Group Ppt : Case study of Facebook Whatsapp Acquisition

1. FACEBOOK –
WHATSAPP
ACQUISITION

2. ACQUISITION
■ The term “acquisition” refers to the procurement of assets
by one company from another company. In an acquisition,
both companies may continue to exist.
■ Acquisition usually refers to a purchase of a smaller firm by
a larger one.
■ In short, it involves purchase of a plant or a unit an
takeover.

3. WHY MAKE AN
ACQUISITION ?

4. COMPANY PROFILE
■ WHATSAPP
 Type of business: Subsidiary.
 Founded: February 24,2009.
 Head quarters: Mountain view, California, U.S.
 CEO: Jan Koum.
 Website: www.whatsapp.com.
 Type: Social media & Instant messaging.
 Vision: “Let’s make Whatsapp available to
everyone in the world.”

5. COMPANY PROFILE
■ FACEBOOK
 Type of business: Public.
 Founded: February 4, 2004.
 Head quarters: Menlo park, California, U.S.
 CEO: Mark Zuckerberg.
 Website: www.facebook.com.
 Type: Social networking service.
 Vision: “Make the world more open and connected.”

6. S.W.O.T ANALYSIS
■ WHATSAPP
STRENGTHS
1. Loyal customers.
2. Market share leadership.
3. No need to log.
4. Group chat.
5. Allow send videos, pictures,
voice notes.
6. You can put profile picture.
7. Available for all platforms.
OPPORTUNITIES
1. Online.
2. Advanced technology.
3. Recognized application.
4. Increased demand for smart
phones.
WEAKNESSES
1. Not diversified.
2. Weak distribution network.
3. Only works with a data plan or
Wi-Fi.
THREATS
1. Competition.
2. Product substitution.
3. Similar applications and free.

7. S.W.O.T ANALYSIS
■ FACEBOOK
STRENGTHS
1. A well known brand name.
2. A series of valuable acquisitions
related to social media and
marketing.
3. Very high number of users.
4. Most popular among social
networking sites.
5. Growing ad revenue.
OPPORTUNITIES
1. Growing number of mobile device
users.
2. Increase income through complete
monetization of instagram and
whatsapp.
3. Diversification.
WEAKNESSES
1. Weak conversion rate of ads.
2. Heavy reliance on ad revenue.
3. Privacy issues.
THREATS
1. Growing use of adblocks.
2. Strong dollar worldwide.
3. Data breaches.
4. Heavy competition from Google and
other social networking sites.

8. PORTER’S FIVE FORCE
MODEL: WHATSAPP
1. BARGAINGING POWER
OF SUPPLIERS:
 High competition among
suppliers.
2. BARGAINING POWER OF
CUSTOMERS:
 Large number of
customers.
 Product is important to
customer.
3. INTENSITY OF EXISTING
RIVALRY:
 Fast industry growth rate.
 Relatively few competitors.
4. THREAT OF
SUBSTITUTES:
 Substitute has lower
performance.
 Substitute is lower
quality.
5. THREAT OF NEW
COMPETITIORS:
 Strong distribution network
required.
 Strong brand names are
important.
 Patents limit new
competition.
 Advanced technologies are
required.

9. PORTER’S FIVE FORCE
MODEL: FACEBOOK
■ COMPETITIVE RIVALRY: MEDIUM.
■ THREAT OF NEW ENTRANTS: LOW.
■ BARGAINING POWER OF SUPPLIERS: MODERATE.
■ BARGAINING POWER OF BUYERS: HIGH.
■ THREAT OF SUBSTITUTES: HIGH.

10. ACQUISITION DETAILS
■ Date: February 18, 2014.
■ Acquirer company: Facebook.
■ Acquiree company: Whatsapp.
■ Acquisition amount: $19 billion.
■ It includes: $4 billion in cash.
$12 billion worth of facebook shares.
$3 billion in restricted stock units.

11. WHY ACQUISITION
■ MAU (monthly active users) will ramp up to $1 billion by
2019.
■ Gives it additional leverage over Twitter in the battle for
more direct messaging market share.
■ Whatsapp’s function will make it a near-essential add-on to
smart phones, and this combined with smart phones user
growth as well as user behavior that’s shifting more and
more towards mobile.
■ This will help facebook to diversify its revenue sources
away from the U.S.

12. REASONS FOR
ACQUISITION
■ PHENOMENAL GROWTH.
■ STRONGHOLD IN MOBILE MARKET.
■ FACEBOOK’S ABSENCE IN “DARK SOCIAL”.
■ FACEBOOK WAS GETTING “OLD”.
■ WHATSAPP WAS GETTING HOTTER.
■ TECHNICAL PROCESS.
■ FACEBOOK MESSENGER WAS LOSING ITS GRIP.

13. PROS OF ACQUISITION
Facebook holds a good position in the world of social media
and has even launched Internet.org campaign to bring more
connectivity to the many parts of the world. So now this is one
more step taken ahead in the same direction.
Although Facebook acquired Whatsapp still the company has
said that it won’t be making any changes in the application for
at least some time. It will operate independently within
Facebook.
If you analyze the cost of deal by per user then it comes
around $42 which looks pretty reasonable in the present
scenario.
Facebook has the technology and the resources to bring the
necessary changes in the app to generate revenue. The
success of Instagram is a good example.
Till this time it is good news for the users that ads won’t be
used to monetize messaging systems.

14. CONS OF AUQUISITION
The deal is considered as quite expensive and it will
require great efforts on the Facebook part to cover the
acquisition costs.
Whatspp has a different business model from Facebook. It
doesn’t support ads and therefore it substantially
diminishes the revenue growth prospects of Whatsapp.
If Facebook brings in the ads in the Whatsapp model then
there is a probability of losing the consumer’s interest.
There are many mobile messaging apps in market and
therefore it will be tough for whatspp to acquire the enough
paying customers into its fold.
There are no plans of modest monetization with Whatsapp.
It will make it really tough for the Facebook to generate
revenues.

15. CONCLUSION
■ Facebook has shown good progress in its business model
and have made sure to bring the necessary changes at the
right time. The deal might seem expensive at that time but
definitely Facebook has means and resources to find out
the right ways to generate revenue from Whatspp.
■ Whatsapp will help Facebook do this by continuing to
develop a service that people around the world.

16. BIBLIOGRAPHY
■ https://www.scribd.com/doc/250619492/SM-PROJECT-
ON-WHATSAPP-by-POOJA-MANDAL-docx
■ http://www.porteranalysis.com/porters-five-forces-analysis-
of-facebook/
■ http://www.careerride.com/view/facebook-acquisition-of-
whatsapp-pros-and-cons-12485.aspx
■ Acquisition https://www.investopedia.com/terms/a/acquisiti
on.asp#ixzz51ipOQoSX

17. MADE BY
■ RUCHITA SANGARE (47).
■ YASHITA SHARMA (56).
■ VAIBHAVI BRAHMECHA (08).
■ RUPAL UPADHYAY (44).