Global Economics Homework

Cisco Systems Inc has been operating on an oligopolistic market structure. The company has been involved in different undertakings that force them to make very tough choices. The choices that have to be taken no one is ever certain sure that the decisions they are making are going to contribute to the success or failure of the entity. Decisions that are made by this corporation are based on logical reasoning basing the arguments on available microeconomic data provided. Microeconomic decisions made by Cisco Systems Company being in possession of oligopolistic market structure are to make the company continue to dominate in this field. Additionally, the economic decision also takes into considerations of the actions the competitor is doing. Further, it is very imperative for Cisco Systems to consider the state of the economy during the time the corporation is taking a particular decision. Microeconomic decisions also reflect different economic variables both known and known and analyze them to come up with a supported decision. This research presents a detailed analysis of Cisco Systems Company.

Different factors have influenced the microeconomic environment in which Cisco Systems has been operating. All these effects have had different effects on the company. Some of the factors have been generated from the outside while others are generated externally. Interest rates are on the forefront in influencing the corporate operation of the Cisco Systems Company However, interests’ rates have had effects on the level of investment decision made by the top management. Interest rates also affect the rates of return that an investment initiated by Cisco Systems will take to generate funds. Taxes change the Microeconomic environment of Cisco Systems. This scenario occurs due to the use of varied taxation policies. Regions, where Cisco Systems has opened branches, have different taxation policies and diverse tax rates. As a result, the company has sometimes found it hard to compute for required taxes that would be in line with the level of production of the enterprise. Some of the regions have gone ahead to use discriminatory taxation procedures that hurt the company’s operation. Market size has also been a factor that has continued to affect the manner in which the corporation is operating. Globally, Cisco Systems is known for Internet networking. Therefore, there is a huge market that is always ready to buy the services that are provided by this company. However, there are some businesses that have continued to compromise the quality of the products made. These companies have been making products that may seem genuine but are counterfeit. Demand has been affecting the microeconomic environment of the corporation. This situation has been so for decades since most people have become loyal to the products of Cisco Systems Company, and they believe the quality of Cisco Systems Company products is always towering. On the distribution chain factor, Cisco Systems Company has continued to ensure that it is continuing to restructure the whole distribution chain (Milanović, 2010). The distribution branches are continuing to be constructed by the corporation. All these efforts being made are to ensure that is a fair supply chain that is in place. Competitors are also trying to become aggressive so as to keep pace with Cisco Systems. They have been using all manners of ways to become the best in internetworking services. Stiff competition in the oligopolistic market structure is being experienced by other corporations such as Juniper, Alcatel-Lucent and HP Company among others. These factors play very pivotal roles in determining whether the organization is making any progress or it’s stagnating in the same position with no signs of improvement. The microeconomic environment of Cisco Systems Company has been affected through media. The aggressive nature of competitors through advertisement has caused adverse effects on the sales made. The sales have been declining in the mean time, and the corporation has continued to demonstrate a significant though slowly, the decrease of the market share it used to hold before (Wylie, 2012).

Regulatory issues have tremendous effects on the Cisco Systems than the economy itself. For instance, the environmental regulations that have been made by the legislature have not been very favorable. The environmental impacts made have been expensive to comply fully with them. Additionally, these effects have also affected the profitability of the company. The environment has been very difficult to conserve. However, many corporations including Cisco Systems Company have gone ahead to regulate the amount of emission to release into the environment and also dereliction of land when installing Ethernet. The permits like Clean Air Act Permit are expensive and require a lot of commitments so as to acquire them. Cisco Systems has to go ahead of acquiring them but still the issue has been a major problem to deal with squarely. Cisco Systems Company has been pushing for changes in accounting regulations that have been set by the FASB. However, their suggestions are waiting approval from the board, and this would mean that Cisco Systems Company will be using other accounting principles rather than the commonly known GAAP. Dodd-Frank Act is a legislation that has been aimed at boosting financial stability in financial systems thus protecting the taxpayers from financial services that seem obnoxious. Cisco Systems Company is on a high alert in adopting the measures stipulated by the Act. The familiar adage of ‘too big to fail’ is no longer in use due to the change in financial regulations. On the other hand, Sarbanes-Oxley Act was meant to protect the shareholders and the public from the errors that arise from the accounting practices. This legislation was also made to ensure that consumers are freed from fraudulent behaviors. Cisco Systems Company has taken these regulations in accounting with a lot of seriousness and efforts are being made streamline the accounting environment of the Cisco Systems (Cisco Systems Inc, 2014).

Cisco Systems has to run its operations in a manner that is acceptable. Code of ethics helps a company act within the laws and requirements of the country. The company experiences ethical issues that influence its decisions. Rules and regulations of a country influence how the company runs its business. It is required to abide by those laws and regulations. The laws and regulations require a company to pay taxes, have licenses and permits to operate the business thus the company has to make the right decisions of abiding by them. Further, the company has an obligation to keep the environment free from any pollution. It is required to put up with all the anti-pollution standards and policies and, therefore, the company takes all the precautions to ensure they are not regulated. The company is also required to treat employees as required by labor laws. Employees are to be shown respect and fairness at any circumstances therefore Cisco Systems has to exercise fairness during employment and in the workplace. Discrimination of workers, harassment, underpayment, and extortion could cause a company to face serious charges, and therefore Cisco Systems avoids these behaviors at all times. Faced with labor laws, Cisco Systems ensures that the laws are followed to the latter. Suppliers are to be respected and paid their dues as agreed upon and, therefore, Cisco Systems Company is expected to treat all of its suppliers with fairness by being honest and straight forward in all their dealings. The suppliers should not be harassed or discriminated against by Cisco Systems Company, and this has enabled the company to have a good relationship with vendors and to obtain the best materials. Further, a company is required to come up with products and services that are genuine and original. This act has enabled the company to be creative and innovative enough to avoid any instances of copying the designs of competitors. Therefore, the company is influenced to create goods that beneficial and safe for people to use. As a result, Cisco Company will continue to dominate this industry of networking despite the competitors efforts (Brate, 2012).

References

Brate, A., & Bunnell, D. (2012). Making the Cisco connection: The story behind the real Internet superpower. New York, NY [u.a.: Wiley.

Milanović, B. (2010). Cisco IOS 12.0 switching services. Indianapolis, Ind: Cisco Press.

Cisco Systems Inc. (2014). Internetworking technologies handbook. Indianapolis, Ind: Cisco Press.

Wylie, K. (2012). SWOT Analysis of Cisco Systems, Inc. München: GRIN Verlag GmbH