Facebook has emerged to be one to the most influential and widely used social media platform. The usage of Facebook has tremendously expanded throughout times utilizing innovate strategies to sustain its lead. In this document, strategic analysis of the case study of Facebook is conducted. By the case study, the information has been assessed to determine strategies Facebook adopted till 2014. For analysis, strategic models PEST and SWOT model is used to assess the external and internal environment. It concludes with the identification of strategic actions and implementation steps Facebook has taken to address the problems and issues.
1. External Analysis
PESTLE Analysis
Political
Constant change in the political conditions across the globe can lead to creating issues because of biases emerging because of the interaction of people from different backgrounds at the same platform. Possible sanctions regionally in the different region of the world because of conflicts between the relationships between the countries can affect social media websites.
Social
There are multiple social factors that may affect the user’s preference and attributes to use Facebook for users. It may include their preferences, use, innovations and features that may change with over time and they alter the way users interact. There can be the possible change in the taste and preference of users because they have similar alternative mediums to advertise or communicate which may arise because of different, social, cultural and political backgrounds.
Technological
There is constant change in the technology regarding programming and graphic that are essential for the development. The organization operating in the industry needs to have the strong grasp on technology advancement to improve its tools and features. Technology is the fundamental critical factor to the success of social media websites to keep traffics on the websites.
Environmental
There are greater implications of the organization to adopt and promote environmental supports and CSR to ensure commitment towards society. There is the greater implication from the government to make use of eco-friendly technology to protect environment and resources. It implies to operations or any other activity that is undertaken by the company.
Legal
Social media have been debated for the accessibility from the governments as well as they are accused of using personal information of the users as a pathway to generate revenue. Therefore, there are the greater implication from the government and cyber law enforcement agencies to protect the rights and privacy of users.
Porter 5 Forces
Threat of New Entrants
The threat of new entrants in the industry high it is because the developers across the globe are developing different websites and applications. Moreover, there are no legal barriers or capital requirement to launch a website or application that enables individuals across the globe to enter the industry.
Threat of Substitutes
The threat of substitute is medium to high, because there are many websites that are developing using similar features and characteristics to gain attention of people across the globe, such as Instagram, Linkedin, etc. It is because number of users is the main factor that impacts the prophecy of the software which is relatively time taking for new website or application.
The degree of rivalry in the industry is high it is because there are multiple websites that are making use of competent technologies to develop its tools and features to reach customers. It includes search engines such as Google, Microsoft, Bing, social media websites as well as social media applications.
Bargaining power of Supplier
The bargaining power of suppliers is low. It is because the developers across the globe can work for the company.
Bargaining power of Buyers
The bargaining power of buyer is medium to high. It is because the users have multiple social media channels that they can switch without any cost. A little change can lead to drastic change in customer preference.
2. Internal Analysis
Strengths
Dynamic leadership with strong professionals such as Sheryl and Sandberg and David Ebersman
Strong business model that supports features of Facebook and makes it an attractive platform, i.e. News Feed, Timeline and Graph Search
Effective tools to enhance connection, share and communicate with the user across the internet
Collaborative platform for developers to enhance application programming interfaces and development tools
Significant decline in the stock prices of Facebook that started with the initial public offering
Innovative products for users
Acquisitions and merger of social media websites/application, such as Instagram and Whatsapp.
Weaknesses
Negative public image because of criticism on the CEO’s attitude.
Privacy concerns related to groups because of merging personal information of users for advertising mechanism.
Delay in the public offering that made investors depressed. In the three hours delay, it is estimated that Facebook lost $500 million investment.
Lack of accuracy in testing stock prices, as the stock prices were overvalued to the amount $38.
Weak protection of information of users.
Too much reliance of advertisement.
Opportunities
Facebook had best features, tools and committed constant development to upgrade the features makes it’s a potential social media that keeps its user attracted.
Investment in technology makes it competent social media website to understand. attributes of its users.
Making use of its users and innovative tools and features to expand its advertising offering through online and offline branded advertisement.
Expanding its advertisement, development and application to improve user’s experience and assess customer profile and relevance across the globe.
Threats
Underperform rating that leads decline in the stock prices of the company which could lead the stock prices to decline to lead the company to fall into bankruptcy.
Overvalued stock may damage reputation of the company in the stock market leading to discourage investors to withdraw their investment.
Lack of privacy and protection rights of the users may lead the company to fall in legal issues as the users can sue the company.
Rapid change in the technology that may provide an opportunity for the other social media websites to take over its attractiveness and features.
Increasing challenge in the industry because of the existing social media websites and search engines because of their strong development.
3. Identification of Strategic Actions and Implementation Steps
As mentioned in the case study and identified from the internal and external analysis of Facebook, it can be identified that Facebook has been facing criticism for laid back attitude for his CEO. In response to that Mark has hired speech advisor who had been working for Clinton to address this criticism (Rothaermel and Taylor). Also, the CEO is reported to acknowledge his late arrivals and casualness as a part of the working culture of Facebook. He has made up leadership model explaining that the youth generates ideas, and smarter people can do it their ways.
Because of the rapid development and advancement of technology Facebook has taken actions to integrate developers across the globe to work collaboratively to improve and enhance features for Facebook. What it provides is a counter strategy for Facebook to generate revenues as well as keep updated with the new features. Also, Facebook has taken steps to develop new tools and features timely to enhance the experience of users to keep it attractive for customers. Facebook has developed new ways to integrate to its platform to enhance the ability of the users to perform multiple things. It may be buying, selling, listening to music, notifications, locations, to track, share information about latest things. Moreover, Facebook has also developed mobile applications that are friendly for the users to use to reach users across the Internet.
For corporate users, Facebook has also provided secure measures for the users to transfer their payments using Facebook Credits to purchase virtual and digital goods. It has gained the attention of corporate clients to do their business as it secures transactions. To keep users attracted there are different multimedia options including music, gaming, messengers and others to sustain the attention of users.
The intense rivalry in the industry Facebook has developed the strategic partnership with the leading companies such as Google and Microsoft to remain competitive. It has brought stability in the company as it has enhanced user interaction through integrating search engines searches that rank Facebook among the top ranked pages (Rothaermel and Taylor 3). Moreover, to sustain its edge in the industry because of the emerging social media websites and applications, Facebook has developed links that facilitate users to make use of the social website.
The company has ensured to monitor the reaction of its users through adding values and enhance the experience of customers that gives the advantage to the company to sustain its edge in the industry by focusing more on the regional business advertisement. To target more customers, Facebook has made the advertisement more regional focusing on the local business advertisement. It has enabled the Facebook to promote local business more than others.
In response to the privacy concerns of the users, Facebook has introduced new features and terms in its policies to protect user’s right. There were developed made in the development of the Facebook tools and features such as HTML5 and other native application to support mobile applications. To expand its user-mobile applications of Facebook are developed to take over other competitors such as Instagram and LinkedIn (Rothaermel and Taylor 15).
Works Cited
Rothaermel, FT and S Taylor. Facebook (in 2013): Will Wall Street Hit the “Like” Button?. New York: Rothaermel and Taylor, 2015. Print.
