Running head: EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 1

External and Internal Business Environments

Name
Course
University Affiliation
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 2

Apparently, the telecommunication industry is one of the main industries that is

experiencing diverse changes especially when it comes to the deployment and implementation of

technological paradigms and systems. As such, most of these changes are geared towards the

realization of the various ways that the players within can benefit from high-quality services. To

the end users of the services and products, they have an advantage since they have a chance of

benefiting from a range of services and products that are readily available through a wider

spectrum. Conventionally, the broad industry covers various areas such as wireless, cabling,

transmission, RF and optical communications, switching, IP networks and media.

Ideally, the telecommunication networks evolve each and every day so as to make

communication possible locally, regionally and on the global map whether on the internet or the

phone. Actually, the dramatic effect that has been spear headed by the demand for better and

faster communication services has resulted to the sophistication of the available topologies with

companies trying their best to outshine the each other in terms of winning customer loyalty.
Cisco Systems Inc. is one of the publicly traded corporations within the

telecommunication industry. The companies deal with products such as automation and analytics

software, blade switches, software for infrastructure and networking, interfaces and modules and

cloud and management systems among others. Moreover, the Corporation offers services such as

advisory services, training, implementation, optimization, support services and the management

of the various systems that revolve around their area of operation. Historically, the Corporation

was founded in 1984 in California by Leonard Bosack and Sandy Lerner, United States. It is

headquartered in San Jose. Throughout the years, the corporation has climbed the ladder to

become one of the largest networking company globally with products and services that target a

three-dimensional approach to the market segment that is the provision of service and enterprise,

home use and the small businesses (Liu et al., 2013).

EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 3

Generally, the segments of both macro and micro environment are divided into the

sociocultural segment, political segment, demographic segment, technological segment, global

and the economic segment. Consequently, these segments affect the ability of a corporation to

earn the profit and create an influence on the sustainability of the strategic competitive steps or

decisions made by a company. As for the case of Cisco Corporation, there are two major

segments of the general environment which have a great impact on their line of operation these

are technological segment and the global segment. To commence with the technological

segment, it deals with some of the technological trends whose existence in the market create an

impact on the general operation of business. As such, this segment concentrates on corporations,

institutions and the various technological activities which are involved in the creation and

application of discovered knowledge into new products, outputs, materials, and processes. To a

larger extent, this segment utilizes the ability of individuals to be creative and the power of

innovation. The technological impact on corporations and organizations has laid hopes for

greater returns on companies that adopt early to the new technologies. As for Cisco Corporation,

it has been highly affected by the rapid pace at which technology is changing. This has led to the

need of exploiting creativity and innovation so as to make sure that the company stays relevant in

the market both regionally and globally.

According to Liu et al (2013), Cisco Corporation has experienced stiff competition from

companies that produce related products and offer similar services like them. In this regard, they

have been forced to engage constantly in product innovation, support projects that involve the

application of knowledge and fund research activities that are geared towards the realization of

new communication technologies. Some of the creative innovations by Cisco Corporation

include: projects on turning the complexity of data into and advantage, the creation of smart

cities that will ensure that the public lighting is connected and the Radio frequency identification
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 4

(RFID) a technology that will aid in the identification of specific customers by the retailers and

march products and services according to the history of the purchases that they had made.
Moreover, the Corporation is investing highly on research that tries to unfold on how the

next evolution of internet usage is transforming everything. This goes hand in hand with the

realization of the full potential of how multiple channels can be unlocked so as to acquire,

engage and retain the customers. From the economic perspective and the challenges that most

businesses face when it comes to data management and security, the corporation is highly

concerned with providing a solution to most of these problems through maximum utilization of

the cloud computing concepts and revealing the inevitable shift in the delivery and consumption

of IT services. In a nutshell, most of the new technologies and innovations by Cisco Corporation

are focused towards solving the problems faced by business enterprise and staying ahead of their

competition in terms of technological and operational strategies.

On the other hand, the global segment deals with the new global markets, changing

market that initially were in existence, influential international events in the political arena and

the cultural and institutional aspects of international markets. Despite the stiff competition that

Cisco Corporation is facing from companies that are producing similar products and services on

the global market, the company constantly reviews its product line and services. It ensures that

the flow of services, goods, knowledge and the financial input that keeps the business under

operation is improved continuously so as to make it easier for the target enterprises to access

them. Moreover, the Corporation invests in market research on the maturing markets that prove

to be economically viable. This also includes the process of going beyond national borders for

the discovery and extension of the potential of earning returns from the newly innovated

products from the unexplored markets. However, in the global arena, Cisco Corporation does not

enjoy full dominance. This is because there is a challenge of similar products that are cheaper
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 5

than their products due to the low cost of production that such companies experience due to their

location in countries with low wage rates and easy access to the various factors of production.
Nonetheless, Cisco Corporation and other related companies that are in the

telecommunication industry are occasionally faced with the risk of investing in immature

markets that are less economical. This is highly influenced by the fact that data from conducted

research sometimes compels and influences decision making out of speculation and support from

other factors that affect the telecommunication business either directly or indirectly. In this

regard, it is very important for corporations and companies in the telecommunication industry to

highly recognize the diversity in not only socio-cultural attributes but also institutional attributes

before undertaking steps of expansion into the global markets. In relation to this, they should

consider the Five Forces of Competition model so as to have an understanding of how acting

strategies mix within the industry and their influence as far as the global industrial market is

concerned. This will aid in the provision of appropriate strategies that can be employed in target

based operation within the telecommunication industry.

Competition is usually inevitable especially in a diverse and ever-changing industry such

as the telecommunication industry. As a matter of fact, the telecommunication industry is one of

the industries whereby companies are in constant progress of improving their products and

services so that they can not only win customers but also increase their market share. Despite of

the jurisdiction that is presented by the laws and regulations that govern most of the markets, the

telecommunication industry is relentless when it comes to competing with each other. According

to the Porter’s five forces of competition, there is a relationship between the development of

business strategy and the industry. As such, the industrial organization economics is applied in

the derivation of the five forces that are used in the determination of the competitive intensity

and thus how attractive is an industry in terms of overall profitability. These forces include the
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 6

threat of new entrants, buyers bargaining power, the threat of introduction of substitutes, rivalry

within the industry and lastly the bargaining power of suppliers. Among this five forces of

competition, there are two of them which are the most significant in the overall operation of

Cisco Corporation. These are the threat of new entrants and the bargaining power of suppliers.
Basically, the entrance of new corporations that are in a similar business line poses a

threat to the initial occupants of the market. This is because they introduce new competition to

the existing fraternity that was initially in competition within the predefined industry. Most

importantly, whenever the entry barrier is low, chances of threats from new entrants to the

existing companies and corporations are high. In this regard, whenever the competition is high,

there is an increase in production of both goods and services regardless of the concurrent

increase in demand by the consumers. As a result, companies and corporations that had initially

occupied a certain market segment begin to experience a decrease in their profits margins. Even

though the threat posed by new entrants shapes the competition structure of a competitive

environment for the competitors that were earlier on existing in the market, it influences there

operations and the market share that they had initially occupied. To the consumers, they benefit

from the provision of quality products and services that are offered and sold at affordable prices.
As for the case of Cisco Corporation, it faces competition from new entrants such as

Juniper which unfortunately took a third of the market share that Cisco used to have after

entering the market in the year 1997. Apparently, this company remains to be one of the tough

competitors as far as internet routing is concerned. According to networld.com, Juniper occupies

a 30 percent share of the 643 million dollar market in the 2nd quarter. Furthermore, the two

companies are in constant competition with each other at a higher speed and density system.

Nevertheless, Cisco is also in competition with other companies such as Alcatel-Lucent, HP,
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 7

Aruba and Polycom among others which are introducing a highly competitive environment ("10

competitors Cisco couldn’t kill off | Network World," 2016).

On the other hand, the bargaining power of suppliers affects the overall ability of an

existing business entity to serve its target market in some ways. This includes the introduction of

pricing pressures due to the ability of the supplier with the increased bargaining power increasing

the prices which leave the affected business with no choice but to incur the extra cost for the

supply of goods or raw materials. Also, the bargaining power of suppliers leads to supply

problems in that shortage of suppliers reduces the quantity of goods that can be produced and

increases the supplier bargaining power. Whenever the production is fixed, there is a likelihood

that there will be a shortage of goods (E. Dobbs, 2014). Additionally, the bargaining power of

suppliers might comprise the quality of products in that an increased bargaining power by the

supplier might tempt them to skimp on the quality of products so as to produce more and earn

more profit. In relation to the Cisco Corporation, increased the bargaining power of supplier

might lead to the introduction of counterfeited products into the market which will be cheaper

and solve the same problems as their products and thus makes them incur losses. Moreover, it

will affect the customer trust on their products due to the spread of counterfeited ones (E. Dobbs,

2014).
In order for the company to improve the ability to address this forces in the near future, it

needs first to come up with ways by which it can budget and allocate more funds to innovation

and creativity. This will help in coming up with products that are better than those of the

competitors and in that way, they will ensure that they maintain their market share. Moreover,

they need to focus on ways in which they can make their products and services affordable,

convenient and accessible so as to attract more consumers. As for the bargaining power of
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 8

suppliers the company needs to maintain the quality of its products and services so as to ensure

that other products in the market do not outshine the ones that they produce.
The external threats facing Cisco Corporation are regulations of some markets and

production of counterfeits products that are not only similar to the ones that they are producing

but also affordable. Personally, I suggest that the company should invest in consumer education

and knowledge of its products. Justifiably, this will not only create awareness of their products

but also give them as an opportunity of defining and understanding its target market. On the

other hand, the greatest strength of the company lies in delivering powerful and innovative

products and services that solve the telecommunication problems of many businesses,

institutions, and corporations. As for the most significant weakness, is in consumer education of

the genuine products that they produce. In order to maximize the advantage of their strength,

they need to relentlessly and creatively invent and improve their products and make sure that

they meet the ever-changing consumer needs. As for the weakness they should fix it by initiating

consumer education and awareness programs. They should also appoint selected dealers as

sellers of their products.

Cisco Corporation has a wider range of resources that range from network monitoring

devices to management devices and services. These resources are effective and efficient in most

of the telecommunication and internet related outlining their core competencies that include

managing and monitoring of network connections such as the LAN and WLANs. Moreover, the

company boast of a well-trained and dedicated staff who have the necessary requirements to

offer the related IT services and come up with IT related products especially those that deal with

telecommunication. Cisco’s value chain is built upon a holistic approach to the corporate social

responsibility. The business is geared towards making impressive designs of innovative products

that solve telecommunication needs of the target market. Even though the value chain of the
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 9

company is almost outsourced, it can sustainably meet the core business needs or processes. As

such, it has the capability of creating value by using the resources, its capabilities, and the core

competencies. Most importantly with a streamlined organization of primary activities such as the

inbound and the outbound logistics the company can come to the full realization of some of the

forces that might be hidden but have an impact when they reveal themselves, this will help in

margin enhancement and thus the input will be easily converted to an output given the capability

of full resource mobilization and utilization. In this regard, the value chain of the company

would have been improved. Last but not least, the core competencies should be guided by the

changing economic and technological preferences that keep on changing to the full realization of

customer needs which play a fundamental role as far as the value chain of the company is

concerned(Fontana & Zirulia, 2015).

All said and done. Both the micro and macro environment of a business are susceptible to

various factors that affect them whether positively or negatively. To a larger extent, this factors

touch on both the operation and management of the business with the markets being the mostly

affected. In the case of Cisco Corporation, the most prevalent segments of the general

environment which are influential are the technological and the global segment. Moreover,

competition is rampant when it comes to the industries technological improvement as such

companies and corporations apply technological topologies and paradigms so as to meet the

demand of the current market. In this regard, it is equally important for the company to consider

the five forces of competition with much emphasis on the threat posed by new entrants into the

market and the bargaining power of suppliers. Nonetheless, the core competencies and

capabilities are important factors in the creation of value by company which in most instances it

can become the source of company’s competitive advantage. Last but not least, it is critical for

Cisco Corporation to initiate strategies that will ensure that consumers are informed on their
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 10

products and services. Moreover, they come up with strategies that help fight counterfeiting of

their products.
EXTERNAL AND INTERNAL BUSINESS ENVIRONMENTS 11

References
10 competitors Cisco couldn’t kill off | Network World. (2016). Retrieved from

http://www.networkworld.com/article/2290577/data-center/111748-10-competitors-

Cisco-couldn-t-kill-off.html
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry

analysis templates. Competitiveness Review, 24(1), 32-45.

Fontana, R., & Zirulia, L. (2015). “… then came Cisco, and the rest is history”: a ‘history

friendly’model of the Local Area Networking industry. Journal of Evolutionary

Economics, 25(5), 875-899.

Liu, B., Jiang, S., Carpenter, B., Venaas, S., George, W., & Cable, T. W. (2013). Cisco Systems.