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Designing a successful and practical business model is a crucial step in the development of every business. Various companies in different industries in any arena pay substantial attention to creating effective strategies that address significant elements necessary for sustainable development and growth. The business model expresses the logic and other factors “that support a value proposition for the customer and a viable structure of revenues and costs” (Massa et al., 2017:75).
In such a way, generating concrete and efficient model for the business becomes an increasingly essential concept for the organizations in numerous spheres. It is beneficial to investigate this idea on the example of a real company to assess contributing elements. This paper aims to analyze the business model of Cisco Systems, Inc., and identify its fundamentals, including value proposition, revenue model, market opportunity, competitive environment, market strategy, and others.
Cisco is the worldwide leader in information technology, information systems, networking solutions, and cybersecurity. The company represents a business entity focused on innovation and seizing the opportunities that contemporary IT developments offer. Various catchy headlines on the official website encourage individuals to think outside of the box and believe that everything is possible. For example, Cisco states that “Between hope and possible, there is a bridge” and “Cisco technology is creating a world of potential” (Cisco Systems, no date).
The company was founded in 1984, aiming to solve the challenges that businesses face every day, which led to the birth of a multiprotocol router, without which it isn’t easy to imagine life today (Cisco Systems, no date). Throughout the years of operations, the organization brings numerous products, including software, security, cloud storage, collaboration opportunities, mobility and wireless systems, and the Internet of Things.
With a wide range of goods and services, Cisco aspires to meet the needs and preferences of the fast-changing world and adapt to it through multiple IT solutions. One of the most significant aspects of a business model is a value proposition. In Cisco, they offer “to accelerate business value with new revenue streams and improved customer services” (Cisco Systems, 2014).
Hence, the company states the advantages that businesses can withdraw through the integration of its products and services, where they help plan, build, and manage service capabilities. Cisco emphasizes that it can help to speed deployment of differentiated services, reduce deployment risk, improve efficiencies and TCO, and ensure an architectural approach (Cisco Systems, 2014). In other words, the organization offers all possible ways to improve the quality of customer services for other businesses. Thus, the value proposition concentrates on what is essential for the firms and outlines highly beneficial outcomes.
Cisco utilized multiple strategies that add to the revenue model. The company’s profit formula’s primary focus is to recur revenues, introduce networking products, buy, build, invest, partner, and co-develop, and focus on software development (Salwan and Sharma, 2018). Therefore, the corporation strives to generate revenues by offering the best quality of information technology equipment, services, subscriptions, certifications, and other channels and decreasing the costs through partnering activities.
For instance, launching WebEx, Spark, and Telepresence, acquiring Appdynamics and Viptela, or innovating an intuitive network Encrypted Traffic Analytics (ETA) became significant steps in the company’s revenue growth (Salwan and Sharma, 2018). It is possible to say that Cisco’s emphasis on obtaining integrated business solutions, investing in future technologies, and focusing on collaboration and security are the core elements of sustainable revenue progression.
The next crucial aspects of the business model are market opportunities and market strategy, which have a unique approach at Cisco. The company believes that integrating strategic collaboration, combining it with employees’ capabilities, enabling them to unleash the talents, and applying it to the emerging market opportunities can generate outstanding results (Kodama et al., 2017).
Consequently, Cisco focuses on utilizing existing resources to recognize the opportunities and seize them at high speed and spectrum. The continuous emphasis on innovation and delivering excellent solutions that respond to customers’ needs and collaboration are at the core of the corporation’s market strategy.
Operating in a competitive high-tech environment and sustaining a robust competitive advantage is critical for Cisco to maintain high growth, profitability, and technological progress rates. The company utilizes such strategies as balancing “diverse business contexts involved in acquisitions, including avoidance of clashes, and evasion of conflicts in authority” and “demonstrating human resource potential to the maximum” (Kodama et al., 2017:54).
Besides, the organization invests in development and in finding new ways to deliver the best systems and solutions to its customers, which can also be observed in the value proposition. As a result, the business has a firm competitive position
Other essential points in a successful business model are organizational development and management team. The paragraphs above mentioned that Cisco pays substantial attention to enabling their employees to unleash their talents and capabilities. Besides, the organization has a high emphasis on teamwork, encouraging shared goals, and hiring the best, fueling “fun and creativity at work (Salwan and Sharma, 2018:155).
The company’s official website reveals the executive leadership team members who represent a highly diverse community. Cisco’s organizational culture and development focus on creative dialogues, understanding and cooperation, strategic collaboration, and prompt decision-making (Kodama, 2018).
In such a way, the company’s leadership manages to enable the team to demonstrate dynamic capabilities, which leads to tremendous progress. For instance, throughout more than twenty years of leadership in the face of John Chambers as a CEO, Cisco substantially grew in revenues, and thousands of employees made a fortune (Kodama, 2018). This example represents the value and success of the current culture and strategies.
In conclusion, one should state that Cisco Systems is a company that utilizes numerous strategies to bring value to the customers and continue bringing innovations and developments for the benefits of the global community. With a high concentration on collaboration among employees and outside, the corporation manages to achieve outstanding results in the high-tech arena. Outlining a vigorous and practical business model and rethinking it in response to the changes in the industry generates beneficial outcomes for the organization.
Cisco Systems. (no date) Cisco overview. Web.
Cisco Systems. (2014) Cisco services for remote expert. Web.
Kodama, M. (2018) ‘Capabilities congruence through collaboration management at Cisco: driving congruence in capabilities.’ In Kodama, M. (ed.) Sustainable Growth Through Strategic Innovation. Northampton: Edward Elgar Publishing, pp. 130-145.
Kodama, M., Yasuda, T. and Hirasawa, K. (2017) ‘Ma thinking and innovation in global high-tech companies: the lessons of business model innovation in Apple and Cisco systems.’ In Kodama, M. (ed.) Ma Theory and the Creative Management of Innovation. New York: Palgrave Macmillan, pp. 43-80.
Massa, L., Tucci, C.L. and Afuah, A. (2017) ‘A critical assessment of business model research.’ Academy of Management Annals, 11(1) pp. 73-104.
Salwan, P. and Sharma, K. (2018) ‘Developing high adaptive capabilities: the case of CISCO.’ Indian Journal of Industrial Relations, 54(1) pp. 146-162.
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