Cisco Case

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Case Analysis

I. Viewpoint

John Chambers, CEO

II. Time Context

January 21, 2011

III. Objectives

a. To formulate a business strategy that will increase Cisco's revenue growth to 12-17% for the next ten years starting in 2011 amidst economic downturn in 2010.

b. To identify prospective new markets that Cisco can penetrate in 2011 to maintain its commitment to add 20 percent of business annually.

c. To properly invest Cisco's $35 billion company expansionary fund into 30 ventures and ensure $1 billion annual return from each venture.

d. To make a directive that will ensure Cisco to earn profit and avoid incurring more losses by the end of 2011. IV. Statement of the Problem

The economic downturn in 2010 threatens to undermine Cisco's expansionary programs to tap more revenue from the emerging collaboration market.

V. Areas Of Consideration

Cisco had been constantly increasing its annual revenue since 1995 through developing new technologies for the collaboration market and aggressive business expansion. However in 2010, Cisco's financial performance is down due to the economic downturn. This weak performance in 2010 can threaten the expansion program of Cisco for the succeeding and not be able to tap revenues from the emerging collaboration market.

Finance

a . Strengths- Cisco's allocation of $35 billion for business expansionary can potentially increase revenue by $30 billion in 2011.

b. Weakness - There is always a risk in investing in new, emerging markets because they are still untested. The recent economic downturn makes it all the more riskier.

c. Opportunities - There is a positive outlook for growth of collaboration market in Asia particularly in China and South Korea because of their drive for the information age. Cisco can further increase their investment in Asia with lesser chance of failure.

d. Threats - It will be very hard for Cisco to recover once its expansionary programs fail because of its huge scale.

VI. Alternative Courses of Action

a.) We will be more conservative in the expansion program and cut the expansion budget by $20 billion

b.) We will make a division that will create consumer based products.

c.) We will not invest our funds and new technologies to new market, rather we infuse them to our existing market .

d.) We will go ahead with the plan and aggressively expand to new markets using the entire $35 billion budget.

e.) We focus our expansionary efforts to China and South Korea

VII. Evaluation of ACAs

a.)
Strengths - We can dramatically decrease the chance of incurring more losses by lessening the scale of the expansion program. Weakness - With the smaller scale of expansion, there is a lesser chance to achieve the goal of increasing annual revenue by 12-17%. And we are not guaranteed that we will not incur any losses Opportunites - We invest only to markets that we think are the most prospective so there is lesser chance for failure. Threaths - While holding back, competitors can already penetrate new markets and have the first-mover advantage. Once that happens, it will very difficult for us to catch up.

b.)
Strengths - This can dramatically increase the market share and revenue of Cisco. It can be a future expansion focus. It can add additional profitable products to Cisco's already impressive portfolio. Weakness - Consumer based products is a forte of Cisco. Also Cisco's 61 new technologies can be wasted if they can't be modified for consumer based products. Opportunities- Cisco can use its experience and technology developing expertise for this venture. Asides, this is in lieu with Cisco's revenue generating strategy which is to expand in ventures related to information technology. Threats - It is a waste of time, effort and resources if not done right. Also competition in consumer based hi-technology devices is already tight with Apple, Microsoft...
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