Routing the Path to End-To-End Communication

An Analysis of Cisco Systems and how the use of Information Technology gave them a Competitive Advantage

Mira Vissell

ISM 158 Business Analysis Paper

March 4th, 2004
Table of Contents

Objective

Section I: Industry Summary: An Analysis of Network Equipment Industry
A. Industry Profile
B. Competitive Strategies within the Industry
C. Porter Model Evaluation of Industry Forces
D. Globalization of the Industry
E. Importance of Information Technology in the Industry

Section II: Company Perspective: An Analysis of Cisco Systems
A. Cisco Systems profile
B. Market and Financial Performance
C. Competitive Strategy Statement
D. Significance of Information and Information Systems
E. Strengths and Weaknesses of Cisco

Section III: Structured Analysis of Information System Use
A. Strategic Option Generator
B. Roles, Roles and Relationships
C. Redefine/define
D. Significance of Telecommunications
E. Success Factor Profile Section IV: A Final Analysis of the Success of Cisco Systems
A. The Success of Business Strategy and IT used to Date
B. The Effective Position of the Company for Future Performance Bibliography

Objective
The objective of this paper is to analyze how Cisco Systems gained competitive advantage in the networking industry through the use of information systems and key business strategies.
This paper has four sections that help in this analysis. The first section looks at the network equipment industry profile and examines the different competitive strategies within this industry. The porter model can be a way of examining the industry forces. It also looks at how companies in the industry are often forced to go global and how information systems have a huge impact of the competitive advantage of companies in the industry.
Section two deals with the company, Cisco, and takes a look at the profile of the company as well as key business leaders. The market and financial analysis shows how Cisco is doing relative to previous years and the importance of information technology shows how Cisco has gained a competitive advantage over competitors. The strengths and weaknesses of Cisco are also examined to help understand Cisco’s standing.
The third section takes a deeper look into how information technology has helped Cisco and the fourth section is a final analysis of the success of Cisco and how IT has helped them gain a competitive advantage.
The fourth section is a final summary of how Cisco is positioned.

Section I: Industry Summary: An Analysis of Network Equipment Industry

A. Industry Profile
The network equipment industry is made up of companies providing networking equipment to ISP servers, large corporations and other businesses or small offices. Companies that compete in this industry are companies that focus on network equipment parts such as routers and switches as their main source of revenue. Cisco is the primary company for routers and has a large market share in such services as switches, cables and network software. Other products they offer are remote access servers, Internet Protocol telephony equipment for transmitting data and voice over the same network, optical networking components, and network service and security systems. They are trying to enter into the telecommunications market, however they are still struggling for recognition. It is still safe to say they are of the network equipment industry. The main competitors in the networking equipment market are Cisco, Nortel, Lucent and Juniper.

Net Income ($ million)
Company
1998
1999
2000
2001
2002
2003
Cisco1
1,350.10
2,096.00
2,668.00
-1,014.00
1,893.00
3578
Nortel2
-593
-257
-2,995.00
-24,307.00
-3,585.00
N/a
Lucent3
970
4,766.00
1,219.00
-16,198.00
-11,753.00
-770
Juniper4
-30.9
-9
147.9
-13.4
-119.7
N/a
Figure 1.1

Nortel Networks is a huge competitive force in the network equipment industry. With its acquisition of Bay Network Nortel in 1998 they now have expertise