Capstone Project: Facebook Inc. ®
The emergence of Facebook® as a company has been a rather interesting case study in the business world. Like any other business venture, its beginning was humble, but its robust acceptance and popularity gained grounds to become the leading company in the world, in social media platform. The mission that Facebook® has established is to offer people a platform to share, as well as make the world a more open and connected arena (Harbour & Koslov, 2010).
The vision of Facebook® is more hidden within the precinct of its mission and a clear identifiable vision statement lacks in the organization’s rudimentary description (Choudhary, 2012). However, the closest vision statement that is emergent can be summed up in the following words; people use Facebook® as a means to staying connected with family and friends in an effort to discover what is going on in the world, and to express and share what they perceive to matter most to them (Harbour & Koslov, 2010).
A closer look at the organization’s performance, especially in line with growth and customer base, it is emergent that the company lives up to the expectation and fulfills its mission comprehensively (Harbour & Koslov, 2010). The beauty of it all is the fact that Facebook® has been able to interconnect people across the divide, young and old alike on a common platform for business, consultation, or pleasure (Harbour & Koslov, 2010). Facebook® has been able to aid faster communication among extended family members. This is unlike in earlier days when the communication was solely via telephone calls, short messaging services, or letters (Choudhary, 2012).
The system created by Facebook® utilizes the vast resources provided by cloud computing thus real-time update and communication is made possible and conversely reducing load on communication devices (Harbour & Koslov, 2010; Choudhary, 2012).
Facebook Inc.® lives up to its mission and vision statements by continuously improving services, and introducing novel applications that make the exchange of information and various data forms easier. Additionally, there is real-time security monitoring, and any threat identified is eliminated with haste so as to avoid its spread across the vast communication network. For example, despite the introduction of good applications, some malevolent users have devised ways of either corrupting phones, PCs, or extorting money from unsuspecting users. These kinds of threats have been a challenge but the haste by which the company deals with these threats aids in improvement of consumer confidence.
How Facebook’s Strategic Goals links to its Mission and Vision
A mission and vision is important to the progress and sustainability of a company. However, these two facets can be ineffective in the event that there is not adequate strategy set to aid in achieving these missions and visions of any company (Hill, 2010). According to Hill (2010), when a company is making considerable strides towards the success path, must have a success strategy in place that details in a comprehensive manner, modalities to be used during the implementation of the vision and mission it has set to achieve. One of the strategies that the company employed in an effort to achieve its ends is to make an easy-to-use web site interface that is actively interactive such that bidirectional communication in real-time is possible (Hill, 2010). Secondly, the company made a system that is easy on the platform of application thus it does not consume a lot of memory when in active or passive mode (Hill, 2010).
Thirdly, the company made it possible to integrate the platform on mobile phones and tablets; thus its robust application makes it possible for users with various gadgets to access the same services (Hill, 2010). This means that individuals could reach out to one another as long as there is mobile and internet connectivity. Additionally, the company created a customized Facebook application for every mobile phone such that instead of having to go through the long process of accessing the internet through a browser and then to the address link, the application is solely developed for its website. Its success in capturing, captivating, and retaining a wealthy customer base is unraveled.
Facebook Inc.® Financial Performance and its link to Strategic Goals
A company’s growth trend and performance is evaluated by its financial stance as compared to previous year(s) performance or in relation to the performance of its rival company. To take a closer look at the financial performance of Facebook Inc.®, it is imperative to take a look at past years’ performance and evaluate any improvement or deterioration in its financial position. Starting with the annual sales, in the year 2008, Facebook Inc.® made an annual sale of $ 272 million with 2009’s figure rising to $ 777 million. In 2010, the figure rose again to $ 1.97 billion then $ 3.71 billion in 2011 while last years’ figure stood at $ 5.09 billion a major leap in sales figure.
In terms of gross income, 2008 had $ 148 million, $ 554 million in 2009, $ 1,48 billion in 2010, $ 2.85 billion in 2011, and finally $ 3.73 billion in 2012. Comparing the sales figures with the amount allocated within the same years for Research and Development (R & D), 2008 had $ 47 million, 2009 saw 87 million invested, and 2010 had 144 million, 2011’s R & D investment stood at $ 388 million while 2012 saw $ 1.4 billion invested. A quick peek at these results shows that, the amount invested for research and development did tend to double from the previous years’ figure although the figure between 2011 and 2012 seems to have quadrupled. Conversely, the more the investment in R & D, the higher the returns thereby the reason there is a big disparity in sales figure between the last two years of the company’s performance.
Remember that the strategic goal of the company is to reach as many customers worldwide as possible and to interconnect them one to another. Based on the enormity of investment in R & D, it is clear that the company is on a rapid expansion plan aimed at edifying the servers and security platform. This is in addition to improvement of its reach in remote areas where there is poor coverage. Additionally, Facebook® also collaborates with local companies with related services that are prerequisite to attaining its goal. In some cases, the reality of mergers and acquisition becomes a better choice especially in regions perceived to house higher potential and the infrastructure models are dilapidated.
Facebook Inc.® Strength and Opportunity Analysis
The social media arena has been one of the most competitive arenas with some companies falling short in achieving their set targets. Some companies that started their social media thrived only for a while, and later came crumbling down because of poor risk management and incompetent expansion strategies adopted. Facebook® on the other hand grew exponentially fast and has had an invigorated expansion plan with consistent growth pattern.
Another strong point is the fact that Facebook®’s customer / user base keeps on growing from year to year with new users being added on a daily basis (Montalvo, 2011). This means that in terms of revenue generated from active and passive advertisements increases since individuals exploit this arena to showcase their products and exemplify on the services they offer.
The third source of strength for the company is in the fact that the company has a massive working capital base that makes it stable in its investment plans. For example, in the event that the company makes a decision to acquire another company as part of its strategic goals, its capital base allows this to be achieved with relative ease.
Finally, it is good to also mention the contribution that share trading has on the performance of the company financially since there is enormous revenue generated from these trades.
In terms of opportunities available, Facebook Inc.® still leaves a vast arena of riches to exploit. For example, in as much as the company has remained on the internet domain, digression towards hardware production is paramount. Take for example, production of smart phones and next generation phones, laptops, tablets and the like in addition to integration of active intelligence on the emerging integration of wireless communication control among home appliances remains a rich arena yet to be exploited by Facebook Inc.® There are vast opportunities that the company can capture for strategic progress.
Also, a good arena that technology firms are fervidly embracing in their strategic investment options is the rapid growth experienced in Africa as an emerging technology destination. Facebook Inc.® can acquire technology firms in select regions, revitalize the infrastructure, and configure the system to work to their advantage and generate more revenue from such ventures instead of acquisitions in an already saturated US market. Being the first to take this step will place Facebook Inc.® ahead of its rivals like LinkedIn, My Space, Flickr, Digg, and Delicious (Montalvo, 2011).
Differentiation to maximize shareholder returns
Over its operation time since coming into existence, Facebook Inc.® has built its reputation by overly relying on a singular product line. In as much as this specialization offers the company a better platform to improve its product line, it is vital to note that overreliance on this also has a negative side (Sorescu et al., 2011). Take for example, Nokia® a company that has filled the world with its handset products was almost tossed into the sea of oblivion due to continuous manufacture and reliance on obsolete technology in the wake of production of Smartphones and tablets (Sorescu et al., 2011). Although Nokia’s product line proved to be quite stable as compared to what was being manufactured by most companies, the truth of the matter is that it took diversity to regain its market stance and a partial merger with Microsoft to enable it to remain in the market (Sorescu et al., 2011).
Diversification of Facebook Inc. ®’s product line will place it at a better position in the market for future sustainability. Another exemplary example can be found in the performance of another technology giant like Apple Inc.® or Google Inc.®. These two companies have diversified their products even eating into Facebook’s niche using Google+ as a social platform, which is emerging to be competing with Facebook although its pick up pace is relatively slow.
Diversification will mean that there will be alternative revenue generation thus the profitability of the company will lead to better returns for shareholders. Research has shown that many technology firms have a habit of reinvesting back shareholder returns and conversely strengthening shareholder shares instead of giving them dividends (Sorescu et al., 2011). However, regardless of the choice adopted, the shareholders stand to gain more through product diversification.
Merger/ Acquisition Scenario
According to Gelis-Filho (2012), when organizations come together in a merger, the resultant environment can best be described as a discursive gravitational field. The main reason for this description is because each company contributes an equivalent measure of capital; thus none of the company feels the weight of losing a substantial amount of money. Facebook can form a merger with a local company to enable it achieve its dreams.
Take into consideration the emerging African development and an investment destination with special emphasis in Kenya that is deemed to be an emerging African technology hub. Supposing further that Facebook approaches the leading mobile telecommunication giant by the name Safaricom® and Huawei®, a mobile and other communications device manufacturer and distributor, to form a merger. Such a merger can further be harnessed by decentralizing duties such that individual companies specialize in areas that they have the best expertise. For example, Huawei® can concentrate in the manufacture of next generation of hardware sets, Facebook® to concentrate its resource in novel operating software platform while Safaricom offers its massive infrastructure network, in addition to, harnessing network coverage and improve data transfer platform.
With such a massive pull in resource and technology prowess, it would be possible to reach a vast number of users within the region bearing in mind these target industries have network coverage in many countries across Africa. Additionally, it is important to also point out that technology developed within a given region finds easy acceptance within that market if proper marketing strategies are done and reliance on a good name for individual companies in their respective fields of investment. Kenya would create a good opportunity especially bearing in mind that the said government has a strategic plan to create Africa’s largest technology hubs on strategic locations on the outskirts of its capital, Nairobi.
Employee Reward and Motivation Strategy
According to Solnet, Kralj, and Kandampully (2012), in creating an attractive reward structure for company employees, it is imperative to take into consideration differences in work attitude. A major change existing is integrating reward system for those considered to be in the old generation with generation X and generation Y, in a competitive reward system (Solnet, Kralj, & Kandampully, 2012).
Since a reward is most likely going to rejuvenate an employee’s spirit, a bonus recompense done biannually would be most inviting. This means that, unlike conventional reward systems that have to wait at the end of the year to get a reward, a biannual monetary reward to employees who contribute invaluable ideas will be used to ensure sustainable idea generation. Such employees will be treated with a set bonus amount, and in case anyone gets their ideas selected twice within a year, they are treated to a one-week all-paid for vacation with a friend or family member. This not only encourages individuals to work hard and to be innovative, but also to uphold invaluable contribution of family and friendship for an all-round individual (Solnet, Kralj, & Kandampully, 2012). A good monetary reward for these individuals would be in the range of $ 9,000 to $ 12,500. With such a generous offer, employees are likely to come up with many ideas to the benefit of the organization and ideas that win and are implemented will lead to monetary gains.
Facebook Inc.® strategy and Ethical Business Practice
Ethics within the social networking arena is a vital component that must be upheld. Ethics is a robust word with divergent interpretation and application. For example, according to Light and McGrath (2010), companies, especially large multinational technology companies, have a habit of creating monopolies in regions perceived to have low entrants. After monopolizing these regions, they make every effort to squeeze hard any new entrants, but flooding the market with their technologies such that smaller companies cannot find a place to sell their products. To some extent, Facebook has been accused of monopolizing the social media platform with almost infallible technologies such that competitors like Flickr and Google+ find it hard to penetrate the market with their products. There exists a thin line that defines what monopoly is and ethical business success.
In any company, public or private, unless it is a non-profit making organization, the driving force towards any investment strategy adopted is to yield returns either in short- or long-term sense (Light & McGrath, 2010). This therefore means launching products and services on time and in the right proportion to optimize on the market’s ability to purchase these products. This means giving the products the right time to be tested and availing them in volumes to increase sales figures. However, this flooding of the market with these products and services is on the other hand considered as a monopolistic approach in a free and competitive market thereby calling for moderation of how many products that can be launched in the market.
It is also identified in Light and McGrath (2010) that Facebook® employees are not supposed to visit Facebook chat website during working hours and some employees have been fired when caught surfing Facebook even if this is such an ironic and perceivably unethical behavior.
Conclusion
In conclusion, it is clear that Facebook Inc. has made great strides in line with its strategic mission and vision statement established. This has put the company at an advantage although there are several areas that need to be changed for better optimization.
References
Choudhary, A. (2012). Mission "trust". Academy of Strategic Management Journal, 11(1), 101-113. Retrieved from http://search.proquest.com/docview/1221540844?accountid=45049
Gelis-Filho, A. (2012). Organizations as discursive gravitational fields. Journal of Organizational Change Management, 25(2), 236-250. Doi: http://dx.doi.org/10.1108/09534811211213928
Harbour, P. J., & Koslov, T. I. (2010). Section 2 in a web 2.0 world: An expanded vision of relevant product markets. Antitrust Law Journal, 76(3), 769-797. Retrieved from http://search.proquest.com/docview/650011519?accountid=45049
Hill, Darryl C, PhD., C.S.P. (2010). ASSE: The vision & strategy. Professional Safety, 55(7), 8-8. Retrieved from http://search.proquest.com/docview/734607865?accountid=45049
Light, B., & McGrath, K. (2010). Ethics and social networking sites: A disclosive analysis of Facebook. Information Technology & People, 23(4), 290-311. Doi: http://dx.doi.org/10.1108/09593841011087770
Montalvo, R. E., PhD. (2011). Social media management. International Journal of Management and Information Systems, 15(3), 91-96. Retrieved from http://search.proquest.com/docview/880253689?accountid=45049
Sorescu, A., Frambach, R. T., Singh, J., Rangaswamy, A., & Bridges, C. (2011). Innovations in retail business models. Journal of Retailing, 87, S3-S16. Doi: http://dx.doi.org/10.1016/j.jretai.2011.04.005
Solnet, D., Kralj, A., & Kandampully, J. (2012). Generation Y employees: An examination of work attitude differences. Journal of Applied Management and Entrepreneurship, 17(3), 36-54. Retrieved from http://search.proquest.com/docview/1041243635?accountid=45049
