Scientific Atlanta Inc. is considering acquiring a new two-way amplifier product from Spencer Kennedy Laboratories to expand into the CATV industry. This would allow Scientific Atlanta to become a full-line supplier but also compete with former customers. However, the FCC had frozen expansion in top television markets and the additional equipment required for households could overestimate sales and involve costs. Remaining dependent on a single large customer like the government is risky if their business changes, but it also provides opportunities to become a full supplier and gain brand loyalty.

1. Scientific Atlanta Inc.
Manufacturer of Electronic Equipment
Decision on Adding a New Product by Acquisition
Bishnu Kumar 11EX-013
Davinder Singh 11EX-015
Prateek Wadhwa 11EX-040
Rajat Goel 11EX-043

2. Scientific Atlanta Inc. – History
1951 - Founded by six professors in Georgia Institute of
Technology
1960 - Earned a place in the space and defence industries as
a manufacturer of electronic testing equipment for
antennae
1971 - New President Sidney Topol sets out to double the size
of company by implementing a long term plan
• Reduce or sell off operations in which company was
losing money
• New opportunities with large growth potential and few
barriers to entry
• Aggressive R&D
• Strong marketing effort

3. Scientific Atlanta Inc. – History
1978 –
• Sales reached $94.2 Million with earnings of $5 Million
• Opened new facilities in Alabama, New Jersey &
Scotland
• Acquired Adar Associates, a company based in
Burlington, Massachusetts
1980 - Became world’s largest supplier of earth stations.
1986 –
• Begins retooling, refocusing and restructuring
• Sold 7 of its 25 business ventures including home
satellite business and coaxial cable subsidiary
• Resulted in $9.2 Million loss

4. Scientific Atlanta Inc. – History
1993 – McDonald became CEO, oversee large investment in
Cable Industry
1997 – Company started focusing on CATV, sold off several
units including its venerable microwave.
2000 –
• Sold satellite networking division to ViaSat for $75
Million
• Consolidated Mfg. and Admin functions across
company divisions
• Expand production & signed several international
deals
2001 – Orders dropped, share price declined half, lay-offs
began
2005 – Purchased by Cisco Systems

5. Scientific Atlanta Business
- Spencer Kennedy wanted to sell its amplifier due to lack of
business caused by FCC freeze on new cable system
construction.
- Scientific Atlanta felt purchasing the amplifiers would promise
• expanded role CATV industry
• makeup for lost business from decrease in military market
- Scientific Atlanta developed products like Electronic instruments
capable of automatically measuring and recording signal patterns
transmitted from high frequency antennas, earth terminals ,
surveillance receivers and manual and slaved satellites and
missile tracking systems
- For CATV industry, manufactured
• a microwave relay system
• full line head-end equipment

6. FCC Freeze
• Prohibited further expansion in top 100 television market.
• Cable TV systems were initiated in local areas where Television
reception was poor or non existent.
• As long as CATV was limited to areas that could not otherwise get
good TV signal broadcasters and FCC were happy.
• With the proliferation of cable systems expansion pressure
increased where 87% of the television sets were located.
• Due to this cable operators had to provide something new to
differentiate their service.
• News and weather reports
• Stock Market tickertape
• Time & temperature report
• Channel from distant metropolitan areas.

7. Channel from distant metropolitan areas
• Broadcasters and FCC expressed concerns.
• FCC decided-
• CATV industry to be regulated
• Agency adopted rules that prohibited further expansion in
top 100 television market
• Remote areas still open for continued development
• If FCC permitted cable into the cities-
• required new technology
• Additional electronics in the houses

8. Should Scientific-Atlanta Inc have purchased the new two-
way amplifier from Spencer Kennedy Laboratories?
Justify your opinion.
Yes –
• The company would become a full-line supplier
• It would mean competing with companies that were formerly
customers
• Being a full-line supplier would mean increase in number of
orders tending to restrict the potential customers to cable system
operators.
No –
• FCC Freeze so no expansion in the current television market.
• Overestimation of sales figures.
• Additional electronic equipment is required at home for the setup
of the two way amplifier which will involve cost for household.
• Acceptability of digital control center for a two way system.

9. What are the dangers of being overly dependent on one
customer, such as the Federal Government? Are there
any advantages?
-Dangers
• Any strategic change such as business line, product
innovation in “customer company” will affect the sales
• Direct Dependence on customer’s sales
-Advantages
• Can become the full line supplier for the company
• Can use the company as testimonial to acquire another
customers
• Brand loyalty will bring word of mouth publicity and
referrals to bring new customer

10. Thank You !!!