E-COMMERCE | ASSIGNMENT NO.

E-Commerce CISCO CFO Write UP

Submitted to

Mr. Asif Rashid Lecturer NUST Business School National University of Sciences and Technology
Submitted by

CFO Team Lead by Faizan Hayat Second Semester MBA 2K11 Section A

NUST Business School [NBS] National University of Sciences and Technology [NUST]

Problem Identification
Being CFO of the company, the core task is to provide sufficient level of investment to the organization to fulfill the requirement of new technology and rapid changing environment in order to sustain in industry. Strategy Formulation The companys strategy allowed for them to be stable in a fast paced market and changing world dynamics. In 1991, Morgridge hired John Chambers to take over as CEO of Cisco Systems. Together, the two created and maintained four basic strategies concerning their business practices: I. II. III. IV. Assemble a broad product line so Cisco can serve as one-stop shopping for business networks. Systematize acquisitions as an efficient business process. Set industry wide software standards for networking. Pick the right strategic partners

We can attract investors by presenting three main features in our business model proposal.

1. Key Success Factors

I. One stop shopping Cisco planned to assemble a broad product line to serve for larger business networks. It would help CISCO attract all kind of market customers with their diversified needs. Customers now would be able to get all kind of products at one stop II. Systemized acquisitions CISCO planned to acquisitions which add value to its market shares which results in more than 70 acquisitions. CISCO has issued IOS (Internetwork Operating System) licenses to Alcatel, Ericson, Northern Telecom, Compaq, Hewlett-Packard, and Bay Networks, 3com, Microsoft, Intel and twelve Japanese companies III. Strategic partnership Cisco is working with Microsoft to create an industry standard for security over the network working with MCI to deliver premium internet services and working with HP to develop and sell internet based corporate computing system

2. Sustainability
How being a CFO we would help our organization sustain its market share? This is the question which requires attention. CFO would consistently engage in providing the required amount of investment for innovation and development by attracting investors with key success factors and minimum risk involved.

Providing the investment consistently for innovation and development Encouraging mergers and acquisitions. ERP model provided a huge market share to Cisco with evident economical budget and outstanding revenue in shorter period of time.

3. Economical Aspect
Market Capitalization

Year 1993 1998 2000

ERP Before ERP After ERP ERP

ERPs Contribution to Revenue

Market Capitalization $ 500 M $ 100 B $ 531 B

Year July 1996 August 1996 1997 1998 2001

Total Revenue 0% of Total Revenue 2% of Total Revenue $ 800 M $6B 92% of Total Revenue i.e. $ 25 B

ERPs Contribution to Net Income

Year 1995 2000

Net Income $ 421,008,000 $ 2,668,000,000

Savings Due to ERP: Due to 80% of technical support provided electronically to customers and resellers, Cisco saved $506 million annually. The use of networked applications has reduced the total cost of NPI by $49 million in 1999.

ERPs Effect on Sprint: Before ERP: The signing of contract to completing networking project took 60 days. After ERP: The signing of contract to completing networking project reduced up to 35-45 days. Also Sprint reduced its networking staff from 21 to 6.