Strategic use of the Internet and e-commerce: Cisco Systems

Information systems are strategic to the extent that they support a firm's business strategy. Cisco Systems has used the Internet and its own information systems to support its strategy in several ways: (1) to create a business ecology around its technology standards; (2) to coordinate a virtual organization that allows it to concentrate on product innovation while outsourcing other functions; (3) to showcase its own use of the Internet as a marketing tool. Cisco's strategy and execution enabled it to dominate key networking standards and sustain high growth rates throughout the 1990s. In late 2000, however, Cisco's market collapsed and the company was left with billions of dollars in unsold inventory, calling into question the ability of its information systems to help it anticipate and respond effectively to a decline in demand.