Polycom Inc. Analysis

            Polycom, Inc. introduced its first product in 1992, and from the start had a strong grasp on technological advancement.  However, the market became saturated and Polycom had to start thinking strategically to stay ahead of the competition.  Polycom turned to acquisitions and a strong sense of culture to pull the company through the competitive market (Polycom, 2001). 

            Polycom has consistently held a strategy of focused cost leadership.  Focused cost leadership is defined by Hill as, combining the fundamentals of low-cost strategy with a small market or specific product line (Hill, 2008).  In order to stay true to their strategy and vision, both of which are important to Polycom, acquisitions to create vertical mergers that benefit Polycom and their ally (Polycom, 2001).  Acquisitions are helpful when a business does not have all the needed competencies to compete in a related field, so they purchase an established company with the competencies (Hill, 2008).  Polycom found this to be a very successful way to stay competitive in their market.  In three years, Polycom had already used three different acquisitions in order to compete in a rapidly growing industry (Polycom, 2001).  This critical action has proved beneficial to Polycom, both for the successes it has brought and for the recognition it has gained.  Through this newly gained recognition other entrepreneurs in the market have brought their ideas to Polycom, keeping executives ahead of the technological advancements and in sync with the up and coming trends (Polycom, 2011). 

            Polycom has done some great things both independently and with the collaboration of their acquisitions.  Polycom corporate-level strategy has remained constant, which has been a major driving force behind their early and continuing successes.  Polycom has also put a large focus on the culture at their company.  The culture of Polycom is centered on a flat hierarchical—system giving a voice and a large amount of autonomy to every employee.  Autonomous action is especially important in a company where there is a large amount of uncertainty due to radical advances in technology (Hill, 2008).  Polycom does a great job of embracing autonomous actions by making it easy for employees to get funding for their ideas.  The executives will listen to ideas as long as it has some connection to their vision, and as long as two members of your team believe in your idea you can have a $500 expense account (Polycom, 2001).  The flexibility is a great way to create new forms of technology.  Polycom does a good job of inspiring the talent they have, and recognizing what talent they need.  Culture, acquisitions to gain vertical integration, and a strong vision are major assets to Polycom’s maintenance of focused cost leadership. 

            Polycom, Inc.; however, is not a perfect company.  It is very dangerous to make three acquisitions in just three years.  Acquisitions have a similar success to failure percentage.  Research has found that 31% of acquisitions lead to initial losses for the company and 30% lead to initial successes, whereas the remaining 39% have little impact on the company (Hill, 2008).  It is important for Polycom to not focus on how successful they have been through acquisitions, and still make the same careful analysis of each and every acquisition they intend to make.  It is important for Polycom to be unbiased by their previous successes.  It is also suggested that many acquisitions end up leading to losses in the long-run (Hill, 2008).  Due to the short turn-around time between the three acquisitions (only three years), it is possible that Polycom has not yet felt the impact of the mergers.  Many acquisitions fail due to misevaluation of the profit (Hill, 2008).

Polycom is also growing exponentially from these mergers.  It is now more difficult to enforce the culture that Polycom has grown and succeeded on (Polycom, 2001).  The case study over Polycom, Inc. mentioned the growing gap between the cultures of the different branches of the company.  Integrations need to occur in order to continue success (Hill, 2008).  Polycom has been successful due to its weekly meetings between executives and employees and the company is now becoming more distant from these values (Polycom, 2001).  The universal vision Polycom had started with is now getting interpreted in different ways.  Now, the disconnect is small, however, without action it will become insurmountable.  Corporate and business-level practices need to remain untouched, using only the small wiggle room allotted in functional-level strategy.

Polycom has had a great strategy.  The focused cost leadership has been successful for the company.  In 1992, when Polycom first started it grew from a $1.4 million dollar industry to a $15 million industry just two years later (Polycom, 2001).  Polycom has increased its acquisitions to include Open Visual Communications Consortium, and through this acquisition has partnerships with many including AT&T and Verizon (Polycom.com, 2011).  In 2011’s 3^rd quarter, Polycom recorded $379 million in net revenues—up from $308 million in the 3^rd quarter of 2010 (Polycom.com, 2011).  Polycom has also joined the popular Android and iPad market making video conferencing possible on a new level (Lawson, 2011).  Retrieved on November 22, 2011, Polycom’s stock was valued at $16.46 (Yahoo!Finance, 2011).  While, the stock is showing a drop in value, it has historically ranged from sixteen to twenty-two dollars, mainaining a pattern in the rise and fall (Yahoo!Finance, 2011).  This can most likely be attributed to the market. We recommend, due to the technologically advanced market, that Polycom increase its investments in research and development to maintain its competitive edge.  A projected financial outcome from Polycom, based on historical data, appears that Polycom will most likely have stock prices rise again.  Based on news articles linked to Polycom.com, it appears that Polycom has just made new acquisitions and partnerships in their industry (Polycom.com, 2011).