Applied Corporate Finance Assignment Sample

 Introduction

This study will evaluate performance of Cisco after acquisition of Broadsoft to understand the effectiveness of Broadsoft for the development of cloud-based communication technology. Financial strategies to acquire Broadsoft will be defined in this study and expected limitations for cross border investment will be enlightened in this study. Challenges of international acquisition and its impacts on the company will be discussed to understand the concept of cross border investment and its impact on Cisco. The management team of Cisco focuses on capturing most of the market capitalization in software and hardware industry to lead this market and they create different strategies based on company’s goal.

Effective corporate strategies that Cisco follows to achieve their predetermined goals will be evaluated in this study. This study will analyse financial strategies that are taken by Cisco and expected challenges for this strategy. Based on financial strategy analysis it will provide a few recommendations to increase efficiency of Cisco that will help to maximize their profit. Few other factors like; employee’s engagement, proper utilisation of resources, increased consumer satisfaction, and efficient supply chain needs to be developed in Cisco that will be explained in this study.

1. Evaluation of deal performance of BroadSoft acquisition and its impact on Cisco’s performance

Cisco has invested almost 1.9 billion dollars to start operation of Boardsoft. BroadSoft Software provides communication facilities and software services to sell software that is cloud-based. Communication service is developed by this software to host meetings of corporate and through Broadsoft acquisition technology. As per the opinion of Dziembek and Turek (2018), team collaboration, and unified communication is necessary to secure a trusted platform of communication technology. A large number of users are satisfied through this software and Cisco has captured most of the market. Approximately 25 out of 30 world’s best software service providers use this software that gives a large amount of revenue to this company (cisco.com, 2021). Broadsoft application is used to empower consumers and teams to share their knowledge and make work easier to enhance the performance of the organisation and grow simultaneously.

Figure 1: Recent acquisition of Cisco

(Source: Dziembek and Turek, 2018)

Cisco’s performance has developed after applying for Broadsoft acquisition and it has become world’s leading technical service. As cited by Fergnani et al. (2020), Cisco’s technological tools have become most trusted communication platform all over the world. A large number of consumers use this technology in their daily lives during telecommunication. In the present time, telecommunication is necessary for work and Cisco’s software’s helps to remove all communication barriers by their effective technologies, Broadsoft is one of the effective innovations of Cisco. Transferring data and information has become easier after acquisition of Broadsoft technology. This technology allows people to share their knowledge through digital devices with the help of internet.

Cisco has more than 100000 centres to store data of their users that is the most dominating IT company. Almost 493 million dollars in revenue was generated in the year 2020 in Cisco for their best service quality (cisco.com, 2021). Cisco acquired Broadsoft in 2018 and invented the most trusted digital communication software for mankind. As opined by Onopreychuk (2018), during the Covid-19 pandemic period companies have experienced an uncertain corporate environment where physical work is not possible and entrepreneurs have taken steps to convey their jobs electronically. Different kinds of communication software’s are available in the market but there is a lack of security and too many bugs. Cisco wants to acquire all software-based organisations that are innovative and have potential to redesign the future of technology.

Cisco has implemented cloud-based communication technology that is more secure and earned a large amount of revenue from it. As per the opinion of Bakhshi et al. (2018), Broadsoft technology provides HD video and audio facilities to its consumers and that communication gap due to low vision screen prevented by this software. It allows sharing screens, files and host conferencing without any complication that helped Cisco to reach its business goals. Cisco has launched Cisco board work which is a trusted communication platform for service providers of this company. Broadsoft has developed an online communication platform with more security and corporate uses this software to host their valuable meetings.

2. Identify financial strategies for acquisition and discuss issues and challenges of Cisco in cross-border investment

Cisco is an established IT software brand and has a large number of consumer bases for its great service quality. This company never hesitated to invest in new innovative things and it has acquired Broadsoft in the year 2018 at almost 1.9 billion dollars. As cited by Khakimov et al. (2018) Cisco has got a new way of marketing communication tools for potential uses. This company follows cross border investment to acquire Broadsoft and expand business areas. Various types of issues arise at the time of cross-border investment because it is an international acquisition and there are many differences in rules and regulations of different countries. Investment banks take the responsibility of cross border acquisition to initiate international trade. Different political leaders view differently as per their vision that governments impose laws and regulations on international acquisition.

Cisco has to deal with laws of the US government on Cross border acquisition culture and moral beliefs are different in different countries that adopting different working methods to invent new effective software for potential consumers is challenging. As cited by Geller and Nair (2018) companies have to deal with employees of different countries, which is complex because local jurisdiction is not the same in different countries. Geographical change of working environment creates complexity for foreign workers. Preparing accounting statements is necessary for a public listed company but different countries have various types of rules of preparing statements that presenting accounting leads to create complexity in preparing an annual report of a company. Tax rules are not the same in different countries where companies are unable to prepare an effective budget considering government tax laws to reduce the payable tax of the company.

Figure 2: Cross-Border Investment in US

(Source: Geller and Nair, 2018)

Cross-border investment deals with companies from totally different countries that facilitate each culture, language, and moral values are hard in the post-acquisition period. As per the opinion of Sendek (2021), many companies have acquired international countries by cross border investment to expand business all over the world and beat market competitors by acquiring them. Many companies have faced communication challenges between employers of different countries because either working style or moral beliefs towards their work is different. It is hard to maintain a diverse team for the development of a company by management in cross border investment. Companies have to deal with diverse laws of national and international government to prepare their annual report, dividend rate, working culture, and tax payable amount of the company.

Cisco evaluated APEC privacy rules of cross-border investment imposed by the US government and acquired Broadsoft in the year 2018. This cross border investment of Cisco is one of the most effective acquisitions that helped this company to become the world’s leading digital communication service provider. As cited by Groeger et al. (2019), cross border investment has attracted international investors to the company and it has increased the company’s network. This has developed the ecosystem of Cisco and more market opportunities have been created for this cross border acquisition. Cisco is a hardware and software-based technology and market leader in this category.

3. Critically evaluate corporate strategies of Cisco

Cisco focuses on the finding of each vendor of networking solutions and acquiring them to reduce market competition. Cisco focuses on providing great service quality of digital communication and effective hardware solutions to its potential consumers. As cited by Podkorytova (2018), consumers easily realize the value of their investment in IT organizations. This company has made unique plans for years to become a global leader. Cisco has acquired almost 218 organisations at more than 70 billion US dollars (cisco.com, 2021). Thousand Eyes is the most recent acquisition of this company. Cisco focuses on the acquisition of upcoming competitors by cross border investment.

A large number of investors can access the financial data of Cisco through their accused company that helps to attract more investors for the organisation. As opined by Ghahroud et al. (2020), the market stock of Cisco has gained more attention for international acquisition that helps to develop capital structure of an organisation. This company promotes their shares internationally and investors have gained a consistent gain from their investment in this company. It creates a great opportunity to improve capital and the main motive of this company is to expand their business globally. Cisco increases its sustainability by acquiring different international companies, if one organisation fails other enterprises are ready to recover the loss and reconstruct that business.

Creating brand equity all over the world is one of the main objectives of Cisco’s corporate strategy that will attract more potential consumers and increase revenue of the company. As cited by Dupont (2019), the corporate strategy of Cisco follows on the development of consumer’s satisfaction and builds a large consumer community to provide strength in this company. This company is focusing on developing its infrastructure according to ever-changing marketing competitions. New high-security technologies are taken into consideration for better performance and that will help to provide an excellent customer experience. This company has prepared effective strategies to grow its business area, this company ensures hassle-free custom experience and the main objective of Cisco’s strategy is to attract more consumers and sell their hardware and software to add value to their lives. This company have taken effective strategies to attract potential consumer of the company.

Figure 3: Corporate strategies of Cisco     

(Source: Ghahroud et al. 2020)

Cisco measures its performance in frequent gaps and implements effective strategies to fulfil the demand of consumers effectively. It sets long and short term goals to achieve the company’s ultimate success. Short term goals are prepared on the basis of those activities where long term forecasts are not possible and the internal and external environment is ever-changing. As per the opinion of Kheyfets and Chernova (2020), the long term goals of Cisco helps to acquire more market capital and help to sustain global leadership in a competitive market. Feedbacks are collected from users that help in decision making of the company. Cisco collects reviews and feedback from its respective stakeholders to increase efficiency and take effective decisions for an organisation. Stakeholders participated in the data analysis of the organisation that helps to provide great knowledge about potential consumers and current market competition.

4. Critical analysis of current financial strategies of Cisco and make a recommendation to set up its financial strategy for 2022-23           

Cisco has purchased innovative technologies and become a market leader in hardware and software market category. This company focuses to acquire most of the market share of hardware and software companies. As cited by Stoliarchuk et al. (2021), Cisco has acquired almost 298 companies and partnerships with leading companies of software. Broadsoft is one of the most effective cloud-based communication software that Cisco acquired in the year 2018 through cross border investment. Cisco has dealt with many cross border investments to become a global leader. A supply chain is not effective enough in this company that this company is focusing to develop supply chain service by 2022-2023 and providing service to its potential and real users as soon as possible.

Price of hardware and software’s are high compared to competitors that it has focused to develop a more efficient way of making software that every people can afford hardware and software of this company. Innovation is a never-ending process and it is the only way to attract consumers and develop the experience of consumers that a large amount of money is invented ‘in my search for new technologies. Smart technologies of Grid is acquired by Cisco and taken initiatives to acquire leading companies of every country to stay as a global leader on a competitive market.

Global political conditions are an ever-changing process that has to prepare for different political changes in countries and make decisions according to the upcoming condition. As per the opinion of Joshi et al. (20219), new entrepreneurs have taken initiatives to acquire a large number of consumers in this competitive market and that technologies are cheaper and more effective. Cisco has to reduce cost of preparing software and hardware to compete in upcoming market. Consumers want great service equality at a cheap price but it is hard for Cisco because managing business operations in different countries is expensive.

Innovation of new technologies can violate the market of products that are on the production line in a current situation that will affect operating results of the company. A supply chain is not efficient and effective in this company where a consumer has to pay extra charges to get their products and services. As per the opinion of Szumniak (2019), Cisco has to develop the supply chain and enable easy steps by which consumers receive their goods and services from this company. This company followed cross border investment to purchase all available technologies and consumers of their product fell more brand value because it has acquired most of the market of hardware and software technology. Most of the efficient technologies of the hardware and software industry work under Cisco.

5. Other important areas  

Cisco’s employees come from different environments and cultures and the employee’s team face different types of communication gap due to lack of understanding. This company has to improve its employment structure so that employees can share their knowledge easily and work becomes easier for everyone. As cited by Ganichev and Koshovets (2019), implementing more employees in this company will help to achieve the company’s predetermined goals. A strategic training programme for conveying information in a diverse team is necessary for this company to increase efficiency. An increase in employee engagement will help to influence productivity of the organisation, in this way Cisco will be able to satisfy its potential consumers and create a big customer base all over world.

A large amount of capital is acquired by this company; most of the capital is invested for the acquisition of an international company. As cited by Grefen (2018), Cisco has to develop a working process to reduce the price of their products and that will help to get a large number of n consumers globally. Consumer satisfaction is key to success and companies have to take care of their potential consumers and make them satisfied in every situation. It has to increase productivity to fulfil demand of global market. Approximately 230 billion US dollars market capital is acquired by Cisco, management has to properly utilize the available resources of a company and make more profitable strategies for the company.

Cisco is predominantly a production hub of hardware and has the least contribution in software technology. Software must be developed by this company to compete in market. As opined by Magee et al. (2019), Cisco provides more security to its users but anonymous hackers have developed technologies to steal information. Cisco is finding more secure software of digital communication technology developing employees’ knowledge of research. Collaboration is primary strategy of Cisco and this company is focusing on acquiring a few famous software companies in upcoming few years. Cisco hosts meetings of consumers to understand their views on its products which will help to make future decisions to sustain global leadership all over the world. Innovative companies are acquired by Cisco that helps to get more consumer engagement.

Cisco has to develop business strategies based on the market demands and have to deal with cross border marketing efficiently. Better utilization of available resources and reduction of cost is necessary to increase profit margin without increasing sales price of software and hardware. Consumer engagement increases for acquiring international companies and responsibility of consumer’s satisfaction is necessary to sustain existence in a competitive market. A large number of consumer uses software’s and hardwires of Cisco because it gives more security to its potential consumers. Different internal and external environments create complications during international trade that Cisco has to prepare most effective way of marketing for the development of business.

Conclusion

Based on this study it can be concluded that Cisco has acquired a large amount of market capitalization and has become a global leader in hardware and software industry. It can be said that acquisition of Broadsoft in 2018 is one of the most effective decisions taken by management, performance of Cisco has developed and it has earned a large amount of revenue from this deal. This deal has attracted foreign inventors and they become motivated to invest in this company. Cisco has made Cloud-based communication technology that provides several features to the users and it has achieved success in this project.

Based on this study it has been seen that Cisco has to develop their business strategies that will help to maximize their profit margin. Cross border investments have been evaluated in this study, it can be said that Cisco wants to acquire every company that innovate new technologies of software to sustain existence in a competitive market. Cross-Border investment is a complex process and companies have to face a lot of operating complications. It is necessary to make an effective financial plan to improve supply chain of Cisco because most of products are high in this company due to ineffective supply chains. Analysing financial and corporate strategies of Cisco, it can be concluded that this company has to increase employee engagement to increase productivity to satisfy consumers by providing great service quality on time. It is necessary to provide great service quality to sustain brand value in global market.

Few other factors have been evaluated in this study to understand the important areas that must be developed in Cisco. Cisco is planning to acquire more companies and increase cross border investment that will reduce risk of bankruptcy because more than 250 companies are acquired by Cisco and they will easily recover company’s sudden loss. As it is a well-established company that investors are highly motivated to invest in it.

References

Journals

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Dupont, B., 2019. The cyber-resilience of financial institutions: significance and applicability. Journal of Cybersecurity, 5(1), p.tyz013.Available at: https://academic.oup.com/cybersecurity/article-pdf/doi/10.1093/cybsec/tyz013/30132313/tyz013.pdf

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Website

cisco.com 2021 Cisco Completes BroadSoft Acquisition https://www.cisco.com/c/en/us/about/corporate-strategy-office/acquisitions/broadsoft.html [accessed on 10 November 2021](cisco.com, 2021)