Analysis of Facebook
Facebook remains an amazing success as a social network, but the company has not always been the main social network in the world. Even as it enjoys the reputation, Facebook has to change frequently to protect its business interest from the competition. More than 700 million people use the Facebook platform for business and personal reasons.
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Facebook collects revenue mainly in the form of online ads. Moreover, the company has introduced many other services that are still in their development phase, but give indications of being revenue sources. Facebook started as “TheFacebook”. The company started with the mission of empowering people to share information.
Porter value chain analysis
In the Facebook line of business, access to social media services is free, and revenue comes from advertising. Additional applications with payment options also bring in revenues. The company offers cost per click advertising and cost per one thousand impressions. It has focused on differentiation of its advertising program from its competitors.
Facebook has also sought to make its offering the most affordable in the market; thus, it has gone ahead to target small businesses that have a limited budget for marketing. Differentiation is through specific Facebook interfaces, such as the timeline and its integration with other websites to collect usage data that helps in the matching of advertising.
Value chain activities on Facebook include inbound logistics, production, outbound logistics, marketing and sales, and services. The activities that are most significant to the customer are production and service. Production involves programming and development of new functionalities for Facebook, which are then used as the basis for offering social network features to users.
The increase in the number of users becomes the product sold to advertisers. Service activities for Facebook are the management of user interaction and presentation of different features and designs, as well as delivery of the advertisements within the Facebook platform.
Facebook does not do significant marketing and sales, except participating in industry-relevant activities and running web advertisements on other platforms on the Internet. The company uses workshops and other outreach options to ensure that advertisers are aware of all its offerings and have sufficient access to its platform. Marketing also includes product ideas, such as payment platforms tested to determine whether they can be a major source of revenue for the company.
Facebook includes a web of activities and its mind map consists of fan pages, profile, groups, deals, tips, apps, stats, analytics, places, and development. Under each title, there are different product and customer options available to help grow the Facebook business. Advertising includes sponsored stories and Facebook ads.
Breaking down stats leads to reports on user activity, reports on ad popularity, reports on the number of users on Facebook, and reports on specific actions that users are taking on the platform. Breaking down apps reveal the native apps on the platform, the third-party apps, apps that integrate with Facebook pages, apps that automatically create actions on the platform and apps that are for sale or offering payment features.
Under the development features, there are social plugins and apps that offer different functionalities that are in current use or can be used to extend the functions of Facebook as a platform to aid clients’ business interests. Under usage, Facebook has groups, pages, and individual profiles.
Each of these features offers different functionalities and levels of privacy. Groups and pages are relevant for businesses that want to have more interaction with their customers, in addition to advertising on Facebook. Places include location-based information that populates the Facebook experience of its users and help to target advertising.
Places can be on the Internet and within Facebook, as well as physical locations identified by the Facebook algorithms whenever users mention them on their profiles. Facebook had different functions and services in profiles. They include updates about personal network members, privacy settings, control of broadcasts and ad audiences, Facebook messages, photos and tagging, and management of followers and friends.
Divergent & convergent
The acquisition and retention of talented human resources are challenging tasks for companies in high technology industries. Many of them are opting to acquire smaller companies to gain their human resources advantages. Facebook has been able to use this strategy in line with its expansion plans.
The practice helps the company to address its competitive advantage needs. The company can preserve a startup team as a cohesive resource bundle. After acquiring a company, Facebook workers get special compensation packages to make them more willing to stay at the bigger company that acquired them. On the other hand, the acquiring company can preserve the dynamic capabilities of the acquired firm. It also gets the tacit knowledge that is embedded in the startup’s team dynamics.
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Facebook and other social media platforms continue to embrace the same functionalities for their customers and their users. Facebook has introduced some features that are inspired by its competition in the social media market. It originally started with a user profile that showed updates of friends’ activities on Facebook.
The company introduced the “Like” button, which allowed users to express satisfaction quickly without writing anything. Recently, Facebook introduced a “Follow” option, in addition to friendship. This matches the option of following another person’s profile that is available on Twitter. The company then introduced the blogging feature for its notes, which made it conform to the strategies provided by content management systems that host blogs such as the Google’s Blogger service and the WordPress.com service.
Notably, Facebook has introduced “news feeds” and sponsored posts on its user feeds to match what Twitter is offering on its timelines. The company is targeting all audiences, as it tries to provide different functionalities that all its competitors provide to ensure that it keeps its large user base. Facebook also copied Google+ features of having circles.
On its platform, users can categorize friendships in terms of family, close friends, and other categories available by default or created by the user. Recently, Facebook launched its video platform, allowing users to upload videos and share them on its feeds. Meanwhile, it detached its Facebook Messenger platform, which it provides as a standalone app for mobile users, similar to Google’s Hangouts.
The above convergence strategies by Facebook are part of the overall industry trend. They help the company to continue attracting a large user base and retain its appeal against the competitive onslaught from its rivals (Sloane 2012). Meanwhile, looking at the overall business processes and intentions of Facebook shows that the company has convergent thinking.
Facebook has used all its avenues to bring users to its platform or enhance their experiences so that it can serve ads to the largest user base. The company can consolidate intelligence about users and direct them to view ads from its clients using apps, different platforms such as Facebook, Facebook Messenger, Instagram, and WhatsApp, while maintaining the users’ engagement in the respective platforms.
The company has chosen to focus on mobile phone users as its avenue for growth. It even uses free internet access offers to different populations around the world to sustain its vision of having the largest number of people using the Facebook platform.
Prototyping process and repairing process
Facebook tests new platforms or app integrations before making them mainstream features. It separated its messenger services from the mobile Facebook app. The company changed its user requirements for mobile messaging when there was significant uptake. Consequently, users had to use the app. Earlier on, the company asked users to use their real identities online, but it decided to step back from the decision and let users have alternative identities after facing resistance from users and fearing loss of its main user base.
The rise of alternatives to Facebook has been a pressure point for the company’s change in approach to new products or features (Bort 2014). The company also had a major redesign vision that changed midway after realizing that a personalized newspaper for its users would not be successful, and the move would alienate some of its users.
The company tests its prototypes first before adopting them as mainstream practices. Facebook uses developers and beta testers who have privilege access to its new services. The company also rolls out services to the public and retracts them when they are not received well (Kapko 2014).
Facebook has purchased more than 50 startup companies and stopped the products and services that the startups were providing. The strategy allows the company in adapting to its environment, being equipped to take on new trends and having well-skilled staff members to inspire new approaches to business environment changes.
Facebook started as a social media startup company and has grown to a giant company providing services to 2.5 million advertisers that target its 1.4 billion users (Digital Strategy Consulting 2015). It used app purchases as a revenue stream, and then picked on desktop advertising before launching into mobile advertising. Currently, the company is testing video advertising and targeting companies that would advertise on traditional television channels (Digital Strategy Consulting 2015).
Facebook has also acquired other companies that have significant user bases and functionalities to expand its portfolio as a new media company. It acquired Instagram, WhatsApp, and TheFind as notable leaders in their respective markets to bring additional market intelligence and functionality.
For example, the acquisition of TheFind allowed Facebook to have the largest expertise in product sourcing and leverage its more than 1 billion people on the platform (Bose 2015). The company has also been testing its payment services as it seeks to become an e-commerce platform, in addition to being a social media giant. It has also created new functionalities on its messenger platform to lure businesses and transform the Messenger into an e-commerce platform that will use its peer-to-peer payment service (Mac 2015).
Managing cash effectively
Facebook started with angle investor funds and eventually made a public offering that transformed it into a public company. The company today relies on strong mobile advertising business, which has helped the company to beat its earnings projections. Its mobile ads revenue has climbed to 90 percent of the company’s revenue. Other sources of funds for the company include desktop advertising and payments. The company has used revenues and investors’ funds to make acquisitions help it grow its advertising and e-commerce business.
Focus on customers
People use Facebook’s social media options to connect with an audience for business purposes. The Facebook users are its product while its customers are the entities seeking to reach out to the Facebook’s user base. Sometimes, the customers are also users of Facebook and are, therefore, products too.
Facebook has been focusing on keeping its ad network clean and effective in leading relevant referrals to clients. It opted to introduce mobile ads, in addition to desktop ads as a way of responding to its clients’ demand for richer access to its user base. Facebook’s customers are the advertisers on its platform.
The company has been focusing on both small and large-scale advertisers. It has been making small innovations to its advertising program to allow small businesses to join and useful drive referrals to their businesses. Facebook realizes that many people expect it to deliver social results, but it is also keeping ahead with its business mandate of delivering business results (Abrams 2014).
Facebook is allowing advertisers to place their content in the middle of a user’s news stream, such that they are hard to miss during typical Facebook usage. It also offers user data about preferences and associations so that advertisers get a better outcome of their market targeting.
Facebook also gets revenues from direct payments for apps and in-app purchases that are on the Zynga platform. It has improved its advertising offerings to include video and partnered with TV rating firm Nielsen to help advertisers plan their campaigns on its platform in comparison to traditional media (Digital Strategy Consulting 2015).
Facebook has grown from humble origins, and its management is yet to become arrogant about the business’ success. The company retains its core leadership and treats its employees well. Mark Zuckerberg, the CEO of the company, is noted for giving out perks and empowering employees. He has built Facebook workplaces to relaxing, and the company offers free lunches while allowing its employees to de-stress without having to leave their workplaces.
The company has thousands of employees and remains adaptable to an individual level; being able to consider employee concerns and suggestions for improving the workplace relations and the environment. Humility has been a factor for management that allows the company to retain most of the workforce coming from the acquired companies (Kux 2014).
The company’s head is deeply involved in activities that Facebook does to grow its business. He communicates frequently with the employees. The leaders can stay engaged in projects without micromanaging, which shows a great value of humility.
Creating & Managing Alliances
Facebook prefers to acquire companies rather than form alliances with them. It has made more than 50 acquisitions since its formation. However, the company has also partnered with mobile telecom companies in the developing world to offer free access to Facebook for its users.
It has also partnered with analytics firms like Nielsen to help it serve its customer advertising interests well. However, its alliances with telecom companies in the Middle East have been problematic as many of them complain of reduced revenues as a result of offering access to Facebook at subsided rates (Darwell 2013).
Creativity & Innovation
Most social media services available on Facebook are available at no cost to the users. Nevertheless, the company has to make use of the collective resources it has as a business. The most innovative approaches have been the use of the mined data to present third party businesses with ideas on ways to reach target customers. Another business venture has been the use of the collected consumer intelligence as a product for sale.
As Facebook grows, its level of innovation also reduces. However, its leadership has focused on making acquisitions of startup companies that are promising, which has led to improved creativity and innovation. The company has also ensured that it remains a great place to work. Employees can bring all their creativity and put up great projects that transform into commercial successes for the company (Eichenwald 2013).
Optimism & Inspiration
The company continues to lead the transformation of social media and general internet usage. Facebook is showing advertisers new ways of reaching audiences. Moreover, it seeks to become the number one platform for internet advertising, especially for mobile advertising.
The company remains optimistic that more than one billion users will remain active on the platform as Facebook uses that number to entice advertisers to choose Facebook for their marketing campaigns. Facebook is inspired by the startup spirit and has been keen to acquire promising startups that help it to remain innovative.
Abrams, R. 2014, Strategies: Facebook entices small firms with mobile ads. Web.
Darwell, B. 2013, Facebook partners with mobile carriers to offer free data for Facebook messaging. Web.
Digital Strategy Consulting 2015, Facebook takes on TV with new video ad buying tools. Web.
Eichenwald, K. 2013, Facebook leans in. Web.
Kapko, M. 2014, Facebook backtracks big-time on major redesign vision. Web.
Kux, S. 2014, 10 reasons why 99% of Facebook employees love Mark Zuckerberg. Web.
Mac, R. 2015, Facebook goes all in on e-commerce by bringing businesses onto messenger. Web.
Sloane, P. 2012, Divergent and convergent thinking. Web.