1. The strategic motives behind the acquisition of WhatsApp were like.

Facebook was
facing mobile connectivity issues, but through WhatsApp they could achieve this issue,
so they could become the market leader in the social media and instant communication
industry. Other motive was the user growth which in case of WhatsApp was increasing
rapidly in the whole world, because the users preferred the app that worked on internet
as internet was available around the globe, so people preferred to communicate through
a app rather than SMS communication through sim network. and as WhatsApp was the
primary way of communication used by youth, and daily usage rate was above the
billion users. So, Facebook thought to connect them with mobile phone and social
media. Also, as Facebook had more customers only in developed countries like USA,
while WhatsApp had more users from the developing countries, so Facebook could
easily access the data of those users and use it for different purposes.
2. $19 billion price for the acquisition of WhatsApp that was offered by Facebook was not
fair according to the other companies. Because WhatsApp had no revenues and profits.
it only charged 1$ per years as subscription fees from the users. Even WhatsApp had no
fixed assets, and very less employees working in WhatsApp. So, 19 billion dollars was
far more then the actual worth of the company. But Facebook was focusing on the users
of the WhatsApp that it had acquired within very short span of time. Because at the time
of acquisition WhatsApp had more than 450 million active users each month, and each
day more than 1 billion users were accessing this WhatsApp. WhatsApp had zero
expenses on the marketing, it was marketing through the strategy of word of mouth only,
and due to which its users had increased in Asian countries mostly underdeveloped and
developing countries. So, Facebook was thinking about that data of users to get access
to, and then Facebook could use that data of customers for many purposes and could
easily get back 19 billion dollars within short period. Goodwill was also the factor as
WhatsApp’s goodwill had more worth than any other messaging app in the market.
3. Dupont analysis of 2013 and 2014
Dupont analysis is the expanded form of ROE formula, which is calculated by the
formula as
Dupont analysis = net profit margin*Asset turnover*Equity multiplier

net income total sales total assets

dupont analysis= × ×
total sales total assets total shareholder equity

Dupont Analysis for 2013

1500 7872 17895
dupont analysis for 2013= × ×
7872 17895 15470
dupont analysis for 2013=19.05 ×0.4399∗1.157
dupont analysis for 2013=9.7 %
Dupont analysis for 2014
2940 12466 40184
dupont analysis for 201 4= × ×
12466 40184 36096
dupont analysis for 201 4=23.58× 0.3102× 1.1133
dupont analysis for 201 4=8.15 %

in 2014 Facebook had lower return on equity as seen through Dupont analysis. Even the
net profit margin in 2014 was higher than 2013 net profit margin, it happened because
the asset turnover in 2014 had decreased as compared to 2013 which decreased the net
profit margin which impacted on lower return on equity.