Page 3: Making a strategic decision
Strategy involves making major decisions about the long-term direction of a business. It results from a process of corporate planning. Deregulation was changing the telecoms landscape in the US and the UK and signs indicated that when changes reached the rest of Europe, the pace would quicken. At a time when transformational change was required for GPT, it was important that strategic decisions would provide a clear direction for GEC’s communication business.
Acquisition is one way of responding to transformational change and the opportunities it creates. This is more responsive than internal development as it allows organisations to improve the speed by which they enter new product and market areas. It also provides an opportunity to share expertise and knowledge.
Most of the critical products and technology were developed when GPT was jointly owned by GEC (60%) and Siemens (40%). The total ownership of technology was to become critical for an organisation determined to revitalise its future and develop new markets and products. As a result, GEC bought the 40% shareholding in GPT that was owned by Siemens, and became sole shareholder. At the same time a merger took place with Marconi SpA, the Italian subsidiary of GEC, to create Marconi Communications.
Within a short period of time, through this decisive set of actions, GEC had created a wholly owned £1.86 billion telecommunications equipment company. Acquisitions were subsequently made to add products from US companies, as well as US market share. For example, the Reltec Corporation was acquired in 1999 to access new technology and enable Marconi to expand into the US market. FORE systems was also acquired for its leading edge broadband switching capability and to give the company a position in the enterprise and campus markets. All of this took place against a backdrop of an industry experiencing a revolution.