Environment analysis is said to be a strategic tool. It is a procedure to recognize all the internal and external elements which can have an impact on the performance of the organization (Pestle Analysis, 2015). The analysis includes evaluation of the level of opportunity and threat involved in an environmental factor (Hussain & Kharisov, 2016). This report is being prepared in order to analyze the case based on Facebook. In this, the analysis of the external environment and internal environment will be done. Along with this the detailed analysis of the industry and competition will be performed. Further, the report will make a long-term strategic plan for the Facebook.
Facebook is a well-known American company of social networking and social media service based in California (Newsroom, 2018). In 2004, the website of Facebook was launched by Mark Zuckerberg. He was a computer science student at the college. The roommates of Mark Zuckerberg were Dustin Moskovitz, Eduardo Saverin, Chris Hughes and Andrew McCollum who gave strong support in creating Facebook (Elhuda & Dimetry, 2014). In 2009, Mark was ranked at 23rd position in Vanity Fair magazine.
Technological Trends- There is a huge impact of technology on the business of Facebook because it is based on online technologies (Haseeb, 2017). In the initial journey, CourceMatch program was written by Mark who allowed students to organize and tactically select their classes. After that Facemash was created by him. This technology offered the opportunity to students to rate other people depending on their looks. After working with the roommates Mark invented Thefacebook which was renamed Facebook.
Demographic Trends- The user count of Facebook is so big that it is good to say that everybody is on Facebook.
Women Facebook user is more compared to men- Facebook is used by approx. 83% of women whereas only 75% of men use Facebook (Hicks, 2018).
All the age group people are involved on this platform- Most of the Facebook users are from the age group of 18-29 which is approx. 88%, 84% people are from 30-49 age group and 72% are of 50-64 age group.
Economic Trends- In 2012 Facebook filed its initial public offering. In the details of the filling Mark had 22% ownership share and owns 57% of voting shares. The value of the shares was $38/share and the value of the company was at $104 billion which is considered as the highest valuation for a newly public company (Rusli & Eavis, 2012). Recently, the market cap of Facebook exceeded $64 billion and reflected a periodic growth rate of about 2%.
Political/ Legal Trends- The business of Facebook is directly linked to the political situations. About Facebook, the government states its worry in the way that the personal information of the particular candidates must be properly secured. Issues related to the customer’s privacy increases the company’s cost (Dudovskiy, 2017).
A limitation is imposed by the law in the business of Facebook. Laws and regulation which are set by numerous regulated businesses to drive the social networking are very essential.
Social-cultural Trends- Facebook operates in a developer-centred culture where the attention is minimum on the flashy features of an innovative product and maximum on the material involved in the manufacturing of the product.
Global Trends- On 30 January 2013, Facebook declared that it had exceeded numerous milestones which are reflected by the increase in the number of mobile users i.e. more than 680 million. Along with this, the firm has exceeded 1.06 billion MAUs. However, the firm faces several unique challenges.
Physical Environment Trends- Despite the scope and size of the business, Facebook never releases its annual report of corporate social responsibility. The company has a separate page for it i.e. Green on Facebook which regularly announces its charitable programs and activities of CSR (Dudovskiy, 2017).
Facebook is affected by various factors, especially by the customers. Customers are of two types: users and advertisers.
Users have great power over Facebook as they continuously ask for new invention or innovations and Facebook cautiously attends their requirements, keeping in mind that there is no cost of switching to the different social network.
Whereas the influences of the user are high, the opposite is realized with the advertisers. At initial glance, it can be said that the power of the advertiser is high because Facebook is based on them for profit. On the other hand, it is a bit contrary. As Facebook supplies a productive base of customer and in spite of assumption around the assessable influence of advertising on the Facebook, the power detained by the advertisers is really low (Hitt, Hoskisson & Ireland, 2014).
Facebook races against direct and indirect competitors with the capability to influence its customers. The example of the Facebook’s direct competitor is Twitter, on the other hand, Facebook’s indirect competitor is Google. The industry is developing fast, cost of imitation is low, and it is tough for companies to shelter their competitive advantages for a lengthy period. There are four key players who give strong competition to Facebook: LinkedIn, Google Plus, Twitter, and MySpace.
|
|
|
|
|
|
Revenue |
50.18B |
972.31M |
5.09B |
|
Quarterly Revenue Growth |
36.2% |
81.0% |
40.1% |
|
Gross Profit |
29.54B |
846.79M |
3.72B |
|
EBITDA |
16.28B |
125.51M |
1.19B |
|
Net Income Available to Common Shareholders |
10.79B |
21.61M |
32.0M |
|
Market Cap |
257.98B |
19.63B |
63.42B |
|
Profit Margin |
21.4% |
2.2% |
1.0% |
|
Operating Margin |
26.7% |
5.9% |
10.6% |
|
Return on Assets |
10.1% |
3.2% |
3.1% |
|
Return on Equity |
16.6% |
2.8% |
0.6% |
|
Total Cash |
48.09B |
749.55M |
9.63B |
|
Total Debt |
7.21B |
0 |
Source [Yahoo! Finance. https://finance.yahoo.com/]
Strength- Web2.0 in one roof’s integrated features is the Facebook’s strengthening factor. The “Like” button is a feature which influences people to love it and it is said to the reason behind the comments of the users and negotiation behind a particular message, status, videos, post, and photos (Bhasin, 2018).
Weaknesses- Verification of the users is an actual problem in the matter of any social networking sites, including Facebook. The number of fake users is more on Facebook and due to this user should manage his/her information from hackers. Besides this to join Facebook the minimum age is just 13 which are not considered as an ideal age for children to involve in Facebook.
Opportunities- As per the statistical report which was projected by Facebook reflected that there is an increase in the revenue of the company. 158% of growth was shown in 2010. The company has many opportunities in the upcoming future as it is growing with time. Mark Zuckerberg and the team have planned to invest some amount in the R&D dollars in order to generate extra value for customers. Along with this Facebook has initiated various acquisitions which have resulted in different business opportunities.
|
Acquisition Date |
Company |
Business |
|
Acquisition Date |
Company |
Business |
|
23 Aug 2005 |
Facebook.com |
AboutFace |
|
19 Jul 2007 |
Parakey |
Offline applications/Web OS |
|
23 Jun 2008 |
ConnectU |
Social networking |
|
10 Aug 2009 |
FriendFeed |
Social networking aggregator |
|
19 Feb 2010 |
Octazen |
Contact importer |
|
2 Mar 2010 |
Divvyshot |
Photo management |
|
13 May 2010 |
Friendster patents |
Intellectual property |
|
26 May 2010 |
ShareGrove |
Private conversations/Forums |
|
8 Jul 2010 |
Nextstop |
Travel recommendations |
|
15 Aug 2010 |
Chai Labs |
Internet applications |
|
20 Aug 2010 |
Hot Potato |
Check-ins/Status updates |
|
29 Oct 2010 |
Drop.io |
File hosting/sharing |
Source [https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Facebook]
Threats- The crimes on social networking sites and imitation have augmented due to the negligence of the user in handling their information or content. Whatever is available in the market has to change and the interest of the user will decrease which will result in the entrance of new players in the market and they might take over Facebook.
The process through which a company selects the suitable ways of action in order to realize its distinct goals is known as Strategy Formulation. This process is vital to the success of the company because it offers an outline of the activities that will be performed for achieving expected results (Karami, 2016). Facebook should add one extra icon of expert advice near to the search icon in which the expert can offer their advice in some particular subjects such as expert advice on General Knowledge (impact of IT, experiences of Hotel, study material of different subjects, etc.).
The method through which organization makes sure that its vision is made concrete is known as Action Plan.
Identification of demanded content by the users – At this stage, Facebook will first identify the most demanded or least aware topics in the society which are important for the growth of the country.
Searching and building relationships with the Subject experts – After the initial stage the concerned department of Facebook will search the experts who can offer their suggestions or reviews on the social networking site which can result in influencing or increasing the knowledge of the user.
Proofreading and editing of the matter offered by the expert – At this stage proofreading and editing of the article or reviews of the experts will be performed and important points will be selected which are important as per the demand of the customer.
Posting the articles, reviews, etc. – In the final stage, the article will be posted on the Facebook’s additional icon of expert advice
Conclusion
Facebook is a well-known social networking site which is preferred by most of the population in order to express their feelings and interacting with their friends and family. In the conclusion, it can be said that the above suggested strategic plan will help Facebook in attracting more users for the sake of gaining knowledge and advice of the renowned lecturers or experts.
References
Bhasin, H. (2018). SWOT of Facebook. Retrieved from: https://www.marketing91.com/swot-facebook/
Dudovskiy, J. (2017). Facebook CSR Overview. Retrieved from: https://research-methodology.net/facebook-csr-overview/
Dudovskiy, J. (2017). Facebook PESTEL Analysis: Two-Way Relationships Between External Factors and Social Media Giant. Retrieved from: https://research-methodology.net/facebook-pestel-analysis-two-way-relationships-between-external-factors-and-social-media-giant/
Elhuda, D.A., & Dimetry, D.A. (2014). The Impact of Facebook and Others Social Networks Usage on Academic Performance and Social Life among Medical Students at Khartoum University. International Journal Of Scientific & Technology Research, 3(5), 41-46.
Haseeb. (2017). Pestle Analysis of Facebook. Retrieved from: https://marketingdawn.com/pestle-analysis-of-facebook/
Hussain, M.C., & Kharisov, B. (2016). Advanced Environmental Analysis: Applications of Nanomaterials. U.K: Royal Society of Chemistry.
Hicks, K. (2018). Who’s On Facebook? Retrieved from: https://www.effectivespend.com/understanding-the-audience-of-each-social-media-platform/
Hitt, M.A., Hoskisson, R.E., & Ireland, R.D. (2014). Strategic Management: Competitiveness & Globalization: Concepts & Cases. U.S: Cengage Learning.
Karami, A. (2016). Strategy Formulation in Entrepreneurial Firms. U.K: Routledge.
Newsroom. (2018). Our Mission. Retrieved from: https://newsroom.fb.com/company-info/
Pestle Analysis. (2015). What is Environmental Analysis? Retrieved from: https://pestleanalysis.com/what-is-environmental-analysis/
Rusli, E.M., & Eavis, P. (2012). Facebook Raises $16 Billion in I.P.O. Retrieved from: https://dealbook.nytimes.com/2012/05/17/facebook-raises-16-billion-in-i-p-o/
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