The article covers the story about the acquisition of Instagram by Facebook in 2013. At the time, the $1 billion deal marked the most significant addition in Silicon Valley. Instagram had only 30 million users and recorded no revenues during the take-over. Remarkably, the number has skyrocketed to 600 million users and turned to a billion-dollar business (Wagner). Aside from the massive growth, Facebook proved that it could merge separate entities without unnecessary interference. The acquisition is crucial since it enhanced Facebook’s position in Silicon Valley as the best place to foster economic growth. Additionally, the business crucially opened mergers with different companies such as the free messaging application WhatsApp and virtual intelligence company Oculus. The acquisition also lured the big-name players into Facebook to other commitments outside the core business strategy, for example, Messenger and PayPal (Wagner). The take-over business involving Instagram gravitated the best talent in the country towards Facebook. Consequently, the social media giant crucially attracted significant companies in Silicon Valley to work with them.

The aggressive acquisition efforts will help the company diversify its customer and revenue growth levels. The combined market based for WhatsApp, Instagram and Oculus translated to at least 2.6 billion users around the world who use at least one of Facebook’s products (Cooley 3). Market analysts are also concerned about the slow growth rates of the company. Forecasts estimate that the growth will decrease further due to investments in research and development. The authorities reckon that the total expenses growth will outpace the revenue generated in 2009 (Cooley 3). Similarly, Facebook must adapt its cultures and infrastructure to its new emerging markets in India and Africa. Some of these adaptations include identifying which platforms can run even on slow connections. The mergers and acquisitions, in a nutshell, only are proof that the parent company can still achieve growth by not interfering with their targets. Part 2

The articles outline several business strategies discussed in class. The first is Facebook acquired Instagram and gained complete control of the company without really interfering with the normal operations. The parent company, Facebook, only focussed on growing the customer base of the newly acquired business. Also, Facebook was interested in increasing the revenue streams given that Instagram did not post any form of revenues at the time. The acquisition is friendly, given the target was a willing participant in the deal. Also, the target saw the transaction as an opportunity to develop new ideas and use the resources of the acquirer (Roberts et al. 1/3). Like many start-ups, Instagram was willing to expand and establish but was held back by capital. The decision to sell the shares of the target company eventually fall on the shareholders (Roberts et al. 1/4). The acquirer may offer cash or shares to acquire the target shares. In this case study, Facebook offered its targets both options.

The rationale for acquiring Instagram, WhatsApp, and Oculus was both speculative and strategic for Facebook. For strategic reasons, the acquisition could be pursued with the intention of gaining a significant foothold in a particularly new area of expertise (Roberts et al. 1/4). The speculative motive involves the acquiring company seeing the target as a commodity. The acquirer, therefore, makes an effort to purchase the other company with the intention of improving its revenues without really committing to a significant strategic realignment (Roberts et al. 1/5). The acquisition project is highly risky, especially from employees working for the target leaving the company before, during, or after the take-over. The advantage of the speculative motive of acquisition is it offers a chance to the acquirer to make substantial profits.

Part 3

Facebook conducted the take-over of the small start-ups meticulously, although there is an opportunity to improve. For example, the acquisition of Oculus translated to delays with releasing their virtual reality console, Rift (Wagner). Also, the successful acquisition of Instagram and the massive upturn in profits showed Facebook’s ability to embrace the strategy of non-interference. The recommendation is to get involved with Instagram so that the app develops a way to remain functional even in areas with slow internet connections. The growing market for the company is to embrace the emerging markets in India and Africa. These areas tend to have slow internet connections, so Facebook has to find a way of remaining relevant in these areas.

Facebook should also consider improving the support system at Oculus. Despite injecting billions of dollars in hardware and software development at the virtual reality firm, costly delays meant Facebook could not maximize on its first-mover advantage. The recommendation is the parent company should consider getting involved in selecting the personnel at the virtual reality firm. The rationale for implementing the proposal is to help fast-track the process of releasing Oculus’ consoles in the industry. The delay at the beginning arose from concerns over the quality of the Oculus product. Modifying the acquisition process to allow infusion of some highly specialized workforce could overcome such setbacks.