Cisco Systems

5 Pages 1219 Words

Overall impression of Cisco’s business model – strengths/weaknesses: I found that Cisco has changed its business model several times to reflect changing market needs and economies. In 1993, Cisco had to realize that the growth of the Internet was creating a demand for technology other than their routers. They set about adopting a strategy to become either the number 1 or number 2 player in each market. They planned to have their company own, develop and market an array of network products and standards as the market demanded them. One of their objectives was to provide a complete solution for businesses. They knew the only way to do that was through acquiring other companies with the needed technologies. In 1997, the business model had to change again when John Chambers realized that the future of the Internet was over IP networks. They moved their strategy to all areas of telecommunications from the end-user to the network backbone, focusing on Digital Subscriber Lines, multi-service products, and
Fiber-Optic equipment.
Is their acquisition/integration strategy a sound strategy (what are the benefits, what are the potential pitfalls with this approach? The acquisition strategy does seem to work for Cisco. It enables Cisco to own, develop and market an array of network products and standards, as the market demands them. The process includes investigating buying start-up companies if they decide that it is too far behind its competitors to take the time to build the product from scratch. They knew they couldn’t possibly develop all the products on their own. They target companies for potential acquisitions that usually have complimentary technologies to Cisco. If they are unsure about the success of a potential acquisition, they acquire a small share of the company and wait for market forces to determine the outcome. Cisco will then acquire the company if it proves to be successful. Cisco has developed a four-s...