Cisco System Inc.

Geopolitical Economy
By: Breejesh Rakeshbhai Fichadiya
I.D: 21572843

Table of Contents

Part A..........................................................................................................................................1

1. Conceptual Part 1:..............................................................................................................1

1.1 Introduction:.........................................................................................................................1

1.2 Objective of the assessment:..........................................................................................1

1.3 Brief overview of the company:.....................................................................................1

1.4 The production value of the company:...........................................................................1

1.5 Employment:..................................................................................................................1

1.6 Strategies for market expansion:....................................................................................1

1.6.1 Strategies to product and service diversification:.........................................................1

2. Conceptual Evaluation 2:.......................................................................................................1

2.1 Cisco’s contribution to global economy:..............................................................................1

2.2 Importance of international trade in global economy:.........................................................1

2.2.1 Protectionism:...............................................................................................................1

2.2.2 Liberalisation:...............................................................................................................1

2.3 Economic shocks:.................................................................................................................1

2.3.1 Financial crisis:.............................................................................................................1

2.3.2 Covid-19 Crisis:............................................................................................................1

2.4 Political decision impact:.....................................................................................................1

3. Conceptual Evaluation:..........................................................................................................1

3.1 Sustainability:.......................................................................................................................1

3.1.1Environment Policy:.......................................................................................................1

3.1.2 Social policy:.................................................................................................................1

3.1.3 Governance policy:.......................................................................................................1

3.2 Adaptation of sustainability in regard to Production:..........................................................1

4. Conclusion:............................................................................................................................1

Part B..........................................................................................................................................1

Executive summary:...................................................................................................................1

References..................................................................................................................................1
Part A

1. Conceptual Part 1:

1.1 Introduction:
Geopolitical economy refers to the study, in relation to politics with its connection to global
economics. The study is quite significant as the tension can cause the economy to be instable
and impact the economy on global scale. Multinational corporation is the company which has
its business operations in more than one country other than its home country. Hence, in
international business, MNC refers to any business that operates across international borders
with having operations in more than 6 different nations. To simplify the term, it refers to sales
of the product and services between different nations. There are other form of international
business as well which can be defined as the company which produces the product
internationally but sells them in their home countries can also be said to be an international
business (Stobierski, 2021). Business performance refers to a variety of methods and metrics
used for tracking and optimizing business performance such as achieving the objectives and
efficiently using the resources to gain profit.

1.2 Objective of the assessment:

The assessments main objectives is to provide a brief understanding about the MNC Cisco
system and its relevance to geopolitical economy. The reason to select the Cisco system is for
its supply chain which is one of the best supply chains as per the Gartner supply chain lists
and Cisco have topped the list for three consecutive years. The reports also highlights the area
of production and revenue costs and the financial crisis faced by the company. The reason for
its operations in more than one country is also discussed in the report. Lastly, the report also
highlights the area of sustainability. The recommendation for the company’s policies and the
area of improvement are also discussed in the report.

1.3 Brief overview of the company:

Cisco system Inc. is an American multi-national tech company which is best known for its
dealing in computer networking products and services. In beginning the cisco system only
sold its product to other business until the second decade pf the 21st century when it started
selling the products to household and making it the largest corporation in the US. The cisco
system was founded in 1984 by Leonard Bosack and Sandra Lerner who were student at
Stanford University (reference). The first product sold was the network interface card for the
Digital Equipment Corporation in 1985. The first successful product which the company sold
was a router which served on multiple network protocols which came in following years. The
growth of the company was skyrocketed in 1990s. In 2006 Cisco came with the concept of
Telepresence which helps anyone to connect with anyone irrespective of the place. The
networking expertise of the cisco made it a leading provider of the products for the Internet of
Things, a concept which often credited as having been named at cisco. The Following year
the company started to shift its focus from hardware to software (Lewis, 2021).

1.4 The production value of the company:

Figure 1: Annual Report of Cisco for 2022

(Cisco, 2022).
The cisco system generated the revenue of around $51.6 billion in the financial year 2022
which represent an increase of almost 1.8 billion USD in comparison to the year 2021 (Alsop,
2022). The segregated revenue within the services and product provided are 46% in Secure,
Agile network, 10% in Internet for future, 9% in collaboration, 7% in end-to-end security,
26% in services and 1% in optimized application experiences. As shown in the Figure 1
clearly depicts that the gross margin has decreased in 2022 however, the operating margin has
rose. The operating cashflow has also decreased by 2% compared to 2021.
The cisco system operates globally with the management done by geographic segment such
as Americas, Europe, Middle East, Africa (EMEA); and Asia Pacific, Japan, and China
(APJC). If we talk about the geographical representation of the cisco system Inc., we can say
that it has a wide market share as it operates in more than 115 countries with approximately
more than 225 sales offices and about 75 after sales service offices worldwide.

1.5 Employment:
There are different number of employees hired by cisco in different report, as per Purpose
report of Cisco system, it had a total of 83,000 employees worldwide. According to (Alsop,
2022), the number of employees at cisco by America’s geographic location has seen an
increment over the course of 2010 to 2022 where the employees in 2010 were at 38,350 while
in 2022 the number increased to 39,901. While in Europe, Middle East and Africa (EMEA)
where there are 43,399 people were hired by cisco (Statista, 2022).

1.6 Strategies for market expansion:

In this modern world the companies looks for different strategy to be more competitive and to
sustain in this fast-growing business world. And cisco plans to achieve its growth by being
innovative which would help them capture more market share, to invest in more market target
and to gain access to new business market (Young, 2012).

 Cisco had developed many innovative products by 1989 where they developed
many products which would help them to speed up network to network
communication by reducing the time delays. Even though, they had innovated
they were still lacking in gathering more market share. As primarily they were
selling their products to scientist at research facilities, government house and
universities for education purpose. So, they had to develop a new marketing
strategy to market their product to larger market. To meet this end, the cisco
needed to develop new products for new consumer as well as for the use of
commercial use. To make sales to commercial sector the cisco contacted
Sequoia Capital (an American capital company) for assistance. Thereafter
 Donald T. valentine secured the chairperson’s role of cisco and during this
tenure he brought John Morgridge as new CEO when the made a sales team to
market the product to commercial partners (Alonso, 2022).

 The cisco system had its presence in U.S and Japan and then they wanted to
expand its market base to other part of the world. In the year 1993, they
opened subsidiaries in Japan, Australia and Hong Kong. When the U.S
imposed the deregulation on the telecom industry it opened new opportunity
for the company. The foreign companies which wanted to expand their
communication network can now partner with the largest manufacturer of
router like cisco. The cisco system then went into joint venture with MCI
International to supply the routers for its telephone lines. And signed the
agreement with major European telecom companies to be the original
manufacturer of equipment. They also expand in their own home country by
merging with Software companies like Novell and Microsoft corporation
(Alonso, 2022).
The aggressive acquisition strategy of cisco helped it with the wider range of
product line which would not have been possible without the mergers and
acquisitions which would then make it the largest provider of networking
solution to the companies operating around the world (Alonso, 2022).
By 90s many telecommunication companies wanted to be a provider of the
package deal which would be inclusive of broadband internet, internet-based
telephone industry, wireless calling and video services and to achieve all this
the cisco came up with the ‘Quadruple play’ strategy to become a sole
provider of this package and in order to do that the company needed to
improve its video providing services. The acquisition of two companies KISS
tech which is networked DVD player manufacturer and Scientific-Atlanta Inc.
which is producer of set up box for television and both this purchase improved
the cisco’s video services (Alonso, 2022).

1.6.1 Strategies to product and service diversification:

As per the corporate team at cisco the market was slowly decreasing towards
hardware sector. So, 2005 and onwards the company changed its focus from hardware
 producer to become the wide range of supplier of software product and services. And
with this the company was offering network solutions to the customer and with this
cisco expanded in the service sector by providing both physical and virtual networks,
cyber security services, data analytics capabilities and solution for network
management. And with this product diversification it helped company with the growth
in the revenue. As the company gradually shifted its focus from hardware to software,
they were now interested in their own cloud-based products and services (Alonso,
2022).

2. Conceptual Evaluation 2:

2.1 Cisco’s contribution to global economy:

 The operations and business activities of Cisco have generated a sizable
number of jobs around the world. Numerous industries, including
manufacturing, engineering, sales, and services, benefit from the company's
thousands of direct and indirect jobs created through its supply chain. There
are also more than 4 million job opportunities developed by cisco.

 Collaboration & Partnerships: Cisco actively works with nations, companies,

and organizations across the globe to promote innovation and digital
transformation. Cisco supports the development of smart cities, digital
initiatives, and environmentally friendly technologies through partnerships.
These alliances encourage trade, information exchange, and technology
transfer, all of which help to strengthen the world economy.

 Economic empowerment: where 3.4 million tons of Co2 emissions were

eliminated by the group of entrepreneurs and population of sub- Saharan
Africa who have solar power.

2.2 Importance of international trade in global economy:

Since it creates advantages and opportunities in the form of lucrative global markets
for transportation, social and economic development, and resource-efficient energy
 items, international commerce of Cisco is essential for the world economy. Here are
Cisco's contributions to international trade in terms of protectionism and
liberalisation:
2.2.1 Protectionism:
Protectionist measures may restrict Cisco's access to international markets, which
might be detrimental to the world economy. Tariffs, quotas, and other protectionism-
related regulations can raise the price of goods and services, lessen competition, and
restrict the range of available items.
Policies that encourage protectionism may potentially provoke retaliation from other
nations, which would hurt the world economy even more. Retaliation may spark a
trade war, which might drive up the price of goods and services, slow economic
expansion, and result in job losses.

2.2.2 Liberalisation:
Increasing Cisco's foreign trade could have a positive effect on the world economy as
a result of liberalisation measures. Increased competition, lower prices for goods and
services, and greater product availability can all be a result of liberalisation policies
like free trade agreements, the removal of trade restrictions, and open markets.
Policies that promote liberalisation can also boost the economy, create jobs, and
stimulate innovation. Liberalisation policies can boost consumer spending by
expanding the range of goods and services available to consumers, which can
stimulate economic growth and job creation.

2.3 Economic shocks:

2.3.1 Financial crisis:
The fall of cisco’s share price which was resulted by the declining in the orders. The
reason behind this share price declining is due to large backlog of products which has
significantly rose due to supply chain constraints. As the customer are now demanding for
new product taking the share down by 4% (sport, 2023). The product order of the cisco fell
by 23% in its third quarter of the fiscal year which is also due to its supply chain situations.
 2.3.2 Covid-19 Crisis:
Cisco had faced one of the highest quarterly losses when the impact of covid-19 and
Russia- Ukraine war held up its stock worth of 15 billion dollars. The war in Ukraine had
impacted the operations of the Cisco as United States imposed the sanction on the Belarus
and Russia which significantly affected its revenue. The other one was when there was a
lockdown in China due to Covid outbreak and this led to severe shortage of the components
which is required in the production of certain products. According to the analyst Scott Herren
a cisco’s CFO told that historically the Russia and Belarus had represented 1% of the cisco’s
total revenue.

2.4 Political decision impact:

The trade war between the two countries US and China had an adverse effect on the cisco’s
sale of switches and routers. The company already knew about the declining sales in China,
but the sudden drop was severe in result. There were the total of the three main issues which
rose from this trade war were closing of the door of the state-owned companies which would
not let cisco make the bid or even to participate. The second issue which arose was from the
penal tariffs on the imports into the US for instance the Cisco had an import tariff of 25%
which had already started to make an impact on the company. The third issue was regarding
the separate self-centric supply chain as the both countries had their own supply chain like
US-centric and China-centric supply chain (Times, 2019).

3. Conceptual Evaluation:

3.1 Sustainability:
Business sustainability is now a most important concept in the modern world. It refers to the
operation of the business where the environment is not affected. (Spiliakos, 2018)
Sustainability is an important factor which can determine the overall success of the company
and it can be stated by the three main components namely ESG which stands for
Environment, Social and Governance all this factors are used to contemplate how ethical a
company is. Company who’s ESG is high can outperform the market in short and long term
(chladek, 2019).
When it comes to having the best ESG plan the Cisco is not only leader in tech industry, but
also a leader in the sustainability initiative.

As well as the report provides information about their past achievements in relation to ESG
(Brue, 2022).
 Sourced 89% renewable energy for the operation of the company.
 11 million dollars were committed to finance the research for climate solution through
the cisco foundation.
 6 million dollars’ worth of communication equipment were provided to nonprofit
partners, Ukrainian government, UN agencies and bomb shelters.
 Focuses on sustainable data center to decrease energy consumption and use energy
efficiency. To achieve this, they have designed the sustainable approach by converting
IT network in OT network and using the warm water cooling and native DC power
unit to achieve these goals (Brue, 2022).

As per the report declared by cisco “The purpose report of 2022” which gives us a brief
description about the IT provider and the networking solution which wants to reduce its
environmental footprint. The report is being distinguished between three purpose pillars
Power (to provide the secure connectivity), Inclusive (Equality to opportunity) and Future
(Sustain the resources). The report also states that how the company plans to reduce its
carbon footprints and using the renewable source of energy. The report also provides the
information about the green construction and make their employees follow the ethical
program (Brue, 2022).

3.1.1Environment Policy:
The company plans to have a net zero greenhouse emission by 2040. By having a GHG
reduction in its operation, supply chain and the products usage. Cisco’s value chain wants to
achieve the net zero till 2025 by reducing the scope 1 and 2 emission by 39% as compared to
2019 which has been approved by the Science based target initiative (Brue, 2022).
By financial year 2030 they want to absolutely reduce the scope 3 emission from purchased
goods and services and reuse of the sold product by 30%, this is active as they have already
reduced 22%. By 2025 the 80% of the cisco’s components, manufacturing, logistics suppliers
will have an absolute GHG emission reduction target which they have set till 78%. Till the
end of this year, they are planning to improve large, mounted equipment system with power
efficiency which they had already achieved by having 87% efficiency (cisco, 2022).

Figure 3: Importance of ESG for Stakeholder

(Cisco, 2021).
3.1.2 Social policy:
Cisco Systems had maintained more than 80% of participation by employees in the
community in three consecutive years. The third world’s best company to work in according
to Great place at work (cisco, 2022).

3.1.3 Governance policy:

Contributed 494 million dollars in kind contribution to community program. Gave support to
Ukraine in the midst of war with 6 million dollars. The student under the cisco networking
academy reached about 17.5 million. (cisco, 2022)

3.2 Adaptation of sustainability in regard to Production:

Circular economy which cannot be implemented without circular design of the products.
Circular design can be classified into five different element which address the most material
impacts.
 The circular design of the product is designed in such a way that it is durable, reusable
and is environment friendly. Cisco is reducing its impact on the environment by
making their packaging more efficient by reducing their single use plastic and foam
and using more readily recyclable materials. In 2020 they redesigned their packaging
in such a way that there was significant reduction in the usage of foam by more than
80,000 pounds in the shipped product for the single year. They also had a target to
eliminate the use of paper in the product shipment by 2021. By this time, they have
been sending the manuals, license and every paper-based material via electronic way
making the use of paper minimal. By moving to electronic delivery, they have already
started to reduce the waste, pricing and GHG emission by streamlining the supply
chain and improve the customer satisfaction. (Cisco, 2021)

4. Conclusion:
In conclusion, Cisco has a very strong base as the company focuses on the security of
the customer. So, from this report we got to know about the MNC company’s
production cost and revenue which helped us to know where the company stand in the
market and the classification of the product and services provides the data on the best
product or services provided by the company. The report also highlights on the impact
from covid and the political impact on the company in the country. The strategy which
company uses to run its operation in the different countries is based on expanding the
market and the consumer base. The ESG factors where the company plan to be free of
carbon emission, where in social the participation of the employees are must.
Governance where the achievements the working climate and the increasing students
shows the successfulness of the governance policy. The changing and using the
sustainability in operations of the company.

Part B

Executive summary:
The policies which Cisco system should implement:
Network Policy: Cisco might develop a network policy that specifies the rules that
control how network device behavior should be. The policy could outline how the
network should operate under various conditions and make sure that all network
devices, users, and applications are subject to those policies (Cisco, 2022).

Cisco may develop a cybersecurity strategy that specifies the security measures that
are put in place and enforced on every electronic and computing equipment used to
carry out Cisco business or communicate with its systems. With security-related
policies, the policy might make sure that security is more readily implemented, threats
are contained more quickly, and risk is decreased more quickly.

Innovation Policy: Cisco may publish a statement outlining its commitment to

encouraging investment and advancing innovation. The strategy might concentrate on
pro-technology laws and regulations that affect Cisco, its partners, and its clients and
support its mission to "Power an Inclusive Future for All."

Privacy Policy: Cisco may draught a privacy statement outlining its commitment to
safeguarding the confidentiality of the personal information of its employees, clients,
business partners, and other individuals. The policy could guarantee that all personal
information is gathered, handled, and stored in accordance with all relevant laws and
regulations. (Cisco, 2022)

Cisco's ethics policy might be updated to include more detailed instructions on how
staff members should act in certain scenarios. Employees could have access to the
resources they need to make moral decisions thanks to the policy, which could also
ensure that the company's commitment to ethical behavior is evident.

Potential improvements:
Strengthening Environmental Commitments: Cisco can establish more challenging
environmental goals including becoming carbon neutral, utilizing more renewable
energy sources, and using less water. Environmental performance can be improved
further by continuing to invest in energy-efficient gadgets, sustainable infrastructure,
and responsible waste management.
 A greater emphasis on Developing Technologies: Cisco should keep funding the
advancement of cutting-edge technologies like edge computing, 5G, and the Internet
of Things. By keeping on the cutting edge of technological developments, Cisco is
better able to meet changing customer needs and take.
advantage of new market opportunities.

Association with Industry Partners: In order to promote innovation, advance

technology, and jointly address pressing issues, Cisco can deepen its partnerships with
businesses, academic institutions, and research organizations. These collaborations
may result in the collaboration of solutions, knowledge exchange, and ecosystem
expansion.

ongoing Employee Development: Cisco needs to give employees the tools they need
to adapt to the changing digital environment by putting a high priority on
programmers for their ongoing learning and development. Programmed for employees
to learn about new technology, cybersecurity awareness, and business savvy can
empower staff and promote creativity within the company.

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