When looking at the pattern of actions and business approaches that define a company’s strategy it is clear that some do not apply to social media sites such as Facebook. One of these sectors are the actions to gain sales and market share with lower prices based on lower costs because there are not many ways a social media site can see substantial savings by lower costs.
Actions to enter new product or geographic markets or to exit existing ones is an approach that Facebook is poising itself to take advantage of with its new Trending option. By including this into a prime spot at the top right of the page Trending will attract attention to current personal and social interests. Facebook hopes this will develop into a complete news service that covers local, nation and international fast breaking news and events. This approach failed however when they added the Hashtags capability. .
They also took action to capture emerging market opportunities and defend against external threats to the company’s business prospects by including advertising in its news feed. This makes them more attractive to advertisers who want to reach the mobile phone community. . Some of its customers do not see this new move as universally positive and it still has to prove itself as a positive move. .
In the header of its Mergers and Acquisitions web page, a quote reads Nothing is certain except mergers and acquisitions, . Therefore, it is no surprise that Facebook took action to strengthen market standing and competiveness by acquiring or merging with other companies. In its pre IPO days Facebook was known as thefacebook.com until it bought the domain name Facebook in 2005. Significant among these were Instagram, Frendster, ConnectU, FriendFeed, Chi Labs, Snaptu, Face.com, Atlas, Branch and the fb.com domain name.
Some of Facebook’s actions as to its acquisitions may have also resulted in via strategic alliances and collaborative partnerships however; most centered on staff acquisitions. Obtaining the highest quality personnel has long been a Facebook policy.
Facebook is constantly looking to broaden its service base and most of their staff acquisitions resulted in improved R & D production sales and marketing, finance, important resources and capabilities.
Actions to help strengthen the firm’s bargains position with suppliers, distributors and others do not have a significant effect on the business strategy of a social media web site. .
Some of the strongest actions Facebook took was to gain sales and market share via more performance features with more appealing design, better quality or customer service, wider product selection, or other such actions. Three ways they did this recently was to add hashtags, Trending and their decision to open the News Feed to advertisers. Not all of these received universally positive feedback. .
When Mark Zuckerberg conceived Facebook, profit was not the object. Before its IPO Facebook had grown to be a 100 billion dollar site. After the IPO Zuckerberg saw the value drop like a stone. Share value went from $38 at the time of its IPO To $?? Per share in 201?. This caused him to ask some hard questions in 2012.
The first was; where are we now? The answer was on the wrong side of the Mobil Phone Bubble. The next question was obvious: where do we want to go? The last was an obvious question; how are we going to get there? The answer was not that clear; one thing that was clear however, what they were doing was not working. They needed a new business strategy.
Strategy is all about How. Before their IPO, the customers were the users and they did a great job of attracting and pleasing them. After the IPO, there was a new group of customers; the advertisers that made Facebook profitable. The problem was that the users did not particularly like the advertisers. .
Initially segregating the ads to the right margin hinterlands worked on computers and everyone was happy for a while. However as the e-world turned increasing numbers of people, especially the youth market began access Facebook on their mobile phones. The small screens made the right margin the wrong place to be. Increasing numbers of advertisers began clamoring to be able to buy their way into the post feed in the center of the screen. This was exactly where the Facebook uses and some advertisers did not want to see them. .
Giving advertisers access to the news feed was a risky move. In the social media community there are always rivals waiting for the first misstep. Recently some of them have been successful in luring users away. A report from iStrategyLabs gives a breakdown of Facebook’s losses in the youthful tween and teen age groups, and it is not good news for Facebook. According to their report, Facebook lost 25% of their youth that translates to 11 million users. .
This meant Facebook needed a better position in the marketplace. To secure that better place they added a new element on “prime real estate” the upper right corner of the screen. Called Trending it features topics that friends are accessing along with other popular topics. This is direct competition with Twitter and puts it in the position to become a world news site as well as a place to keep up with those cute pictures of cats and babies. This is definitely a new position in the market, and one that did not exist at the time of its IPO.
A good business strategy helps a company respond to changing economic and market conditions. The best business strategies capitalize on attractive opportunities to grow the business.
Mark Zuckerman knows one thing, and he lives it; his company’s success is built on a philosophy and internal corporate that foster it. He still wears blue jeans and drives a Volkswagen GIA, the “Aquarium” conference room is still 68 degrees. This part of Facebook has not changed since the earliest pre-IPO days.
Zuckerman considers the new changes to be part of a business trajectory designed to achieve the firm’s performance targets. . This includes financial performance, competitive position, and a sustainable competitive advantage. Facebook always had a creative, distinctive strategy that produces above-average profits that already took out its former rival. Now with its new competitive pressure on rival Twitter it is in a position of challenging that sector of social media. This is a substantial difference between Facebook in the time before its IPO and Facebook today .
This new inclusion will help Facebook meet customer needs more effectively with a new service that it is clear their user customers value. It will also help them meet their advertising customer needs more efficiently by providing a broader range of products and a broader pricing range for them.. This is a substantial change from their pre-IPO policies.
The inclusion of the new Ticker will also help them maintain a sustainable competitive advantage by giving their users lasting reasons to choose Facebook as an on line information “one stop shopping” site where they can go to get family local and international news and trends. That advantage will give them a good reason to prefer Facebook to other competing sites.
Advertisers evaluate on line advertising by its click through costs, looked at in terms of the amount of click throughs, the amount of purchases per click and how the activity affects their search engine performance. Because of their social media market share offers one of the best best-cost provider performance rates available on the Internet. This also serves to position them as capable of serving niche markets as well.
Facebook’s strategy up to early 2014 enabled them to create a sustainable competitive advantage. They are looking to hold onto this by using their expertise and competitive capabilities over the long-term by adding Trending, which will move them into the local, national and international news media on the same page that also helps their user customers keep up to date on family and social events. That combination is one that rivals cannot readily copy, match or best. These moves put the constant quest for sustainable competitive advantage at the center stage of their business strategy, just where it is supposed to be.
This strategy also gives Facebook the capability to modify strategy in response to changing market conditions, advancing technology, innovations from fresh moves of competitors along with shifting buyer needs. Because they focus on proactive development and broadening market share, it will also allow them to take advantage of emerging market opportunities.
Facebook will also be able to stay nimble enough to incorporate new ideas for improving the strategy because they do not rely upon one market sector. Their current strategy is a blend of deliberate proactive strategy elements that include both continued and new initiatives as can be seen by their Trending option and emergent reactive emergent strategy elements that are required due to unanticipated competitive developments and fresh market conditions. An example of their reactive responses is how they began including advertising in their news feed to maximize their effectiveness on mobile phones and communication devices.
Looking at Facebook today, the company’s performance demonstrates that it met all the criteria for performance, strategic fit and competitive advantage by its stock performance the stock passed its IPO price of $38 per share on 2 August 2013 that canceled out a $50 billion slide in value since its IPO and closed at $54.56 on 5 January 2014. 2013 saw Facebook post a 105% gain in 2013 in comparison to the composite NASDAQ gains of $34% . This shows that Facebook employed a successful business strategy since their early pre-IPO days that provides a prescription for doing business that includes a road map to competitive advantage, a game plan for pleasing customers along with a formula for attaining long-term standout marketplace performance. The rising prices on their stock shows that experts agree with existing strategy and expect it to continue in the future.
Bibliography
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Mulready, R. (2014). Why It Might Be Time to Ditch Your Facebook Strategy. Retrieved from Entrepreneur: http://www.entrepreneur.com/article/230599
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