SWOT analysis

SWOT analysis method is put forward by a management professor from University of San Francisco in 1980’s. The four letters of SWOT respectively stand for strength, weakness, opportunity and threat. Therefore we will analyze the relevant situations of Cisco and Huawei from the above four aspects respectively, meanwhile creating the SWOT matrix to combine the internal conditions and external situations of enterprises, and come up with the developing direction of enterprises in future. 

From the above we can easily find that as a certain character of an enterprise, the strength and the weakness can transform mutually in different conditions. This is also what we need to discuss in the next part. How can we fine a balance point which makes the character come into play furthest. However, based on the concept of strategic brand management, we need to make some analysis to it firstly.

P.S. The relevant strategy in the graphs such as SO and WT strategy, will be involved in the following blogs. Here we don’t investigate them.

Sources:
1. Huawei SWOT analysis model, Baidu Wenku, Nov 2013

http://wenku.baidu.com/link?url=gL0FMCSLmP6UE0xbCT3qo2yor2UdrOvUnRHo6C0BIk2sjHOs8Z9P4nMFuz2grfvxOT3oT9FD4VaN1ZcpWIwiDvOFjVJAe3ZhI7i2autz_Cq

2. SWOT analysis and comparison of Huawei Technologies Co., Ltd. and Cisco Systems Inc., docin, Nov 2013

http://www.docin.com/p-677073008.html

SUN Jiawei

Consumer Analysis: brand images perceveid by the customer at the category level

Huawei: 

1. For the telecom market, one of the category product

For the telecom market, Huawei chose the geographic breakdown of market segments. At first, Huawei chose the rural market in China as a breakthrough.  Huawei access server data communication products entering the own understanding of the Chinese telecom network operators to meet the domestic demand conditions for the access server when Huawei proposed “broadband MAN” is the concept, “psychological differences” considering the results.

2.  For the enterprise market,

In early 2011, when the telecommunication equipment market turned into a difficult situation, Huawei announced officially to enter the corporate network. Huawei in the enterprise uses a differentiated marketing strategy to achieve specialization.

3.  The phone market for the end consumer

In 2005, Huawei allowed to enter China mobile phone market vendors after got the mobile phone licenses to approval system. For the present situation, Huawei uses the differentiated strategy.  Huawei lanunched in mid-funcional business phone in terms of the quality and not lag behind leading brands of similar foreign products, and take satisfaction in pricing, which will inevitably end business phone number of the consumer will have a greater appeal.

Cisco: 

For every market size at the category level, Cisco offers Unified Communication solutions. The following chart describes the small and medium-sized, midmarket, and enterprise market segments and the Unified Communications solution that Cisco offers for every market: 

The consumer focused market: 

Small and Medium Business

Midmarket Business

Enterprise Business

The brand image perceived by customers at the product category：

Consumers, in reponse to Cisco, have left brand to be one of high-quality, innovative end-to-end and comprehensive services, while Huawei response is that of innovative, advance and ease-of-use regarding consumer mobile devices. 

Compared to the Cisco, who established a loyal customer base, committed to the company’s product and identity over the past yeas, Huawei, has struggled to establish such a clear customer base, especially in terms of the oversea markets.  

Sourcing:

1:http://blogs.forrester.com/henry_dewing/12-05-09-2012_huawei_global_analyst_summit_enterprise_is_part_of_the_plan

2 http://www.cisco.com/cisco/web/docs/iam/unified/ipt701/ENT/Market_Descriptions.html

CHEN Xiaoxin

Brand identity prism

Huawei’s brand identity prism

华为=中华有为

The implied meaning of the brand: China is and always will be able to develop great deeds with bright prospects.

P.S. “Wolf culture” :There are 3 remarkable characters of wolf: sharp sense of smell, perseverant and indefatigable offensive spirit, awareness of striving in group.

Cisco’s brand identity prism

In the early days of its establishment, Cisco intended to use the registering place, San Francisco, as the name of the company. According to American laws, companies are not allowed to use any city’s name as its product brand’s name, so they use the last five letters of San Francisco to register. Meanwhile, they took the representative building Golden Gate Bridge as the logo of the company. After continual evolution and abstraction, it becomes the hodiernal sign. 

SUN Jiawei

The influence of US surveillance program "PRISM" for Cisco

The US surveillance program "PRISM" or will make Cisco defeated in China

 Whether the recent U.S. spying scandal was affecting overseas business of Cisco in China ?

  

In the wake of Edward Snowden's revelations about the extent of U.S. National Security Agency electronic spying programs aimed at China, among other countries, some Chinese media have questioned Cisco's credibility.

Cisco is involved in almost all of China's large network construction of the project, involving financial, government, railways, civil aviation, military and other key departments of network development. But as in recent years, product constantly exposed loopholes and the back door, Cisco's business in China began to crack.

Huawei, Zte with the advantages of price and innovation investment, etc, are eating into Cisco's market share. With the increase of friction in Sino-US trade, trade protection become the main game between the government. After the outbreak of the "prism", the Chinese government may strengthen the supervision, Cisco's business in China will shrink in future

 

1.Prism incident exposed China's information security hidden danger

 USA          

  Asia-Pacific, pacific rim and china

  Others  

      The income regions constitute of Cisco ( Source : Bloomberg , GUOHAI security company )

On June 9, former CIA employees Edward Snowden revealed the "prism" event. At the same time, the media began to focus on some of the communications companies in the United States, with point of view of a potential threat to China's information security

Although it have no direct connection with Cisco equipment, nor is there any evidence that the Cisco's equipment had a quality problem . But Cisco communications equipment involved in almost all of China's large network construction project, so the Cisco pose a threat to China's information security of speculation is not surprising.

Currently, China's four big Banks and city commercial Banks ' data center all adopt the Cisco 's equipment and Cisco holds more than 70% share of China's financial industry. Meanwhile, in the customs, public security, industry and commerce, education and other government agencies, Cisco's share of over 50%. In addition, the Cisco's share reached 60% in the rail transportation network and in the field of civil aviation, air traffic control network backbone are all adopt the Cisco's equipment.

Although Cisco made an official response very soon , said the "prism" is not a Cisco project, Cisco's network is not involved in the project. In addition, the company stressed that there is no ordinary citizens or government's  department were under observation.

But this response is difficult to restore the confidence of the users in a short time. Today, by influence of the growing trade friction and the resurgence of trade protection , Cisco must face with the winter in China.

2.China release signal of instead because of Cisco product 's vulnerability

Sales volume

Number of employees

 

 Compare of sales volume and number of employees between cisco and Huawei in last 10 years 

Although the Cisco's network equipment widely used in the backbone of Chinese telecom operators, financial, government, railways, civil aviation and other key sectors. But, in fact, Cisco's products is not absolutely safe.

As early as in July 2005, Beijing Netcom' s ADSL and LAN network was widespread disruption, 200,000 netizens were affected, most of the questionable equipment are provided by Cisco. In 2009 the U.S. Department of Homeland Security found that Cisco's network equipment have security vulnerabilities, hackers can use these vulnerabilities invade the enterprise's  computer network.

In 2010, the loophole of Cisco's router software which triggered off a brief internet paralyzed accident was founded, about 1% of the global Internet were affected .

Cisco 's product security vulnerabilities also caused the attention of China. On October 25, 2012, China Unicom said they have already changed all the Cisco's equipment of "China169" backbone nodes at the core of the cluster router's relocation project in Wuxi city, Jiangsu province. the Chinese experts pointed out that the Cisco product has the back door and loopholes.

This events released an important signal to the outside world: in the Internet industry, telecommunications and other open competition, Cisco's products is no longer irreplaceable.

For Cisco, the profit contribution of the Chinese market is second only to the United States, accounting for 30% of its overall profits. Once the business in China blocked, the blow for Cisco will be very heavy.

3.Trade protection , add insult to injury

 

             The variation of Cisco's stock price in last 10 years

  

       When Cisco' s business began to appear rift in China, the competition with Chinese companies also exposed the weakness . Especially Huawei, because of price and disadvantage in aspects of innovation investment, let Cisco retreat all the way.

Although Cisco 's equipment is still very advanced, but because of its too large pace of mergers and acquisitions, main dilution, organization overstaffed, Cisco had to retreat to the core domain gradually.

As far back as 2002, Cisco sued Huawei, on grounds of infringement of intellectual property rights. But that did not stop the footsteps of Huawei. In the operator market, Huawei and zte seize the market share with channels and marketing advantages and march the high-end routers market .this situation lead to Cisco retreat to its the two core business, routers and switches

And by the end of 2012, Huawei suddenly being investigated in the United States, the United States claims that "Huawei, Zte may bring security threats against the United States", Huawei and Zte are difficult to stand on the United States market . Cisco stood behind the U.S. government again this time.

Although Cisco hold the most profitable market temporarily by the protection of trade protection, but Huawei is attacking Cisco's position relies on product quality, low price, performance. Especially under the background of Sino-us trade friction increase, trade protection became the main weight of game to the various countries' government.

The "prism" events, will let more countries to establish perfect auditing supervision system, strengthen the construction of national communications security. when the time comes , the situation of a one-horse race will change, Huawei and the other company will have much more  opportunities of further expanding the business landscape.

Conclusion

However Cisco still have obvious advantages in high-end sectors such as finance, government and large companies, but the outbreak of the "prism" events, will make the Cisco 's business in China which has started to shrink retreat rapidly . 






BY: YUAN Peng