CISCO CORPORATE OVERVIEW Husband and wife Leonard Bosack and

Sandy Lerner, both working for Stanford University, wanted to link disperate computer networks on campus together,so they develop the first “multiprotocal”.

Cisco’s technologies open up the potential to link disperate networks all the world

CISCO CORPORATE OVERVIEW(2) With an early foothold in the data

networking networking equipment market,Cisco become the market leader

Company’s product line had expanded to include a broad range of other networking solutions to offer customers an “end-to-end” network solution

Routers and Switches are still Cisco’s core product

CISCO CORPORATE OVERVIEW(3) In 1996 Cisco entered the $250billion

telecom equipment market, which was in significant change

Historically there had been 3 type of network Phone network for translating voice Computer network for transmitting data Broadcast network for transmitting video

• Advance in digitalization make it possible to transmit all three over one network

CISCO CORPORATE OVERVIEW(4) Cisco was competing with many rivals but Cisco

scored a victory when Sprint select Cisco to be the supplier of its new data and telephone network.

Cisco went public in 1990,closing its first day of trading with a market value of $222 million.

Just 8 years later, Cisco’s market value topped the significant $100 billion mark, reaching that mark faster than any company in history and stripping Microsoft of the previous record of 11 years.

BUSINESS STRATEGY•Assemble a broad product line in order to provide customers one- stop shopping for networking solutions.

•Systematize the acquisition process.

•Define industry-wide software standards for networking equipment.

•Pick the right strategic partners.

BUSINESS STRATEGY(2) An inherent part of

Cisco’s strategy was using acquisition and partnership to gain access to new technologies

CISCO’S MANUFACTURING PHILISOPHY AND ORGANIZATION

Structured as a highly centralized organization.

Only engineering and marketing were decentralized at the business unit level

Cisco own and operated three manufacturing facilities in San Jose. Tasman Walsh Silver Creek

CISCO’S MANUFACTURING PHILISOPHY AND ORGANIZATION(2)

Cisco’s heavily dependent on outsourcing. It would keep only the core business and outsource everything else to alliance partners

About 25percent of Cisco’s revenue and 50 percent of its unit volume was from external factories

Cisco did supply them to make sure that they met Cisco’s standards

CISCO’S ACQUISITION STRATEGY

Employee Retention

Follow-up on new product development.

Return on investment

EMPLOYEE RETENTION Cisco itself was the combination of 25 different

organizations. Cisco specifics of the transition plan to the needs

of the acquired company’s employees. co’s HR professionals went to great lengths to tailor

After the acquisition closed, Cisco’s HR team would spend another six to sevens on-site executing the transition plan.

For the employees of the acquired firm, working for Cisco required a number of significant changes to their compensation.

EMPLOYEE RETENTION(2) Every redundant person had the opportunity to

apply for any Cisco job opening world-wide over 300-600 job openings available at any one time

Employee turnover rate for acquisitions was only 8 percent, the same level as for Cisco’s long-term employees

About one in five Cisco employees and one-third of Cisco’s top management positions were filled by people who had come from acquired companies.

NEW PRODUCT DEVELOPMENT Cisco’s new product introduction(NPI)

process required both technical expertise and management talent

Cisco found that the most effective way to do was for the acquired company to adopt Cisco’s cross-functional, systematic NPI process

RETURN ON INVESTMENT With Cisco’s powerful sales

organization and third party distributors,they can sell the acquired company’s product in two-to five times ramp up in the acquired company’s volume

This is the key driver behind the significant groth in cisco’s revenue

TYPE OF ACQUISITIONS

software companies

pre-production hardware companies

small hardware companies shipping product

mature hardware companies

CISCO’S ACQUISITION INTEGRATION PROCESS

Before agreeing to the term of an acquisition, Cisco conduct thorough due diligence on the company

After the acquisition had closed, Cisco would move forward with postacquicition process

Use “scenario planning”

MANUFACTORING INTEGRATION TEAM

To manage the postacquisition process was to appoint one of the senior managers in the acquired company as the integration team leader

Cisco also had developed the “buddy system” approach. The buddy system involved appointing an experienced Cisco employee to be the “manager of the intangibles” in the acquired company, and swapping a handful of Cisco employees with employees from the acquired company. Both the manager of intangibles and the on-site Cisco staff would assist employees from the acquired company with questions regarding how to access information and get things done within the Cisco organization.

MANDATORY INTEGRATION STEPS

merging information system

• evaluating supplier • ascending outsourcing options • determining product lifecycles

aligning current process

implementing ongoing mathodologies

THE SUMMA FOUR ACQUISITION Summa Four is a leading provider of

programmable switches which will enable Cisco to offer value- added telephony applications to new and existing service providers as well as extending these services to IP (Internet Protocol) networks, which were able to transmit voice, data, and video.

SUMMA FOUR PRODUCT LINE

VCO/Series 80

VCO/Series 20

VCO/4k

SUMMA FOUR ORGANIZATION Project Alpha was still in the

development phase at the time of the acquisition, and over a year away from product launch Key reason behind Cisco’s interest in Summa Four

In September of 1998, the idea of being acquired by Cisco was still very new to Summa Four’s employees, but their exciting.

SUMMA FOUR ORGANIZATION(2) Summa Four’s plant compared favorably

to many of the other plants that Cisco had acquired. However, the plant used a homegrown, PC- based test system that was far less automated than Cisco’s Autotest system.

Summa four purchased approximately 5,000 individual parts from 250 suppliers, 85 of whom were new to Cisco

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