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Cisco

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Problem definition Cisco Systems Inc. is one of the leading companies operating in the telecommunication industry. At the present moment, the company has a strong position in the world market and actively develops its business targeting at the wider implementation of new technologies. In fact, the company was traditionally oriented on the introduction of innovations and nowadays it is still focused on the development of new technologies which can improve the position of the company in the market and guarantee its leadership in the future. In such a situation, Cisco Systems Inc. develops its corporate strategy, which basically targets at the acquisition of smaller companies which a great potential and have developments which could be very perspective in the future. One of such companies is Summa Four, which Cisco Systems Inc. wants to acquire.

In this respect, it should be said that the acquisition of the new company will inevitably pose certain difficulties Cisco Systems Inc. will have to overcome. Even though the company has a huge experience of acquisitions, since the company has launched the strategy of acquisition since the early 1990s, the acquisition of Summa Four is different from the acquisition of any other company Cisco Systems has ever bided for before. To put it more precisely, as a rule Cisco Systems Inc. acquired companies which were small and did not possess significant manufacturing facilities. Basically, such acquisitions were rather investment in the human capital than in the production proper because it was mainly the ideas and intellectual and creative potential of the personnel of these companies and their technologies and innovative ideas that actually attracted Cisco Systems Inc. In contrast, Summa Four has not only quite perspective ideas and developments, such as the Project Alpha – the industry’s first standards-based open programmable switch, but also the plant in Manchester and about 200 employees, which are well-qualified and very perspective.

In such a way, Cisco Systems Inc. faces a serious problem of the integration of the new, perspective company, Summa Four, especially in regard to its manufacturing facilities and potential. What is meant here is the fact that Cisco Systems Inc, should actually solve the problem of the integration of Summa Four’s manufacturing, decide where the next-generation products of the company will be manufactured and what the company will do with the manufacturing facilities of Summa Four. In addition, it is important to solve the problem of suppliers of Summa Four many of which are new and Cisco Systems Inc. has never cooperated with them before and, what is more, some of these suppliers are sole suppliers that puts the company at risk of high pricing of supplied products and threatens to the reliability of the supply. In such a situation, Cisco Systems Inc. needs to assess carefully all the risks and threats that the company may face after the acquisition of Summa Four and its further integration since this acquisition may be viewed as pilot project because there a lot of other companies similar to Summa Four that are attracting and very perspective for the acquisition by Cisco Systems Inc. and the success of the acquisition and integration of Summa Four may define the future strategy and development of the entire company.

Company mission/goals Taking into consideration the general strategy of Cisco Systems Inc it is impossible to identify the mission and major goals of the company. Obviously, the company targets at the market leadership through the introduction of innovations and the acquisition of Summa Four is an important step in the advancement of the company since Summa Four possesses not only intellectual potential but also manufacturing facilities. In such a context, the major goal of the company is to integrate Summa Four successfully into its structure. In short terms, this will allow Cisco Systems to introduce the new product developed in terms of the Project Alpha, while in long terms, this will allow the company to develop an effective strategy of integration of such companies as Summa Four and, therefore, attain its goal of the further market expansion.

Company current strategy

Speaking about the current strategy of the company, it should be said that it is very effective, but the peculiarity of the acquisition and integration of Summa Four will unquestionably need to change slightly the current strategy. At the present moment, the acquisition and integration strategy implemented in Cisco Systems Inc is based on a three step process. Firstly, the company focuses on the retention of the personnel. This step is strategically important because human resources are the most important element of the acquisition of a high tech company. Secondly, the new product development means that the company will continue to work on the Project Alpha, which may be very perspective. Finally, return on investment implies that the acquisition and integration will definitely bring profits to the company.

Recommendations concerning company strategy and its advantages

In such a context, it is possible to recommend maintaining the existing strategy because it is really effective, but it is important to modify it in order to provide the opportunity for effective integration of manufacturing facilities of the company. In fact, Cisco Systems Inc should give Summa Four the opportunity to preserve the large autonomy in terms of the new company and give its employees access to the information and knowledge the rest of the company possesses.(AUTONOMY) In such a way, Cisco System Inc will minimize possible negative effects of the integration, preserving the unique corporate culture of Summa Four, prevent the personnel turnover, preserve the company’s manufacturing facilities and, what is more, accelerate its researches and development of new technologies through the access to new information, which could be available to Summa Four from other units of Cisco Systems Inc.

Obviously, such a strategy will force the company to refuse from the traditional use of its integration team and minimize any external interference in work of Summa that will maximize the effectiveness of its work.

Leveraging the firm’s key competencies In such a situation, the assistance to Summa Four in the realization of its Project Alpha and other developments is strategically important and Cisco Systems Inc should facilitate the development of key competencies of Summa Four as its unit. Consequently, Cisco Systems Inc will need to assist financially and technically to Summa Four to fully realize its existing projects and develop new ones.

Key steps of implementation

Basically, it is necessary to integrate Summa Four in possibly shorter terms and the orientation on the preservation of the high autonomy of the company can facilitate this process. In fact, the traditional work of the integration team which lasts for a couple of days may be sufficient for the preparation of the acquisition, while the process of integration will be basically oriented on the sharing of information between Cisco Systems Inc and Summa Four. The latter should preserve its structure and corporate culture. The introduction of an effective information system may take about a week or a bit more.

At the same time, the integration will not need substantial investments, but investments in the development of an effective information system and the faster realization of the Project Alpha. Four Summa has already got manufacturing facilities to implement the Project Alpha, but it will probably need the involvement of specialists from other units of Cisco System. In perspective, it is possible to start the production of the new product in terms of the Project Alpha in other units of Cisco Systems. As for the organizational structure, basically it will remain unchanged, though it is possible to introduce a new top executive in Summa Four, who could control the implementation of the Project Alpha and other projects and help develop effective cooperation between Summa Four and other units of Cisco Systems Inc. In such a way, it will be possible to minimize costs of the integration and develop new products, which could be initially produced on the basis of Summa Four manufacturing facilities and later the production may be developed in all units of Cisco Systems Inc.

Describes the procedures and processes used by Cisco Systems in its acquisition of high-technology firms. Its goal is to retain key engineering talent and to leverage existing product development efforts, but to quickly merge acquired companies its own systems and procedures. In addition to describing the general approach used by Cisco, this case describes some of the specifics involving its acquisition of Summa Four, a designer/manufacturer of a related product line, whose major activities are located in New England.

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