Case Study Group: Based on FEP-KLTSA Business Challenge

 Why is culture important?

According to Arthur Asa Berger, the term culture comes from a French term that is in turn derived from the Latin word "colere" which means to tend to the earth and grow, or cultivation and nurture (Pappas & McKelvie, 2022). Culture can be defined as a way of life. It describes the shared behaviors, norms, values, and beliefs of a group of people. In a company, the culture reflects how employees, customers, vendors, and stakeholders experience the organization (Wong, 2023).
Peter Thiel argued that culture is crucial because it can be more influential than strategy. A strong culture produces a successful company as it influences the decisions of employees and how they communicate with others. Having a sense of shared culture guides the employees in the same direction towards the same objectives, encouraging unity and focus. According to an employee from IBM, it was persistent adherence to the three core values of the company: respect for the individual, superlative customer service, and the pursuit of excellence in all tasks that made them successful. 
Moreover, workers are more likely to be driven and take responsibility for their work if they can relate to the company's culture.
and companies with strong cultures encourage their staff to take initiative and adjust to changing circumstances (Joly, 2022).

Do you think Facebook overpaid for WhatsApp? Why?

WhatsApp, a messaging app used all over the world, made everyone talking about it when Facebook (now Meta) decided to buy it. In 2013, when WhatsApp was struggling and lost $138 million and made $10.2 million in revenue, Facebook bought WhatsApp and made it the biggest app’s purchase at that time. So, how did WhatsApp convince Facebook to buy it? (Deutsch, 2022)

Facebook bought WhatsApp for huge price $19 billion, plus $3 billion for WhatsApp’s staff to stay in the company in 2014, which seemed like a lot of money to many people. However, Facebook had good reasons for this big purchase(Deutsch, 2022).

Figure1

Why WhatsApp?

With the huge growing in WhatsApp’s number of users, which was over 600 million people used WhatsApp monthly, Facebook access to lots of people instantly (Olson, 2014). Even though WhatsApp wasn't making much money back then. However, Facebook believed it could possibly earn money from it later by adding ads or even special services. This deal has been a great deal for Facebook to stay ahead in the messaging world. After Facebook bought WhatsApp, they made it even better by adding features like voice and video calls, making it even more popular (Tiwari, 2018) . Looking back, even though the price was high, Facebook's decision to buy WhatsApp was a smart move that helped them grow in the messaging world.

Was it worth it?

Whatsapp was able to grow with up to 1 million users per day and 70% of them being active, so the short answer is yes. The long answer: The price tag for Whatsapp may not have seemed worth it during the initial purchase but after a year, Facebook is now using Whatsapp for a significant role in global areas crucial to the growth of Meta. Meta is focusing on the future of international, cross-platform communications (Deutsch, 2022). 

Messaging apps have been a huge thing in tech for a very long time and Facebook wanted to join the race but Messenger was unable to compete with competition like Whatsapp, Snapchat, Kik and LINE. So they captured the winning lead (Edwards, 2014). Personally, the WhatsApp purchase was an exceptional move by Facebook to get ahead of the race rather than putting too much of their resources on Messenger. It allowed them to focus better on things such as Meta.

What are some of the problems bringing in new investors?

One of the potential problems that FEP-KLTSA business challenge might face bringing in new investors is when the investors have a lack of awareness about the said business. The reason for this could be because of the limited exposure of the challenge to the public due to poor marketing plans or a lack of funds allocated to advertising. Market timing is also an important aspect to consider as it can be used by investors to decide when to make a sale for an asset based on price fluctuations (Rassolli, 2024). Moreover, there is a high chance that potential investors might lose interest or have a decreased interest in the business challenge if it is complicated to understand. Furthermore, the company would struggle to make decisions since investors tend to have a financial interest and a say in the business. This can keep the company from expressing their creativity to come up with great ideas that would help with the business and rip off the aspect of flexibility which is important in a business challenge(Panel, 2022).

One major problem in bringing in new investors is the challenge of establishing trust and credibility. This is particularly crucial in the financial world where investors need assurance that their investments are safe and will yield returns. New investors may be hesitant to invest in a company or venture if they do not trust the management or believe that their investment is at risk.

According to one study, trust is a critical factor in investor decision-making processes. Investors need to trust that the company's management is competent and transparent, and that their investment will be used wisely. Lack of trust can lead to investors not wanting to invest or withdrawal of investments, which can slow down the future growth of the company. (Alfalih, 2022)

Furthermore, another study shows for companies that lack credibility can result in higher cost of capital for that company, as investors may demand higher returns to compensate for the perceived risk. This can make it more challenging for companies to attract new investors and raise necessary capital for expansion or projects. (Hitachi, 2020)

Establishing trust and credibility requires transparent communication, sound governance practices, and a track record of delivering on promises. Without these elements in place, companies may struggle to attract new investors and grow their businesses effectively.

Businesses find it hard to attract new investors. A common problem among investors is a lack of knowledge about the company that they intend to invest in. This can be through the use of specific marketing strategies that target people looking for places to invest their money. An increase in visibility will then follow through networks such as digital platforms or otherwise but still fail when the value proposition lacks clarity thereby creating doubt amongst those who want to invest their cash into that particular venture because even when awareness exists without effective presentation investors’ decision-making process would be affected plus unclear propositions made by owners thereby leading them not invest their money or even time in such things based on those provided reasons. To recognize chances is very important. Also, another critical factor is availability of resources and provision of necessary assistance which eventually can come in handy. Making sure that the company is in a stable position, has prospects for its expansion along with an obvious way how it can become profitable will make resource providers have trust in it. But even in the presence of an attractive business idea, the fear of risk may prevent people from investing in it. Performing deep evaluations aimed at reducing uncertainties as well as being open during any communications are needed actions required for mitigation of potential hazards. It is also worth remembering about effective communication; explaining your corporate structure, policies and ways of business development is of crucial importance.

References

Alfalih, A. A. (2022, March 5). Customer engagement design during the covid 19 pandemic, mutual trust and Intelligent Automation: A Conceptual Perspective - Journal of Innovation and Entrepreneurship. SpringerOpen. https://innovation-entrepreneurship.springeropen.com/articles/10.1186/s13731-022-00222-7

Deutsch, A. L. (n.d.). WhatsApp: The best meta purchase ever?. Investopedia. https://www.investopedia.com/articles/investing/032515/whatsapp-best-facebook-purchase-ever.asp

Joly, H. (2022, June 10). Does Your Company’s Culture Reinforce Its Strategy and Purpose? Harvard Business Review. https://hbr.org/2022/06/does-your-companys-culture-reinforce-its-strategy-and-purpose

Edwards.J (2014, February 20). Why Facebook Paid 19 billion for Whatsapp. Business Insider https://www.businessinsider.com/why-facebook-paid-19-billion-for-whatsapp-2014-2

Figure1. Pepitone, J. (2014, February 21). Four reasons mobile messaging is huge. CNBC. https://www.cnbc.com/2014/02/21/four-reasons-mobile-messaging-is-huge.html

Harroch, R. (n.d.). 10 Tips for Making a Great Investor Pitch. Forbes. Retrieved

Hitachi, Ltd. (2020). Risk factors. https://www.hitachi.com/IR-e/corporate/risk/index.html 

Olson, P. (2014, October 6). Facebook closes $19 billion Whatsapp deal. Forbes. https://www.forbes.com/sites/parmyolson/2014/10/06/facebook-closes-19-billion-whatsapp-deal/?sh=4119382c5c66

Panel, E. (2022, April 21). 10 good reasons not to seek investors for your business. Forbes. https://www.forbes.com/sites/theyec/2021/12/22/10-good-reasons-not-to-seek-investors-for-your-business/?sh=2c37fde320fc

Pappas, S., & McKelvie, C. (2022, October 17). What is culture? Live Science. https://www.livescience.com/21478-what-is-culture-definition-of-culture.html

Rassolli, M. (2024, February 8). 6 Common challenges faced by new investors and how to face them. TrendScout UK. https://www.trendscoutuk.com/blog/6-common-challenges-faced-by-new-investors-and-how-to-face-them/

Ronick, D. (n.d.). How to Attract Investors: 7 Steps to Successful Capital-Raising. Entrepreneur. Retrieved 

Tiwari, S. (2018, March 9). Whatsapp Voice calling - everything you need to know. LinkedIn. https://www.linkedin.com/pulse/whatsapp-voice-calling-everything-you-need-know-surendra-tiwari

Wong, K. (2023, June 28). Organizational Culture: Definition, Importance, and development. Achievers. https://www.achievers.com/blog/organizational-culture-definition/