Cisco Systems Case Study Essay

5131 Words Oct 10th, 2010 21 Pages
Cisco Systems, Inc.

International Business Case Study

Executive Summary

Cisco Systems is a global market leader and innovator of computer communications and networking solutions. Established in the 1980’s, the company rapidly developed into the world’s greatest manufacturer of internet routers and was/is a foremost provider of commercial communication network devices. The aim of this case study report is to create an understanding of Cisco’s historical international business activities as well as explore their recent and current developments in international business management. The ‘Recent Development’ section details both Cisco’s main strategy of Acquisitions and how the company has operated under and coped with new management.
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Although routers and switches used to be the most profitable products of Cisco with a margin rate of 60%, the leaders of Cisco realized that the profitability would be diluted as network applications becomes more common than before, they will just turn out to be cheap necessities. As a strategy requires enhancement of an entity’s competitiveness and risk reduction, acquisition was considered to be most efficient means in the global crisis.

To maintain continuous rise in profitability, Cisco has to enter potential markets, which it has done internationally by acquisitions. According to Hill (2008), acquisitions have three major points in their favour: first, they are quick to execute; second, they enable firms to pre-empt their competitors; third, they are considered less risky than Greenfield venture. Chambers likes to get into the new fields through acquisitions with the first favour, hence a quick execution. Because of the non-technical background of the leader, instead of innovation of its own technique, it prefers to purchase an existing and better one from the market by the means of acquisition. If there is a more advanced technology, Cisco has no reason to insist on the risky and time-consuming creation and innovation. Due to the fast development of technology on daily basis,

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