Monday, November 18, 2019

Discussing why Facebook recently acquired Whatsapp Essay

Discussing why Facebook recently acquired Whatsapp - Essay Example Facebook and whatsapp are among the leading social media platforms we have in the modern world. The two social Medias have significant number of users that each pose a threat to another as far as the social media business is concerned. In comparison to other social Medias that have been in existence before the invention of whatsapp, facebook was dominating the market with the highest number of users. With the coming of whatsapp in the social media market, it intensified the completion to a point where facebook opted to acquire it. Apart from the excessive competition in the social media market brought about by Whatsapp application, there are many other ways to justify the acquisition of Whatsapp by Facebook. Just like in other forms of business, one business my either merge with another or fully acquire it depending on the business environment they both face. According to studies by Ireland, Hoskisson and Hitt (2012 pp.133), one business may acquire another in order to increase its growth, gain market power, manage risks and reduce costs. In relation to such acquisition reasons, Facebook owners made the move to acquire Whatsapp in order to increase its growth in the social media market. Acquiring Whatsapp, which is a strong competitor, would also help Facebook manage the risk of elimination from business and cut costs of operation such as advertising. Management of such factors would subsequently lead to an increase in the market power by Facebook. In studies conducted by Frankel (2011 pp.22), he notes that, among the main reasons why one business may acquire another include customers and market share. One business may want to take over the customers of a competing business and successively take over the market share. In relation to the above studies, Facebook will take over the users of whatsapp and subsequently its market share. This is possible because Whatsapp has the ability to attract many users than facebook. Studies

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