Case Study Description of $19B 4 txt app WhatsApp...omg!
In February 2014, Facebook announced the acquisition of WhatsApp for $19 billion. WhatsApp, founded in 2009, was a relatively young company that employed only 50 people and earned merely $10 million in revenue in 2013. It was one of many mobile messaging services that allowed users to contact each other without paying costly text message fees. However, its popularity and growth potential enticed Facebook, a company facing many challenges and looking for opportunities to expand its user base. Facebook, the social networking website that allowed users to share information with friends, believed WhatsApp was a logical next step that would help it achieve its mission of "making the world more open and connected." When Facebook announced the acquisition, it vowed to keep WhatsApp operating independently, letting the founders control the direction of the company and allowing WhatsApp to stay true to its mission. Yet, many debated the logic behind paying so much for such a small company with limited revenue streams. Was Facebook correct to purchase WhatsApp? Even at $22 billion? How could it create value if it did not integrate WhatsApp with Facebook?
Swot Analysis of "$19B 4 txt app WhatsApp...omg!" written by David J. Collis, Ashley Hartman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Whatsapp Facebook facing as an external strategic factors. Some of the topics covered in $19B 4 txt app WhatsApp...omg! case study are - Strategic Management Strategies, IT, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the $19B 4 txt app WhatsApp...omg! casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, technology disruption, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy,
banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, etc
Introduction to SWOT Analysis of $19B 4 txt app WhatsApp...omg!
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in $19B 4 txt app WhatsApp...omg! case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Whatsapp Facebook, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Whatsapp Facebook operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of $19B 4 txt app WhatsApp...omg! can be done for the following purposes –
1. Strategic planning using facts provided in $19B 4 txt app WhatsApp...omg! case study
2. Improving business portfolio management of Whatsapp Facebook
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Whatsapp Facebook
Strengths $19B 4 txt app WhatsApp...omg! | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Whatsapp Facebook in $19B 4 txt app WhatsApp...omg! Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the $19B 4 txt app WhatsApp...omg! Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Whatsapp Facebook is one of the most innovative firm in sector. Manager in $19B 4 txt app WhatsApp...omg! Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Whatsapp Facebook is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David J. Collis, Ashley Hartman can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– Whatsapp Facebook is one of the leading recruiters in the industry. Managers in the $19B 4 txt app WhatsApp...omg! are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Whatsapp Facebook digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Whatsapp Facebook has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Whatsapp Facebook has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Whatsapp Facebook has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Organizational Resilience of Whatsapp Facebook
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Whatsapp Facebook does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Whatsapp Facebook in the sector have low bargaining power. $19B 4 txt app WhatsApp...omg! has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Whatsapp Facebook to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Strategy & Execution field
– Whatsapp Facebook is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Whatsapp Facebook in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Whatsapp Facebook is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Whatsapp Facebook has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Whatsapp Facebook has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Whatsapp Facebook to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses $19B 4 txt app WhatsApp...omg! | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of $19B 4 txt app WhatsApp...omg! are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study $19B 4 txt app WhatsApp...omg!, is just above the industry average. Whatsapp Facebook needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study $19B 4 txt app WhatsApp...omg!, it seems that the employees of Whatsapp Facebook don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Skills based hiring
– The stress on hiring functional specialists at Whatsapp Facebook has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Whatsapp Facebook is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study $19B 4 txt app WhatsApp...omg! can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Whatsapp Facebook has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Products dominated business model
– Even though Whatsapp Facebook has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - $19B 4 txt app WhatsApp...omg! should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Whatsapp Facebook has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Workers concerns about automation
– As automation is fast increasing in the segment, Whatsapp Facebook needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the $19B 4 txt app WhatsApp...omg! HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Whatsapp Facebook has relatively successful track record of launching new products.
High cash cycle compare to competitors
Whatsapp Facebook has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, firm in the HBR case study $19B 4 txt app WhatsApp...omg! has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Whatsapp Facebook 's lucrative customers.
Opportunities $19B 4 txt app WhatsApp...omg! | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study $19B 4 txt app WhatsApp...omg! are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Whatsapp Facebook can use these opportunities to build new business models that can help the communities that Whatsapp Facebook operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Whatsapp Facebook can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Whatsapp Facebook has opened avenues for new revenue streams for the organization in the industry. This can help Whatsapp Facebook to build a more holistic ecosystem as suggested in the $19B 4 txt app WhatsApp...omg! case study. Whatsapp Facebook can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Whatsapp Facebook can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Whatsapp Facebook can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Whatsapp Facebook can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Better consumer reach
– The expansion of the 5G network will help Whatsapp Facebook to increase its market reach. Whatsapp Facebook will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Whatsapp Facebook in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Whatsapp Facebook in the consumer business. Now Whatsapp Facebook can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Whatsapp Facebook can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. $19B 4 txt app WhatsApp...omg! suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Loyalty marketing
– Whatsapp Facebook has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Whatsapp Facebook can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Whatsapp Facebook can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, $19B 4 txt app WhatsApp...omg!, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Whatsapp Facebook can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Threats $19B 4 txt app WhatsApp...omg! External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study $19B 4 txt app WhatsApp...omg! are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Whatsapp Facebook has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Whatsapp Facebook needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Whatsapp Facebook business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Whatsapp Facebook in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Whatsapp Facebook demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High dependence on third party suppliers
– Whatsapp Facebook high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Whatsapp Facebook with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Whatsapp Facebook.
Regulatory challenges
– Whatsapp Facebook needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Environmental challenges
– Whatsapp Facebook needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Whatsapp Facebook can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study $19B 4 txt app WhatsApp...omg!, Whatsapp Facebook may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Shortening product life cycle
– it is one of the major threat that Whatsapp Facebook is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of $19B 4 txt app WhatsApp...omg! Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study $19B 4 txt app WhatsApp...omg! needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study $19B 4 txt app WhatsApp...omg! is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study $19B 4 txt app WhatsApp...omg! is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of $19B 4 txt app WhatsApp...omg! is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Whatsapp Facebook needs to make to build a sustainable competitive advantage.