Cisco Systems, Inc. Essay

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Cisco Systems, Inc. was incorporated in 1984 in California’s Silicon Valley. The idea for this company came about when two Stanford University employees, a husband and wife, tried to figure out a way to stay connected throughout the day and had to overcome the technological inability to send e-mail from one building to another (“Cisco overview,” n.d.). The couple designed a multi-protocol router to communicate across campus (“Cisco overview,” n.d.). The company’s primary goal was to transform the way that people connected. Since its inception, the company has expanded its operations on a global scale, employs approximately 71,825 employees and identifies itself as “The Human Network” (Cisco Systems, Inc., 2011). A strategic audit of…show more content…
Furthermore, the company’s net income decreased 16% from 2010 to $6,490,000. Therefore, Cisco was not as profitable as they were the year prior. Impressively, Cisco has still outperformed its two main competitors, Alcatel-Lucent and Juniper Networks, Inc., in the Networking and Communication Devices industry (“Competitors,” n.d.). Cisco generates the most revenue of its competitors, but spends the least on R&D as a percentage of revenue (“Competitors,” n.d.).Additionally, Cisco has the highest operating profit margin amongst its competitors. Operating profit margin, “a measure of the company’s operating effectiveness,” can be calculated using figures form the income statement (Keown, Martin, & Petty, 2011, p. 94). Cisco’s operating profit margin is 22.9% which means that for every dollar of sales, Cisco earned 22.9 cents in operating income. This number compared to the 18.8% operating profit margin of Juniper shows that Cisco’s management is better than Juniper’s at managing operations (Keown, Martin, & Petty, 2011). Cisco’s financial performance indicates that they are an industry leader. Cisco’s current mission is to “shape the future of the Internet by creating unprecedented value and opportunity for our customers, employees, investors, and ecosystem partners” (“Frequently,” n.d.). According to the company’s annual report, their five foundational and strategic priorities include leadership in core

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