228 Part 2: Strategic Actions: Strategy Formulation
KEY TERMS
acquisition 208
merger 207
restructuring 224
takeover 208
REVIEW QUESTIONS
- Why are merger and acquisition strategies popular in many
firms competing in the global economy?
- What reasons account for firms’ decisions to use acquisition
strategies as a means to achieving strategic competitiveness?
- What are the seven primary problems that affect a firm’s
efforts to successfully use an acquisition strategy?
- What are the attributes associated with a successful acquisi-
tion strategy?
- What is the restructuring strategy, and what are its common
forms?
- What are the short- and long-term outcomes associated with
the different restructuring strategies?
Mini-Case
Strategic Acquisitions and Accelerated Integration of
Those Acquisitions are a Vital Capability of Cisco Systems
Cisco Systems is in the business of building the infra-
structure that allows the Internet to work. As the
Internet evolved, however, Cisco’s business was required
to change with this evolution. As part of its advance-
ment, Cisco Systems has used an acquisition strategy
to build network products and extend its reach into
new areas, both related and unrelated. In the beginning,
digital connectivity was important through e-mail and
Web browsing and searches. This evolved into a network
economy facilitating e-commerce, digital supply chains,
and digital collaboration. Subsequently, the digital inter-
action phase moved Cisco into developing infrastruc-
ture for social media, mobile and cloud computing, and
digital video. The next stage seems to be “the Internet
of everything” connecting people, processes, and data.
This will require the basic core in routing, switching,
and services, as well as large data centers to facilitate
visualization through cloud computing. Video and col-
laboration as well as basic architecture of the business
will be transforming to become the base strategic busi-
ness blocks. Furthermore, the need to have strong digi-
tal security will be paramount.
Cisco has entered many aspects of the business in
which it competes through acquisitions. For instance,
in 2012, Cisco acquired TV software developer NDS
for $5 billion. NDS Group develops software for televi-
sion networks. In particular, its solutions allow pay-TV
providers to deliver digital content to TVs, DVRs, PCs,
and other multimedia devices. It provides solutions that
protect digital content so that only paid subscribers can
access it. Because of Cisco’s customer-driven focus, it
has sought to help its customers capture these market
transitions and meet their particular needs. Of course,
Cisco also builds the routers that allow video data and
e-mail communications to come together through their
blade servers (individual and modular servers that cut
down on cabling). These routers and servers support
cloud computing for the mobile devices that deliver the
video that NDS software enables on desktop and mobile
devices.
Also in 2012, Cisco purchased Meraki for $1.2 billion.
Meraki provides solutions that optimize services in the
cloud. For instance, it offers mid-sized customers Wi-Fi,
switching, security, and mobile device management
