to take a hard look at restructuring itself in order to meet the revenue growth and margin expectations it has set with the market". In Cisco's second fiscal quarter, switching revenue was down 7% from last year and 11% from the first quarter. Routing revenue was up 4% from last year but down 7% from Q1. What are the external and internal factors for this change? Possibly insert competitors here


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Data center and enterprise sales helped drive Cisco's better than expected Q2, but a major product transition is crimping switch sales. Data center was a highlight in the quarter, with product sales growing 59% year-over-year. Insert graph showing growth here Enterprise order growth was in the high 20% range, while orders overall were up 8%. Collaboration is on a $4 billion run rate, But switching was a lowlight in the quarter. Revenue was down 7% and Chambers attributed it to transitioning the $10+ billion Catalyst base to new models and product lines. For Q2 the company posted revenue of $10.4 billion and adjusted earnings per share of $0.37. Overall product revenue was $8.2 billion, up 3% from last year. Thirty-nine percent of product revenue was from new product categories, like collaboration and video. Routing was up 4%. And Cisco landed 40 new data center customers in the quarter, double that of Q1, Chambers said. Weak areas in the quarter were public sector, set top boxes, and consumer products, which is 2% of Cisco's business. Order growth in the public sector will be "challenged" in the coming quarters, Chambers said. For Q3, Cisco guided to revenue 4% to 6% higher than last year's Q3, which is within analyst estimates. And Q4 should be 8% to 11% better than last year's. But Q3 earnings could be off as much as 16% from last year.

Microeconomic Factors
Suppliers, customers, stakeholders, intermediaries, competitors
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Currently Cisco faces fierce competition in the hardware end of its business from a variety of companies. Cisco s competitors within the switching and routing sector include Alcatel-Lucent; Arista Networks, Inc.; ARRIS Group, Inc.; Aruba Networks, Inc.; Avaya Inc.; Brocade Communications Systems, Inc.; Check Point Software, Huawei. Other competitors in other sectors include:

Macro Economic Factors

Within Economic, technological, social/cultural, political/legal sectors Cisco faces a changing face of focus with the emergence of Asia especially China and the companies from there which are competing against it in the routing and switchgear business, driving margins down. This has resulted in lower revenues but a maintenance of market share within that industry. This general shift from hardware to software related industries has been reflected in recent times with the shift of companies like HP and IBM to focus on services and high end business solutions rather than traditional hardware which has begun to become commodious. The global shift towards high tech development and the jobs created around the world as a result also means there are plenty of global business opportunities to expand into. However the focus on America has meant that Cisco has fallen behind in emerging nations where growth is forecast such as India and China.

Evaluation of factors influencing key organisation changes

Overall the above factors have resulted in a shift from Cisco into new markets and they have attempted to accomplish this over the past 18 months by acquiring and collabarating with software and services based companies. A few recent acquisitions have been Versly, a privately-held company that develops collaboration tools that integrate with Microsoft Office applications. With the acquisition of Comptel s Axioss Software for $31 Million, Cisco hopes to extend network and service management technologies across its IP-based network platforms and enable service providers to more quickly
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launch new video, data, mobility and cloud services to their customers, using a single management architecture. Cisco also has bought Clouds Automation and Management Software Company NewScale which will complement and expand its existing IT and cloud management and automation software offerings. Cisco announced that it has completed its acquisition of privately-held Pari Networks, a provider of network configuration and change management solutions, in an effort to complement its own smart service capabilities. Cisco this morning said it intends to purchase LineSider Technologies, a privately-held network management software based out of Danvers, Massachusetts. LineSider markets software that enables companies to build network services and securely create and deploy cloud computing infrastructure. Cisco says LineSider will enhance its ability to rapidly provision network services to its clients. In addition to providing Cisco with advanced network management technology, the company says the deal would bring an experienced engineering team to the company. Upon the close of the acquisition, the LineSider team will become part of Cisco s NMTG. There has been a shift away from hardware with for example the phasing out of the Flip line of camcorders and the axing of 550 employees.

SWOT analysis


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Based on these factors we have done a SWOT analysis to visualise what new market areas Cisco should target for future growth. The figure below provides a briefing of the factors that are to be considered while doing the analysis.

Based on the analysis we have done our area of interest in this report will be to exploit the area of cloud computing being introduced by Cisco and the threats and opportunities related to this new technology.

Strategic Analysis


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Insert Porters five forces model of competition here

Opportunities and Strategic Alliances

The primary opportunity for Cisco is presented by cloud computing, where there is much more promise for the company. Cloud computing enables Cisco to directly provide platforms to customers eliminating traditional solution platform providers, such as Microsoft. Using cloud computing more services can be offered from the cloud, rather than installing on specific on-premises platforms such as Windows. This is a huge opportunity for Cisco to move into software based market adjacencies that enables networking of people or companies. With this venture Cisco can provide public sector and federal government agencies with strategy, architecture, and solutions for cloud computing. Cloud computing is a means to deliver IT resources and services in a conceptual manner from underlying components, with characteristics such as on-demand, at- scale and multitenancy. These characteristics directly affect the cost savings both the operating and capital expenses while also enhancing the flexibility of IT services. Taking a cumulative look at cloud computing Cisco anticipates that there will be different types of clouds (public, private, virtual, and inter-clouds), and various services (software, platform, and infrastructure) would be delivered via a cloud marketplace. One of the eventual goals of Cisco is to facilitate federation and interoperability services via network enablement among a considerable number of marketplace clouds. Cisco brings key groundworks and collective technology building blocks, which will initially capacitate adoption of cloud computing to an IT organization using private cloud data centres. The goal of these private cloud data centres is to gradually extend externally to gain and expand IT services leading them to be customer friendly. Using cloud computing public sector and federal government entities are being enabled with the ability to access infrastructure how and when they choose. Cloud computing can be provided using various sources such as an enterprise s data centre, a cloud provider or a government cloud.

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Cisco defines cloud computing via three key attributes which include: On-demand: This attribute makes sure that resources can be arranged immediately when needed, released when no longer required and billed only when used. At-scale: To make sure all demands are taken care of the service provides the illusion of infinite resource availability. Multitenant environment: In order to notably reduce the provider costs the resources are provided to many consumers using a single implementation.

Cisco Cloud Data Centre Evolution Path

Cloud computing brings with it a number of advantages namely: 1. Reduced Cost: A company s cost can be divided into two sections: CostEx and OpEx. Due to cloud computing a company does not need to build infrastructure for maximum capacity and can spend in increments of required capacity reducing the CapEx. The OpEx constitutes the majority of spending therefore, by exploiting a cloud provider or adopting internal clouds, organizations can cut down on functional and maintenance funds.

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2. Flexibility: In public sectors, cloud computing provides brisk attainment and acquisition of processes and timelines which assists in providing flexibility from rapid provisioning of new capacity and rapid relocation or migration of workloads.

3. Improved Automation: The main basis of cloud computing is the argument that services can also be de-provisioned in a highly automated fashion making this specific attribute highly significant in providing efficiencies to enterprises.

4. Focus on Core Competency: Cloud computing allows government agencies to focus on its core mission and core objectives while leveraging IT resources as a source to provide services to the public.

5. Sustainability: Until now all the existing technologies and data centres had poor energy efficiency due to poor design and poor asset utilization which is now deemed to be environmentally and economically unviable. Cloud computing provides leveraging economies of scale and the capacity to manage assets more efficiently consuming far less energy and other resources. The nature of the technology sector is such that strategic interrelations with other companies are pursued in areas where fraternization can produce industry advancement and acceleration of new markets. An example of this is the recent fraternization with Citrix to offer Office services to business customers. There is the potential for several benefits and opportunities such as technology exchange, product development, joint sales and marketing, or newmarket creation. Currently Cisco has established strategic interrelations with companies such as: Accenture Ltd; AT&T Inc.; Cap Gemini S.A.; Citrix Systems, Inc.; EMC Corporation; Fujitsu Limited; Intel Corporation; International Business Machines Corporation; Italtel SpA; Johnson Controls Inc.; Microsoft
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Corporation; NetApp, Inc.; Nokia Corporation; Nokia Siemens Networks; Oracle Corporation; SAP AG; Sprint Nextel Corporation; Tata Consultancy Services Ltd.; VMware, Inc.; Wipro Limited; Xerox Corporation; and others.

Risk Factors

Cisco faces security- and trust-related threats in the infrastructure models of cloud computing. Trust in a cloud data centre centres on several significant concepts such as: Security: Traditional issues around data and resource access control, encryption, and incident detection are factors here. A cloud data centre would be achieved with cloud visibility and cloud protection aspects across all building blocks to ensure security. Control: The ability of the enterprise to directly manage how and where data and applications are deployed and used. Typically data unification can lead to greater insider threat; hence a compartmentalization strategy is a key component of data control. Moreover, unencrypted data in a cloud data centre should be considered as part of risk management and control policy. Compliance and service-level management (SLA): This concept refers to contracting and execution of service-level agreements between varieties of parties, and congruence with regulatory, legal, and general industry requirements. Interoperability: One of the future challenges that Cisco sees in the cloud environment is interoperability among the clouds. In a classic cloud use case scenario, enterprises would want to help ensure an exit or a transfer strategy across multiple clouds, thereby avoiding the perils of a vendor lock-in. Enabler Ecosystem: There are many complex domains within a cloud data centre infrastructure. Typical examples of these domains are computing, network, storage, security, software applications and service management. Within those domains, there are several areas of multiplicity, including integration, interoperability, operation, scalability, and compliance. Thus as
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enterprises start adopting private clouds, they would need a healthy ecosystem of cloud solution providers, which would ease the burden of the above mentioned multiplicity by providing interoperable, pre-integrated, pretested, pre-validated, and coordinated solutions.

Threat Profile

The above structure portrays the threat model of a cloud data centre and the measures that one can take to mitigate security risks. Additionally, the framework shows the overarching controls, compliance, and SLA components. The threat profile consists of elements such as service disruption, impingement, data leakage, data disclosure, data modification, and finally, identity theft and fraud. Set forth below are descriptions of the risks and dilemma that could cause Cisco s actual results to differ materially from the results contemplated by the company.

The factors include:

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Inconstancy in demand for the products and services, especially with respect to telecommunications service providers and Internet businesses. Changes in sales and implementation cycles for the products and reduced visibility into the customers pending plans and conjoined revenue. The ability to maintain appropriate inventory levels and purchase liability. Price and product competition in the communications and networking industries, which can change briskly due to technological modernization and different business models from various geographic regions. The overall movement towards industry consolidation among both the company s competitors and customers. The introduction and market acceptance of new technologies, products and success in new and evolving markets, including the New Products category and materializing technologies, as well as the adoption of new standards. Variations in sales channels, product costs, or mix of products sold. The ability of the customers, channel partners, contract manufacturers and suppliers to gain financing or to fund capital expenditures, especially during a period of global credit market severance. Share-based compensation expense. Company s ability to achieve targeted cost reductions. As a consequence, operating results for a particular future period are difficult to predict, and, therefore, prior results are not necessarily demonstrative of results to be expected in future periods. Any of the preceding factors could have a material adverse effect on Cisco s business, results of operations, and financial condition that could adversely affect its stock price.

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Cisco s competitors include Alcatel-Lucent; Arista Networks, Inc.; ARRIS Group, Inc.; Aruba Networks, Inc.; Avaya Inc.; Brocade Communications Systems, Inc.; Check Point Software.

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Marketing Plans
In order to successfully setup the new division, Cisco needs a good marketing plan and need to implement it with precision. Marketing is a process of identifying the needs, wants and demands of markets, thereby developing the right product and services at the correct price for the value and satisfaction and then offering it to the correct market. Detailed analysis of marketing plans required is discussed in this section.

Marketing Mix

Cisco will be able to control these tactical tools to invoke a positive response among the target market. Marketing mix involves the 4P s that form the base of marketing.  Product - By offering the service of cloud computing, Cisco is offering an industrial product aimed at large and small businesses. The core product that is at offer is the computing platform and infrastructure. Customers use this service to build, manage, secure and transform their businesses. Therefore it is important to offer the core product in all these variants and allow the customer to choose what s right for them. The actual product includes object storage, communication and database among many others.

By packaging the core with required actual products and augmented products like installation and set-up, the product can be made more appealing for the market. Selling products as a package can also increase the chances of sale for potential products like additional data storage and additional storage.

 Promotion Promotion mix is important in creating product awareness and building up sales. The promotion mix involves the following features and can be used to fulfil the advertising and marketing objectives of the company.
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 Advertising: Use of popular advertising means through television, radio and magazines can all be employed. An internet based campaign will be the most appropriate option as it will focus entirely on the target audience and will also reduce unnecessary spending.  Personal-selling: By making personal presentations to key target market audience the benefits of the product can easily be brought to their attention.  Sales-Promotion: Discounted prices and free augmented and additional products can be offered to gain initial market share.  Public-Relations: Cisco can highlight the new service area in its PR exercises. It can use its brand name and good corporate image to good effect to earn the new product good publicity.  Direct-Marketing: Cisco can make use of its large existing client share and customer loyalty to sell the new product one to one.  Place The product should be delivered to the customer mainly through internet. The existing company website should be modified to fit in the new section with required details and product options clearly mentioned. Various technological events like the London Tech Show can also be used as platform to promote and market the product. Emerging countries like China, India and Brazil should be key market of focus as they are some of the largest spenders in IT and cloud computing. Developed countries should automatically qualify as a key market as the total revenue in this sector is expected to around 55 billion by 2014.

 Price Some of the key factors that might affect the pricing of the product is shown in the figure below.

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For market penetration and initial market share new product pricing techniques can be used. Market-penetration pricing of setting a lower price first will suit this market as it is saturated with well-established competitors. Some of the pricing strategies that can be employed to increase the profit margins are outlined in the table below.

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The price adjustment strategies outlined in the table below can be used to stay ahead of the competitors in this particular sector. The implementation of these strategies will be the key to success of this section.

Extended Marketing Mix

How the people, process and physical environment will affect this new section is considered below.

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Internet Marketing Mix

The effect of internet has created further marketing mix which is vital to implement in a technology based sector like this. The measures that need to be undertaken are outlined in the diagram below.

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Undoubtedly, cloud computing is a ground-breaking idea for numerous business organisation. Ease of implementation, lower maintenance costs and larger workflow effectiveness are reason for which technologies will surely gain widespread popularity around the world for going forward. Cloud computing also presents itself as an all in one solution for the administrators working for the growing demand for IT in their individual companies. Therefore, being able to satisfy the growing IT needs as well as reducing energy usage all at a reasonable price. The company is in a growth stage with strong financial background so it can actually think of diversifying and target new markets with new products and services. But they need to make sure that they have in depth analysis of what kind of services can be offered and in what manner. It should use its strength and find out ways to overcome the weaknesses and make complete use of the opportunities available in the environment that will help them to minimize on the threats and competition.

Key Factors:y CISCO needs continuous research on competitors as it is a fast changing market; competitors will be introducing innovative product and services. So they should be well equipped with staffs that can adapt to the changes and overcome competitors. y Can make the suppliers their partners so that the bargaining power of the suppliers is less as then they would think the company as their own and everyone will work towards the betterment of the company thus helping to reach economies of scale as the company goes for expansion. y The target market for the service is divers so it will need to cater its products and services according to each kind of customers so a good knowledge of the markets is mandatory.
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y Should focus on flexibility more as the services are being offered to so many different levels of customers. In order to achieve customer satisfaction the emphasis on tailoring the services for the customers should be more. y Strategic alliances are beneficial and should be continued to build a good relationship with them as they reduce the pressure on the company itself and also helps in improvement of the kind of service provided. y Have to watch out for the risk factors, gaining trust and confidence of the customers that the services are secured. y The marketing strategies should be such so that they are cost effective and also meets the needs and demands of the customer. Thus overall the company should for this expansion which will be beneficial for all the stakeholders and increasing its customer bases and goodwill.

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y y y y y

y y y y y y y y

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