Ipo Funded : A New Economy Essay

Ipo Funded : A New Economy Essay

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The late 90’s ushered in a new economy, IPO-funded .com companies. Apparently, investors believed that this new economy was the next big thing. Consequently, this belief, fostered in over-priced stock value. For instance, companies that had never produced any revenue, witnessed their stock trading at enormous value. Therefore, overnight a lot of executives and employees became millionaires (Ljungqvist, & Wilhelm, 2003). Unfortunately, at the time, there was a myth about how successful these companies would be. Moreover, investors were not interested with the bottom lines of these companies. For this reason, a lot of companies took on massive amounts of debts to grow with the new economy. Nevertheless, at the same time, Microsoft was declared a monopoly and the Fed rose rates. Accordingly, investors started to panic and in the early 2000’s, the .com bubble burst. Consequently, over a trillion dollars in market value was lost, and some companies went bankrupt. Likewise, this was the landscape that the following companies had to navigate through (Wang, 2007).
Initially, Cisco Systems controlled its inventory utilizing the push system. In addition, at the time, the economy was doing great, therefore, using the push system to stock pile inventory was acceptable. However, during the dot-com bust of the 2000’s, its sales and the demand for its products greatly decreased. Unfortunately, during this time, Cisco discovered that it possessed an abundance of inventory, and, wrote off more than $1 billion in inventory. Consequently, the company learned that acquiring inventory in anticipation of market demand, and not factoring in the human element of its business increased its risks of failure. Obviously, Cisco wanted to meet its customer’s d...


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...pdates every night to its distribution centers. Thus, the company could immediately fulfill request, while freeing up over $50 million by reducing its inventory levels (O 'Brien, & Marakas, 2011).
In conclusion, these cases, have shown us that companies must be able to quickly respond to customer demands and the economy, without storing an abundance of excess inventory. Furthermore, utilizing an effective inventory management system can be beneficial for a business. Additionally, a management system can reduce inventory to increase capital, and, can provide a better view of the supply chain. Research has shown us that Cisco evolved from push to pull. Black & Decker, established an integrated inventory system, and, O’Reilly’s uses a replenishment system. Consequently, each company had to discover which system was the most efficient for the business and implement it.

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