culture and investment

 

Organization culture is a very critical factor when it comes to defining or examining the identity of an organization or how it operates. A rich organizational culture does not only specify the behaviours in an organization but also speaks to the strategic plans and the behaviours of the employees (Denison and Mishra, 1995). It applies to improving the level of employee involvement, as well as satisfaction, which constitutes two cornerstones for long-term business success (Schein, 2010). For example, note that it is important to understand that positive organizational culture can create a sense of identification common good such that employees are motivated to work harder (Schneider, Ehrhart, and Macey 2013). In addition, opines that corporate cultures that are supportive of strategic agendas lead to enhancement of decision-making processes and organizational performance (Warrick, 2017). More specifically, it has been underscored that strong DCs enhance the capacity of organisations to create value, engage in market competition and adapt to change (Denison & Mishra, 1995; Schneider et al., 2013). Hence, it is apparent that developing a healthy organizational culture in addition to increasing the overall internal cohesion has other benefits that could be viewed as valuable for the future evolution of the organisation in the context of the contemporary intensified global business competition.


One of the biggest tech transactions in history, Facebook's $19 billion acquisition of WhatsApp in 2014 sparked debate over whether the messaging software was overpriced. When assessing this deal, there are a number of things to take into account.

First off, with a constantly increasing rate of user acquisition, WhatsApp boasted a vast user base at the time of about 450 million monthly active users. Facebook's enormous user base gave them a significant strategic edge that allowed it to compete with WeChat and Snapchat and grow its market share in the messaging space globally.(Constine, 2014).

Second, there was cause for concern given WhatsApp's poor revenue production. After the first year, the company offered a $1 annual subscription plan, which was a meagre revenue stream in comparison to the acquisition cost. The valuation was criticized for being more predicated on potential than on actual financial performance. Facebook, however, most likely recognized the value in WhatsApp's data and its potential for revenue generation from advertising and ecosystem integration.

Furthermore, the agreement can be viewed within the larger framework of Facebook's plan. Facebook eliminated a possible rival and fortified its dominance in the mobile messaging market by acquiring WhatsApp, which is critical given that the social media landscape is still shifting in favour of mobile-first usage.(Mac & Warzel, 2014).

In summary, even if the purchase price seemed high, it was in line with Facebook's long-term strategic objectives. Securing future growth and market domination was more important to the purchase than obtaining quick financial gains. Whether this was an overpayment or not will rely on WhatsApp's capacity to make money under Facebook's watch and to work well with the company's other services in the future


Fear and greed usually drive emotional decision-making in new investors. Frequently, new investors make poor returns by buying high in bullish trends motivated by greed and selling low in bearish trends motivated by fear due to their emotional reactions to market volatility. In addition, inexperienced investors may hang onto lost assets longer than necessary in an attempt to break even, which increases losses. The act comes from the emotional distress of acknowledging a loss. (S,2018)

The second issue is that new investors typically don't diversify their portfolios. They often make large investments in a single stock or industry, which exposes the portfolio to a great deal of risk in the event that the investment underperforms. (Rassolli, 2024)  

Weakening of Proprietorship: When a company brings in financial specialists, the initial proprietors frequently confront weakening of their possession stakes. This implies that as unused offers are issued to suit speculators, the rate of the company possessed by the authors diminishes. Whereas this convergence of capital can be useful for trade development, it diminishes the founders' control and share of future benefits. Over time, as more financing rounds happen, this weakening can essentially affect the founders' impact over the company, possibly driving to clashes with respect to the course and administration of the commerce.

Exit Weight: Financial specialists ordinarily enter a commerce with a clear desire of leaving their venture productively. This makes critical weight on the company to create and execute an exit procedure, such as an securing or an initial public advertising (IPO). Whereas this will lead to fast development and expanded valuation, it might not adjust with the founders' vision for the company's future. The direness to meet exit expectations can lead to vital choices centered on short-term picks up instead of long-term supportability, possibly compromising the company's steadiness and the quality of its items or administrations.


Denison, D. R., & Mishra, A. K. (1995). Toward a Theory of Organizational Culture and Effectiveness. Organization Science, 6(2), 204–223. https://doi.org/10.1287/orsc.6.2.204

Schein, E. H. (2010). Organizational Culture and Leadership (4th ed.). San Francisco, CA Jossey-Bass. - References - Scientific Research Publishing. (n.d.). https://www.scirp.org/reference/referencespapers?referenceid=1848176

Schneider, B., Ehrhart, M. G., & Macey, W. H. (2013). Organizational Climate and Culture. Annual Review of Psychology, 64(1), 361–388. https://doi.org/10.1146/annurev-psych-113011-143809

Warrick, D. (2017). What leaders need to know about organizational culture. Business Horizons, 60(3), 395–404. https://doi.org/10.1016/j.bushor.2017.01.011


Constine, J. (2014, February 19). Facebook buys WhatsApp for $19 billion, turns messaging into a money pit. TechCrunch. 

https://techcrunch.com/2014/02/19/facebook-whatsapp/


Mac, R., & Warzel, C. (2014, February 20). Why Facebook bought WhatsApp. BuzzFeed News. https://www.buzzfeednews.com/article/charliewarzel/why-facebook-bought-whatsapp

 

S, Nael. (2018, March 9). What kind of problems arise when you start to invest for the first time in the share market?

https://www.linkedin.com/pulse/what-kind-problems-arise-when-you-start-invest-first-time-shahbaz

 

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/

Equidam. (2020). Dilution 101: Calculation and examples. 

 https://www.equidam.com/dilution-101-calculation-and-examples/


Rooled. (2022). Understanding dilution: A guide for startup founders.

 https://rooled.com/understanding-dilution/


Settle. (2022). What are the consequences of equity dilution? 

 https://www.settle.com/blog/what-are-the-consequences-of-equity-dilution


Comments

Post a Comment

Popular posts from this blog

Mental health support through Artificial Intelligent (AI)

Image
 Mental health issues such as depression anxiety and stress are pervasive and often debilitating affecting millions of people worldwide. Though the importance of mental health to overall wellbeing is becoming increasingly acknowledged many people lack access to professional mental health care or are uncomfortable seeking traditional forms of therapy because of stigma or other obstacles. Artificial intelligence (AI) by providing easily accessible reasonably priced and unbiased support offers a promising solution to this pressing need. The purpose of this essay is to examine how artificial intelligence (AI) can improve mental health care significantly by lowering stigma personalizing resources and being available around-the-clock.  The ability of AI to offer round-the-clock support is one of the biggest benefits in the field of mental health care. In contrast to traditional therapy sessions which are often limited to office hours artificial intelligence-driven chatbots and virtu...
Read more

Challenges and opportunities for Amazon

Image
  (Akmal Nasimboev TP072456) Amazon faces several significant challenges and opportunities in its operations. According to an article by Team Hopstack (2022), one major challenge for Amazon FBA sellers is managing inventory effectively. Sellers often struggle with stockouts and overstocking due to unpredictable demand and supply chain complexities. This can lead to lost sales or excess inventory costs. Additionally, Amazon’s stringent rules and high competition among sellers can be daunting. Sellers must navigate a complex landscape of policies, fees, and competition, which can impact their profitability. The constant need to optimise listings and adapt to Amazon’s changing algorithms requires ongoing effort and resources. However, these challenges also present opportunities. Effective inventory management and adaptation to Amazon’s policies can lead to better performance metrics and increased visibility. Sellers who successfully leverage Amazon’s platform and tools can reach a...
Read more

Effectuation and Entreprenuership

1) Can effectuation also be used in companies? Or is it useful only for entrepreneurship Although effectuation was first designed for entrepreneurship, established businesses can also benefit from it. The study conducted by Matalamäki, Vuorinen, Varamäki, and Sorama (2017) demonstrates how effectuation principles, which include flexibility, focusing on controllable areas, and leveraging existing resources, can improve business growth in mature organizations. 1) Adaptability: Market fluctuations and uncertainty confront well-established businesses. By utilizing stakeholder commitments and available resources, effectuation allows these organizations to quickly change without depending only on predictive planning. 2) Innovation: Effectuation encourages experimentation and creative thinking in well-established businesses. Iterative learning and adaptability enable businesses to take advantage of new opportunities, change course as needed, and generate value in uncertain settings.  ...
Read more