Saturday, November 12, 2011

THE RETURN OF CISCO THROUGH NEW STRATEGIES THIS YEAR.

Most corporations in the services and communications
industry take a battering whenever faced with either stiff competition or
global economic issues. Cisco is no different. Over the last few years the
company had struggled to grow profits with a strategy focusing on increasing non-core business activity.
Subsequently, though there was an growth increase in that aspect, overall
profit margins were left flagging.
My question for this multi-billion dollar company, with a known history of
successful profit growth, is what could be done to make a turn-around in a
market that demands lower prices, a customer base that is cutting expenditure,
and an economic fallout in one of their largest income markets in Europe.
The CEO John Chambers apparently has the answers.
He greeted analysts with the results of a revised strategy
that the organization employed this year and it seems to be yielding some
dividends, literally. Chambers states that :
“Our strategy and vision outlined in our 3 year plan is taking hold and
off to a very good start, and we have organized Cisco to successfully execute
against our strategy of providing intelligent networks, architectures and
integrated products that solve customers' business problems”1
Now coming from a tech services CEO, it may come off as a
clichéd rhetoric, but the post quarter results of 12% growth ending October 13th,
proves otherwise. Reacting to the change in the nature of the market and the
economic downturn, Cisco decided to quickly change it strategy from non-core
business to its core business in a certain sub field. It focusing on
high-definition telepresence solutions for private businesses which is expected
to yield 1.4 Billion dollars this year.
Another area that they quickly addressed was that a lot of their prospective
income came from public sector clientele. With governments under pressure to
tighten their budgets Cisco identified public sector business as a high risk
strategy and are making steps to lower that dependency even though there was
some growth. In my opinion this is a good move.
Chambers also addressed Europe and its fallout. He categorized Europe into 4
major sub markets and insisted that only 1 (Western Europe) had experienced a
hit and expects Cisco’s growth in that region to continue to expand. I’m not
too sure about that.
Is Chambers trying to steady the ship more than the seas will allow it to
improve market confidence? The figures
are pointing in the right direction. Let’s see what happens in the upcoming
quarters as only time will tell.

1.
http://money.cnn.com/2011/11/09/technology/cisco_earnings/index.htm

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