Cisco Systems: New Millenium †New acquisition strategy Essay

The case deals with the acquisition policy implemented by Cisco, by giving some real samples. The most interesting point concerns the way Cisco acquired companies during 90s with 4 main goals: a shared vision, shareholders’ satisfaction, motivating value added for employees, shareholders, customers and partners and a perfect â€Å"chemistry† (P.9). Contrary to the global trend of big companies’ acquisition, Cisco was involved in smaller companies, based on selection criteria (presented below) which fit the company’s needs and strategy: * Small companies: the advantage is that those companies are start-ups coming with new disruptive Ideas highly complementary with Cisco’s businesses. * Limited number of employees (but engineers as the large part of them): Cisco gives a huge importance to skilled people, because as they say, those people are the real asset which permits to increase future market shares, So people retention becomes one of acquisitions’ main goals (success driven by a very low turnover compared with the industry). * Very entrepreneurial systems focused on fast growing: the need to grow by forming part of Cisco is one of the motivating arguments to have win-win negotiations. On the other hand, this kind of companies is not risk adverse and promises future benefits to their owners. * Geographical proximity: for large acquisitions, it permits to shorten lost time and get directly to the real acquisition’s implementation in order to share the distribution channels (cost reduction) and obtain the new product earlier. * Comparable cultures and visions: since acquisition leads to the integration of the acquired company to the group, it is necessary to have the same vision of the future strategy and cultures which can be merged to obtain a coherent unit. Last, the company’s strength resides in its ability to decentralize decision making by creating a new business unit at each acquisition, because the acquired company is considered as a master in its domain. This system permits to make acquired company feel independent in the way it is managed (less change management to be processed). Cisco represents a benchmark as acquirer for the entrepreneurial firms which aim to be acquired because it proposes several advantages in terms of independency, people treatment, product valorization and so on, which form part of the most important criteria for acquisition. Moreover, in the last decade, it increased its attractiveness based on the personalized treatment provided to the new joiners and the restructuration by type of technology which makes economies of scale and allows people to share their knowledge with their previous â€Å"internal competitors† and increase their skills. So, in terms of win-win relationship, Cisco acquisition model can be a basis of comparison for any potential acquired company.