402final report - finallll__plz add the graphs and reduce words

8/3/2019 402Final Report - FINALLLL__plz Add the Graphs and Reduce Words

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1 | P a g e Group -3

BUSINESS REPO RT ON

Cisco Systems

ELE402-ENTERPRISE MANAGEMENT

Group Membe rs:

Mr. Prathmesh Kaneri (ec)

Mr. Amith Mohan(ec)

Mr. Dharmit Gandhi (ec)

Mr. Ayush Abrol (ec)

Mr. Safat Mahmood (ec09512)


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Table of Contents

Summary of Responsibilities ............................................................................................................... 2

Individual Member 1 Contribution: Dharmit Gandhi ...... ....... ....... ....... ....... ....... ........ ...... ...... ...... ... 3Individual Member 2 Contribution: Ayush Abrol ...... ....... ....... ....... ....... ....... ........ ...... ...... ...... ...... ... 3

Individual Member 3 Contribution: Prathmesh Kaneri .................................................................... 3

Individual Member 4 Contribution: Amith Mohan .......................................................................... 3

Individual Member 5 Contribution: Safat Mahmood ...................................................................... 3

Introduction ....................................................................................................................................... 3

External Analysis ................................................................................................................................ 4

Strategic Analysis ............................................................................................................................... 9

Marketing Plans ............................................................................................................................... 17

Conclusion ....................................................................................................................................... 22

References ....................................................................................................................................... 24

Summary of Responsibilities


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Individ ual Membe r 1 Cont r ibu ti o n : Dhar m it Ga nd h i

Dharmit Gandhi wrote the Introduction section and a part of External Analysis

Individ ual Membe r 2 Cont r ibu ti o n : Ayus h Ab rol

Individ ual Membe r 3 Cont r ibu ti o n : P ra t hme sh Ka n e r i

Individ ual Membe r 4 Cont r ibu ti o n : Am it h M o ha n

Individ ual Membe r 5 Cont r ibu ti o n : Safa t Ma hm oo d

Safat Mahmood wrote the conclusion section and did background research onmarketing plans.

Introduction


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Cisco currently competes in the networking and communications equipmentmarkets, providing products and services for transporting data, voice, andvideo traffic across intranets, extranets, and the Internet. These markets arecharacterized by rapid change, converging technologies, and a migration tonetworking and communications solutions that offer relative advantages. Thesemarket factors represent both an opportunity and a competitive threat to thecompany. Cisco competes with numerous vendors in each product category.Also, the identity and composition of competitors may change as the companyincreases its activity in the New Products markets. As the company continuesto expand globally, new competition in different geographic regions arises. Inparticular, price-focused competition from competitors in Asia, especially fromChina is anticipated.

Insert graph showing share prices over the past 18 months here

Ex ternal Analysis

Internal Analysis - How has Cisco done over the past 18 months?


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In response to current market conditions, Cisco is in the throes of acompanywide transition away from the switches and routers that form the

bedrock of its business toward new markets to fuel future growth -- and theshift is affecting Cisco's revenue.

The transition is broader and more profound than just a product line overhaul,and the company is struggling with new competitors, customers, pricingstrategies and profit pressures.

In fact, reinventing itself means Cisco has been forced to scale back its growthambitions, cutting its 12% to 17% annual growth targets to more modest 9% to11% in fiscal 2011.

"The 12% to 17% growth target is causing them to be much more aggressive intargeting new markets to sell into that they are taking their eye off the ball,"says Zeus Kerravala of the Yankee Group, referring to Cisco's plan to address 30or more market adjacencies. "Why wouldn't they stick to the stuff they do welland move into 10 markets instead of 30? You can't continually grow at 17%when you're a $40 billion company."

For the first time in company history, revenue in Cisco's core routing andswitching markets has been overtaken by sales of new products and associatedservices in data center, virtualization, video, collaboration and mobility.

Insert graph here showing the change of revenue from routing andswitching markets

"As customers continue to transition from traditional router and switchproducts to Cisco's next-generation products and services, the company willneed to take a hard look at restructuring itself in order to meet the revenue

growth and margin expectations it has set with the market". In Cisco's secondfiscal quarter, switching revenue was down 7% from last year and 11% from thefirst quarter. Routing revenue was up 4% from last year but down 7% from Q1.

What are the external and internal factors for this change? Possibly insertcompetitors here


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Data center and enterprise sales helped drive Cisco's better than expected Q2,but a major product transition is crimping switch sales. Data center was ahighlight in the quarter, with product sales growing 59% year-over-year.

Insert graph showing growth hereEnterprise order growth was in the high 20% range, while orders overall wereup 8%. Collaboration is on a $4 billion run rate,

But switching was a lowlight in the quarter. Revenue was down 7% andChambers attributed it to transitioning the $10+ billion Catalyst base to newmodels and product lines. For Q2 the company posted revenue of $10.4 billionand adjusted earnings per share of $0.37. Overall product revenue was $8.2billion, up 3% from last year. Thirty-nine percent of product revenue was fromnew product categories, like collaboration and video. Routing was up 4%. AndCisco landed 40 new data center customers in the quarter, double that of Q1,Chambers said.

Weak areas in the quarter were public sector, set top boxes, and consumerproducts, which is 2% of Cisco's business. Order growth in the public sector willbe "challenged" in the coming quarters, Chambers said.

For Q3, Cisco guided to revenue 4% to 6% higher than last year's Q3, which iswithin analyst estimates. And Q4 should be 8% to 11% better than last year's.But Q3 earnings could be off as much as 16% from last year.

Microeconomic Factors

Suppliers, customers, stakeholders, intermediaries, competitors


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Currently Cisco faces fierce competition in the hardware end of its businessfrom a variety of companies. Cisco s competitors within the switching androuting sector include Alcatel-Lucent; Arista Networks, Inc.; ARRIS Group, Inc.;Aruba Networks, Inc.; Avaya Inc.; Brocade Communications Systems, Inc.;Check Point Software, Huawei. Other competitors in other sectors include:

Macro Economic Factors

Within Economic, technological, social/cultural, political/legal sectors Ciscofaces a changing face of focus with the emergence of Asia especially China andthe companies from there which are competing against it in the routing and

switchgear business, driving margins down. This has resulted in lower revenuesbut a maintenance of market share within that industry. This general shift fromhardware to software related industries has been reflected in recent times withthe shift of companies like HP and IBM to focus on services and high endbusiness solutions rather than traditional hardware which has begun tobecome commodious. The global shift towards high tech development and the jobs created around the world as a result also means there are plenty of globalbusiness opportunities to expand into. However the focus on America hasmeant that Cisco has fallen behind in emerging nations where growth isforecast such as India and China.

Evaluation of factors influencing key organisation changes

Overall the above factors have resulted in a shift from Cisco into new marketsand they have attempted to accomplish this over the past 18 months byacquiring and collabarating with software and services based companies. A fewrecent acquisitions have been Versly, a privately-held companythat develops collaboration tools that integrate with Microsoft Officeapplications. With the acquisition of Comptel s Axioss Software for $31 Million,Cisco hopes to extend network and service management technologies acrossits IP-based network platforms and enable service providers to more quickly


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launch new video, data, mobility and cloud services to their customers, using asingle management architecture. Cisco also has bought Clouds Automation andManagement Software Company NewScale which will complement and expandits existing IT and cloud management and automation software offerings. Ciscoannounced that it has completed its acquisition of privately-held PariNetworks, a provider of network configuration and change managementsolutions, in an effort to complement its own smart service capabilities.Cisco this morning said it intends to purchase LineSider Technologies, aprivately-held network management software based out of Danvers,Massachusetts. LineSider markets software that enables companies to buildnetwork services and securely create and deploy cloud computinginfrastructure. Cisco says LineSider will enhance its ability to rapidly provision

network services to its clients. In addition to providing Cisco with advancednetwork management technology, the company says the deal would bring anexperienced engineering team to the company. Upon the close of theacquisition, the LineSider team will become part of Cisco s NMTG.

There has been a shift away from hardware with for example the phasing outof the Flip line of camcorders and the axing of 550 employees.

SWOT analysis


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Based on these factors we have done a SWOT analysis to visualise what newmarket areas Cisco should target for future growth. The figure below provides abriefing of the factors that are to be considered while doing the analysis.

Based on the analysis we have done our area of interest in this report will be toexploit the area of cloud computing being introduced by Cisco and the threatsand opportunities related to this new technology.

Strategic Analysis


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Insert Porters five forces model of competition here

Opportunities and Strategic Alliances

The primary opportunity for Cisco is presented by cloud computing, wherethere is much more promise for the company. Cloud computing enables Ciscoto directly provide platforms to customers eliminating traditional solutionplatform providers, such as Microsoft. Using cloud computing more servicescan be offered from the cloud, rather than installing on specific on-premisesplatforms such as Windows. This is a huge opportunity for Cisco to move intosoftware based market adjacencies that enables networking of people or

companies. With this venture Cisco can provide public sector and federalgovernment agencies with strategy, architecture, and solutions for cloudcomputing. Cloud computing is a means to deliver IT resources and services ina conceptual manner from underlying components, with characteristics such ason-demand, at- scale and multitenancy. These characteristics directly affect thecost savings both the operating and capital expenses while also enhancing theflexibility of IT services.

Taking a cumulative look at cloud computing Cisco anticipates that there will be

different types of clouds (public, private, virtual, and inter-clouds), and variousservices (software, platform, and infrastructure) would be delivered via a cloudmarketplace. One of the eventual goals of Cisco is to facilitate federation andinteroperability services via network enablement among a considerablenumber of marketplace clouds. Cisco brings key groundworks and collectivetechnology building blocks, which will initially capacitate adoption of cloudcomputing to an IT organization using private cloud data centres. The goal of these private cloud data centres is to gradually extend externally to gain and

expand IT services leading them to be customer friendly.Using cloud computing public sector and federal government entities are beingenabled with the ability to access infrastructure how and when they choose.Cloud computing can be provided using various sources such as an enterprise sdata centre, a cloud provider or a government cloud.


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Cisco defines cloud computing via three key attributes which include:

On-demand: This attribute makes sure that resources can be arrangedimmediately when needed, released when no longer required and billed only

when used. At-scale: To make sure all demands are taken care of the service provides the

illusion of infinite resource availability.

Multitenant environment: In order to notably reduce the provider costs theresources are provided to many consumers using a single implementation.

Cisco Clou d Da t a Cent re Ev olu ti o n P a t h

Cloud computing brings with it a number of advantages namely:

1. Reduced Cost: A company s cost can be divided into two sections: CostExand OpEx. Due to cloud computing a company does not need to buildinfrastructure for maximum capacity and can spend in increments of

required capacity reducing the CapEx. The OpEx constitutes the majorityof spending therefore, by exploiting a cloud provider or adopting internalclouds, organizations can cut down on functional and maintenancefunds.


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2. Flexibility: In public sectors, cloud computing provides brisk attainmentand acquisition of processes and timelines which assists in providingflexibility from rapid provisioning of new capacity and rapid relocation ormigration of workloads.

3. Improved Automation: The main basis of cloud computing is theargument that services can also be de-provisioned in a highly automatedfashion making this specific attribute highly significant in providingefficiencies to enterprises.

4. Focus on Core Competency: Cloud computing allows governmentagencies to focus on its core mission and core objectives while leveragingIT resources as a source to provide services to the public.

5. Sustainability: Until now all the existing technologies and data centreshad poor energy efficiency due to poor design and poor asset utilizationwhich is now deemed to be environmentally and economically unviable.

Cloud computing provides leveraging economies of scale and thecapacity to manage assets more efficiently consuming far less energyand other resources.

The nature of the technology sector is such that strategic interrelations withother companies are pursued in areas where fraternization can produceindustry advancement and acceleration of new markets. An example of this isthe recent fraternization with Citrix to offer Office services to businesscustomers. There is the potential for several benefits and opportunities such as

technology exchange, product development, joint sales and marketing, or new-market creation.

Currently Cisco has established strategic interrelations with companies such as:Accenture Ltd; AT&T Inc.; Cap Gemini S.A.; Citrix Systems, Inc.; EMCCorporation; Fujitsu Limited; Intel Corporation; International BusinessMachines Corporation; Italtel SpA; Johnson Controls Inc.; Microsoft


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Corporation; NetApp, Inc.; Nokia Corporation; Nokia Siemens Networks; OracleCorporation; SAP AG; Sprint Nextel Corporation; Tata Consultancy Services Ltd.;VMware, Inc.; Wipro Limited; Xerox Corporation; and others.

Risk Factors

Cisco faces security- and trust-related threats in the infrastructure models of cloud computing. Trust in a cloud data centre centres on several significantconcepts such as:

Security: Traditional issues around data and resource access control,encryption, and incident detection are factors here. A cloud data centre wouldbe achieved with cloud visibility and cloud protection aspects across allbuilding blocks to ensure security.

Control: The ability of the enterprise to directly manage how and where dataand applications are deployed and used. Typically data unification can lead togreater insider threat; hence a compartmentalization strategy is a keycomponent of data control. Moreover, unencrypted data in a cloud data centreshould be considered as part of risk management and control policy.

Compliance and service-level management (SLA): This concept refers tocontracting and execution of service-level agreements between varieties of parties, and congruence with regulatory, legal, and general industryrequirements.

Interoperability: One of the future challenges that Cisco sees in the cloudenvironment is interoperability among the clouds. In a classic cloud use casescenario, enterprises would want to help ensure an exit or a transfer strategyacross multiple clouds, thereby avoiding the perils of a vendor lock-in.

Enabler Ecosystem: There are many complex domains within a cloud datacentre infrastructure. Typical examples of these domains are computing,network, storage, security, software applications and service management.Within those domains, there are several areas of multiplicity, includingintegration, interoperability, operation, scalability, and compliance. Thus as


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enterprises start adopting private clouds, they would need a healthy ecosystemof cloud solution providers, which would ease the burden of the abovementioned multiplicity by providing interoperable, pre-integrated, pretested,pre-validated, and coordinated solutions .

Threa t P rof ile

The above structure portrays the threat model of a cloud data centre and themeasures that one can take to mitigate security risks. Additionally, theframework shows the overarching controls, compliance, and SLA components.The threat profile consists of elements such as service disruption,impingement, data leakage, data disclosure, data modification, and finally,identity theft and fraud.

Set forth below are descriptions of the risks and dilemma that could causeCisco s actual results to differ materially from the results contemplated by thecompany.

The factors include:


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Inconstancy in demand for the products and services, especially with respect

to telecommunications service providers and Internet businesses.

Changes in sales and implementation cycles for the products and reduced

visibility into the customers pending plans and conjoined revenue.

The ability to maintain appropriate inventory levels and purchase liability.

Price and product competition in the communications and networking

industries, which can change briskly due to technological modernization anddifferent business models from various geographic regions.

The overall movement towards industry consolidation among both the

company s competitors and customers.

The introduction and market acceptance of new technologies, products and

success in new and evolving markets, including the New Products category andmaterializing technologies, as well as the adoption of new standards.

Variations in sales channels, product costs, or mix of products sold.

The ability of the customers, channel partners, contract manufacturers and

suppliers to gain financing or to fund capital expenditures, especially during aperiod of global credit market severance.

Share-based compensation expense.

Company s ability to achieve targeted cost reductions.

As a consequence, operating results for a particular future period are difficultto predict, and, therefore, prior results are not necessarily demonstrative of results to be expected in future periods. Any of the preceding factors couldhave a material adverse effect on Cisco s business, results of operations, andfinancial condition that could adversely affect its stock price.


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Cisco s competitors include Alcatel-Lucent; Arista Networks, Inc.; ARRIS Group,Inc.; Aruba Networks, Inc.; Avaya Inc.; Brocade Communications Systems, Inc.;Check Point Software.


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Marketing Plans

In order to successfully setup the new division, Cisco needs a good marketing

plan and need to implement it with precision. Marketing is a process of identifying the needs, wants and demands of markets, thereby developing theright product and services at the correct price for the value and satisfaction andthen offering it to the correct market. Detailed analysis of marketing plansrequired is discussed in this section.

Marketing Mix

Cisco will be able to control these tactical tools to invoke a positive responseamong the target market. Marketing mix involves the 4P s that form the base of marketing.

Product - By offering the service of cloud computing, Cisco is offering anindustrial product aimed at large and small businesses. The core productthat is at offer is the computing platform and infrastructure. Customers usethis service to build, manage, secure and transform their businesses.Therefore it is important to offer the core product in all these variants and

allow the customer to choose what s right for them. The actual productincludes object storage, communication and database among many others.

By packaging the core with required actual products and augmentedproducts like installation and set-up, the product can be made moreappealing for the market. Selling products as a package can also increasethe chances of sale for potential products like additional data storage andadditional storage.

Promotion Promotion mix is important in creating product awareness andbuilding up sales. The promotion mix involves the following features andcan be used to fulfil the advertising and marketing objectives of thecompany.


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Advertising: Use of popular advertising means through television, radioand magazines can all be employed. An internet based campaign will bethe most appropriate option as it will focus entirely on the targetaudience and will also reduce unnecessary spending.

Personal-selling: By making personal presentations to key target marketaudience the benefits of the product can easily be brought to theirattention.

Sales-Promotion: Discounted prices and free augmented and additionalproducts can be offered to gain initial market share.

Public-Relations: Cisco can highlight the new service area in its PRexercises. It can use its brand name and good corporate image to goodeffect to earn the new product good publicity.

Direct-Marketing: Cisco can make use of its large existing client share andcustomer loyalty to sell the new product one to one.

Place The product should be delivered to the customer mainly throughinternet. The existing company website should be modified to fit in the newsection with required details and product options clearly mentioned.Various technological events like the London Tech Show can also be used asplatform to promote and market the product. Emerging countries like China,

India and Brazil should be key market of focus as they are some of thelargest spenders in IT and cloud computing. Developed countries shouldautomatically qualify as a key market as the total revenue in this sector isexpected to around 55 billion by 2014.

Price Some of the key factors that might affect the pricing of the product isshown in the figure below.


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For market penetration and initial market share new product pricingtechniques can be used. Market-penetration pricing of setting a lower pricefirst will suit this market as it is saturated with well-established competitors.

Some of the pricing strategies that can be employed to increase the profitmargins are outlined in the table below.


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2 0 | P a g e Group -3

The price adjustment strategies outlined in the table below can be used to stayahead of the competitors in this particular sector. The implementation of thesestrategies will be the key to success of this section.

Extended Marketing Mix

How the people, process and physical environment will affect this new sectionis considered below.


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2 1 | P a g e Group -3

Internet Marketing Mix

The effect of internet has created further marketing mix which is vital toimplement in a technology based sector like this. The measures that need to beundertaken are outlined in the diagram below.


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Co nclusi o n

Undoubtedly, cloud computing is a ground-breaking idea for numerous

business organisation. Ease of implementation, lower maintenance costs andlarger workflow effectiveness are reason for which technologies will surely gainwidespread popularity around the world for going forward. Cloud computingalso presents itself as an all in one solution for the administrators working forthe growing demand for IT in their individual companies. Therefore, being ableto satisfy the growing IT needs as well as reducing energy usage all at areasonable price.

The company is in a growth stage with strong financial background so it can

actually think of diversifying and target new markets with new products andservices. But they need to make sure that they have in depth analysis of whatkind of services can be offered and in what manner.

It should use its strength and find out ways to overcome the weaknesses andmake complete use of the opportunities available in the environment that willhelp them to minimize on the threats and competition.

K ey Fact o rs:-

y CIS CO needs continuous research on competitors as it is a fast changingmarket; competitors will be introducing innovative product and services.So they should be well equipped with staffs that can adapt to thechanges and overcome competitors.

y Can make the suppliers their partners so that the bargaining power of the suppliers is less as then they would think the company as their own

and everyone will work towards the betterment of the company thushelping to reach economies of scale as the company goes for expansion.

y The target market for the service is divers so it will need to cater itsproducts and services according to each kind of customers so a goodknowledge of the markets is mandatory.


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y Should focus on flexibility more as the services are being offered to somany different levels of customers. In order to achieve customersatisfaction the emphasis on tailoring the services for the customersshould be more.

y Strategic alliances are beneficial and should be continued to build a goodrelationship with them as they reduce the pressure on the companyitself and also helps in improvement of the kind of service provided.

y Have to watch out for the risk factors, gaining trust and confidence of thecustomers that the services are secured.

y The marketing strategies should be such so that they are cost effective

and also meets the needs and demands of the customer.Thus overall the company should for this expansion which will be beneficial forall the stakeholders and increasing its customer bases and goodwill.


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R eferences

y https://greenpages.eecs.qmul.ac.uk/courseinfo/ele402/documents/ELE402Topic5_6pp.pdf y http://marketingteacher.com/lesson-store/lesson-process.html y http://www.sayeconomy.com/extended-marketing-mix-7-ps/ y http://en.wikipedia.org/wiki/Cloud_computing y http://www.itproportal.com/2011/11/01/huawei-open-building-partnerships-companies-

experienced-cloud-computing/

y http://techcrunch.com/2011/08/29/cisco-acquires-collaboration-software-maker-versly/

y http://techcrunch.com/2011/08/22/cisco-to-buy-comptels-axioss-software-assets-for-31-million-in-cash/

y http://techcrunch.com/2011/03/29/cisco-buys-cloud-automation-and-management-software-company-newscale/

y http://techcrunch.com/2011/03/02/cisco-completes-acquisition-of-pari-networks-started-by-former-cisco-execs/

y http://techcrunch.com/2010/12/01/cisco-linesider/

y http://www.engadget.com/2011/05/13/cisco-phasing-out-flipshare-30-days-to-save-your-videos/

y http://www.engadget.com/2011/04/12/cisco-killing-flip-line-of-camcorders-shakes-fist-at-hd-recordi/

y http://is002.sbpauog.us/The%20Website/performance-conclusion.html

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