Cisco Systems Inc. is an IT company that operates in the Telecommunications Infrastructure. The company designs manufacture and sell network-based infrastructure, internet protocols, and other products that are related to communications and IT.
In this article, we cover the SWOT analysis of Cisco which consists of internal strategic factors; strengths and weaknesses, and external strategic factors; opportunities, and threats. Before jumping to the detail of Cisco’s SWOT analysis, let’s go through the key highlight of the company.
Cisco – At a Glance
| Name | Cisco Systems, Inc. |
| Website | https://www.cisco.com/ |
| Founders | Leonard Bosack and Sandy Lerner |
| Chief Executive Officer (C.E.O.) | Chuck Robbins |
| Headquarters | San Jose, California |
| Type of Corporation | Public |
| Year Founded | December 1984 |
| Revenues (2019) | $51,904 million (FY 2019) |
| Key Products/Services | VoIP services, Hosted Collaboration Solution (HCS), Network Emergency Response, Certifications |
| Key Competitors | Junipter, IBM, HP, Checkpoint, Aruba, Microsoft, Polycom, Avaya, |
Cisco’s Strengths
Leader in Technology Manufacturing
The company is a leader in the technology industry having designed and manufactured technologies that mainly serve the high-growth markets.
Strong financial performance
Strong Growth Strategy
The company employs an aggressive growth strategy. In addition to well self-developed technologies, the company focuses on the acquisition of new and well-developed technologies. Its strong growth over the last years has been attributed to this strategic acquisition of innovations and technologies that best suit its customer’s rapidly changing needs and wants.
Strong Products across its Segments
Cisco takes the leadership position in the market segments that it serves. The market segments include routing, switching, and their associated services that include among others mobility solutions and comprehensive security. Cisco retained the leader position in 2020 by a 35.7% market share in the enterprise router segment and had almost a 50% market share in the Ethernet switching market segment. The company has a 42.6% market share in video conferencing equipment and over 9% in the enterprise security market. Further in emerging markets like India where the company has a market share of more than 60% in 2020.
Presence across the High-Growth Product Segments
Cisco has a huge presence in the wireless, and networking business segments. With increased internet presence and the need for data, there will be increased demand for data centers, high-speed devices, and cloud computing among others. Given Cisco already has a leading presence in these areas, the company will reap heavily from these growths.
According to industry predictions, wireless, data center, and service provider video end markets will drive growth in the IT industry. This is attributed to the low cost and effectiveness of cloud computing that will attract higher levels of demand for the cloud. There is also the rising demand for handheld devices as well as the increased sales of high-speed wireless gadgets; these will see a dramatic increase in the demand for Cisco’s wireless products. Similar growth is envisioned in the service provider video market segment. With these segments generating high growths for CISCO, the company envisions stronger days.
Cisco’s Weaknesses
Weak Supply Chain
Cisco’s products are of top-notch quality but there are a number of times customers have had to deal with delayed orders arising from issues in the supply chain.
Cisco’s Opportunities
Strong Financial Performance
Strong free cash flows provide the company with capabilities to invest in innovative and in adjacent product segments. It can invest in novel technologies and new products.
New technologies and innovation
New technologies provide Cisco company with the opportunity to innovate and as well practice differentiated pricing strategies for their new markets. Cisco could leverage the new technologies
Favorable Policies and Regulations
Policies that favor technological innovations and those that favor green initiatives and environmental preservation offer Cisco more opportunities for growth given the company is already practicing green manufacturing. Opportunities in cloud computing
According to a study done by Fortune Business Insights, the cloud computing market size is expected to grow from USD 250.04B in 2021 to USD791.48B in 2028 with a CAGR of 17.9%. The strong presence of Cisco in this market segment is expected to significantly increase the company’s revenues with every industry growth.
Growth Opportunities in Software Market
The global software market was valued at USD 389.86B in 2020, it expanded to USD 429.59B and is expected to reach USD 911.77B at a CAGR 11.3% from 2021 to 2028. Cisco has great opportunities to strategically maximize its growth and expansion with this growth.
Growth Opportunities in Cloud Security
The global cloud security market is valued at USD 179.96B and is expected to grow at a growth rate of 10.9% to reach USD 372.04B in 2028. Cisco has a lot of room for innovation and growth in this market segment. With the right strategic strategy, Cisco’s revenues from this segment could dramatically increase their revenues and earnings.
Cisco’s Threats
Stiff Competition
Cisco faces stiff competition from numerous companies. They include Huawei Technologies; AmazonWeb Services; Microsoft; Alcatel-Lucent; PaloAlto Networks; ARRIS Group; Blue Jeans Networks; Arista Networks; Avaya; Extreme Networks; Symantec; Brocade Communications; Citrix Systems; Check Point Software Technologies; F5 Networks; Dell; LM Ericsson; FireEye; Ubiquiti Networks; HP; IBM; Fortinet; Juniper Networks; Motorola Solutions; Polycom; Riverbed Technology; Ruckus Wireless; and VMware.
New Technologies
Competitors could develop a product that could disrupt the industry and provide a more efficient product for the market thus rendering Cisco’s products obsolete.
Conclusion
Cisco is a force to reckon with in the IT industry with its novel inventions, acquisitions, strong growth strategy, and strong products. The company however has immense opportunities for expansion. Thankfully, these opportunities are in respect to the company’s product lines of operation. And while competition is fierce, Cisco is already a leader in the industry and therefore has competitive advantages that will ensure the company stays ahead of the competition.
