Microsoft buys into Facebook

by Business Case Studies on Wednesday 7th November, 2007

Microsoft buys into Facebook

Microsoft has successfully outbid Google Inc to buy a 1.6% share in Facebook, the social networking site, for a reported £117 million. Facebook had previously rebuffed a $1 billion takeover offer last year from Yahoo.Microsoft currently provides banner advertising and links on the US site but as part of the new deal will also sell internet ads for Facebook outside the United States (BBC, 24 October 2007).

Owen Van Natta, Facebook's vice president of operations, said:“We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to the more than 49 million active users of Facebook.”  (Daily Mail – 25 October 2007)

When different firms merge or collaborate in their operations, there can be significant clashes between the cultures of the two organizations.However Charlene Li, a Forrester Research analyst, said that Microsoft's success in closing the deal demonstrated its experience in working with program developers and building computing environments was a better fit with Facebook's forward plans (The Times – 25 October 2007).

To look at the culture of an organisation, see the Times 100 case study on Siemens' culture -“What the organisation stands for (its values) and the dreams that it seeks to turn into reality (its vision) are fundamental in creating a dynamic culture.”See also the Times 100 Business Theory section on corporate and organizational culture.

Sources:

The Times 100 Edition 12 Case Studies – Siemens, Creating a high performance culture

BBC News – Microsoft buys stake in Facebook, 24 October 2007

The Times – Microsoft beats Google to take stake that puts $15bn tag on Facebook

Daily Mail – Microsoft buys up £120m stake in Facebook, 25 October 2007

Potential Study Questions:

Give a definition for the term organisational culture.

-Examine some of the reasons why you think it might be important for two organisations working together to have a similar organisational culture.

– A number of organisational culture types have been identified by researchers. Consider the different culture types and explain which you think might apply in the Microsoft and Facebook organisations and give your reasons.

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