Facebook (in 2013) Harvard Case Solution & Analysis

Technological

Due to Facebook’s weakness in the technological factor because of the weaker business plan, the company has not been frequent in coming up with new products to increase its user experience. However, the security system of the website is the second best after the security system of NASA. Even though the company has launched products after a certain period of time, Facebook has introduced three major functions which include timelines, Newsfeed, and graph.

Environmental

Facebook considers as a responsibility to work on the environmental sustainability by making a contribution in investing in educational sectors by providing them the facility of hot water and electricity system. The company manages Corporate Social Responsibility and improving the lives of the people of community and the environment.

Legal

Facebook has been facing a lawsuit over the privacy concerns of its users. The company has been criticized for offering the private information of Facebook users without their consent to the advertisers so they could target their customers effectively. Facebook allows advertisers to cater their specific target market.

Porter’s 5 Forces Model

Threat of a New Entrant

Facebook, Twitter, and other social networking websites already have a huge consumer base which cannot be hampered by the new entrant in the market. Therefore, the overall threat of a new entrant is low. However, Google plus is working hard to attract internet users and keep up the pace of the social networking industry.

Threat of a Substitute

Many countries also have their own government based social networking websites. In China, Renren is the social networking website which is identical to Facebook, whereas, in Europe, VK provides the services of social networking with more than 100 million users. Similarly, Google AdSense competes well against Facebook ads which could be considered as a social networking substitute.

Bargaining Power of a Buyer

There are three sets of Facebook customers, which include the internet users, the advertisers, and the third party developers. The internet users have respectively higher bargaining power than the developers and advertisers because the internet users provide the data for companies and developers to market their products. Facebook provides a platform for the advertisers and the developers to market their product with an exchange of revenues and profits.

Bargaining Power of a Supplier

The users are the suppliers for Facebook because they provide the information which is used by Facebook in attracting advertisers to invest in its company. The information is provided by the user through shares, likes, photos and video sharing. Therefore, the bargaining power of a supplier is high as Facebook would have achieved nothing without its large consumer base.

Competitive Rivalry

The competitive rivalry in the social networking website is moderate as none of the social networking website possess 1 billion customers. The second most competitors for Facebook is Twitter with over 500 million users, but with only 27% active users. Google Plus social networking website has failed to make an impression amongst the particular target market. However, Instagram was becoming a threat to Facebook, but then the company acquired Instagram for $1 billion to limit competition.

SWOT Analysis

Strengths

Facebook has a large consumer base which would make it the third largest country in terms of population with more than a million Monthly Active Users (MAU).Facebook has integration with websites around the world through social plugins which makes it the most popular and the most recognized social website. The user experience of Facebook customers has been enhanced due to the company, focusing on the elements of simplicity and ease of use for Facebook users.

Weaknesses

Despite of the increased popularity of Facebook, the company stock prices have lowered and is continuously in decline which is a major setback for Facebook and its investors. It has always been criticized that the CEO of Facebook is untested and immature, which had increased stock prices and the shares that were to be offered in the Initial Public Offering (IPO). The company highly generates revenues 88% from advertisements which makes it dependent on other companies for its growth.

Opportunities

Facebook has the opportunity to increase the number of mobile users to start using the Facebook mobile application. The company can also focus on increasing its advertising revenue per user which is currently staged at $15, compared to Google’s $88. This shows the market gap and potential that can be captured. Facebook can also charge for its premium users togain access of many elite Facebook products.

Threats

As Facebook has a weaker business model which does not provide the company a long-term sustainability as developed by Google and Twitter, therefore this can further dent the performance of the company in near future. Many privacy concerns and issues could also lead to loosing many consumer base for Facebook. Competitors like Google, Twitter, and Facebook is competing well against Facebook which might allow consumer base to shift towards its competitors................................

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