Facebook In 2013: Will Wall Street Hit Like the Like Button? Harvard Case Solution & Analysis

Question 3

PESTEL Analysis

Political Factor

  • Restriction from the government over the use of Facebook is the most important political factor.
  • Increased emphasis on the privacy of the user by the authorities.
  • Currently, blocked by the government in the China.

Sub conclusion

It is concluded that the political factors are very important for the company in order to market its offerings into the new countries where it has less or no presence. Furthermore, it also creates the situation of uncertainty as government can impose restrictions or ban it anytime.

Economic Factor

  • Facebook is a social network that provides free of cost services to the users and is not as much effective by economic turndown.
  •  It provides an opportunity for the people with the less disposable income that want and look for cost effective ways of getting entertainment.
  • Decrease in the stock price of the Facebook is another economic factor.

Sub conclusion

It is concluded from analyzing economic factor that Facebook provides the opportunity to the people to connect with the people anywhere around the globe free of cost.

Social Factor

  • Facebook helps the people to develop new relations as well as maintain them in the long term.
  • Changing preferences and lift style of the people around the world.
  • The use of the Facebook allows the user to keep in touch with their friends, family and relatives everywhere in the world.

Sub conclusion

It is concluded that the Facebook provides better platform especially for those who have limited spare time for meeting their friends and relatives.

Technological Factor

  • Internet plays an important role in the growth and success of the Facebook across the globe.
  • Facebook has evolved new technologies constantly by introducing new applications and features as well as creating new ways to adopt the technology in its service offerings.
  • The increase in the users of mobile phone and resolution in the mobile industry also impacts the growth of the Facebook.

Sub conclusion

It is concluded that the technology has played a significant role in the growth of the Facebook in order to provide the best product and user experience to the people by engaging them with the services.

Environmental Factor

  • The ecosystem of the Facebook is consisted of mainly three pillars that include News Feed, Timeline and Graph Search.
  • The company has made continuous innovations in these three pillars in order to provide the   user better social environment to connect with other people.
  • Moreover, Facebook provides the friendly environment to the user in order to interact with friends, relatives and other new people.
  • It provides the environment where people can search for people, page, share photos and allow them to share information with the contacts.

Sub conclusion

Facebook has create the user friendly environment since its beginning that provide the users with the easy access of connectivity with their close ones.

Legal Factor

  • The hacking of the accounts as well as fake accounts are an important legal factor that contribute to the negative publicity of the Facebook.
  • Privacy concern is another legal factor as Facebook has limited privacy for its users.

Sub conclusion

It is analyzed from the legal factors that Facebook needs to focus on the methods and procedures that increase the security and safety of the user’s accounts. Furthermore, serious measures should need to be take in order to avoid the fake accounts and hacking.


In the end it is concluded from the analysis that Facebook activities are greatly affected by the PESTEL factors that impact the growth and success of the Facebook. However, Facebook has met the expectations of the users by making timely and accurately decisions towards the  changing trends of external environment  that may affect  the achievements of the Facebook.

Porter Five Forces

Rivalry among Competitors(High)

The competition in the industry is high as there are various major competitors of the Facebook that are offering the features on their websites that meet the existing requirements of the users. These competitors include Google+, Twitter, and LinkedIn .Furthermore, continues innovation and introduction of new services by the competitors is another reason for intense competition.

Bargaining Power of Buyers(High)

The bargaining power of buyers is low due to the low switching cost (zero) across different sites. Almost all the site provides the user with an easy sign ups and they may delete their accounts if they have privacy issues. In addition to this the advertisers and user are the largest buyers of Facebook that generates the larger portion of the revenue...............................

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