MAN5058 - Applied Business Management Report on Facebook Acquisition

This report provides a comprehensive analysis of Facebook's acquisition of WhatsApp, examining the strategic management principles at play. It begins with an introduction to strategic management and a literature review covering theoretical concepts, strategic tools (like SWOT analysis), and strategi...Read More

Applied Business Management
MAN5058
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APPLIED BUSINESS MANAGEMENT
Table of Contents
1. Introduction..................................................................................................................................2
2. Literature Review........................................................................................................................3
2.1 Theoretical Concept...............................................................................................................3
2.2 Strategic Tools.......................................................................................................................4
2.3 Strategic Methods..................................................................................................................4
2.4 Critical Analysis....................................................................................................................5
3. Case Study...................................................................................................................................6
3.1 Introduction............................................................................................................................6
3.2 Objectives..............................................................................................................................7
3.3 Scenario Overview.................................................................................................................7
3.4 Type of Strategy....................................................................................................................7
3.5 Process of Change..................................................................................................................9
3.6 Changes in Action................................................................................................................10
3.7 Critical Evaluation on the Impacts of the Strategic Changes..............................................12
3.8 Value of Using Strategic Intervention.................................................................................12
3.9 Conclusion...........................................................................................................................13
References......................................................................................................................................14
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1. Introduction
Strategic management is an important aspect for the growth and development of the company.
As this feature of the management helps the company to grow in a positive way. This feature
includes the various types of planning and implications of those plans that can be helpful in order
to develop the whole process in a positive way. Good strategic management lowers the risks of
the company. Further, motivates the company's employees in a positive and knowledgeable way
to work more. This strategic management has various tools attached to it that help the company
to run its business in more good and positive ways. The tools that are helpful for the company
development are an analysis of the market to checking all the strengths opportunities of the
company.
It is noted that discussing all these aspects can help the company to grow in a more positive
direction. In addition, the company uses the strategic tool of SWOT that has detailed data about
the company's internal and external factors. In order to discuss this strategic management in the
study the author also uses some articles from various writers, to provide a more accurate result.
The researcher of this topic discussed this strategic management with respect to the current issue
of where the company of Facebook buys the multinational franchise of the Whatsapp. It has
some prominent impacts on organizational changes. The notable change, that is prominent after
the process is the employment structure also changed in a positive way to the consumer base of
the company has also increased. The author discussed all the organizational details of this study.
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2. Literature Review
2.1 Theoretical Concept
In this part of the study the author, mainly describe the essential tool and techniques which
related to strategic management. The industry's economic growth has depended greatly on the
strategic planning of the business. Strategic management essentially involves organizational
planning to suggest new business proposals and processes. Additonally, strategic planning of the
company are help to achieve their organizational goal. There are many strategic tool and models,
which help to planning a strategic management plan for a company (Alhassan et al. 2017). This
is one of the expensive processes. Strategic management planning are divided into three parts,
those are strategic planning techniques, organizational strategy and control techniques.
Figure 1: Concepts of Strategic Management
(Source: Awan et al. 2017)
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2.2 Strategic Tools
The strategic development of any company depends on the whole purpose of the company.
When the company is trying to imply the organizational strategic in order to develop the
company's business prospect on that fact the section is used in the tools. It is noted that the
implications and importance of these tools are changing as the nature of a business changes as
well. When any company deciding these tools which can be use full in the company's growth
normally that profit developed by the managers of those company (Vanerio and Casas 2016).
In this section, these tools are mainly used to improvement of organizational structure, which
helps the company to develop their prospect of the business. Strategic management tool and the
concept of the strategic management are interrelated with each other. when any company
deciding these tools which can be use full in the company's growth normally that profit
developed by the managers of those company. There are many tools in the company, which are
used by the managers for the development purposes. For implementation of a new strategic plan
the manager of the company has to identify the gaps of the company, the analyzer also has to
analyze the market matrix as well as calculate their brand value. According to Bajaj and Jindal
(2015), the manager of the organization also needs to analyze their product cycle and give a
proper analytical information about the services. In order to implement strategic planning the
manager need to do internal analysis to identify the strength weakness opportunities and threats
of the company. The supervisors of the company have to use PESTLE analysis for knowing the
external factors of the company. For implementation of new strategic planning porters five forces
and BCG matrix gives many important information about the organization (Bozic et al. 2019).
2.3 Strategic Methods
There are so many strata in the concept of strategic management and they are vast. The strategy
planning tools of the company have so many methods associated with describing more fully the
strategic planning tools and regarding the strategic position of the company. Although all of the
templates connected with these types of strategic management tools, techniques and equipment
can help us to determine all potential concepts that can be part of the learning process and most
helpful. In order to serve the purpose with a more accurate approach, which is the recent time of
all, the models associated with process are advance in a way. However, Çetinkaya and Sütçü
(2018), mentioned the below factors for further growth of the business as well.
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 The company must implement a more comprehensive strategy.
 More plans that allow the company to develop and grow in the future.
 The organization must control strategies and assess them in its policies.
 The business needs to maintain greater guidance on its needs.
 The industries need to develop and maintain techniques which benefit the growth of the
organization.
 Environmental analysis needs to be conducted in the company to improve the company.
The strategic management has some models have been described below:
Glueck’s Model: This is an essential plan for the planning and execution for each business
strategy.
Andrew’s Model: This technique, which focuses primarily on selecting the proposals, does not
fully implement them.
2.4 Critical Analysis
This part described the important articles by different authors in this study in order to evaluate all
of the theories, tools and models associated with strategic management. These articles assist us in
establishing precise and prominent knowledge.
According to Bozic, Siebert and Martin (2019), one of the most used techniques of companies
that is describing the knowledge management. In this study, the author of the study has described
the knowledge management. Now the problem is any how the relation between the knowledge of
the company and the performance of the company's associated with each other gap in them can
create a major issues in the future of companies.
As mentioned by Inkinen (2016), this authors research paper describes how well the company's
strategic activities and how it affects its trust drivers. This segment utilizes the Strategic Issue
Analysis Tool to identify the business problems in the investigation and also how they impact the
organization, and to provide further solutions.
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3. Case Study
3.1 Introduction
Strategic management is something, which is a vital action by any of the organization to plan,
monitor, analyze and assess all the necessary steps for the benefits of the organization. Strategic
management helps the organization to accomplish its objectives and goals. Strategic management
is a procedure of integrating the overall activities and functions within the company into a
rational whole. There are mainly four different types of strategies, which the corporate use in
their organization. The types are combination, growth, retrenchment and stability. Strategies are
mainly used in the organizations to go through the process of changes in the process if needed in
the organization. The researcher will discuss about the Whatsapp acquirement of Facebook.
Facebook Inc. is an online social networking and social media company of America. Mark
Zuckerberg and his friends established the company. Whatsapp Messenger is the freeware, voice
over IP and a cross platform messaging service. Jan Koum and Brian Action founded Whatsapp
in 2009 (Čirjevskis 2017).
Figure 2: Facebook Acquisition of Whatsapp
(Source: Čirjevskis 2017)
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3.2 Objectives
The objectives for the study can be listed as follows:
 Understand about the market structure where Facebook operates.
 Discussion on the proper reasons behind acquiescing Whatsapp by facebook.
 Analyzing the strategies taken by Facebook to acquire Whatsapp.
 Types of strategies taken by Facebook.
 Process of change.
 Evaluation of the change.
 Valuation of the usage of strategic intervention.
3.3 Scenario Overview
In 2014, the CEO and founder of Facebook Inc. acquired the company Whatsapp Inc. that is a
developer of mobile application, for the value of $19 billion. The price amount was paid as the
restricted stock of $3 billion, cash of $4 billion and stock of $12 billion. The news of this
acquisition made a mixed reaction in the market. Some of the people agreed that was a strategy
of Facebook Inc. The founder of Facebook, Zuckerberg was sure about the taken decision (Kwon
et al. 2018). He said that no one before this have done something like this. He was sure that the
strong and huge users of Whatsapp Messengers would be advantageous for the development of
the business prospect of Facebook (Cosentino 2015).
3.4 Type of Strategy
Zuckerberg, the founder of Facebook gave a rare insight in the way of his approaches to acquire
other companies. The main strategies, which were mainly used in the acquisition, are mentioned
as follows.
 Relationship building is first: While the process of acquisition completed, Zuckerberg
said that one of the strategies that he applied in the buying process of Whatsapp was the
approach of establishing relationship with the owner of the company that he want to buy
(Cosentino 2015). Zuckerberg maintained a relationship with the owner of Whatsapp for
several years and got involved with the people of the company. A strong relation was
built between them before the buying process.
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 Shared vision: The other strategy that was used in the case of buying Whatsapp taken by
Facebook was a vision that is shared. Zuckerberg expressed the shared vision as the most
important strategy for acquiring any companies. It is important to have clear vision about
the circumstances and detailed information about the companies (Reddick et al. 2017).
 Uses of scare tactics sometimes: Conerning the case of acquisition of Whatsapp by
Facebook, Zuckerberg said that sometimes it is important to use scare tactics (Cunha
2015). Zuckerberg prefers the tactics of making other companies a little sacredness that
they will not be able to run their business being alone. The companies then think that they
need to be associated with some other companies to fulfill their goal.
 Shift fast and need to buy things: Zuckerberg had taken the strategy of moving fast and
buying thing. He preferred the way to expand the business and make larger spreading in a
rapid manner. He said that in the time of buying some other companies, it is difficult to
have much time for business dealing. It is important to do things in less time as there are
several other competitors in the market, who may want to buy the companies. For this it
is important to move fast in the market and make the buying procedure faster (Reddick et
al. 2017).
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Figure 3: Acquisition Value of Facebook with Merger
(Source: Esayas 2017)
3.5 Process of Change
According to Doyle (2015), the process of change means the sequential actions, which are
occurred due to the change that has been placed in the situation. In the case of buying Whatsapp
by Facebook, there are several changes took place for both of the companies.
 Stakeholder’s involvement: In the process of change of the companies Facebook and
Whatsapp, the involvement of the stakeholders played an important role. The changing
process starts from the stakeholders of any organization. the stakeholders need to give
their point of view in the strategic plan that is being taken. The engagements of the
stakeholders are the key part of any project like buying a company. The owner of the
company, who wants to buy an existing company in the market, needs to take the long-
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term ideas and views of the stakeholders (Esayas 2017). In the case of acquiescing
Whatsapp, Facebook Inc and its stakeholders were highly involved in the process of
change. All the stakeholders of Whatsapp were involved deeply in the process of change.
 Role of administration: The administrative role in any changing situation of the company
plays one of the most important roles for the company. The management of any
organization makes the strategic plan for that company. These strategic plans are usually
effective for the company for its growth and achieving its target. The role of the
management gathers all the views and opinions from the employees, stakeholders and
other members of the organization for setting priorities strengthen its operations, focus on
the resources and energy to ensure the achievable target of the company (Haeruddin
2017). In the case of acquiring Whatsapp, there were major acts from the side of the
administrative management for both of the companies. Facebook Inc. and its
management took the huge action as the administrative part for buying Whatsapp.
3.6 Changes in Action
As stated by Inkinen (2016), while Facebook Inc. bought Whatsapp Ink, there were several
changes occurred for both of the companies. There is a basic structural change for the
companies, which are being bought, or the company that is buying. A numerous changes have
occurred in both the companies. These changes are mentioned as follows.
 Structural changes: The case of buying Whatsapp, several structural changes happened
in Facebook Ink. There was an addition to the company by adding Whatsapp with it. The
structure of Facebook Ink got expanded with the addition of Whatsapp (Esayas 2017).
 Changes in management: There were major changes in management of Facebook Ink
and Whatsapp. Both of the companies and its management Facebook changes structure
due to the incident of acquisition of Whatsapp. The management of Whatsapp got more
changes that Facebook as the company is sold to Facebook and Facebook became its
parental company. There are also changes in the management structure of Facebook as
there is an addition to the company (Ioppolo et al. 2016).
 Changes in the employment structure: There are changes in the employment due to the
incident of acquisition of Whatsapp by Facebook. The employment structure was hugely
changed in Whatsapp as the company was sold to Facebook. There were changes in the
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employment structure of Facebook too as the company had an addition to it. The
employees of Whatsapp became the employees of Facebook after Facebook bought
Whatsapp (Esayas 2017).
 Changes in work: In the pattern of work, there were changes for both of the companies.
There were few newly added works for Facebook, where there were changes in the work
pattern of Whatsapp as well. The employees of Whatsapp became the employees of
Facebook after the company bought Whatsapp (Johnsen 2015).
 Changes in consumers: There are always huge changes in consumers when a company
acquires any other companies. The primary consumers are changed with the addition or
the expansion of the companies. In the incident of acquiescing Whatsapp, there was a
major change in the consumers or the users of both of the companies as there were certain
changes with the service that has been occurred from the change (Doyle 2015).
Figure 4: Growth of Facebook and Whatsapp on World-Wap
(Source: Raford 2015)
 Changes in products: Sometimes there are some changes in the product of the
companies, which are engaged in the action of change. In the scenario of acquiescing
Whatsapp by facebook, there were changes in the products of both of the companies. The
services of Whatsapp are partially changed in its provided service (Cunha 2015).
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 Changes in marketing strategies: There are several changes in marketing strategies due
to the change in action that has been placed in the situation. In the case of acquiring
Whatsapp, there were few changes in the marketing strategies.
 Changes in product quality: There are some changes in the quality of the products due
to the action in change. In the case of buying Whatsapp, Facebook need to careful about
the product or services that it provides for the users. As the company acquires Whatsapp,
Facebook is now more conscious about its services (Raford 2015).
3.7 Critical Evaluation on the Impacts of the Strategic Changes
As stated by Čirjevskis (2017), there are several impacts generated from the acquisition or
mergers. Several changes occur in any organization during strategic management and its
application. This is the era of taking new strategies for the organization for its development. In
the case of acquiring Whatsapp, Facebook used its strategic planning behind this in 2014. There
were several impacts on Whatsapp that has been taken place because of that acquisition. There
were structural and management changes in Whatsapp that was a huge impact from the strategic
changes of Facebook Inc.
As critiqued by Awan, Khan and Ho (2017), there is a huge impact on the consumers that occurs
from any acquisition and mergers. The consumers’ behavior can change due to the acquisition or
the merger of the organization and its products. There is always a brand awareness on the
consumers that takes places in every aspect. People are of present day’s are more brand
continues than before. In the case of the acquisition of Whatsapp by Facebook Inc. there was a
change in the consumers’ behavior in the initial stage of the incident. The consumers were not
habituated with many of the product’s features that were not previously attached with Whatsapp.
As opined by Raford (2015), it took time for the consumers to deal with the changing impacts
which were took place because of the incident.
3.8 Value of Using Strategic Intervention
According to Ramírez and Selsky (2016), values are connected with strategic interventions.
These are listed as follows.
 With the strategic interventions, the organization can have fulfillment of its objectives
and can achieve its goal (Kwon, Lim and Lee 2018).
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 A strategic intervention can be the reason of the organizational growth.
 Strategic interventions can give the organization ideas about various changes in the
organization, which are needed for the development process of the organization.
 Strategic interventions are one of the most important parts of the organizational actions
for the ongoing improvement for the firm (Haeruddi 2017).
3.9 Conclusion
It can be concluded that the researcher has discussed in the above case study about incident of
acquisition of Whatsapp by facebook in 2014. The researcher has discussed about the objectives
of the incident. The strategies which Mark Zuckerberg utilized to accomplish the process of
acquisition of Whatsapp is been discussed by the researcher. The process of changes includes the
involvement of the stakeholders and the role of the administration. The change in action when
the deal was completed there were several situation that has been occurred. The researcher has
discussed the impacts of the strategic management in a critical way that has taken place
Whatsapp after Facebook has bought it. The values of using strategic intervention is also been
discussed by the researcher in the case study.
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