Facebook Company Essay

Introduction

Facebook Corporation was established by the current chief Executive Officer Mark Zuckerberg in 2004. In its inception days, the Facebook Corporation membership was limited to Harvard students though it was later expanded to other institutions in the city of Boston (Veer, 2011, p.271). The company operates as a social networking site connecting users with friends who work, live and study around them.

People use Facebook to keep up with others, upload photos, share videos and links as well as understand the situation about people they meet. Of all social networking sites Facebook has the widest regional coverage with over 700 million active users (Facebook Inc, 2011, p.36).

PESTEL analysis

Since the establishment of Facebook Inc, the company has been facing legal proceeding in regard to the use of the social networking idea. The company has been accused of interfering with the privacy of the users.

This resulted in declining traffic in key markets until the company introduced powerful controls for sharing personal information. Although they claim to reinforce the law on users, case of hacking confidential information still affect the company’s business (Facebook, 2009, pp.1-11).

Another political factor could be the copyright policies. Considering the scattered nature of Facebook users, most of them are not aware of these policies and end up violating them. The social network site is also affected by bans in certain countries. For instance, the company had been banned operating in China since 2009 (Facebook, 2011, p.36).

Children welfare associations affect the company as a result of exposing detrimental materials to children. Indeed, the office of the New York Attorney General stepped up warnings against the company saying that Facebook might face a consumer fraud indict for misrepresenting how the site is safe for children.

The growing of Asian and Latin America economies is an economic factor that has the highest leverage on the business. In fact, the company fiscal 2011 plan is to expand to the Asian countries such as China.

The company plans to launch in China and abide by the laws of the corporation by partnering with the Chinese search engine Baidu. These growing economies increase the income of the people and are able to access computers more. The rising literacy level especially in the developing nations is a factor influencing the business.

The number of people who can use computers effectively is growing dramatically. For example, statistics indicate that 60% of the Indians are computer literate and 90% of them have daily access to the computer. This is the very reason why India has the highest number of people socializing through Facebook and other social sites. The other economic factor is employment which is associated with internet accessibility.

People working tend to have ample access to computers and are able to socialize more through the social sites. Facebook is ranked at the top when considering the preference of the working community to social networking sites.

Like other internet sites, age demographic is the major influencing factor of Facebook business (Taylor et al., 2003, p.237). Youths tend to be the major users of the site when connecting with their peers.

The minors are increasingly using Facebook to socialize posing risks to the business. In reality, the company has not devised effective measure to filter underage uses out of the site. Religion is also a factor that is affecting the company’s business especially in the Arab countries.

Facebook has been unable to penetrate many of the Arab countries such as Saudi Arabia and Pakistan due to religion restrictions. In addition to these, gender and marital status could leverage the networking business.

Males have been the dominant users of the social networking sites though females have picked the same pace. Unmarried individuals tend to use Facebook more than married individuals perhaps due to time limitations or benefits sort.

Technological factors affecting Facebook business include mobile growth. Nearly 35% of the total Facebookers access the social site from a mobile device. This trend has even moved the mobile market for products like Apple’s iPad and iPhone.

New software technologies have enabled the company to add new features on their site which are attracting more consumers (Kwon, 2010, p.257). In terms of these features, the chat option is the biggest attraction to the site followed by the sharing option.

Advancement in space technology is also expanding the market for the business. Many remote areas have accessibility to information technology through the use of space equipment. Furthermore, connectivity speed has improved very much and people can socialize fast and effectively.

Some new technologies such as third-party medial plug-ins have expanded the use of Facebook credits thus enhancing e-commerce. Besides, technology allows for business transactions to be conducted through Facebook site and therefore attract a new segment of consumers. Undeniably, technological advancement is the key enabler of Facebook business.

TOWS analysis

SWOT Matrix

Strengths
Global popularity
Easy user interface
Wide applications
Weaknesses
Advertisement effectiveness
Frequent litigations and lawsuits
Opportunities
Rising internet usage
Need of social engagement
Threats
Customer privacy issues
Intense competition
Regulations by various countries

TOWS Alternative Matrix

External opportunities (O)
Rising internet usage
Need of social engagement
External threats (T)
Customer privacy issues
Intense competition
Regulations by various countries
Internal strengths (S)
Global popularity
Easy user interface
Wide applications
SO
Use the wide applications to meet the needs for social engagement
Use global popularity to attract the increasing number of users
ST
Utilize the wide applications to counteract customer privacy issues
Utilize mergers to counteract regulations
Use the easy interface to differentiate in the completion
Internal weaknesses (W)
Advertisement effectiveness
Frequent litigations and lawsuits
WO
Strengthen objectives to curbthe effect of advertising effectiveness
Enforce laws to avoid frequent litigations and lawsuits
WT
Maintain customer privacy toavoid lawsuits and litigations
Differentiate in the competition and enhance competitive advantage

Weaknesses and threats (WT)

A company with great weaknesses has to route to a survival strategy (Stokes & Wilson, 2010, p.225). Facebook should consider the option of joint operation with Baidu and other search engines in difficult markets. Another alternative would be to withdraw from the challenging markets altogether.

But, the challenges of the company must not have to route to a survival strategy due to the company’s strengths. Consequently, better strategy would be to attempt to develop weaknesses into strengths.

Weaknesses and opportunities (WO)

The rising internet usage has resulted in using more the social network sites. Yet Facebook essentially follows a one-model policy which presents a problem if other designs of site features become obsolete. The company has to introduce new features to reach a wider spectrum of users. This will allow using the same site for a range of needs ranging from business to dating.

Strengths and threats (ST)

One of the biggest threats to Facebook is the customer privacy issues. There has been continued criticism that the company does not offer the standard confidentiality demanded in a social networking environment.

The company should reduce such issues using the many applications available that can ensure maximum confidentiality. Another strategy for avoiding competitive pressure is to differentiate the site through easy user interface.

Strengths and opportunities (SO)

Generally, Facebook can build on their strengths by taking the advantage of the opportunities. The company’s strength in global coverage and popularity becomes evident. This strength can enable the company to develop a consumer relationship that attracts regulatory restricted environments.

Eventually, the strength will enable the company to open operation in China and Arab countries. Thus Facebook can benefit from considerable concessions offered by the governments to attract the company.

Conclusions

Facebook Company is certainly operating in a tricky environment due to the changing nature of communication and networking environment. The environment is tricky because there in increasing preference for social networks yet the technology responsible cannot meet the intrinsic demand of the consumers. Policies regulating social medial works have requirements beyond the ability of technology.

This attracts other groups of interests while regulations in some countries cannot be fully satisfied. However, the growing economy and advancement in technology promise a brighter future for the company.

If Facebook can exploit the opportunity of rising usage of the internet through its global coverage, there is a chance of attracting policy makers in other countries and maybe adjust regulations. There is a chance to develop the weaknesses into new strengths once the company is better positioned in the market.

Since the market of social media environment is quite demanding, Facebook must focus on its core resources and competencies. In this case, integration of features and ease of use are distinctive resources that can enable effective differentiation in the competition.

When combined with the threshold resource of regional coverage, the competencies can leverage the brand name in the face of consumers as well as policy makers. It is therefore recommended that the company should:

  • Use the status updates to provide targeted adverts
  • Focus on monetization to improve valuations
  • Provide local advertising based on customer location
  • Enable controlled application
  • Improve in storage and archival
  • Engage in mergers with search engines
  • Solve the problem of privacy

References

Facebok Inc. 2009. Facebook law enforcement guidelines. Web.

Facebook Inc 2011. Private Company financial report. Web.

Kwon, O. & Wen, Y. 2010. An empirical study of the factors affecting social network service use. Computers in Human Behavior, 26(2), pp.254-263.

Stokes, D. & Wilson, N. 2010. Small Business Management and Entrepreneurship. Florence, KY: Cengage Learning EMEA.

Taylor, W. J., Zhu, G. X., Dekkers, J. & Marshall, S. 2003. Socio-economic factors affecting home internet usage patterns in Central Queensland. Information Science Journal, 6, pp.233-244.

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