But when the telecoms industry hit a downturn, Cisco was one of the worst affected - perhaps in part because of the high gearing that had served it well on the way up. Customer orders fell, production orders continued to go out, raw-parts inventory increased by more than 300% between the third and fourth quarter of 2000. Cisco was forced to write down $2.25 billions.
According to Lakenan, Boyd and Frey, "Cisco simply wasn't able to scale up or down as quickly as it thought it could."
Discussion QuestionsEconomics -- How does outsourcing affect profit: (a) in an expanding market, (b) in a contracting market.
Social Patterns -- What business relationships are implied by such concepts as the virtual supply chain or global virtual manufacturing? What is the nature of these relationships in the Cisco case?