Chpt8_Cisco Systems_ NetFlix_ and Office Depot Presentation

8/7/2019 Chpt8_Cisco Systems_ NetFlix_ and Office Depot Presentation

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Cisco Systems, NetFlix, andCisco Systems, NetFlix, andOffice Depot: The BusinessOffice Depot: The Business

Value of RealValue of Real--Time WebTime WebDecision SupportDecision Support

Chapter 8: Real World Case 3Chapter 8: Real World Case 3


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Team MembersTeam Members

Elisabeth CatesElisabeth Cates

Yvonne HildebrandYvonne Hildebrand Jesse JanisJesse Janis

Mary NapierMary Napier

Nina WolfNina Wolf Eric YoungEric Young


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Cisco SystemsCisco Systems


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Yvonne HildebrandYvonne Hildebrand 4 4

Cisco SystemsCisco Systems -- CEOCEO

John Chambers is president and CEO of CiscoJohn Chambers is president and CEO of CiscoSystems, the worldwide leader in networkingSystems, the worldwide leader in networkingfor the Internet. Since January 1995, when hefor the Internet. Since January 1995, when heassumed this position, Chambers has grownassumed this position, Chambers has grown

the company from $1.2 billion in annualthe company from $1.2 billion in annualrevenues to its current runrevenues to its current run--rate ofrate ofapproximately $18.9 billion.approximately $18.9 billion.

Chambers joined Cisco in 1991 as senior viceChambers joined Cisco in 1991 as senior vicepresident, Worldwide Sales and Operations.president, Worldwide Sales and Operations.Prior to joining Cisco, Chambers spent eightPrior to joining Cisco, Chambers spent eightyears at Wang Laboratories and six years withyears at Wang Laboratories and six years withIBM. Chambers holds a law degree and aIBM. Chambers holds a law degree and a

bachelor of science/bachelor of arts degree inbachelor of science/bachelor of arts degree inbusiness from West Virginia University. He laterbusiness from West Virginia University. He laterreceived a masters of business administrationreceived a masters of business administrationdegree in finance and management fromdegree in finance and management fromIndiana University. He is married and has twoIndiana University. He is married and has twoadult children.adult children.


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John T. ChambersJohn T. Chambers --

AwardsAwards Number 2 CEO in America, WorthNumber 2 CEO in America, Worth

MagazineMagazine The Most Powerful Person in Networking,The Most Powerful Person in Networking,

Network WorldNetwork World The Most Influential CEO, InstitutionalThe Most Influential CEO, Institutional

Investor MagazineInvestor Magazine Vice Chairman, President George W.Vice Chairman, President George W.

Bush National Infrastructure AdvisoryBush National Infrastructure AdvisoryCouncil (NIAC)Council (NIAC)

Member, President George W. BushMember, President George W. BushTransition Team, Education CommitteeTransition Team, Education Committee

Best Boss in America, 20/20Best Boss in America, 20/20 CEO of the Year, ChiefExecutiveCEO of the Year, ChiefExecutive

MagazineMagazine Internet Industry Leader Award, U.S.Internet Industry Leader Award, U.S.

Internet CouncilInternet Council Mr. Internet, Top 25 ExecutivesMr. Internet, Top 25 Executives

Worldwide, Business WeekWorldwide, Business Week Member, President Bill Clinton TradeMember, President Bill Clinton Trade

Policy CommitteePolicy Committee


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About Cisco SystemsAbout Cisco Systems

Cisco was founded in 1984 by a small group ofCisco was founded in 1984 by a small group ofcomputer scientists from Stanford Universitycomputer scientists from Stanford University

Since inception, Cisco engineers have beenSince inception, Cisco engineers have been

prominent in the development of Internet Protocolprominent in the development of Internet Protocol(IP)(IP)--based technologiesbased technologies

This traditition continues with industry leadingThis traditition continues with industry leadingproducts in the core areas of routing and switching,products in the core areas of routing and switching,along with advanced technologies in areas such asalong with advanced technologies in areas such as

optical, network security, IP telephony, wirelessoptical, network security, IP telephony, wirelessLAN, storage and home networking.LAN, storage and home networking. Broad range of service offerings, including technicalBroad range of service offerings, including technical

support services and advanced services.support services and advanced services.


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About Cisco SystemsAbout Cisco Systems

Cisco sells ist products and services:Cisco sells ist products and services:

Directly:Directly: through its own sales forcethrough its own sales force

Indirectly:Indirectly: through channelpartners to largethrough channelpartners to largeenterprises, commercial businesses, serviceenterprises, commercial businesses, serviceproviders, andconsumers.providers, andconsumers.

Cisco is the worldwide leaderin networking fortheCisco is the worldwide leaderin networking fortheInternet. Cisco hardware, software, andserviceInternet. Cisco hardware, software, andservice

offerings are usedto create internetsolutions soofferings are usedto create internetsolutions sothatindividuals, companies, andcountries havethatindividuals, companies, andcountries haveeasyaccess to informationeasyaccess to information regardless ofregardless ofdifferences in time andplace.differences in time andplace.


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Nina WolfNina Wolf 88

Financial HighlightsFinancial Highlights


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AlliancesAlliances -- Enable customer success by drivingEnable customer success by drivingbusiness and technology change through strategicbusiness and technology change through strategic

alliances with industry leaders.alliances with industry leaders.

AccentureAccenture

BearingpointBearingpoint

CallismaCallisma

Cap Gemini Ernst &Cap Gemini Ernst &YoungYoung

EDSEDS HPHP

MicrosoftMicrosoft

MotorolaMotorola

SonySony

SunSun

Thru PointThru Point

IBMIBM ItattelItattel


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CompetitorsCompetitors

Cisco's market cap is now five times that ofCisco's market cap is now five times that ofits competitors.its competitors.

Cisco's goal is to grow 10 percent fasterCisco's goal is to grow 10 percent fasterthan its competitors, and revenue increasedthan its competitors, and revenue increased9 percent year over year for the most9 percent year over year for the mostrecently reported quarter, while competitors'recently reported quarter, while competitors'

revenue shrunk.revenue shrunk.

goal of growing 10 percent faster than thegoal of growing 10 percent faster than thecompetitorscompetitors


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CompetitorsCompetitors

Some competitors from different marketSome competitors from different marketsegments:segments:

Foundry NetworksFoundry Networks Riverstone NetworksRiverstone Networks

Juniper NetworksJuniper Networks

Nortel NetworksNortel Networks

Lucent TechnologiesLucent Technologies

3Com3Com

Extreme NetworksExtreme Networks


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NetFlixNetFlix


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Eric YoungEric Young 1313

Reed HastingsReed Hastings

Founder and CEOFounder and CEO Reed founded his first company, Pure Software, in 1991. HeReed founded his first company, Pure Software, in 1991. He

led Pure Software to go public in 1995, completed severalled Pure Software to go public in 1995, completed severalacquisitions and made it one of the 50 largest public softwareacquisitions and made it one of the 50 largest public softwarecompanies in the world by 1997. Pure was acquired in 1997companies in the world by 1997. Pure was acquired in 1997

by Rational Software.by Rational Software. Reed and colleagues formed Netflix in 1997 and launched theReed and colleagues formed Netflix in 1997 and launched the

subscription service in 1999. Reed has since led Netflix tosubscription service in 1999. Reed has since led Netflix toreach 1m subscribers in just three and a half years. Netflix isreach 1m subscribers in just three and a half years. Netflix isnow a freenow a free--cashcash--flow positive public company on Nasdaq.flow positive public company on Nasdaq.

Reed also serves as President of the California State Board ofReed also serves as President of the California State Board ofEducation, and has led successful campaigns for more charter

Education, and has led successful campaigns for more charterpublic schools and easier passage of local school bonds. Hepublic schools and easier passage of local school bonds. He

served for a year as CEO of TechNet and was a coserved for a year as CEO of TechNet and was a co--founder offounder ofAspire Public Schools, NewSchools, and EdVoice.Aspire Public Schools, NewSchools, and EdVoice.

Reed received an MSCS degree from Stanford University inReed received an MSCS degree from Stanford University in1988 and a BA from Bowdoin College in 1983, and holds1988 and a BA from Bowdoin College in 1983, and holdsseveral patents.several patents.


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About NetFlixAbout NetFlix

Netflix (Nasdaq: NFLX) is the world's largest online movieNetflix (Nasdaq: NFLX) is the world's largest online movierental service, providing more than one million subscribersrental service, providing more than one million subscribersaccess to more than 15,000 DVD titles.access to more than 15,000 DVD titles.

Netflix is the largest online entertainment subscription serviceNetflix is the largest online entertainment subscription servicein the United States, providing more than 1,487,000in the United States, providing more than 1,487,000subscribers access to a comprehensive library of more thansubscribers access to a comprehensive library of more than15,000 movie, television and other filmed entertainment.15,000 movie, television and other filmed entertainment.

For $20 a month subscribers can rent as many DVDs as theyFor $20 a month subscribers can rent as many DVDs as theywant with no due dates or late fees.want with no due dates or late fees.

In addition to offering a subscription movie rental service,In addition to offering a subscription movie rental service,

NetFlix helps members expand their movie interests. TheirNetFlix helps members expand their movie interests. Theirproprietary Cinematch technology personalizesproprietary Cinematch technology personalizesrecommendations based on a member's tastes andrecommendations based on a member's tastes andpreferences and allows them to promote smaller, highpreferences and allows them to promote smaller, high--qualityqualityfilms to customers who otherwise might miss them.films to customers who otherwise might miss them.


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About NetFlixAbout NetFlix

Netflix has more than 15,000 titles and more than 5 millionNetflix has more than 15,000 titles and more than 5 millionDVDs total. A typical neighborhood video store generally hasDVDs total. A typical neighborhood video store generally hasless than 3,000 titles, with multiple copies available only for aless than 3,000 titles, with multiple copies available only for afraction of these titles.fraction of these titles.

Netflix has more than 150 million movie ratings fromNetflix has more than 150 million movie ratings fromcustomers. The average subscriber has rated about 50customers. The average subscriber has rated about 50movies.movies.

Netflix's members rent on a monthly basis approximately 97Netflix's members rent on a monthly basis approximately 97percent of all titles in the Netflix library.percent of all titles in the Netflix library.

Netflix members select approximately 60 percent of theirNetflix members select approximately 60 percent of their

movies based on movie recommendations tailored to theirmovies based on movie recommendations tailored to theirindividual tastes.individual tastes.


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Shipping CentersShipping Centers

Twenty shipping centers nationwide.Twenty shipping centers nationwide. Shipping centers serving metropolitan areas in Atlanta,Shipping centers serving metropolitan areas in Atlanta,

Boston, Chicago, Dallas, Denver, Detroit, Fort Lauderdale,Boston, Chicago, Dallas, Denver, Detroit, Fort Lauderdale,Houston, Los Angeles, Minneapolis, New York, Newark,Houston, Los Angeles, Minneapolis, New York, Newark,Philadelphia, Phoenix, Portland, San Jose, Seattle, St. Louis,Philadelphia, Phoenix, Portland, San Jose, Seattle, St. Louis,Stamford, and Washington, D.C.Stamford, and Washington, D.C.

Netflix reaches more than half of its subscribers with generallyNetflix reaches more than half of its subscribers with generallynextnext--day delivery. By yearday delivery. By year--end 2003, Netflix expects to reachend 2003, Netflix expects to reachmore than 70 percent of its subscribers with generally nextmore than 70 percent of its subscribers with generally next--day delivery.day delivery.

The efficiency of these shipping centersThe efficiency of these shipping centers -- most are no moremost are no morethan 8,000 square feetthan 8,000 square feet -- is driven by proprietary software thatis driven by proprietary software thatenables a lean crew to process and ship a daily averageenables a lean crew to process and ship a daily averagevolume of between 5,000 and 30,000 discs a day.volume of between 5,000 and 30,000 discs a day.


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Office DepotOffice Depot


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Jessi JanisJessi Janis 1818

Bruce NelsonBruce Nelson

Chairman & CEOChairman & CEO Bruce Nelson was named Office Depot's ChiefBruce Nelson was named Office Depot's Chief

Executive Officer in July 2000 and inExecutive Officer in July 2000 and inDecember 2001 was named as the ChairmanDecember 2001 was named as the Chairmanof the Board.of the Board.

Prior to this, Mr. Nelson was President ofPrior to this, Mr. Nelson was President ofOffice Depot International and President &Office Depot International and President &CEO of Viking Office Products after Viking wasCEO of Viking Office Products after Viking wasacquired by Office Depot in 1998.acquired by Office Depot in 1998.

Nelson began his office products career inNelson began his office products career in1968 when he joined Boise Cascade.1968 when he joined Boise Cascade.

Over the next 22 years, he held a number ofOver the next 22 years, he held a number ofsenior management positions in both thesenior management positions in both thewholesale and contract business segments.wholesale and contract business segments.

From 1990 to 1994, Nelson was President &From 1990 to 1994, Nelson was President &CEO of BT Office Products USA. He joinedCEO of BT Office Products USA. He joinedViking in 1995 and was named President &Viking in 1995 and was named President &COO within a year.COO within a year.


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About Office DepotAbout Office Depot

Office Depot, Inc. Founded in 1986, is one of the world'sOffice Depot, Inc. Founded in 1986, is one of the world'slargest sellers of office products and an industry leader inlargest sellers of office products and an industry leader inevery distribution channel, including stores, direct mail,every distribution channel, including stores, direct mail,contract delivery, the Internet and businesscontract delivery, the Internet and business--toto--businessbusiness

electronic commerce.electronic commerce. Office Depot sells more office products to more customers inOffice Depot sells more office products to more customers in

more countries than anyone else.more countries than anyone else. Their distribution channels include stores, direct mail, contractTheir distribution channels include stores, direct mail, contract

delivery, the Internet and businessdelivery, the Internet and business--toto--business electronicbusiness electroniccommerce.commerce.

Viking Office Products, Their wholly owned subsidiary,Viking Office Products, Their wholly owned subsidiary,currently operates one of the industry's leading direct mailcurrently operates one of the industry's leading direct mailmarketers of office products worldwide.marketers of office products worldwide.


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About Office DepotAbout Office Depot

Distribution channels:Distribution channels:Shop Online 24 Hours a day: ww.officedepot.comShop Online 24 Hours a day: ww.officedepot.com

AOL Keyword: office depotAOL Keyword: office depotCall 24 Hours a dayCall 24 Hours a day

Fax 24 Hours a dayFax 24 Hours a dayLocate a Store: 1Locate a Store: 1--888888--GOGO--DEPOTDEPOT

North America: There were 1,068 Office DepotNorth America: There were 1,068 Office Depotstores operating in 13 countries.stores operating in 13 countries.

International Division encompasses our direct mail,International Division encompasses our direct mail,contract, Internet andretail operations in 20contract, Internet andretail operations in 20countries outside of the UnitedStates andCanada.countries outside of the UnitedStates andCanada.

In addition theysell office supplies andservicesIn addition theysell office supplies andservicesthrough joint venture operations and licensingthrough joint venture operations and licensingagreements in 8 countries.agreements in 8 countries.


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Mary NapierMary Napier 2121

Case SummaryCase Summary

Cisco Systems couples received data from thereCisco Systems couples received data from therepartners with realpartners with real--time webtime web--based inventorybased inventoryinformation, and uses analytic software to findinformation, and uses analytic software to findcauses of distribution problemscauses of distribution problems

NetFlix.com developed its own movie rankingNetFlix.com developed its own movie rankingsystem, because the software they used before wassystem, because the software they used before wasillill--suitedsuited

Office Depot wants to develop a realOffice Depot wants to develop a real--time alerttime alertsystem for its sales and customer datasystem for its sales and customer data


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Question 1:Question 1: Whatare the business benefitsandWhatare the businessbenefitsandlimitationsofCiscos WeblimitationsofCiscos Web--based system for itsbased system for its

channel managers?channel managers?

Cisco Systemswantseveryone in the companyto have accesstoCisco Systemswantseveryone in the companyto have accesstorealreal--time information.time information.Theyuse a graphical user interfaceTheyuse a graphical user interface--based view from OneChannelbased view from OneChannelInc. thatgivesthem realInc. thatgivesthem real--time viewsoftheir account and othertime viewsoftheir account and other

activities.activities.Cisco receives pointCisco receives point--ofof--sale data via the internetor throughsale data via the internetor throughelectronic data interchange from their partners.electronic data interchange from their partners.Cisco couples itwith realCisco couples itwith real--time Webtime Web--based inventory informationbased inventory informationand processes itusing analytical software from Hyperionand processes itusing analytical software from HyperionSolutionsCorp.SolutionsCorp.Channel managersthen analyse to find the underlying causesofChannel managersthen analyse to find the underlying causesofanydistribution problem.anydistribution problem.Limitation:Limitation: Mostofthe data isbatched. Theyalwayssuffer aMostofthe data isbatched. Theyalwayssuffer atime lack in analysing the data they receive.time lack in analysing the data they receive.Result: Insufficient problem solving processand no optimalResult: Insufficient problem solving processand no optimalsolution for their distribution.solution for their distribution.


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Elizabeth CatesElizabeth Cates 2323

Question 2)Question 2)Visit the NetFlix website. DoyouagreeVisit the NetFlix website. Doyouagreewith them that theirrealwith them that theirreal--time personalizationsystemtime personalizationsystem

is critical to theirbusiness success?is critical to theirbusiness success?

RealReal--time as a competitive advantage:time as a competitive advantage:This industry is verycompetitive and the fact thatThis industry is verycompetitive and the fact that

NetFlix uses realNetFlix uses real--time allows them tostaytime allows them tostaycompetitive in the market in the way that if batchcompetitive in the market in the way that if batchtime was used itwould be inefficient ingetting thetime was used itwould be inefficient ingetting theproduct to the consumerbecause of the time lapseproduct to the consumerbecause of the time lapsebetween the orderbeingplaced, processed andbetween the orderbeingplaced, processed andshipped to the customershipped to the customer

Theirwebsite is available 24 hours soorders canbeTheirwebsite is available 24 hours soorders canbeplaced and shipped immediatelyplaced and shipped immediately

Theycan ship to70% of theircustomers inone dayTheycan ship to70% of theircustomers inone day


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Elizabeth CatesElizabeth Cates 2424

Question 2)Question 2)Visit the NetFlix website. DoyouagreeVisit the NetFlix website. Doyouagreewith them that theirrealwith them that theirreal--time personalizationsystemtime personalizationsystem

is critical to theirbusiness success?is critical to theirbusiness success?

Competitive Market cont.Competitive Market cont.

Because this is a realBecause this is a real--time servicetime serviceNetFlix canstaycompetitive and alsoNetFlix canstaycompetitive and alsohave the competitive advantage in thehave the competitive advantage in thewayof having the product deliveredwayof having the product delivered

right toyourdoorwith no late feesright toyourdoorwith no late feeswhen theyare returnedwhen theyare returned


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Question 3)Question 3) Do youthink salespeople will appreciateDo youthink salespeople will appreciateandbenefit fromthe realandbenefit fromthe real--time alertsystemenvisionedtime alertsystemenvisionedforOffice Depot?Whyorwhynot?forOffice Depot?Whyorwhynot?

Advantage:Advantage:

Salespeople can reactSalespeople can react immediatelyaftertheyimmediatelyafterthey

receivedthe salesalertreportaboutone ofreceivedthe salesalertreportaboutone oftheircustomer in theirterritorytheircustomer in theirterritory can visitcan visitcustomer faster and make special offerscustomer faster and make special offers

Disadvantage:Disadvantage:

Salespeople can transmit to fast an offer forSalespeople can transmit to fast an offer fortheir customer, which will be not ideal and willtheir customer, which will be not ideal and willnot help to solve the problemnot help to solve the problem


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Question 3)Question 3) Do youthink salespeople will appreciateDo youthink salespeople will appreciateandbenefit fromthe realandbenefit fromthe real--time alertsystemenvisionedtime alertsystemenvisionedforOffice Depot?Whyorwhynot?forOffice Depot?Whyorwhynot?

Ifthe salespeople appreciate the newIfthe salespeople appreciate the newsystemdepends on theirattitude tosystemdepends on theirattitude to

the systemthe system

The systemwill carryoutbenefits forThe systemwill carryoutbenefits forthe salespeople, iftheyanalyze thethe salespeople, iftheyanalyze the

situation before theyreactsituation before theyreact


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Questions?Questions?

Documents

Chpt8_Cisco Systems_ NetFlix_ and Office Depot Presentation