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Cisco
Cisco Systems, Inc. is the worldwide leader in networking for the Internet. Cisco's Internet Protocol-based (IP) networking solutions are the foundation of the Internet and most corporate, education, and government networks around the world. Cisco provides the broadest line of solutions for transporting data, voice and video within buildings, across campuses, or around the world.
Cisco was founded in 1984 by a group of computer scientists from Stanford University. Since the company's inception, Cisco engineers have been prominent in advancing the development of IP- the basic language to communicate over the Internet and in private networks. The company's tradition of innovation continues today with Cisco creating leading products and key technologies that will make the Internet more useful and dynamic in the years ahead. These technologies include: advanced routing and switching, voice and video over IP, optical networking, wireless, storage networking, security, broadband, and content networking.
From Cisco’s business area we can easily define its strategic business intent. The strategic business intent of Cisco is:
“To become a leader in providing end-to-end networking solutions; to succeed in each individual line-of-business segment targeted; to forge strategic partnerships; to spearhead data/voice/video integration efforts; to recruit, retain and develop the top 10 percent of technology employees; to become number one in sales of high-end networking products and to promote Cisco’s IOSF (Internetworking Operating System) as the leading network services architecture. ”
In order to achieve this strategic business intent, Cisco has to always putting the customer first and changes itself to satisfy customers change. Another important aspect that Cisco has to pay attention is the feature of Internet technology. Development of Internet technology is rapidly growth since it was founded, and there is no fixed standard for information exchange. For example, we could find a case of Boeing decided to choose a networking technology based on switches but not Cisco’s routers in Cisco’s history. In order to satisfy customer’s need, the only way that Cisco could do is also to produce switches, which means Cisco has to diversify its business. However, Cisco lacked of human capital and knowledge at that time.
As we found from the case, the most important strategy that made Cisco success is product diversification.
What are the performances of Cisco’s product diversification strategy? Till to year 2000, Cisco has achieved unprecedented successes and has acquired and successfully integrated 70 companies into its fold. Cisco Systems passed a capitalization mark of $100 billion in 1998 only 14 years after it was founded. On 10th December 1999, Cisco became only the third company in history to go past the $300 billion mark in market capitalization. Since going public in 1990, Cisco’s annual revenue has increased from $69 million to $18.9 billion in fiscal 2000 – nearly 275 fold in 10 years. The financial highlights during 1993 to 2000 are show as Table 1