The paper has discussed the acquisition of Tumblr by Yahoo. Both companies are social networking platforms. The paper has embraced the circumstances that led to the acquisition of Tumblr by yahoo and the significance of the acquisition. The paper has also discussed the organizational structure of the two companies before and after the acquisition. The discussion has also touched on the organization of human resources in the two companies. More especially, reasons as to why the human resource at Tumblr was not affected have also been discussed.
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Tumblr is a social networking and micro-blogging platform. The service permits users to make and post their multimedia content on the website as blogs (Roberts, 2014). It also allows users to follow other users and share their interests with them through posts. Yahoo is an international technology corporation (Roberts, 2014). Among many other things, Yahoo specializes in marketing services and properties that are specifically designed to reach and even connect with users via distribution platforms of affiliates. Yahoo uses affiliates to reach or position its offerings to a wide range of clients.
Circumstances leading to the acquisition of Tumblr
Previously, Tumblr was still a profitable media network and sustained its performance after the acquisition (Taylor, 2013). In fact, Yahoo was attracted by its incredible engagement and popularity amongst users (Jenkins, 2012). Because of the dwindling performance of Yahoo in social networking, Tumblr was acquired expected to enhance the audience base of Yahoo. Before the deal as hammered, Tumblr had more than fifty billion blog posts, with more than eighty million blogs arriving daily (Roberts, 2014).
The acquisition also offered exceptional opportunities for both organizations (Roberts, 2014). Tumblr benefited from the search infrastructure and personalization technology of Yahoo to help its visitors and users link with major bloggers and their content (Taylor, 2013). On the other side, Yahoo benefited from the efforts of Tumblr by creating seamless opportunities for its advertisers and clients.
Significance of the acquisition
Both companies belong to the search engine industry, and lately, it has negatively been affected by inflation and economic recession (Roberts, 2014). Competitiveness and emergence of other customized portals such as eBay have also negatively affected the market of traditional players, making it hard for them to break even (Boone & Kurtz, 2013). Because of all these factors, players have to adopt capabilities to help them deliver on the end-user demand effectively (Boone & Kurtz, 2013).
Tumblr, in this case, helps Yahoo to effectively deliver its offerings to clients. In the year 2011, the entry of Facebook in social networks significantly reduced the market share of Yahoo (Roberts, 2014). Previously, the financial performance of Yahoo was expected to grow to about $80 billion by 2015 (Taylor, 2013). However, this estimation was scaled down due to the entry of Facebook, the effects of economic recession, and other competitors.
Examples of the effects of the acquisition include enhanced the competitiveness of Yahoo in online business. For instance, the company has the world’s largest market share in online advertising. Yahoo’s United States market share for display advertising by the end of 2013 was at 17 percent, followed by Microsoft at 11 percent, and AOL comes in third at 7 percent. Secondly, Tumblr received over thirteen billion international page views in 2013 (Roberts, 2014). As of today, Tumblr has over eighty billion blog posts (Taylor, 2013). This means that more than ninety million posts are being created daily. These are examples that resulted from the deal.
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The organizational structure
Previously, Yahoo had two major divisions: the enterprise and public divisions (Jenkins, 2012). Under the enterprise division, Yahoo developed wireless infrastructure, highly advanced data capture, barcode scanning, and wireless broadband networks (Roberts, 2014). Under the public division, the company produced government and public products. In addition, Yahoo developed data and products (Boone & Kurtz, 2013). The corporate structure of Tumblr was a multidivisional structure, where small units of business or operation were divided in terms of product market. Its organizational structure ensured centralized planning whilst giving other units the flexibility to innovate.
Upon acquiring Tumblr, Yahoo reorganized its business line mainly into four divisions: advertising, cloud computing services, or simply internet (Boone & Kurtz, 2013). The cloud services division and ecosystem division mainly focus on services and content. Furthermore, the new structure was meant to help the organization shape its internal processes and focus on major market opportunities in the online market.
Organization of Human Resource
This was a vertical merger, which meant that all activities, including employees of Tumblr, were to be fully acquired by Yahoo (Jenkins, 2012). However, the management of Yahoo announced that Tumblr would be separately operated with very little incorporation or integration of the two organizations (Boone & Kurtz, 2013). In this case, Tumblr added more than 255 employees to Yahoo. Based on the fact that the two companies would work independently, the human resource at Tumblr was not reorganized in any way. However, at Yahoo, some kinds of reorganization were carried out just to ensure the company operations fit with that of Tumblr (Roberts, 2014). The company had to change its human resource operations to data-based people management.
According to Yahoo, the main reason for adopting this approach was to have organizational structures that make it easier to deliberate in terms of managing people. Boone and Kurtz (2013) indicated that an organization could only attain its objectives if it is able to make accurate deliberations on how to manage its people well (Taylor, 2013). Therefore, after finalizing the deal, the Human Resource at Yahoo became different from the previous HR. Each division, including the acquired section, has its own analytic teams accountable to the president of the company (Taylor, 2013). Another function of the team entails carrying out surveys on things that can be adopted to better the operations of the company.
Reasons why the HR at Tumblr was not changed
As soon as the deal was made public in mid-2013, a good number of Tumblr’s users were not happy. In fact, they immediately petitioned the idea by collecting more than 180,000 signatures (Roberts, 2014). This forced Yahoo to announce that the company would not be affected in any way as it would work independently (Boone & Kurtz, 2013). In addition, Yahoo retained the entire staff, including the management under David Karp as the CEO.
After a careful analysis of Yahoo management and profitability, acquiring Tumblr was a good move. The company was effectively working towards growing revenue and increasing its competitiveness. Some of the challenges that faced the company before the acquisition included increased competition from other companies such as Facebook and even Microsoft. The acquisition of Tumblr brought Yahoo numerous benefits, including millions of blog visitors and clients. The other competitive advantage arising from the deal is the customized web pages and services that meet the needs of customers. In fact, by the end of 2013, Yahoo had outshined Google on the number of visits to its websites. This means that the deal between the two companies was successful and profitable.
Boone, L. E., & Kurtz, D. L. (2013). Contemporary business. Hoboken, N.J: John Wiley & Sons, Inc.
Jenkins, S. (2012). Tumblr for dummies. Hoboken, N.J.: John Wiley & Sons.
Roberts, J. (2014). Mobile Tech Report 2014: Technology news from 2013 and predictions and insights about 2014. New York, NY: Mindwarm Incorporated.
Taylor, G. (2013). Tumblr for business. New York, NY: Global & Digital.