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 government debt because of Covid-19 spendings, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models,
there is backlash against globalization, increasing household debt because of falling income levels, 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 -
Effective Research and Development (R&D)
– Whatsapp Facebook has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study $19B 4 txt app WhatsApp...omg! - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Whatsapp Facebook in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Whatsapp Facebook are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
Training and development
– Whatsapp Facebook has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in $19B 4 txt app WhatsApp...omg! Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
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.
Highly skilled collaborators
– Whatsapp Facebook has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in $19B 4 txt app WhatsApp...omg! HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
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.
Slow to strategic competitive environment developments
– As $19B 4 txt app WhatsApp...omg! HBR case study mentions - Whatsapp Facebook takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
Aligning sales with marketing
– It come across in the case study $19B 4 txt app WhatsApp...omg! that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case $19B 4 txt app WhatsApp...omg! can leverage the sales team experience to cultivate customer relationships as Whatsapp Facebook is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study $19B 4 txt app WhatsApp...omg!, in the dynamic environment Whatsapp Facebook has struggled to respond to the nimble upstart competition. Whatsapp Facebook has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Whatsapp Facebook has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Whatsapp Facebook even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
Lack of clear differentiation of Whatsapp Facebook products
– To increase the profitability and margins on the products, Whatsapp Facebook needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Low market penetration in new markets
– Outside its home market of Whatsapp Facebook, firm in the HBR case study $19B 4 txt app WhatsApp...omg! needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Whatsapp Facebook supply chain. Even after few cautionary changes mentioned in the HBR case study - $19B 4 txt app WhatsApp...omg!, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Whatsapp Facebook vulnerable to further global disruptions in South East Asia.
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 -
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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Whatsapp Facebook to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Whatsapp Facebook to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Whatsapp Facebook can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Whatsapp Facebook to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Whatsapp Facebook is facing challenges because of the dominance of functional experts in the organization. $19B 4 txt app WhatsApp...omg! case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Whatsapp Facebook to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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 -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Whatsapp Facebook will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Whatsapp Facebook needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Whatsapp Facebook can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study $19B 4 txt app WhatsApp...omg! .
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.
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.
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.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Whatsapp Facebook in the Strategy & Execution sector and impact the bottomline 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 .
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.
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.
Stagnating economy with rate increase
– Whatsapp Facebook can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
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.
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.