Cisco Systems, Inc.

Cisco Systems, Inc. – GCPS Case Study Report (2025)

Industry Focus: Communications Equipment | Region: United States

Presented By:

Group 14

Sabiha Begum Mohammed
Vaibhav Arora

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Cisco Supply Chain Case Study Response

Selected Company: Cisco Systems, Inc.
Cisco was selected based on its prominent role in the Communications Equipment industry and availability of comprehensive data within the GCPS Navigator platform.

Industry Classification (GICS): Information Technology > Technology Hardware & Equipment > Communications Equipment

Introduction:

This report presents a detailed analysis of Cisco Systems, Inc. using the Global Company Performance System (GCPS). The objective is to evaluate Cisco's position within the Communications Equipment sector, benchmark its financial and operational performance against peers, and examine its role in the global supply chain. The study spans industry trends from 2020–2023 and includes visual insights drawn directly from GCPS analytical tools.

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GCPS Navigator – Cisco’s Industry & Global Positioning

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The GCPS Navigator module visualizes Cisco Systems’ competitive position within the global Communications Equipment industry. The network layout helps identify related sectors, and confirms Cisco’s classification under Information Technology > Technology Hardware & Equipment > Communications Equipment. Major peers like Ericsson, Nokia, and ZTE appear as top competitors based on total revenue.

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Total Revenue

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-The Communications Equipment sector (Cisco’s domain) has moderate revenue (~$3.98B average).
-Internet Software & Services dominates revenue (~$10.36B) and profitability (23.2%).
-Tech Hardware leads in total revenue (~$31.81B), showing Cisco operates in a mid-tier revenue industry compared to software/hardware leaders.

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Net Income

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-Cisco holds the largest bubble, indicating the highest net income in the Communications Equipment industry.
-Other profitable peers include Arista Networks, Juniper, Motorola, ZTE, Nokia, Yealink, and Ubiquiti.
-Over 150 companies have zero or negative net income, proving Cisco is in a top-tier profitability class.

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Market Cap

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-Surprisingly, top market cap growth bubbles were not Cisco or Nokia, but regional firms like:
-DASAN Networks (South Korea)
-LiComm Co. Ltd.
-Wuhan Yangtze Communication

These firms showed high growth rates (e.g., Ituran Location and Control Ltd. at 0.26), indicating investor optimism in regional disruptors.

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Inventory- Communication Equipment

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 By Inventory

ZTE Corporation (Leads in inventory size)

Nokia Oyj

Cisco Systems, Inc.

Telefonaktiebolaget LM Ericsson

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Cisco is an undisputed leader in profitability, consistently topping the industry in net income, thanks to its balanced cost structure and operational discipline. It demonstrates strong inventory efficiency, striking a productive balance between scale and turnover. This contrasts with peers like ZTE, which hold larger inventory volumes but may suffer from slower turnover and higher holding costs.

In terms of revenue, Cisco operates within a sector that exhibits moderate average revenue (~$3.98B), which is not as high as Technology Hardware or Internet Software industries. However, Cisco's higher margins offset this gap, showcasing effective value generation despite the mid-level revenue environment.

When examining market capitalization growth, Cisco trails newer, more agile firms—often regional disruptors or software-focused players—who attract more aggressive investor sentiment. While Cisco’s market cap growth is stable rather than exponential, it reflects the market's perception of Cisco as a mature and reliable player.

In summary, although Cisco may not lead in every growth metric or investor hype category, it remains a stability anchor in the industry. It combines steady income generation, efficient supply chain management, a global presence, and strong financial controls, making it a dependable and strategically grounded enterprise. Overall, Cisco balances scale, profitability, and operational efficiency, making it a top-tier performer in its industry.

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Industrial Breakdown - Revenue

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-Industrial Breakdown – Revenue (Bar Chart)
-Technology Hardware, Storage & Peripherals leads with the highest revenue (~$31.81B average).
-Internet Software & Services shows strong revenue (~$10.36B) with the highest profitability (~23.2% net margin).
-Communications Equipment (Cisco’s sector) has moderate revenue (~$3.98B) and ~6.6% net margin.
-Electronic Equipment & Instruments has similar revenue to Comm. Equipment but near-zero margin.
-Cisco’s sector lags behind hardware and software in revenue but outperforms some sectors in profitability.

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Industrial Breakdown - Assets

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Industrial Trend – Industry Total Size (Multi-panel Chart)
-Panel 1 : Revenue:
Tech Hardware leads revenue growth (surpassing $600B by 2023).
Communications Equipment shows stable, modest growth.
-Panel 2 : Net Income:
Tech Hardware had sharp income spikes (2021–2022), while Comm. Equipment remained steady.
-Panel 3 : Operating Income:
Tech Hardware dominates; Comm. Equipment shows consistent but modest profits.
-Panel 4 : % Profitable Firms:
-Internet Services & IT Services: 85–95% of firms are profitable.
-Communications Equipment: 70–85% profitability – healthy but lower than top sectors.
-Cisco’s sector is stable and profitable but not the most dynamic in income growth.

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Industrial Trend - Industry Total Size

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 -Panel 1: Total Revenue (Million USD)
Technology Hardware, Storage & Peripherals (Green) consistently leads in revenue, crossing $600B in 2023.
IT Services (Red) and Internet Software & Services (Teal) show steady revenue growth.
Communications Equipment (Blue) and Diversified Telecommunication Services (Purple) remain relatively stable, withmoderate growth over time.
Wireless Telecommunication Services (Orange) has the lowest revenue trend, lagging behind other sectors.

-Panel 2: Total Net Income (Million USD)
Technology Hardware (Green) had massive net income spikes in 2021 and 2022, followed by a dip in 2023—potentially due to post-pandemic normalization or supply chain issues.
Internet Software & Services (Teal) maintains strong, steady net income, second to Hardware.
IT Services (Red) shows a gradual net income increase, indicating sustained margin control.
Wireless Telecom (Orange) consistently shows lowest or negative net income, reflecting poor profitability.
Communications Equipment (Blue) and Diversified Telecom (Purple) stay stable, but modestly profitable.

 -Panel 3: Total Operating Income (Million USD)
Technology Hardware again dominates, mirroring the Net Income trend—confirms strong operational efficiency.
Internet Software & Services and IT Services show consistent growth.
Communications Equipment stays steady, with moderate operational income.
Wireless Telecom remains the lowest performer, likely facing structural or competitive challenges.

-Panel 4: Proportion of Profitable Enterprises
IT Services (Red) and Internet Software & Services (Teal) maintain the highest proportion of profitable firms (around 85–95%).
Communications Equipment and Technology Hardware remain reliably profitable (approx. 70–85%).
Wireless Telecom lags significantly, with profitability below 60%, indicating industry instability or high fixed costs.
Diversified Telecom shows volatility, suggesting inconsistent profitability across players.

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Profit vs. Cost - Net Income

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Profit vs. Cost – Net Income (Scatter Plot)
-Cisco is high on both cost and net income → shows strong operational efficiency.
-Arista & Motorola: Mid-cost, mid-high income.
-CommScope & IBM: High cost, low income → less efficient.
-Most industry players cluster near the origin with low cost and low/no income.
-Cisco’s scale is matched by its efficiency, making it stand out.

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- Communications Equipment as a sector operates in the mid-range in terms of both total revenue and asset size when compared to broader IT and telecom sectors.
- While it doesn’t match the scale of Technology Hardware or the asset intensity of Diversified Telecommunications, it is characterized by financial discipline, stable profitability (net margin ~6.6%), and relatively lean operational structures.
- Cisco’s position within this sector illustrates the advantages of operating in a space where capital intensity is lower, allowing for more flexible investments and innovation cycles.
- The Profit vs. Cost scatter plot reinforces Cisco’s status as an efficiency outlier—maintaining high profitability despite significant operating costs, unlike peers such as CommScope and IBM who fail to convert cost into returns.
- In contrast to Electronic Equipment & Instruments, which shows near-zero profitability, Communications Equipment—and Cisco in particular—has proven more resilient, productive, and well-positioned in managing margins.
- Overall, Cisco’s industry is financially sound, moderately competitive, and well-suited for firms that balance operational efficiency with global scale.

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Enterprise Breakdown - Revenue

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Enterprise Breakdown – Revenue (Stacked Bar Chart)
-Cisco: Balanced structure with 37.27% COGS, 13.25% SG&A, 6.64% R&D, and a solid 22.13% net income margin. Reflects strong operational control with profitability.
-Arista: Extremely lean – lowest SG&A (5.03%), highest net margin (35.62%), and moderate COGS (38.05%). Demonstrates a highly optimized and profitable structure.
-Juniper: Higher SG&A (20.57%) and COGS (42.46%), yet maintains a 26.77% net margin, indicating operational leverage and strong market capture despite heavier costs.
-Motorola Solutions: Higher COGS (50.19%) and moderate SG&A (8.60%), resulting in a net income margin of 17.18%. Operates with higher cost base but maintains moderate profitability.
Cisco performs well with stable profitability, but Arista leads in lean efficiency. Motorola is cost-intensive but relatively profitable, and Juniper combines high costs with strategic income retention.

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Enterprise Breakdown - Assets

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Enterprise Breakdown – Assets (Stacked Bar Chart)
-Cisco: Balanced asset structure – 42.56% current, 57.44% non-current. Demonstrates liquidity and long-term investment capacity.
-Arista: 84.35% current assets, only 15.65% non-current – extremely asset-light, prioritizing liquidity and agility.
-Juniper: 39.87% current, 60.13% non-current – capital-intensive, relying heavily on infrastructure.
-Motorola Solutions: Similar to Cisco, with 42.93% current and 57.07% non-current assets. Reflects a well-diversified structure but less agile than Arista.
Cisco maintains operational balance. Arista is highly agile and asset-light. Motorola and Juniper lean on heavier long-term investments, with Motorola showing a structure closer to Cisco.

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Enterprise Comparison - Efficiency

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Enterprise Comparison – Efficiency (Radar Chart, smaller is better)
-Arista: Most efficient across all metrics – lowest inventory days, best CCC, lean SG&A.
-Cisco: Efficient, especially in CCC and inventory management. Outperforms Juniper.
-Juniper: Less efficient – higher SG&A and longer inventory turnover.
-Motorola Solutions: Moderately efficient. While not as lean as Arista, Motorola outperforms Juniper in inventory turnover and manages SG&A costs reasonably. Its CCC is better than that of capital-heavy peers.
-Cisco holds middle ground – efficient but not as lean as Arista. Motorola sits just behind Cisco, showing respectable efficiency and tighter operational execution than Juniper.

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Enterprise Comparison - Key Indicators

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Enterprise Comparison – Key Indicators (Radar Chart, larger is better)
-Cisco: Strong in ROE, inventory turnover, and net margin.
-Arista: Dominates in ROA, growth, and overall profitability.
-Juniper: Competitive in margin but weaker in growth and liquidity.
-Motorola Solutions: Shows stable performance in ROA and profitability but lags behind in growth and innovation-related metrics. While not a growth leader, it maintains consistent and dependable financial outcomes.
Cisco ranks high in consistency and return metrics, while Arista leads in innovation-driven growth. Motorola stands as a stable performer with reliable metrics but lacks acceleration in market expansion and innovation.

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Cisco demonstrates a well-rounded financial and operational profile, showing consistent strength across cost control, margin performance, and asset efficiency. Its cost structure remains well-managed, allowing for competitive net income even when operating at significant scale. Cisco’s margins are solid, reflecting its ability to convert revenue into profit more efficiently than most competitors.

When compared to peers:

Arista Networks represents a high-performance benchmark in lean operations and innovation. Its ultra-light asset model, minimal SG&A costs, and high profitability make it ideal for rapid growth and investor appeal.
Juniper Networks carries more infrastructure and associated costs. Despite this, it maintains healthy net margins, demonstrating strategic profitability, but it lacks flexibility and operational agility.
Motorola Solutions operates with a relatively higher cost structure but maintains stable returns. It reflects a dependable performer that focuses on steady profitability rather than high growth or aggressive expansion.

Cisco sits between these three—offering scalability and consistent operational performance, with stronger balance sheet health than Juniper, more agility than Motorola, and broader global scale than Arista.

This enterprise-wide comparison highlights Cisco’s strength as a dependable, high-margin, and well-diversified industry leader. While it may not be the fastest innovator or the leanest operator, its balanced approach ensures reliable returns, competitive efficiency, and long-term strategic viability.

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KPI Examination - Standard KPI examination

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Below are key financial metrics with Cisco's values, definitions, and example calculations:

Gross Margin:

Definition: (Revenue – COGS) / Revenue - Cisco Value: 62.7%
Example: If Revenue = $100M, COGS = $37.3M → Gross Margin = (100 - 37.3)/100 = 62.7%
Insight: Indicates Cisco adds significant value after direct costs.

Net Margin:

Definition: Net Income / Revenue - Cisco Value: 22.13%
Example: If Net Income = $22.1M, Revenue = $100M → Net Margin = 22.13%
Insight: Shows high profitability after all expenses.

Return on Assets (ROA):

Definition: Net Income / Total Assets - Cisco Estimate: ~10–15%
Insight: Cisco effectively generates profit from its asset base.

Inventory Turnover:

Definition: COGS / Average Inventory
Insight: High inventory turnover suggests Cisco moves inventory efficiently, reducing holding costs.

Payable/Receivable Days:

Insight: Cisco has favorable terms — pays suppliers later and collects customer payments sooner, aiding liquidity.

ROE (Return on Equity):

Definition: Net Income / Shareholder Equity - Cisco Value: Top 10% in the industry
Insight: High ROE indicates strong shareholder returns.

Current Ratio:

Definition: Current Assets / Current Liabilities - Cisco Estimate: >1
Insight: Healthy short-term financial position.

1 / Liability Asset Ratio:

Definition: Assets / Liabilities - Cisco Estimate: >1
Insight: Cisco has more assets than liabilities, showing low financial risk.

Cash Conversion Cycle (CCC):

Definition: Inventory Days + Receivable Days – Payable Days - Cisco Value: Moderate
Insight: Reasonable cash flow timing, but can be shortened for efficiency.

Revenue Growth:

Cisco Trend: Steady, modest growth
Insight: Reflects stability in a mature market

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Enterprise Comparison - Choose Your Own KPIs

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Custom KPI Triangle Chart – Insight Justification (Cash Conversion Cycle, Payable, and Receivable Days)

This triangle chart evaluates Cisco’s working capital efficiency through:

-Cash Conversion Cycle (CCC): Cisco maintains a moderate CCC, better than Juniper and Motorola. Arista performs best due to tight control of inventory and receivables.
-Receivable Days: Cisco collects payments more quickly than Juniper and Motorola, reducing liquidity risks. Arista once again leads, likely due to fewer client delays and more efficient billing.
-Payable Days: Cisco strategically delays payments to suppliers without impacting relationships, demonstrating negotiation power. Motorola is also strong here, while Arista operates with lower payable days, likely for agility.
These KPIs are essential for understanding how effectively a firm manages cash across its supply chain. Cisco balances speed and stability well, though it can improve its CCC to enhance cash flow velocity.

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Value Driver Analysis

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 Inventory Days vs Valuation (Price/Sales Chart)

This scatter plot relates inventory holding periods to investor valuation.

-Cisco (CSCO): Positioned in the lower-middle of the graph with shorter inventory days and a mid-range price-to-sales ratio (~3.8). Investors reward Cisco's efficient turnover but expect more growth.
-Arista (ANET): Long inventory days yet extremely high price-to-sales ratio (~13). Investors bet on future innovation and profitability despite inefficiencies.
-Motorola (MSI): Performs well with a decent price/sales multiple (~5.5) and lower inventory days. Indicates investor confidence in its predictable performance.
-Juniper (JNPR): Lags in both inventory efficiency and valuation — low price/sales ratio and long inventory days.
Cisco appears undervalued relative to its efficiency, suggesting a gap between operational excellence and investor sentiment.

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Value Driver Analysis

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Revenue vs Assets (Total Revenue vs Total Assets Regression)

This linear regression graph shows asset productivity:

-Cisco (CSCO): The highest revenue generator and the most asset-loaded firm. Despite its scale, it maintains excellent asset utilization efficiency.
-Motorola (MSI): Solid performance on both revenue and assets, staying close to the trendline — stable and balanced.
-Juniper (JNPR): Below average in both revenue and assets — underperforming in asset leverage.
-Arista (ANET): Light on assets but delivers strong revenue per unit of asset, emphasizing high asset productivity.
Cisco’s positioning at the top of the regression curve emphasizes its superior asset leverage, validating its supply chain scale and revenue reliability.

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Enterprise Comparison - Choose Your Own KPIs

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Enterprise Comparison
-Arista Networks, Inc. (Blue):  Strongest Overall Performer across all KPIs. Excels particularly in Market Cap Growth Rate and Inventory/Total Assets, indicating investor confidence and efficient inventory utilization. Also performs well in Labor Productivity, making it a balanced leader among the peers.
-Cisco Systems, Inc. (Red): Shows moderate performance across all KPIs.
While stable, it lags behind Arista in growth and asset efficiency, possibly due to its larger, more mature market presence.
Labor productivity is decent but not the highest.
-Juniper Networks, Inc. (Green): High Labor Productivity, comparable to Arista.
Lower performance in Market Cap Growth Rate and Inventory/Total Assets, suggesting potential operational inefficiencies or slower market expansion.
-Motorola Solutions, Inc. (Orange): Weakest overall performer among the four.
Shows low values in all three KPIs, pointing to potential challenges in asset utilization, productivity, and market sentiment.

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Collective Observation:

The Custom KPI chart complements earlier visualizations by offering strategic angles for Cisco:

Cisco's high Inventory/Asset score confirms supply chain maturity and operational control.
Labor productivity, while behind Arista, shows Cisco's workforce is more productive than Juniper or Motorola.
The lower market cap growth rate suggests the need for Cisco to enhance innovation and investor perception.

This supports the recommendation that Cisco explore agile models (like Arista), modernize R&D focus areas, and fine-tune its inventory-to-growth balance for future scalability.

Conclusion

Cisco demonstrates operational balance, strong financial metrics, and market leadership in Communications Equipment. It benefits from solid supply chain leverage, high profitability, and efficient working capital. Opportunities lie in accelerating growth and shortening the cash conversion cycle.

Strategic Recommendation

To strengthen its market valuation and maintain competitiveness, Cisco should:

Shorten its cash conversion cycle by improving receivables and inventory turnover.
Explore asset-light strategies in select product lines (similar to Arista) to boost agility.
Invest more in growth-oriented R&D areas (e.g., cloud, AI-powered networking) to drive long-term scalability.

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Cisco Systems, Inc.

Collective Observation:

Conclusion

Strategic Recommendation

Primary Modal