Facebook (FB: US) Complete Analysis of the Company Case Solution
Facebook is the social media platform that enables users to connect, share, discover and communicate with people they know or don’t know. Meanwhile, it enablespeople to make new friends from around the world, and share their activities, opinions and ideas by posting videos, photos, with awiderange of audiences from around the world and people whom they are close friends with. Meanwhile, Facebookenables people to stay connected through its wide range of products such asFacebook, Instagram, Messenger, WhatsApp, and Oculus as well.
Furthermore, Facebook has been providing these services to the customers, free of cost. However, it has been generating its revenues, substantially from the selling of advertisement placements to the marketers.Facebook has become an attractive and interactive platform, especially for the marketers to target their specific markets and advertise their products online,toa wide range of available customers.Furthermore, Facebook has enabled companies to make ads by designing them particularly for different customerswhich are also relevant to their various backgrounds.
Also, marketers can purchase the ads that would appear in multiple places while browsing Facebook, Instagram, and at other third party applications. Similarly, Facebook also provides services to the marketers to reach people with avariety of factors including customer behavior, interest, location, personal preferences, age andgender. On the other hand, Facebook has been investing in long-term initiatives to increase connectivity and conducting artificial intelligence research that would help Facebook increase its user base and its revenues as well.
The Mark Zuckerberg founded the Facebook Inc. (FB: US) in 2004. He was a 23-year-old student who was studying psychology at Harvard University. Initially, only students from the Harvard University were allowed to create a Facebookprofile,however, within a week of Facebook’s launch, at least half the students had aprofileon Facebook. Consequently, Facebook allowed all university students to create their profiles from anywhere in the United States.
Furthermore, it spread across allschools in the United States, United Kingdom and eventually all over the world whenFacebook allowed users to create their online profiles on Facebook. It also allowed users to customize their profiles and share their special moments with friends and family, instantly.Due to these facts, the users of the Facebook increased dramatically, from around the world. Consequently, the number of people who use Facebook has increased to 1.86 billion and rising.
Facebook is operating in the social media industry that enables users to connect and share video, photos and other posts with their friends, online. However, Facebook is one of the leading interactive social platforms that is free of cost. Meanwhile, Facebook hasthelargest online user base in the world. Simultaneously, it is also one of thefastest growing networks in the world.It has its fair share of competitors in the social media industry such as Google, Twitter and LinkedIn.
Nevertheless, thethreat of new entrants is stillmoderate in the social media industry becauseFacebook and other social media networks are well developed and strongly established. A new entrant, however, does emergerarely, that could be athreat to Facebook. On the other hand, there is also themoderate power of usersfor the marketers and advertisers,since users cannot play monopoly because the social media platform is free of cost. It also considerably cheap for advertisers, which prevents them from switching or leaving Facebook.
Facebook has a huge user base worldwide.This leaves no place for monopoly, that advertisers or marketers can play.Furthermore, there isa low power of suppliers in the industry and the threat of substitution in the industry is moderate to nill because Facebook is the most advanced and interactive social media platform out there. However, Google, LinkedIn are Facebook’s most close competitors,withTwitter also catching up due to itsuser-friendly interactivity service. See Porters Five Forces in Appendices.
Competitiveness can be defined as thecapability to offer something better in the market that is also being offered by other companies in the market. Even, if not better, it can still compete in price, value and quality of the product or service. Furthermore, Facebook has strong financial standing in the market, which includes having high technology, and initiatives at employinglatest technology such as artificial intelligence,which would increase the productivity of online advertisement and marketing.
Facebook has agood user base as compared to the other competitors like Twitter, Google Plus, and LinkedIn. Subsequently, Facebook has alarge collection of online user data that can be used for marketing purposes. Meanwhile, it has also built an online apps platform that can integrate with Facebook’s existing offerings and help Facebook attract new users, and marketers due to increased user interaction.
Consequently, Facebook has become capable of growing rapidly in the market, which isitstemporary competitive advantagethat can be converted to apermanent competitive advantage if Facebook successfully brings some innovations in its market offerings.Similarly, as far as innovation is concerned, it can be determined that clearly Facebook would be able to retain its creative innovation as asustained competitive advantage. Some of its innovative features are Facebook Live, discussion groups and also broadcasting live scores of football and Cricket matches. See Strategic Capabilities, and VRIO test in Appendices...................................................
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