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FACEBOOK CASE STUDY

Development of Facebook's Strategy Including Business and Revenue

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SWOT analysis

SWOT is a useful framework to understand the competitive advantage of a firm. It provides a comprehensive idea about the internal environmental of a firm (Lin et al. 2016). 

Strength

Facebook is a top most tech company based in the United States. As of 2019, it is 5th most valuable brand in the world. The brand value of the company stood at 88.9 billion US dollars in 2019 (Yang, Ren and Adomavicius 2020). It dominates the social media industry significantly. Another strength of the company is diversified portfolio including messenger, oculus, Instagram, WhatsApp, calibra and portal. Therefore, the company do not need to depend on single source o revenue. It can earn revenue from various segments of the business. The monthly active people value of the company remained 2.89 billion as of 2019. It is recognized as no 1 brand in the social media industry. Another strength of the company is human resource policies that makes the company best employer of the world. Loyal customer base of Facebook is a great asset of the company that boost the revenue profoundly.    

Weakness

Privacy of users is a major concern on the social media platform. The company faces criticism due to its lack of transparency related to the privacy of data of users (Coelho, de Oliveira and de Almeida 2016). Therefore, it is one of the vital weaknesses, which may lower the popularity of the brand in the long run. Since 2017, the company lost almost 15 million users due to the privacy issues. Spreading fake news is another weakness of the company that may hamper the growth of the business. The overdependence on the advertising for the generation of revenue may also create problem for the company. The annual revenue of near to 98.5 % comes from the advertising in case of the Facebook. The integration among the top management level of the company hampered due to various cases of scandals. For instance, the Russian meddling scandal created problem among the top-level management executives of the company, which may turn into a key weakness for the company.  

Opportunities

One of the potential opportunities for the company like Facebook is diversification of business. It may develop a business model beyond the social media industry with the help of paid services such as new subscription, e-wallets, peer to peer marketplace and hardware services. Therefore, the expansion of the existing business platform will enable the company to compete with the giants like PayPal, Tinder, YouTube, eBay, Amazon, Apple and Netflix (Triantafillidou and Siomkos 2018). The incorporation of advanced technology allows the firm to integrate with other applications to connect users to other platforms thorough Facebook. The integration with other applications such as contests, videos, surveys, blogs, e-commerce and games will act in favor of the business growth of the company. The company can tap the opportunity to expand its business through the acquisitions. The company acquired CTRL- Labs in 2019 with the assistance of its financial resources. Younger population of the countries across the world is the main target audience of Facebook. The company can shift its focus on targeting older generations with the help of change in features.    

Threat

Competition is one of the key threats of the company despite it dominates the social media industry. The entry of new companies and other old companies may threaten the business of Facebook. Thus, it may lose the customer base, which will hamper the future growth of the business. The increased regulations for this industry hamper the way business operate earlier. The scandals like Cambridge Analytica forced the government to impose unfavorable regulations on the company. Various regulatory bodies enact regulations for the company that will force it to adhere to new accountability and transparency requirements to avoid issues with insensitive content, infringement of intellectual property rights and data safety (Abuhashesh et al. 2019). There are various countries that banned Facebook such as Iran, Russia, North Korea and Iran. Therefore, it is one of the vital threats of the company, which may hamper the sustainability of the business. Data breach is another threat to the growth and sustenance of the company. In 2019, the personal information of more than 267 million users of Facebook were exposed in a major data breach (Yang, Ren and Adomavicius 2019). The creation of false or duplicate account on the platform of Facebook also threatened the growth of the business of the company. These accounts are mainly belonging from Indonesia, Vietnam and Philippines. 

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PESTLE analysis


Factors that affect the macro business environment of Facebook is analyzed with the help of PESTLE analysis. 

Political factors

Facebook is US-based company that dominates the social media industry dramatically. The political environment in the country like US is stable. Therefore, it acts in favor of the business growth of the company. The government of US also supports the internationalization of businesses and industries (Chang, Liu and Shen 2017). Thus, it has helped in the expansion of the business outside the country. Conflicts between the US and China may act against the growth of the business in the Chinese market. The government of US took various actions against the online data breach incidents of Facebook. Thus, it has posed a threat for the macro business environment of the company.   

Economic factors

US is a highly developed and high-income economy of the world. Hence, the sound economic environment of the country is a major contributor of the growth of the business. In addition to this, the expansion of the business in the emerging markets also facilitates the business growth due to lucrative opportunities (Galati et al. 2017). The rise in disposable income also encourages people to access the service provided by Facebook. Users have access to paid Facebook advertisements in order to promote their own products online. Thus, it acts in favor of the business as well as economy. 

Social factors

Initially, Facebook use the platform to connects the peoples around the world. Thus, it is the largest social media platform in the world. The company also used to offer high quality services and maintains the privacy of the personal data of the customers (Shiau, Dwivedi and Lai 2018). Later on, Facebook shifts its focus from the largest social media platform to marketplace that connects customers with the businesses. However, there were many cases data breaches against the company, which led to the deterioration of the service. Therefore, it can be said that the socio-cultural factors affected the macro business environment of the Facebook.   

Technological factors

Technological factors impact the macro environment of the company dramatically. The growth of this tech company largely depends on the technological advancement. The emergence of mobile applications supports the growth of the business. It also helps the company to rise the numbers of customers across the world. In this context, it is necessary to mention that technological advancement also brings problems in form of security issues for the company (de Oliveira, Huertas and Lin 2016). The company should emphasize more on the actions to counter the data leaks and hacking attempts. Moreover, the tracking system of Facebook related to the activities of the customers online to sell the data to the advertisers need to be changed in order to improve the macro business environment. The expansion of the business in other platforms also largely relies on the technological advancement.
 
Legal factors

Legal factors play a significant role in influencing the macro business environment of a company. As the scammers affect the reputation of Facebook through leaking the data, the regulation and control of this industry is necessary for the government. In order to protect the online data breach, the government of US and other developed countries impose the regulation, which may generate adverse impact for the growth of the business in future. General Data Protection Regulation started in European Union to impose stricter policy regarding data privacy and data of users (Liebana-Cabanillas and Alonso-Dos-Santos 2017). Violating the same will lead to the penalties for the company. Improvement in patent laws across the world is a major benefit for the business of Facebook. The regulatory support for the free Wi-Fi creates opportunity for the business of the company case study.  

Environmental factors

Environmental factors change the way a business operate in a particular market. Here, the environmental factors impact the macro business environment of the Facebook. The carbon footprint of the companies led to the climate changes. The company uses coal power to generate power in the data centers. Also, they use nuclear and gas as well. It is necessary for the company to lower the level of carbon emission (Raza, Qazi and Umer 2017). Therefore, Facebook took actions to lower the consumption of energy and emphasize on the use of renewable energy to lower the carbon footprint, which in turn will create positive impact on the natural environment. As a result, it also contributes in lowering the global warming and conservation of natural resources. Therefore, it will prove beneficial for the business in the long run. Choose our plagiarism checker is free to use for everybody.

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