John Chambers-Cisco's Driving Force
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Case Details:
Case Code : LDEN016
Case Length : 11 Pages
Period : 1991-2002
Pub Date : 2002
Teaching Note :Not Available
Organization : Cisco Systems Incorporated Industry : Computer Networking
Countries : USA
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Excerpts Contd...
The Crisis Manager
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In the financial year 2000-01, due to the global economic slowdown and reduced
IT spending by organizations all over the world, Cisco posted its worst-ever
financial performance.
Though the company's revenues increased by 17%, for the first time in its
history, it reported a net loss of $1 billion.
Moreover, the market capitalization of Cisco came down to $135 billion in March
2001, compared to $531 billion in March 2000. Chambers was quick to spot the
impending problem and realized that the immediate objective for Cisco was to
focus on profitability. In order to achieve this objective, he announced a
six-point plan (Refer Table I) on January 15, 2001...
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The Leadership Style
Chambers was well recognized for his oratory skills. During his early years at
Cisco, while addressing a gathering of employees, Chambers said, "The
hallmark of a great company is not that you don't hit potholes, because
every good company does, but how quickly you adjust and move out of that so
that you don't let the pothole consume you"16...
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The Criticisms
Chambers was always optimistic about Cisco's performance and never hesitated
in voicing his optimism by making statements that were grossly exaggerated.
He made statements such as "We want to create the greatest company in
history" and "We want to change the world."19
In 2000, he predicted that within the next couple of years, Cisco would earn
revenues amounting to $50 billion and its market capitalization would be
worth trillions of dollars. Industry analysts criticized Chambers for
misleading them about the performance of Cisco despite the fact that its
orders had started falling in December 2000... |
Exhibits
Exhibit I: Cisco - The E-Company
Exhibit II: Cisco's Financial Performance
Exhibit III: Elements of Cisco's Culture
Exhibit IV: Major Acquisitions by Chambers
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