In March 2009, Cisco Systems, a US-based multinational corporation, acquired Pure Digital Technologies Inc., the maker of the Flip Video brand, for over $500 million. Pure Digital pioneered the development of consumer-friendly video solutions with a wide customer base. The acquisition was an attempt by Cisco to become more deeply engaged in the consumer electronics markets.
However, two years later, in April 2011, Cisco announced it was shutting down the Flip business. Was Cisco’s acquisition an interesting way to spend $500 million? Why would the company do something as strange as that? Was it a mistake?
Applying Porter’s Five Forces might have helped Cisco make a better decision regarding the strategic investment and the acquisition.
When was the last time you used Porter’s Five Forces? Probably when you last assessed a market in a qualitative manner to determine its attractiveness.
However, by applying Porter’s Five Forces in a quantitative manner, using a visual framework, and exploring the effect on return on invested capital (ROIC), you can experience a powerful and exciting way to make informed management decisions. The applications can span from operating model changes to pricing decisions, product introductions, mergers, and strategic investments.
How well are you applying Porter’s Five Forces to make informed strategic decisions for your company? The Accenture Academy course Applying Porter’s Five Forces
offers a set of tools and a method to help you apply Porter’s Five Forces more rigorously in your current role while dealing with typical strategic situations.
By exploring various strategic decisions such as changes in a company’s operating model, a pricing decision, a product introduction, a merger decision, or a strategic investment decision, you can experience the versatility of the model. In addition, you can review how to link these strategic decisions to ROIC, leverage a graphical representation of Porter’s Five Forces, and practice a technique to help guide your thinking to make better decisions.