Case Study Cisco Systems

Topics: Corporation, WebEx, Strategic management Pages: 3 (1014 words) Published: October 5, 2010
Cisco Systems

Cisco Systems is a global company that manufactures routers. It is known in its industry for its partnerships with other companies and it’s “Internet Ecosystem.” Cisco is facing the issue of whether or not to buy International Network Services (INS), which is a provider of network design, consulting, and integration services. Cisco has had a partnership with INS but the CEO of INS is looking to sell and Lucent, a competitor of Cisco has already made an offer valued at $3.7 billion. Cisco has to decide if it wants to purchase INS or try to maintain the partnership in existence. If Cisco chooses to maintain the partnership, Lucent’s acquisition of INS could dissolve the partnership between Cisco and INS. The decision requires Cisco to reexamine their company’s extremely successful strategy.

There are a number of things to reflect on in this type of situation. Whether or not to introduce a counteroffer to purchase International Network Services would definitely be the first decision to make. There would be a great deal of capital needed to make the purchase; however, deciding against the purchase could be fatal for the company as well. There are really three main options to consider in this situation, which include a counteroffer to purchase INS, focusing on maintaining and building on the relationship in existence, or cut all ties with INS. There are advantages and disadvantages to all the alternatives.

The first option is for Cisco to introduce a counteroffer to buy INS. Stepping in with this counteroffer could end the possibility of INS accepting Lucent’s offer. Purchasing INS would allow Cisco to acquire all of INS’s talent, and the talent of INS employees is already a very important aspect of Cisco’s success. Purchasing INS would also be a smart financial decision for Cisco because of the financial success associated with INS. INS and Lucent both had higher revenues than Cisco at the present year. Purchasing INS would give...
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