Read the case attached, “Facebook and WhatsApp: Acquire or Ally,” and using the methodology and the format contained in the Case Analysis Folder, analyze and develop your paper to be submitted in bbl by attaching your word document to this assignment.I do not want you to cut and paste the paper in the assignment submittal window. I will not accept email or hard copy submittals.
Use these as your Case Questions: Make sure to use these (see Rubric) as your headings in the report. Dont make me search for this content. See the rubric for point allottment and headings for the paper.
Analyze the macro or general environment for the Internet Publishing and Broadcasting Industry (SIC 51913) You can use the IBIS World study for reference.
2.3 Bonus worth 20 points: Use SAM and do a financial analysis of Facebook using the data from the case.
2.4 Do a SWOT and TOWS Analysis of both companies and determine what kind of strategies are suggested from the TOWS matrix. (Hint: SO, SW, WO, and WT strategies.)
2.5 Do a Risk Assessment for both companies in this case.
3. What are the alternatives in this case (duh)
4. What are the criteria for decision making in this case?
5. Do a decision matrix, does your decision jibe with the one FB made? Why or why not?
6. How would you implement your decision?
7. What are your overall conclusions and insights to this case?
8. Financial Analysis9B14M107
FACEBOOK AND WHATSAPP: ACQUIRE OR ALLY?1
Meeta Dasgupta wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright 2014, Management Development Institute Gurgaon and Richard Ivey School of Business Foundation Version: 2014-09-02
It was February 2014, and Mark Zuckerberg and Jan Koumhad decided to work together, with the latter giving his consent to Facebooks takeover of WhatsApp. Zuckerberg, founder of Facebook, believed WhatsApp was a company that would strategically fit Facebooks business. He had decided that until 2018, he would allow WhatsApp to focus not on making money but on expanding its user base.2 Of the global population, 70 per cent was still without Internet access and access, according to Zuckerberg, was growing slower than what many people in the Internet-connected world believed.3 The Internet already connected the wealthiest members of the worlds population. Connecting further users and also reaping profits through them was perceived to be a challenge.4 WhatsApp had started with no users and no product. The company still had no marketing and had relied mostly on word of mouth to gather its 465 million active users. For Koum, India was a critical market and he had hoped to achieve the goal of having one billion WhatsApp users in India.5 Should WhatsApp sell its assets to Facebook? Should the company have insisted for an equity alliance instead? In the face of both positive and negative industry sentiments about the deal, both Zuckerberg and Koum were challenged to make the best of it.
THE MOBILE COMMUNICATIONS INDUSTRY
The mobile communications industry was witnessing heady growth, with more than half of the earths population using mobile communications by 2013. In addition, there were many who appreciated the various benefits of mobile technology but had no access to it. An AT Kearney report forecasted that by 2017, a further 700 million subscribers would be added and by 2018, the figure would exceed 4 billion.
Surprisingly, although the over-18 age group was enthusiastic about smartphones, globally the over-60 age group was growing faster than the total population.6 Subscribers were growing four times faster than the global population (see Exhibit 1). Whereas on one hand the connections and subscriber growth in the developed markets was slowing down, emerging markets were becoming centres for growth in subscribers and mobile connections. The Asia Pacific region, with a share of just under 50 per cent of the global total, was leading. Declining prices and progressing disposable income was driving people to own and use mobile technology.
New business models delivering services in communication and adjacent services emerged to take advantage of the continuously evolving technology and the falling average revenue per subscriber (see Exhibits 2 and 3).
Page 2 9B14M107 continuously developed by network operators. Competition among device manufacturers and operating system (OS) developers focused on driving innovation by building faster and lighter smartphones. With increasing use of smartphones, OS platforms including Android, iOS and Windows were driving the purchase decisions of customers. Demand for lower prices was forcing network infrastructure vendors to improve operational efficiency. Content providers were innovating hardware and software while a new community
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