1.

Of the “Reasons for Acquisitions” section in the chapter, which reasons are the primary
drivers of Cisco’s acquisition strategy?

Based on the case and according to our analysis, some of the drivers why Cisco’s acquisition
strategy is being continuously implemented is because they are trying to evolve and adapt more
in their business operation and its environment by building network products and extending its
reach into new areas of business, whether related and unrelated which is really crucial whereas
primarily it’s mostly driven by Cisco’s customer focus. This is because of the evolution that’s
happening on the internet requires some effort to necessarily integrate & provide a lot of
aspects in the internet such as starting from softwares & hardwares for networking, digital
infrastructure, digital activities & interactions, digital business activities / network economy,
Internet of things / everything, digital security, digital connectivity, cloud computing, etc which is
usually aimed to support customers’ usage & activity in the end. It can be inferred that the
primary drivers of Cisco’s acquisition strategy is because of their customer-driven focus which
also somehow helps and drives them in gaining and capturing more market share, especially by
doing related and unrelated acquisition & expansion alongside with improving their operations &
products such as optimizing their network services, optimizing their cloud services, improving
their multimedia content delivery, building routers that allows video data & e-mail
communications to come together through their servers & clouds and some other improvements
that are important in their customer driven focus. Whereas by doing so, they believe that if their
primary drivers is their customers, they could also listen closely to customers to knows about
what necessary changes that they need to do in order to fulfill and optimize their needs, then
Cisco believe that they could also transform the base of their strategic business blocks and they
could make the transition into the all-everything network, especially in terms of Internet of things
/ everything (IoT) that’s optimized for their customers which could be really strategically
beneficial and influential for Cisco, especially in gaining competitive advantage.
Nevertheless, this primary drivers which is Cisco’s customer-driven focus also drive Cisco into
doing some strategic acquisitions that help them in moving onto some new areas of business as
its environment (internet & technology) changes, whereas it also helps them in learning about
new technologies and knowledge alongside with gaining experience in this shifting or
transitions. Besides that, some other primary drivers that also drive cisco into doing acquisitions
are such as cost-reduction, product innovation, operation optimization, etc which is strategically
beneficial for them, especially in their business and competitive environment.
1. Of the “Reasons for Acquisitions” section in the chapter, which reasons are the primary
drivers of Cisco’s acquisition strategy?

Acquisition strategies create stakeholder value and competitive advantages. With regards to
Cisco’s primary drivers in their acquisition strategy, it is based on identifying and driving market
transitions. Cisco System is in the business of building the infrastructure that allows the Internet
to work. However, as the Internet evolved, they were required to adapt to this evolution. They
build network products and extend its reach into new areas; both related and unrelated which is
crucial to handle. Cisco segments acquisitions falls into three categories: market acceleration,
market expansion, and new market entry. Their overall business development effort includes
engaging from the early diligence phase through to mainstream business, by investing in
dedicated integration resources across the company at the corporate and functional levels They
adapted and implemented to these changes from network economy facilitating e-commerce,
digital supply chains, and digital collaboration to developing infrastructure for social media,
mobile and cloud computing, and digital video; and the “Internet of everything” that requires the
basic core in routing, switching, and services, as well as large data centers to facilitate
visualization through cloud computing to connect people, processes and data. Also, because of
their customer-driven focus, they were able to cater the needs of their customers that help them
in gaining more market share, strong competitive advantages, and stable market position.

which also somehow helps and drives them in gaining and capturing more market share,
especially by doing related and unrelated acquisition & expansion alongside with improving their
operations & products such as optimizing their network services, optimizing their cloud services,
improving their multimedia content delivery, building routers that allows video data & e-mail
communications to come together through their servers & clouds and some other improvements
that are important in their customer driven focus.

Cisco segments acquisitions into three categories: market acceleration, market expansion, and
new market entry.

Leaders in IT and other markets frequently seek Cisco's advice on acquisition integration. Our
integration process starts with the entire acquisition strategy. Cisco seeks acquisitions where
there is not only a strong business case but also a shared business and technological vision,
and where compatibility of core values and culture foster an environment for success.
Cisco Systems is in the business of building the infrastructure 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 advancement, 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 interaction phase moved Cisco into developing infrastructure 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 collaboration as well as basic architecture of the business will be
transforming to become the base strategic business blocks. Furthermore, the need to have
strong digital security will be paramount.
>An acquisition is a strategy through which one firm buys a controlling, or 100 percent, interest
in another firm with the intent of making the acquired firm a subsidiary business within its
portfolio. After the acquisition is completed, the management of the acquired firm reports to the
management of the acquiring firm
>Achieving greater market power is a primary reason for acquisitions. Market power exists
when a firm is able to sell its goods or services above competitive levels or when the costs of its
primary or support activities are lower than those of its competitors.
Market power usually is derived from the size of the firm, the quality of the resources
it uses to compete, and its share of the market(s) in which it competes.16 Therefore, most
acquisitions that are designed to achieve greater market power entail buying a competitor,
a supplier, a distributor, or a business in a highly related industry so a core competencies.

Acquisitions are also used to diversify firms. Based on experience and the insights resulting
from it, firms typically find it easier to develop and introduce new products in markets they are
currently serving. In contrast, it is difficult for companies to develop products that differ from their
current lines for markets in which they lack experience. Thus, it is relatively uncommon for a firm
to develop new products internally to diversify its product lines. Acquisition strategies can be
used to support the use of both related and unrelated diversification strategies.
The target companies might bring different types of assets to Cisco, including great talent and
technology, mature products and solutions, or new go-to-market and business models. Cisco
particularly seeks acquisitions with the potential to reach billion dollar markets.
Integration is essential to successful acquisitions. Our overall business development effort
includes engaging from the early diligence phase through to mainstream business, by investing
in dedicated integration resources across the company at the corporate and functional levels.
We have a long history of integration, achieving best practices through continuous learning and
deep experience with a process that challenges all companies who repeatedly make
acquisitions.