Executive Summary
Cisco Corporation was established by Sandy Learner and her husband Len Bosack in 1984. The couples graduated from Stanford University as computer analysts. They started the company on a small scale, producing cable routers for campus buildings. By 1990, the company was positioned at the centre of the networking business, selling routers and switches to industries and government corporations. The advanced technology created a competitive advantage for Cisco Systems International. The growth rate of the company recorded significant heights in 1995 and Cisco’s market worth rose to $150 billion. The company’s revenue rose by 19% in 2007 with a profit of $9.4 billion after tax. Cisco International expanded its market across the globe. The company added corporate digitalization, mobile broadband equipment to its list of products, thus, increasing its capital strength. The growth speed of Cisco Corporation describes the advancement in networking technology. By 1998, Cisco entered a partnership with local agents to produce large security gadgets for big corporations and government agencies. The company estimated a net profit of $1.5 billion for each new product. The company increased its production of switches, routers, security gadgets, and advanced technologies. By mid-July of 2009, the sale of routers scored 28% of the company’s revenue, switches scored 41%, while other technologies added 20%.
Cisco Corporations have a strong capital base with an investment base of $48 billion. The profit margin of the company stands at 19% while its ROE measures 17.34%. Cisco acquired more than 125 companies globally, increasing in strength, efficiency and technology. The corporation leads the world’s networking technology with a strong management team headed by John Chambers. The strengths of the corporation lie in the ability to manage its earnings. Cisco records 53% net profit from foreign markets. With the consolidation of major assets like Tandberg Network, Cisco has positioned itself in the mobile world. The corporation dominates in routing services and other areas of technology. The firm’s weakness lies in its inability to forecast the sales and demand for new technology. The company’s earnings influence its production in large quantities. Cisco’s opportunity improves with the demand for technological advancement. The threat to our market strategy is the reduction in sales. Inconsistent market trends would affect our earnings and reduce production. Cisco’s SWOT analysis is shown below.
The Risk and Challenges of Launching New Products
The introduction of new technology is influenced by many factors. These factors include competitive edge, low-cost, and customer’s satisfactions to mention a few. The existence of competitive advantage plays an important role in marketing. Corporations apply aggressive market strategies while launching new products. The failure of new products to gain acceptance in the market has reduced the capital strength of most firms (Crabb 34). These challenges limit the successful introduction of new technology. The challenges of launching new products include;
- Product design: The design of the new technology must meet the requirements of the customer. Customers may be scared with the new product or may see a change with the new product, thereby reducing their desire for the product.
- Poor product testing: The pattern of product testing must meet market standards. Market targets are used for product testing. When the information is wrong, it will affect the launch of new technology.
- Cost of production: The pressure of product differentiation increases the cost of production. This would affect the demand for new technology.
- Quality of the new product:
- Customer’s acceptance
- Unsuccessful introduction.
The Risks and Benefits of Hiring Foxconn
Cisco Corporations initiated an early partnership with the Chinese firm to reduce the risk of introducing new products. Familiarization with the new product before launch will give the Chinese Company an edge in production. Cisco understood the complexity in the production of its new product. To avoid these challenges, the company gave Foxconn a broad role in its production process. This would reduce the market pressure of outsourcing its production in America. However, the partnership faced some challenges, and this affected the introduction of technology. Foxconn’s strength in big projects will be tested with the task, and this posed a big risk for the new technology. The partnership with Foxconn accelerated the production time of the product. The quality of the new design was improved, and the product gained wide acceptance. Cisco lost its production strength in America.
How to Mitigate the Risks of Launching New Products
The introduction of new technology requires strategic planning and implementation. The development process follows three stages:
- Strategic planning: The engineers must design an acceptable product with quality components. The production must cut costs and have far-reaching market gain.
- Implementation: This phase involves the implementation of the endorsed plan. Resources are distributed across various segments in the production chain. Each segment will be evaluated based on the objective of the project.
- Monitoring and evaluation: Test samples will be used to access the general acceptance of the new technology. It will also monitor the company design pattern.
The introduction of new technology must align with the management’s drive for success. The objectives include: To strategize and plan the product design, negotiate a product that meets customer’s satisfaction, reduce the cost of production while enhancing product quality, manufacture, test products for market sampling and coordinate the pricing market. These steps would influence the smooth introduction of new technology. Marketing strategies require management to maintain a product identity. The new technology must align with the customer’s expectations and requirements. Cisco Corporations must remain invaluable during the launch of its new product (Ulrich 13). The company must incorporate launch packages, posters, handbills and other incentives before and after the launch. This would bridge the gap between old and new products. Such innovations will maintain high priorities, which are triggered by market sales.
Competitors Analysis
- CSCO = Cisco Systems International
- HPR = Hewlett-Packard Corporations
- JNPR = Juniper Networks International
- Industry = Networking Company
SWOT Analysis
Works Cited
Crabb, Howard. The Virtual Engineer: 21st Century Product Development, SME and AMSE Press, 1998. Print.
Ulrich, Karl. Product Design and Development, McGraw-Hill, 2000. Print.