FACEBOOK CASE Harvard Case Solution & Analysis

Question 2

What are the sources of Facebook's competitive advantage during its rise in the social media industry?

One of the largest networks in the social media world is owned by FB. The deep pockets and the network effects of the company have created the competitive advantage for the company in the social media industry. The sources of competitive advantage of FB are briefly explained below:

  • The most obvious source of competitive advantage is the network effect of the company as FB has created an interest neutral multimedia platform that allows the people to engage with their families, friends, acquaintances, strangers etc. and allows them to interact with them.
  • Since, FB is a larger network therefore, it is also more attractive for the smaller advertises and advertising has become the main source of revenue for the company. Google Plus shows the real power of the network effects.
  • Another source of competitive advantage is that brand identity of FB provides it differentiation from any of the other upstart social networks.
  • The high sustainable margins of the company are another indicator of the competitive advantage that FB has created. The operating margins have been volatile for the company but despite that the spending of the company on research and development and infrastructure has consistently risen over time.
  • The company has more than a billion of active monthly users and it has rapidly integrated with applications and websites. It has inordinate amount of the user’ data and this has made FB as one of the most efficient target marketing platforms. Fb provides customized approach to target marketing by targeting the women, men or the baby boomers.
  • The mobile trend had also contributed towards the competitive advantage of FB when FB began releasing mobile advertising products in 2012. The mobile advertising market was expected to grow to $ 20 billion by the end of 2015. Posting ads on mobile apps was 15% less expensive then desktop ads. In 2013, 3800 mobile developers made use of such aps for advertising. The growth in the Facebook apps such as messenger and mobile phones, there has been a rapid increase of the Facebook usage.
  • FB Understands the behavior and needs of users and has high level of user engagement. Users have the ability to scroll through the different catalogs and express the views and opinions on different services and products.
  • The company has captured the major markets of the world like Asia, Europe, US, Canada. Strategic acquisition is going to contribute to the competitive advantage of FB in future years.


FACEBOOK CASE Harvard Case Solution & Analysis

Question 3

What are the key drivers of profitability in Facebooks business?

There are three key drivers of profitability for the FB business and these are discussed below:

Mobile Engagement

The first driver of FB profitability is the mobile trend that has been followed by the company. The industry experts saw this as an important development and there has been a rapid increase in the number of the users that accessed the FB site through the mobile devices..............................

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