Strategies for partnership or acquisition for a telecom OEM (Lucent technologies)

Abstract

The global telecom industry is undergoing a huge transformation post the global downturn after the dot-com burst. The companies that once were very large have shrunk considerably and a phase of consolidation is set in. The other dynamic change is the ever-evolving technological changes in the industry. With large scale reductions in workforce and not so healthy financial statuses of the larger companies it becomes imperative for them to go for acquisitions partnerships to grow inorganically and fill up holes in technology portfolio. This project looks at a telecom OEM Lucent technologies and its evolution towards strategies for acquisitions or partnerships. The project uses a model from corporate strategy board and analyses the three factors Surfacing threats and opportunities Setting Strategic Priorities Crafting a strategic response The analysis was done with respect to the service provider market, looking at their priorities (Service providers across the globe were analyzed for their priorities and where they wish to invest in the future). The trend shows a decline in the traditional revenues (undifferentiated services due to regulation)but there is a definite potential in new services in broadband and media through broadband (some emerging technologies like IPTV, IMS, MPLS, VoIP are discussed) Lucent's strategy stems from these observations and the project discusses where it should concentrate. An analysis on competitors gives an idea on where they are investing and any partnerships or acquisitions they are scouting for. The project then looks at some candidates that Lucent looks for partnership or acquisition. A model for analyzing these candidates is done as described in the Appendix. After all the analysis of the partnerships and acquisition prospects, I conclude it with the following recommendations. Any Strategy for acquisition should look beyond a single product or financial gains. An acquisition brings a new set of people with different culture that is not the same as the acquiring company. The Synergies should match or plans should be drawn to bring them to the same table Partnership strategies should look at the options that the other partner has in other areas of business than the business that we partner with. In this case Lucent should look at it's partners and take a call on whether they can be threats in other areas of operations. It should not give easy access to its customer base to its partners for product sets that are different and competing. Any Partnership has it's own life time and a company should learn from it's partners (internalize the technology) and adapt to changing dynamics of the industry all the while. Lucent can also look at In house development of products Large scale layoffs have dented the innovativeness of the company. The company should look at hiring again and get more products out. In all the companies discussed Lucent has not been involved indirect funding like the way Cisco or other bigger companies like Intel does. That is one aspect that Lucent can think of. Invest in some companies pursuing new technologies and later acquire it. Services together with products will make the right mix for the company, concentrating on one (just services) and losing focus on the other can prove harmful as the company will lose its innovativeness and bargaining power with other partners.