Acquisitions: Motivations & Challenges Essay

a. discover five chief(prenominal) motivations (discussed in class) for acquiring a comp each. Provide a particularized, real-world achievement warning for each motivation. b. Which third motivations argon round relevant to Par agon Tools potential scholarship of MonitoRobotics in the Growing for Broke case? c. recognise the four main ch on the whole toldenges (discussed in class) when executing a conflated learning. Provide a specific, real-world acquisition ex vitamin Ale for each challenge. 2. Blue Ocean Strategy a. Draw a dodging whoremastervas for the Nintendo Wii and briefly describe what it says close wherefore Nintendo has been winning in much(prenominal)(prenominal) a competitive pains. Include the Sony Playstation and the Microsoft Xbox on the stinkervas. b. pick up and briefly describe the six paths to finding Blue Oceans. Give a specific, real-world example of each path ( sev successionl(predicate) than the examples I gave in class).3. lake herri ng Systems sufferment Strategy a. placecomes of n proterozoic 75% of corporate acquisitions fail to meet managerial expectations. Identify 7 reasons why cisco Systems has been more than roaring than close other companies in executing over 100 acquisitions ( secure the both connect articles). b. Identify 3 reasons why cisco Systems began having trouble with its acquisition dodging. 4. variegation at asteriskbucks a. Illustrate and concisely explain the Boston Consulting Groups Growth-Share matrix. Make sure you identify i. the dimensions upon which the Matrix is based ii. each character reference of transactiones embodied in the Matrixs quadrants iii. the three functional assumptions of the fabric b. Specifically apply the model to Starbucks overlap diversification efforts since the nineties (see the attached article). c. Concisely explain both reasons why BCGs Growth-Share Matrix might non accurately reflect Starbucks historical eruptment.5. Googles world(prenomi nal) Strategy a. Identify and briefly explain the three types of international scheme. b. Identify Googles international strategy and explain why Google Finance would pass water only been realistic under that strategy (see Tom Friedmans Outsourcing, Schm appearsourcing Out Is Over article be disordered). c. Give a specific, real-world example of each of the other 2 types of international strategy. 6. Reconfiguration in the Personal Computer (PC) pains a. Identify and briefly explain six distinct methods that unswervings lav use to acquire the resources and capabilities they look at to develop hot products and businesses. b. Drawing on our discussion of the strategical sourcing frame attain, briefly describe and/or illustrate the relative advantages and disadvantages of these methods.c. Both PC software and hardware manufacturers hold in been forced to adapt to the rapidly evolving industry in order to survive. apply the PC industry, provide a specific example of 5 of these 6 methods. d. Briefly explain why drive erupt may be greatest success and the worst failure in the history of the PC industry. 7. Outsourcing at GM a. Concisely describe the strategical Sourcing Framework. Be sure to identify the relevant costs/advantages associated with the grass-or- acquire decision.b. In February 2006, GM proclaimed a huge package of outsourcing contracts. See the attached article. Using the Strategic Sourcing Framework and our class discussions of GM, explain why GM chose to do this. c. Concisely describe the disadvantages GM faced in choosing to outsource, like this. 8. In the early 2000s, Boeing began aggressively outsourcing the using and production of the 787 airplane design. By slow 2008, Boeing managers admitted that they restore some mis sates in pursuing the outsourcing strategy and that Boeing would significantly trot outsourcing. List Boeings initial motivations for outsourcing and the reasons behind its subsequent change of heart.9. va riegation a. Concisely describe and explain the kinship between diversification and corporate performance. b. Give one(a) example each of companies with rattling low diversification, very high diversification, and moderate diversification. Make sure these examples accurately reflect the relationship you described in part a. c. In class, I argued that Tyco could be considered an elision to the generally understood relationship between diversification and performance. Explain why you entail this is true or untrue. d. Regardless of how you answered part c, identify 4 or 5 shipway that Tycos diversification strategy is polar from typical corporations corporate strategy.10. Hybrid Engine Technology & Industry Evolution a. Concisely explain what type of industry disruption outdo describes Toyotas introduction of the first hybrid engine car tar acquireed for the linked States plumping bucks market. c. Give a specific historical example (from any industry) of the other maj or type industry disruption. d. Using a scientific S-curve graph (Walker Figure 4.5), illustrate the evolution of the automobile engine. In your illustration, make sure you capture the development of 1) hybrid, 2) henry fuel cell, and 3) standard gas-powered burning engine technical schoolnical schoolnologies. Also include in the illustration indicators of todays date in provideition to the dates at which each technology was ( allow be) introduced to the U.S. mass market. e. Concisely explain Utterbacks model of pattern (Walker Figure 4.4). f. affair Utterbacks model to specifically and concisely explain why hydrogen fuel cell engines might not be commercially operable for a very, very long time.How lake herring Makes Takeovers Work With Rules, Focus On Client Needs By Mike Angell, deckors trade cursory Investors Business Daily Investing in technology is risky. average ask lake herring Systems. In 1997, the networking leader bought Dagaz, a caller that make cant over for digital subscriber lines. Dagaz wasnt solid, and cisco had to spoil some other corporation to get the right product. You receive to be ready to crawfish out those risks, verbalize Ammar Hanafi, ciscos business development manager. Hes been involved in al about every cisco takeover since 1998. simply Dagaz was an exception among the 70 companies cisco has bought in the last seven years. That makes Cisco an exception, too.According to a content by consultant A.T. Kearney, more than half(a) of mergers move intot work out. Here are some of Ciscos rules Stay close to home 73% of Ciscos targets make network gear. Deals make geographic sense, too. Theyre close to a Cisco unit or a key talent capital. cast down early wins targets consent products customers deficiency right straight. Familiarity Cisco has stakes in 15% of its targets. Think small Cisco buys start-ups mostly Management sash and quickly light upons the Cisco way. Beyond those factors, Cisco looks at w hat the target firm wants to accomplish, the strikes of Ciscos customers and how targets fit. Cisco is the best example of a beau monde with a well-established acquisition and post merger strategy, Kearneys goop Schroeck said. Many fai guide mergers stem from companies trying to come to new markets or but cut costs. Successful mergers are between companies in related lines, the study says. That means joining peck who share jazzledge and experience.Cisco rest close to network gear. It strays, but not far. Smaller forays control been in Net-based phone gear (3%), software for content delivery (15%) and wireless gear (8%). Customer Focus Were always focused on our customers wants and needs, Hanafi said. Were always expanding the range of products we have as our customers own networks expand. The best example may be Ciscos first acquisition in 1993. CEO keister put up, then Ciscos take gross revenueman, was negotiating an order. but the client leaned toward a rival. So C isco bought the rival, crescendo conversations, for $ 89 million. Crescendos product was no killer, Hanafi said. But by the third generation, it brought in almost half of Ciscos sales. The first generation should be genuine decorous for a customer, Hanafi said. The second generation is usually a great product. By the third, it should be a market leader.Buy Vs. Invest But how does Cisco know this lead be the case? Homework. thirty race screen companies, probe market potential and talk to probable targets. Its engineers study products, and it queries customers. In some cases, this leads to an investment one that helps Cisco learn rough new technologies. If its a new market and product line, Cisco will invest. If the technology isnt ready but looks right, Cisco will invest as well. Were always looking to enter new parts of the network, Hanafi said.Sometimes there are companies that are not as strategic, but wed like to know what they do. Of the 20 companies Cisco bought this ye ar, it had stakes in eight. Overall, it has stakes in close to 15% of its possible targets. Sometimes investments prompt Cisco to go with a rival. Two years ago, Cisco bought a stake in a companionship called Tellium that made an optical switch. Following some changes at Tellium, and later learning about that market, Cisco bought Monterey Networks instead for $ 500 million. Cisco still has a supine investment in Tellium but may sell its stake when it can, Hanafi says. For the most part, Cisco targets start-ups. Chambers doesnt believe mergers of equals can work. The Kearney study agrees. It said nearly one-third of mergers of equals destroy shareholder value. Ciscos 1996 buy of StrataCom makes the point. At $ 4 million, StrataCom was Ciscos largest takeover to date. StrataComs sales force touted one data standard, Ciscos another.Users were confused. Integrating the two sales forces was more difficult, Hanafi said. Geographys Role Cisco besides has a rule that targets must be physically near one another. This year, Cisco added a poop federation to its Israeli portfolio. And it added its second Canadian company, a software firm called PixStream. These areas are promising new high tech hubs, and Cisco needs to go where the talent is. People asked us why buy PixStream? Its in Waterloo, Canada, Hanafi said. Its right next to the University of Waterloo, a dependable school for engineers. Though it may take up to two years to identify a potential acquisition, Cisco doesnt bollocks time closing the deal.Hanafi has seen some sealed in as hardly a(prenominal) as 10 days. Ultimately, Cisco buys talent. It woos people by insureing them Cisco will help make their product No. 1. integrating Teams Were saying to them, Use our sales force, our manufacturing size, Hanafi said. Come in and well help make you a leader. Thats kept 75% of acquired companies CEOs at Cisco. Cisco sets up a chain of command, and the CEO of the acquired company stays in charge. Integ ration is easier. Cisco has made integrating companies a discipline. Hanafi has a group of 10 people who run this process. They send up to 65 others from sales, human resources, manufacturing and finance to meet with every worker to discuss salaries, benefits and roles.The first question people ask after being acquired by Cisco is, Whats going away to happen to my dentist? Hanafi said.Cisco Shopped till It Nearly Dropped By John A. Byrne and Ben Elgin in San Jose, Calif., BusinessWeek It was an all-too-typical deal for Cisco Systems Inc. Monterey Networks Inc., an opticalrouting startup in which Cisco held a minority stake, was a quarry with no revenue, no products, and no customers  further millions in losings it had racked up since its founding in 1997. Despite those shortfalls, Cisco plunked down a half-billion dollars in caudex to buy the rest of the company in 1999. But within days of closing the deal, all three of Montereys founders, including its engineering guru and chief systems architect, walked out the door, taking with them millions of dollars in gains from the sale. I came to the realization I wasnt going to have any meaty impact on the product by staying, says H. Michael Zadikian, a Monterey founder.Eighteen months afterward, Cisco shut down the business altogether, sacking the rest of the management team and taking a $ 108 million write-off. That dismal tale hardly jibes with Ciscos widespread reputation as an acquisitions whiz. Not since the conglomerate era has a company relied so heavily on its ability to identify, acquire, and integrate other companies for growth. CEO John T. Chambers believed that if Cisco lacked the internal resources to develop new products in six months, it had to buy its way into the market or miss the window of fortune. Some put a new make out on it acquisitions and development, a way for the company to shortcut the usual investigate cycle. Its belief in the strategy has led Cisco to gobble up more than 70 companies in the past eight years. Analysts and academics heaped praise on Ciscos acquisitions prowess in articles, books, and business-school case studies.In the early days, some of this praise was deserved, as Cisco morphed from a router company to a networking powerhouse. Its first acquisition, Crescendo Communications Inc., guided Cisco into the switching business, which generated $ 10 billion in sales last year. All told, acquisitions have fixed the foundation for about 50% of Ciscos business. But in early 1999, with exuberant investors enticing a growing number of on trial companies to go public, Cisco suddenly had to acquire companies at a oftentimes earlier stage. Cisco had long claimed an unprecedented success rate of 80% with its acquisitions. Chambers now says it fell to something like 50% during the Internet delirium still above the industry average.We bet on products 12 to 18 months out, concedes Chambers. We took dramatically higher risks. Chambers often maintain ed that his acquisition strategy was aimed at acquiring brainpower more than products. But an analysis of the 18 acquisitions Cisco made in 1999 shows that Monterey was no fluke. Many of the most worthful employees, the highly driven founders and chief executives of these acquired companies, have since bolted, taking with them a good deal of the expertise and experience for which Cisco paid top dollar. The two founders of StratumOne Communications Inc., a maker of optical semiconductors purchased for $ 435 million, left Cisco. The chief exec of GeoTel Communications Corp., a call-routing outfit acquired for $ 2 billion, walked out after nine months. So did the CEOs or founders of Sentient Networks, MaxComm Technologies, WebLine Communications, Tasmania Network Systems, Aironet Wireless Communications, V-Bits, and Worldwide Data Systems all high-priced acquisitions in 1999. Some simply felt Cisco had begin too big and too slow. People who crave risk dont do so well at Cisco , says Narad Networks CEO Dev Gupta, who change Dagaz and MaxComm Technologies Inc. to Cisco in 1997 and 1999, respectively.Cisco focuses much more on speedy customer needs, less on high-wire technology development that customers may want two to three years out. Chambers maintains that Ciscos swage rates are the best in high technology. In our industry, 40% to 80% of the top management team and top engineers are done for(p) within two years, he says. Our voluntary attrition rate is about 12% over two years. Difficulty holding on to top talent was not the only flaw in the Cisco acquisition machine. Cisco often paid outrageous sums for these unprofitable startups a fare of $ 15 billion in 1999 but. Even some of the deals that Cisco considers successful look pretty dreadful using simple math. Its 1999 acquisition of Cerent Corp., a maker of opticalnetworking gear, is a good example. Cisco paid $ 6.9 billion for the company, or $ 24 million for each of Cerents 285 employees, even though the company had neer earned a penny of profit and had an accumulated deficit of $ 60 million.Even if earnings bounce back to 2000 levels of roughly $ 335 million, it would take Cisco about 20 years to recoup the purchase price. Of course, deals such as Cerent found their rationale in Wall Street math. If investors were automatic to pay 100 times earnings for Ciscos stock in 1999, then a Cerent profit of, say, $ 300 million could in effect increase the market cap of Cisco by some $ 30 billion. Call it bubble economics. Besides, many of these deals were done for highly inflated Cisco stock instead of cash. Even so, that wampum could have been used to buy other assets that could have delivered greater returns. Only in the months since the bubble fail has it become evident honest how muddled Ciscos mergers-and-acquisitions strategy became. In its haste to do deals, Cisco often purchased companies it didnt need or couldnt use.In some cases, the buying spree led to overlapp ing, duplicative technologies, political infighting, and fairish plain wasted resources, as Monterey shows. M&A works to some extent, but at Cisco, it got out of hand, says Iqbal Husain, a former engineering executive at Cisco. After losing many of the leadership of these businesses, product delays and other mishaps were not uncommon. When Cisco closed down Monterey, for example, the company still hadnt put a product out for testing, which alone would take as long as a full year.By the time the product was there to test, the market wasnt, says Joseph Bass, former CEO of Monterey. Chambers says he has moved to correct the flaws. Its acquisition binge has slowed  from 41 companies from 1999 finished 2000 to nevertheless two purchases in 2001. While Chambers expects to do 8 to 12 acquisitions this year, he insists that market conditions will let Cisco tarry at least until a target company has a be product, customers, and management team before cutting a deal. Were devisin g the decisions to acquire a company based on a later point in time, which dramatically lowers the risk, Chambers says. Anything more ambitious, Cisco now knows, may be foolhardy.A Costly Acquisition Strategy oft lauded for its buyout successes, Cisco has purchased more than 70 companies in the past eight years. In 1999 alone, it paid $15 billion for 18 startups, many of which never delivered on their early promise. Here are the most noteworthy COMPANY price STATUS SKINNY CERENT $6.9 Alive and Although Cerent has generated $1 billion well billion in estimated sales for Cisco, two decades could be needed to recoup the horrid price.PIRELLI $2.2 Alive but A disappointing judge to bolster optical billion struggling Ciscos long-haul optical networking. SYSTEMS But Pirellis technology still trails that of rivals. MONTEREY $500 Dumped This upstart optical company never NETWORKS million in April produced a viable product, and Cisco cut its injusticees with a $108 million write-off in April. AMTEVA $170 Sold at a Lackluster revenue forced Cisco to million loss in July sell this unified-messaging business. MAXCOMM $143 Part of their Founders and key technologists walked TECHNOLOGIES million DSL strategy out soon after the deal closed. Data BusinessWeekThe Toronto Star April 28, 2006 Friday region BUSINESS Pg. F01 LENGTH 631 words HEADLINE Starbucks develops taste for independent look ats BYLINE Sharda Prashad, Toronto Star BODYFirst it was deep brown, then CDs, now its movies. Today, the independent plastic film Akeelah and the Bee will make its debut in theatres, with a marketing advertize from Starbucks. The java giant is advertising the Lionsgate Entertainment Corp. film about spell out bees, starring Laurence Fishburne and Angela Bassett, by using promotional coffee sleeves, coasters and displays in stores. uncomplete party has disclosed the amount of cash thats changing transfer in this deal, other than divulging Starbucks will be receiving a cut of the films profits for its marketing efforts. And when the DVD goes on sale, it will get a share of those profits the DVD, by the way, will be ready(prenominal) at Starbucks.Akeelahs soundtrack will also be flogged at the coffee house. Our customer is the demographic that Hollywood needs as it is facing a double-digit decline in the box office and slowing DVD sales, Howard Schultz, Starbucks hot seat, told Business Week earlier this year. We have a unique cross-section of assets a foundation of trust and confidence in Starbucks that can promote a move that our customers know is relevant. But is the purveyor of java risking its strong brand bring up by moving away from its coffee encumbrance with this latest surmise? Starbucks, named for a character in the literary classic Moby Dick, currently has 11,000 outlets in 37 countries and is planning to open 1,800 this year. Its long-term plan is to have 30,000 outlets around the world. Starbucks doesnt sell coffee, it sells a ret ail environment thats chic, urban and authentic, says Jay Handelman, marketing professor at Queens University School of Business.If they were just change coffee, why would they (customers) pay $4? Since Starbucks is in the business of interchange an urban experience, the professor says, the foray into a movie such as Akeelah and the Bee is consistent with that brand since the film is an urban, intellectual tale. If the movies and coffee were selling different experiences, the brand strategy wouldnt work since customers would be confused about what Starbucks stood for, adds Andrea Wojnicki, marketing professor at University of Torontos Rotman School of Management. Should the movie do poor box office sales, it wont necessarily put on the Starbucks brand, she says. Starbucks is about connoisseurship, she argues. It introduced people to the subtleties of coffee and its attempting to do the same with its CDs, which it started selling in 1995. The CD venture has also involved an ur ban experience.In 2004, for example, it coproduced Ray Charles Genius Loves Company and last year it held exclusive diffusion for Alanis Morissettes Jagged Little Pill Acoustic. Should the movie become a box office flop, Starbucks isnt necessarily in trouble, says Wojnicki. It could hold up its connoisseur flag and say its campaign is about appreciating art and not about flogging blockbusters. It could also be argued that Starbucks took a growth opportunity that has stretched its brand too far, argues Mary Crossan, business policy professor at the University of Western Ontario. When they start to move into movies, theyre not leveraging their resources or capabilities (in coffee).Starbucks has stated that it is not interested in producing movies, just promoting them, but Crossan warns that companies need be careful about taking focus away from the affection business. And Starbucks has made some poor business choices. It has failed in previous ventures, including an attempt to get i nto the Internet business in the 1990s and an in-house magazine called Joe that folded after three issues. But Akeelah star Angela Bassett thinks the movie business is a good move for Starbucks. Everybodys got something to sell, she told Newsweek. You just have to be sure of what youre trying to sell.Copyright New York Times Company May 19, 2006 I was on my way from downtown Budapest to the airport the other day when my driver, Jozsef Bako, mentioned that if I had any friends who were planning to come to Hungary, they should just contact him by his Web site www.fclimo.hu. He explained that he could show people online all the different cars he has to offer and they could choose what they wanted. How much business do you get online? I asked him. About 20 to 25 percent, the Communist-eraengineer-turned-limo-proprietor said. The former deposit of state James Baker III used to say that you know youre out of office when your limousine is yellow and your driver speaks Farsi. I would say, You know that the global economy is spinning off all kinds of new business models when your Hungarian driver has his own Web site in English, Magyar and German with background music.Jozsefs online Hungarian limo company is one of many new business models Ive come crossways lately that are clearly expanding the global economy in ways that are not visible to the naked eye. I was recently interviewing Ramalinga Raju, chairman of Indias Satyam Computer Services. Satyam is one of Indias top firms doing outsourced work from America, and Mr. Raju told me how Satyam had just started outsourcing some of its American work to Indian villages. The outsourcee has become the outsourcer. Mr. Raju said We told ourselves if business process outsourcing can be done from cities in India to support cities in the developed world, why cant it be done by villages in India to support cities in India. Things like processing employee records can be done from anywhere, so there is no reason it cant be done from a village. Satyam began with two villages a year ago and plans to scale up to 150.There is enough bandwidth now, even reaching big Indian villages, to parcel out this work, and the villagers are very eager. The attrition level is low, and the commitment levels high, Mr. Raju said. It is a way of breathing economic life into villages. It gives improve villagers a chance to stay on the land, he said, and not have to migrate to the cities. A short time later I was interviewing Katie Jacobs Stanton, a senior product manager at Google, and Krishna Bharat, founder of Googles India lab. They told me that Google had just launched Google Finance, but what was interesting was that Google Finance was entirely conceived by the Google team in India and then Google engineers from around the world fed into that team rather than the go fors being driven by Google headquarters in ti Valley.Its called around sourcing instead of outsourcing, because there is no more out anymore. Out is o ver. We dont have the idea of two kinds of engineers ones who think of things and others who implement them, Ms. Stanton said. We just told the team in India to think big, and what they came back with was Google Finance. Mr. Bharat added We have entered the generation of the virtual office. Product development happens across the global campus now. destination story. Im in gray Newark speaking to local businessmen. I meet Andy Astor, chief executive of EnterpriseDB, which provides special features for the open-source database called PostgreSQL. His primary development team, he tells me, consists of 60 Pakistani engineers in Islamabad, who interact with the New island of Jersey headquarters via Internet-based videoconferencing.The New Jersey team software architects, product managers and executives comes to work a couple of hours early, while the Islamabad team comes in late, and we have at least five to six hours per day of overlap, Mr. Astor said. We therefore have multiple face -to-face meetings every day, which makes a huge difference for communication quality. We treat videoconference meetings as if we were all in the same room. What all these stories tell me is that we are seeing the emergence of collaborative business models that were simply unthinkable a decade ago.Today, there are so many more tools, so many more ideas, so many more people able to put these ideas and tools together to discover new things, and so much better communications to disseminate these new ideas across the globe. If more countries can get just a few basic things right enough telecom and bandwidth so their people can get connected steadily improving education decent, corruption-free economic governance and the rule of law and we can find more sources of clean energy, there is every reason for optimism that we could see even faster global growth in this century, with many more people lifted out of poverty.GMs Landmark in IT Outsourcing By Steve Hamm BusinessWeek 2/2/20 06 A huge package of outsourcing contracts announced Feb. 2 by General Motors seems to signal shifting fortunes in the $600 billion-a-year information-technology service industry. EDS, GMs longtime primary supplier, lost ground, while Hewlett-Packards sometimes-overlooked serve unit got a big lift. The profile of Indias tech industry rose when GM named one of the countrys wind companies, Wipro, as a tier-one supplier. All told, about $7.5 billion in five-year contracts were awarded. some other $7.5 billion in contracts are expected to be parceled out as new projects come up over the next couple of years. EDS, which once had about two-thirds of GMs outsourcing business, still has the biggest share. It got contracts worth $3.8 billion or about half of the business. HPs contracts totaled $700 million, and GM called it out as one of the major gainers.IBM got $500 million in contracts. financial SHADOW. The package is significant beyond its sheer size because its an meter reading of how GM Chief Information Officer Ralph Szygenda is reshaping the way the company handles tech outsourcing. He handed contracts in large chunks to companies that will handle them on a global basis rather than country by country. Also, GM and the tech suppliers worked together to create new standards for managing technology, which means all suppliers will do things in a uniform way. Szygenda says the new strategy will allow GM to improve global collaboration while guarantee reliability of its computing systems and cutting costs. It lets GM focus on innovation rather than expense a lot of time on managing its suppliers, he said at a press conference. GMs financial woes cast a shadow over the announcement, in time. The carmaker reported a $4.8 billion quarterly loss on Jan. 26.While Szygenda said low prices were only a secondary impetus behind the way he structured the outsourcing contracts, some suppliers didnt even participate in the bidding, most notably, Accenture. Others said they didnt bid on all of the pieces because they were concerned they wouldnt make enough money on them. A BIG KICK. to that extent those who did win contracts were jubilant. HP selectively bid on areas where we know we can do a great job and where focus was on core areas of importance to HP and GM, says Steve Smith, senior vice-president of HP Services. His business is often overshadowed by IBM and Accenture, but it has been gaining momentum lately.Its revenues grew 6% in HPs fourth quarter, to $3.9 billion. Last quarter, IBMs services revenues were in the doldrums, declining 5%, to $12 billion. Wipro had already been doing some work for GM, but the new package gives it a believability lift. Its contracts were worth $300 million over five years. Wipro Executive Vice-President Girish Paranjpe says the company is delighted to be picked. Its a huge morale acquaintance for us to be able to play with the big boys, he says. Also, because were the only tier-one player GM picked from India, its a big upsurge for us.If GMs new strategy for managing outsourcing works well, it could become a model for other large corporations. The package has five-year contracts instead of the more traditionalistic 10-year pacts and splits the work up among several suppliers instead of relying predominantly on one. This is a tipping point for IT, says Robert McNeill, principal analyst at Forrester Research. Organizations will have to add skills to their vendor management function and make transition management a key for success when moving to a more flexible services model. Another lesson from the contract Even financially troubled companies are spending big on IT. Thats great news for the tech titans that got a bigger piece of the GM pie. It should even provide solace to EDS, however diminished its share.