Question

In 2014, Whats App (a messaging app start-up) was purchased for $19 billion by Facebook. The price paid for this small company surprised some in the industry. Based on what you’ve learned about negotiations, what are 3 factors that could have influenced this negotiation? What were likely strategic (marketing related) goals behind Facebook’s purchase of Whats App?

Answer 1

The factors which have influenced negotiation between Facebook and Whats App are discussed below-
1. The mutual interest between both the parties in terms of negotiation. When the negotiations had been successful Facebook and Whats App both the parties will mutually be benefited.
2. The second factor which have influenced the negotiation between Facebook and Whats App is that the price paid by Facebook for buying Whats App extremely genuine for closing the deal.
3. The third factor which has influenced the negotiation between Facebook and Whats App is the past relationship between both the companies, which has been extremely strong and cooperative towards each other.
The Strategic marketing goals behind Facebook purchase of Whats App is whats App is a very fast growing company with a fast growing subscriber base and it was potentially a threat to the future of Facebook. This strategy is followed by all the top companies in the world which see the smaller companies as a potential threat to themselves and they engage in buying that company and making that company a part of the parent company. This is a strategy which is followed by Facebook for buying instagram.

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