Facebook (in 2013) Harvard Case Solution & Analysis

Facebook (in 2013): Will Wall Street Hit the ‘Like’ Button?

Introduction

The paper attempts to describe the key issues faced by Facebook and the current strategies adopted by Facebook. The paper discusses the internal and external analysis of Facebook through the application of RCC model, SWOT Analysis, Porter five forces, and PESTEL Analysis. Furthermore, the paper assesses Facebook’s international strategy along with the role of innovation and entrepreneurship in the strategies adopted by Facebook. Moreover, the paper elaborates key challenges faced by Facebook and recommendations are provided for future growth strategies.

Key Issues

Due to the decrease in stock prices of Facebook while approaching Initial Public Offering (IPO), the company is focusing to improve its business operations through various options as each option carries issues and challenges. The first issue arises when the company adopts a strategy of increasing advertising revenue per user. This strategy may allow to increase higher cost of advertisement from its advertisers. The other issue arises when the company charges a premium price for the usage of its website. This may allow to decrease the number of customer base through which Facebook has gained recognition. Finally, the company faces issues of increasing international market expansion but then it would not yield the company with higher profits.

Facebook Current Strategies

The current Facebook strategy has been focused upon providing the best product and user experience where there would be a win-win situation for everyone including the users, advertisers, and the stakeholders. Therefore, the entire strategy developed by Facebook revolves around satisfying the needs of the customers and improve their user experience.

RCC Model

In the particular model, resources are defined as those assets which are available with the company at this present time. Facebook has a large customer base of over 1 billion which is far better than any other social networking website. This is the physical resource available to the company. While considering the financial resource, Facebook had sales of $5.09 billion in the year 2012 which is higher than its competitors. The third resource with respect to the managing of human resource is its high professional team with descent educational background and with highest potential to lead a multi-billion organization.

However, the core competencies for physical resource include providing the best product and the user experience through countries where Facebook is operating. The financial core competency is that the company is generating 88% of the revenues through its advertisement strategies. Facebook also have human resource where the company has the best technical support team which helps in maintaining an extraordinary website with no chance of security threats.

Therefore, when the strategic capability test for competitive advantage of Facebook is performed, the core competitive advantage of the company amongst all the above competitive advantage is its large customer base which has never been achieved by any of the social media websites. The particular core competency of the company is valuable and rare, but it is also imitable which means that other companies could meet the desired number of followers. This strategy would provide the company with a sustained competitive advantage which has long been desired by the company.

PESTEL Analysis

Political

The government body has expressed their concerns for exposing the users' privacy to advertising companies so that they could effectively target their consumer base. Many countries, including Germany warned Facebook of its practices that breached the European laws and regulations. However, Twitter faces the similar problem and is more severe than Facebook. If a court proceeding rules the decision against Facebook, then it would lose a large chunk of revenues from its income.

Economical

The user base and as well as the growth revenues are also on the verge of increment each year, which makes the position of Facebook as financially strong. Positive cash flow has also been a major economic factor that reveals a strong financial position of Facebook. The company has achieved positive results in the developing as a renowned socializing website all over the world. Facebook has successfully surpassed Orkut in Brazil and has become their leading social networking website.

Social

Facebook has well addressed the increasing trends of usage for social networking websites by internet users through involving companies to market those trends. Facebook increased the socializing network through the launch of app center and messenger due to which it provides easy access to friends. The social element could also be highlighted as people from Facebook can enter a single platform through game application and can socialize.........................

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