CISCO Business Strategy: Acquisitions for Market Expansion

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Business Strategy of CISCO: A Growing Empire of Networking Solutions

Name of Company: Cisco Systems

Business: Networking hardware company (Communications Equipment)

Number of Employee: 71,883 (May, 2016)

Year of foundation: 1984

Founder’s name: Leonard Bosack and Sandy Lerner (Husband & Wife)

Name of CEO: Charles Robbins (Source: Forbes World’s Most Valuable Brands)

Cisco was incorporated in December of 1984 in the state of California. The company is involved in the business of providing a number of internet related products and services. As per its website probably no other company is as involved with making the internet work for the people as Cisco. From internet infrastructure to connectivity solutions, there is a wide range of tools, products and services that Cisco provides so people can manage their sites without difficulty. Apart from it  Cisco is continuously devoted to the development of new products and services. A major strategy of brand expansion that the company has utilized in these thirty two years of its existence is acquisition. Cisco has acquired more than 150 companies in the meantime. Its acquisition strategy is aimed at adding new technologies and business models to Cisco’s business. At the basis of its growth strategy are market transitions. It strategically acquires companies that help it capture these market transitions.

The acquisitions made by CISCO can be put into three main categories. First are those aimed at market acceleration. Then come the ones aimed at market expansion and the third are the ones aimed at market entry.   The acquired companies bring assets, technologies, talent and multiple other things like products and solutions as well as new business models some times. The ones which Cisco is particularly after are those having the potential to reach billion dollar markets. After these businesses are acquired they are carefully integrated into the larger business model. Acquisitions are not successful unless complete integration is made strategically, efficiently and effectively. Cisco focuses a lot on this part so that the profits from these acquisitions can be maximized. It dedicates sufficient resources at both the corporate and functional levels right from the early diligence phase till the business reaches mainstream. However, continuous learning has enabled Cisco to perform its job of integration better. In terms of acquisition integration, Cisco has proved itself a leader and other companies to seek its advice on integration after they have made acquisitions. Cisco remains careful when it is about to acquire a new business. It does not just seek profitable business models. Instead the focus is on a shared vision of business and technology. Cultural integration is easier and more probable to be successful where core values match. It is how Cisco has continued on its growth spree by acquiring and successfully integration so many businesses with its own business.

Cisco has a large  number of competitors. The below list has been acquired from CISCO website. Some of these companies are focused at single products and many compete along several product groups.

  • Alcatel-Lucent (ALU)
  • Amazon Web Services LLC (AMZN)
  • Arista Networks, Inc. (ANET)
  • ARRIS Group, Inc. (ARRS)
  • Aruba Networks, Inc. (ARUN)
  • Avaya Inc. (AV)
  • Brocade Communications Systems, Inc. (BRCD)
  • Check Point Software Technologies Ltd. (CHKP)
  • Citrix Systems, Inc. (CTXS)
  • Dell Inc.
  • LM Ericsson Telephone Company (ERIAF)
  • Extreme Networks, Inc. (EXTR)
  • F5 Networks, Inc. (FFIV)
  • FireEye, Inc. (FEYE)
  • Fortinet, Inc. (FTNT)
  • Hewlett-Packard Company (HPQ)
  • Huawei Technologies Co., Ltd.
  • International Business Machines Corporation (IBM)
  • Juniper Networks, Inc. (JNPR)
  • Microsoft Corporation (MSFT)
  • Motorola Solutions, Inc. (MSI)
  • Palo Alto Networks, Inc. (PANW)
  • Polycom, Inc. (PLCM)
  • Riverbed Technology, Inc. (RVBD)
  • Ruckus Wireless, Inc. (RKUS)
  • Symantec Corporation (SYMC)
  • VMware, Inc. (VMW)…………………………………………These are the main competitors of CISCO.

Apart from these things customer orientation is also an important part of Cisco’s business strategy. The company has remained focused on forming long lasting customer relationships. Customers always come first and for any successful brand the first thing has been to identify their needs and produce solutions that fulfill them. Cisco has moved along the same path. Right since its inception, Cisco has focused on the concept of producing solutions that address customer challenges. Cisco is basically a provider of IP based networking products and services for the IT and communications industry. The company offers a broad range of products meant to carry data, voice and video within buildings and across campuses. Some of the important product offerings from Cisco are:

Switching: A form of networking technology used in both LANs and WANs. The switching products serve as aggregators for LANs and WANS as well as provide various forms of connective to the end users, IP phones, servers, access points etc. the blade switches [provided by Cisco have some great advantages. They are easier to deploy and operate and flexible. Users can configure the network topology as per the application needs.

Routers: Cisco’s Routers provide strong security and services to the networks. Apart from that with the Cisco routers the customers have better choices available to them. The payment options are also better with Cisco as  customers would have to pay based on their needs.

Apart from these, Cisco provides products and services across several groups like Clouds and Systems Management, Security, conferencing, customer collaboration,  Wireless, Video and even storage networking. The comprehensive networked video solutions and the medianet architecture provided by Cisco can provide improved security, collaboration, sharing and engagement for the video service users.   It also provides great video collaboration services for the businesses of all sizes so that they can connect with the people inside their ecosystem seamlessly. Service providers too can avail of video services provided by Cisco to deliver more content to the customers over a larger number of devices. Now, wireless is being increasingly used across organizations for the mobility it provides. Cisco can provide unmatched wireless services where the businesses can optimize the network for high density environments. It can provide a more personalized experience where the businesses can analyse visitor behavior and engage with the mobile customers on a more personal level. User data is also protected and the business gets strong network based security. Moreover, the businesses have better options to update their services as their needs grow bigger. This is the digital era where security and customer service have become an important priority for the businesses across industries. Cisco has acquired assets and technologies through time that enable it to better meet the needs of its customers spanning several industries.