Case Study Facebook PDF

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Case Study FacebookSummaryCompany: Facebook, Inc. CEO: Mark Zuckerberg Founders: Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz, and Chris Hughes Year founded: February 4th, 2004 Headquarter: 1 Hacker Way, Menlo Park, California, U Number of Employees (FY2019): 44, Type: Public Ticker Symbol: FB...

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Case Study Facebook

Summary Company: Facebook, Inc. CEO: Mark Zuckerberg Founders: Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz, and Chris Hughes Year founded: February 4th, 2004 Headquarter: 1 Hacker Way, Menlo Park, California, U.S Number of Employees (FY2019): 44,942 Type: Public Ticker Symbol: FB Annual Revenue (FY2019): $70.7 billion Profit | Net income (FY2019): US$18.5 billion Products & Services: Social Media Platform | News Feed | Watch | Marketplace | Stories | Messenger | Lasso | Instagram | WhatsApp | Oculus – Virtual Reality Device | Workplace – Business Tool | Portal – Video Calling Device | Calibra – Electronic Payment System | Facebook Dating Competitors: • Social Media & Messaging – Tencent (WeChat) | Twitter | Pinterest | Snapchat | Bytedance | Vkontakte | LinkedIn • Advertisement – Google | Amazon • Business tools – Microsoft Teams | Slack | Zoom • Videos – YouTube |Tik Tok • Online Dating – Tinder | Hinge | Bumble • Electronic Payment – PayPal | Venmo • Peer to Peer Marketplace – Letgo | OfferUp | Craigslist | eBay

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Facebook has brought a whole new level of personal marketing to the world of business. The social networking Web site fulfills people’s desire to communicate and interact with each other and uses that power to help other companies target very specific audiences with personalized messages. Facebook was founded in 2004 by Mark Zuckerberg, who was a student at Harvard University at the time and created the first version of the Web site in his dorm room. Zuckerberg recalled, “I just thought that being able to have access to different people’s profiles would be interesting. Obviously, there’s no way you can get access to that stuff unless people are throwing up profiles, so I wanted to make an application that would allow people to do that, to share as much information as they wanted while having control over what they put up.” From the beginning, Facebook has kept its profiles and navigation tools relatively simple in order to unify the look and feel for each individual. Within the first 24 hours the Facebook Web site was up, between 1,200 and 1,500 Harvard students had registered and become part of the Facebook community. Within the first month, half the campus had registered.

Today, Facebook is the most popular social networking Web site in the world, with over 500 million active users (now its 2.7b, 2021). The site allows users to create personal profiles with information such as their hometowns, work, educational background, favorite things, and religious affiliation. It encourages them to extend their network by adding other users as friends, and many people try to see how many “friends” they can accumulate. To interact with Facebook friends, users can send messages; “poke” each other; upload and view albums, photos, games, and videos; and “tag” or label people in their photos. They can post comments on friends’ “walls” and create status up- dates viewable to everyone. In summary, Facebook is full- filling its mission to “give people the power to share and make the world more open and connected.” In 2010, Facebook surpassed Google as the top Web site in the world based on unique visitors per month and also ranked number one for number of pages viewed per month. Facebook has become an important part of consumers’ everyday lives and therefore a critical component in personal marketing strategies.

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Facebook’s Strengths 1) Strong Brand Having a strong brand is vital both for stability and long-term sustainability. In 2019, Facebook was ranked #5 most valuable brand by Forbes. With $88.9 billion in brand value, Facebook is the strongest brand in the social media industry globally.

2) Diversified Portfolio Diversification enhances the stability of companies by protecting their core financial assets in case of revenues decline in one sector. Facebook clearly understands that you shouldn’t put all your eggs in one basket, opting instead to spread its investment across different areas.

With WhatsApp, Instagram, Messenger, Oculus (virtual reality device), Workplace (business tool), Portal (video calling device), and Calibra (electronic payment system) under its portfolio, Facebook’s diversification is a major strength.

3) Market Dominance Companies that dominate the market can leverage their elevated positions to their advantage. The leading social network of the world, Facebook and its family products (Instagram, WhatsApp, Messenger), have Monthly Active People (MAP) value of 2.89 billion (Dec 31, 2019).

You will find more infographics at Statista 4) Loyal Customer Base Nothing communicates a company’s strength, stability, and success more than a large and ever-growing number of extremely loyal customers. About 40% of the world population 3

uses Facebook and its family products (Instagram, WhatsApp, Messenger), putting Facebook in an irreplaceable position.

5) World’s Best Employer Facebook’s excellent HR policies are regarded as one of the best not only in the social media industry but also globally across all other industries. It is known to attract and retain top talent in the industry. Forbes ranked Facebook in the following categories:

#147 Best Employers for Diversity 2020, #144 World’s Best Employers 2019, and #71 America’s Best Employers 2019 6) Visionary Leadership The impeccable and visionary leadership of Mark Zuckerberg is a strength that most companies in the world can only dream of. The fruits of Zuckerberg’s strong visionary leadership include company culture, stability, increased profitability, innovation, and sustainability with minimum internal wrangles within its ranks and management, unlike most other companies.

7) Focus on R&D Regardless of the industry, success in the digital age requires technological innovation through research and development. Facebook is one of the global leaders in R&D spending and has increased investment in R&D from $4.8 Billion in 2015 to $13.6 Billion in 2019, which is about 19% of its annual revenue.

8) Strong Advertising Business

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Even though Facebook is synonymous with social media networks, the major source of its revenue is from the advertisement. In 2019, $69.66 billion (98.5% of its $70.70 billion annual revenue) came from advertising.

9) Effective Marketing Strategy Facebook’s marketing is simple. The fact that over 2 billion people use their applications every day makes it a very powerful and effective marketing tool.

Facebook’s Weaknesses 1) User’s Privacy Concerns Facebook is facing backlash over its negligence in the protection of user’s privacy, with the company experiencing a decline in popularity in some regions across the world. If the company does not address users’ privacy concerns promptly and effectively, it risks losing its popularity.

According to Edison Research data, Facebook has lost about 15 million users since 2017.

You will find more infographics at Statista 2) Overdependence on Advertising Facebook business model relies heavily on advertising for its revenues. About 98.5 % of its annual revenue comes from advertising. In 2019, Out of $70.70 billion annual revenue, $69.66 billion was its advertising revenue.

3) Spreading Fake News

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Facebook has been under a lot of criticism for spreading fake and misleading information. Fakebook’s inability to control misleading information can be very detrimental to society at large.

4) Friction in Management Consecutive scandals have been disintegrating the harmony that existed between toplevel management since the company was founded. The need for accountability is turning into a weakness as top executives point fingers and seek to distance themselves from major scandals such as the Russia meddling scandal. Facebook’s Opportunities 1) Diversify Portfolio Even though Facebook Inc. owns WhatsApp, Instagram, Messenger, and other platforms, the majority of its business revenue is dependent on social media and advertising. Facebook has the opportunity to extend its portfolio beyond the social media industry.

For example, develop a business model with additional paid services such as online dating, peer to peer marketplace, hardware devices, e-wallet, news subscription, etc.

2) Expansion of Existing Platforms With billions of users, Facebook can expand its existing services such as marketplace, online video streaming, online dating, business tools, e-wallet, etc. to compete with giants such as Amazon, eBay, YouTube, Netflix, Apple, Tinder, PayPal, etc.

3) Increasing Integration to other Applications As technology advances, more and more applications and websites are integrated, allowing users to connect via other platforms. Facebook can open its platform to integrate 6

with a variety of other applications such as e-commerce, surveys, blogs, podcasts, videos, contests, reviews, games, etc.

4) Target Different Audience Although Facebook is popular, the drivers of its popularity is mainly tech-savvy and younger demographic. By introducing new features, Facebook can attract other target segments such as older generations or high-end business platforms such as LinkedIn.

5) Expansion through New Acquisitions Facebook has financial resources to expand its portfolio by acquiring established entities. Also, it can acquire promising technology start-ups with the potential to revolutionize the world, just like Facebook did.

For example, In Oct 2019, Facebook acquired a brain computing start-up “CTRL – Labs” that specializes in sending brain signals to a computer and use these signals to perform various tasks.

6) Exploit Changes in Advertising Trends A majority of Facebook users access their accounts via mobile app. Facebook has an invaluable opportunity to improve its mobile-based advertising to take advantage of a 26% increase in mobile in-app ads.

You will find more infographics at Statista Facebook’s Threats 1) Competition 7

Competition from both old and new platforms is threatening to reduce Facebook users. As new entrants to the field, such as TikTok, provide customized platforms targeting younger generations, Facebook’s future becomes dimmer and dimmer. In an attempt to compete with TikTok, Facebook has launched its own version of short, fun videos platform “Lasso.”

2) Increased Regulations The number of unfavorable regulations to Facebook is being passed and adopted at an alarming rate, fueled by recent scandals such as Cambridge Analytica.

In addition, issues with data safety, insensitive content, and infringement of intellectual property rights have prompted several regulatory bodies in the department of commerce to enact regulations that will force Facebook to adhere to new transparency and accountability requirements. These laws threaten to reduce the number of Facebook users, as some of its customers can migrate to other platforms.

You will find more infographics at Statista 3) Bans in Several Countries In democratic countries, regulations are being adopted to curb fake news used to undermine democracy, while autocratic governments are restricting access to Facebook to curb freedom of speech.

For example, Facebook is banned in countries such as China, Iran, and North Korea. In addition, Russia has recently banned Facebook in its country.

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4) Data Breach Facebook has experienced many instances where its data was breached, affecting millions of its users. For example, in December 2019, during a major data breach, over 267 million Facebook users’ personal information (names, user ID, phone numbers) was exposed to the dark web.

5) New Digital Tax Recently, the UK and the EU introduced a new digital tax that will require Facebook to pay a higher tax threatening its dwindling profits. If digital taxation is adopted by more countries, a large portion of Facebook’s profits will be directed to paying digital taxes.

6) Tainted Reputation From New Zealand’s terror live stream to Cambridge Analytica data scandal to fake news, to hacked accounts, just to name a few, the spectacular image and reputation of Facebook is going down the drain at a frightening rate. This is a major threat.

7) Duplicate & False Accounts Facebook estimates that out of its 2.5 billion (Dec 2019) Monthly Active Users (MAU) worldwide, 11 % may represent duplicate accounts and 5% false accounts. The majority of the duplicate and false accounts originate in developing countries such as the Philippines, Vietnam, and Indonesia.

You will find more infographics at Statista

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Questions

1)

Why is Facebook unique in the world of personal marketing?

a) Keeping Personal and Public Facebook Content Separate

One of the top concerns you might have about mixing your marketing messages with your personal profile is keeping your personal things personal. You can keep everything separate by turning on the allow subscribers setting. To do so, go to your Account Settings > Subscribers.

b) Suggest Your Page to Friends

If you have lots of friends on Facebook, but not lots of fans on your business page, you can suggest your business page to them. Go to your Facebook page’s Admin Panel > Build Audience > Invite Friends.

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c) Subscribe to & Comment on Personal Profiles

Want to get your name in front of someone specific, but don’t know them well enough? Why not subscribe to their personal profile (if available) and start engaging on their public updates (if allowed).

d) Participate in Groups

While many groups on Facebook are polluted by spam, there are some good ones.

e) Segment Friend Lists for Targeted Messaging

When it comes to posting updates on your Facebook business page, you can either send your update publicly or target it to people in a specific location. On your personal profile, you have a lot more options. You can target your status updates to particular people or people on a friends list.

f) Send Private Messages

Although Facebook has opened the door to allowing business pages to receive private messages, they still can’t send them unless it is a reply to one they have received. With your personal profile, you can send private messages to one or more friends at a time. Just because you can send messages to multiple people at once doesn’t mean you should though. Individual, personalized messages go a long way.

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2) Is Facebook just a passing fad is it here to stay? What are the company’s greatest strengths and risks?

As my own opinion, Facebook is here to stay for the following decades.

a) STRENGTHS

The success of Facebook today are because of the strengths possesses by the company. Strengths are resources and capabilities that can be used to gain competitive advantage. Facebook have its own strength to enable it to get to this stage. Facebook is the biggest and the strongest brand name in social networking. Facebook have become a global phenomenon with presence of over 70 languages, which provides convenience especially for those users who cannot understand English. Signing up for Facebook is easy and free. Therefore, the present users on Facebook are around 600 million and increasing. Facebook provides the easiest mode of communication with friends and colleagues from all over the world.

Facebook not only able to attract users, but it also knows how to maintain their users. The policy and services of Facebook pleases the users and the privacy settings are easy to modify depending on the users’ wishes. Basically, Facebook understand their customers’ wants and behavior. Since Facebook have wide number and range of audience, it has become one of the favorite platforms for businesses, organizations and companies to get tons of publicity for their marketing strategies.

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b) WEAKNESSES/RISKS

Weaknesses are the factors that could prevent successful results within a company. Weaknesses can damage a project even before it begins; even Facebook is not excluded from having its own weaknesses.

Facebook gain more than 80% its revenues from advertisements on its social network. However, the revenue is depends proportionally on the growth of users which eventually can be only marginal as the social network already has so many users. Other than that, Facebook is unable to make profit from its mobile user even the latter cover about 60% of the total Facebook users.

There is barely any restriction to sign up for Facebook, therefore fake accounts can be made easily. People often misuse those account and make other users felt insecure. The lack of Facebook security also makes it vulnerable to spam and attacks of viruses and hackers. Such attacks happen every day and thousands of passwords were stolen.

3) Discuss the recent issues that challenged Facebook. Will privacy restrictions limit its ability to offer personal marketing opportunities?

a) Widening exposure of member information 2011–12

In 2010, the Electronic Frontier Foundation identified two personal information

aggregation

techniques

called

"connections"

and

"instant

personalization". They demonstrated that anyone could get access to information saved to a Facebook profile, even if the information was not intended to be made 13

public. A "connection" is created when a user clicks a "Like" button for a product or service, either on Facebook itself or an external site. Facebook treats such relationships as public information, and the user's identity may be displayed on the Facebook page of the product or service.

b) News Feed and Mini-Feed

On September 5, 2006, Facebook introduced two new features called "News Feed" and "Mini-Feed". The first of the new features, News Feed, appears on every Facebook member's home page, displaying recent Facebook activities of the member's friends. The second feature, Mini-Feed, keeps a log of similar events on each member's profile page. Members can manually delete items from their Mini-Feeds if they wish to do so, and through privacy settings can control what is actually published in their respective Mini-Feeds.

Some Facebook members still feel that the ability to opt out of the entire News Feed and Mini-Feed system is necessary, as evidenced by a statement from the Students against Facebook News Feed group, which peaked at over 740,000 members in 2006. Reacting to users' concerns. Facebook developed new privacy features to give users some control over information about them that was broadcast by the News Feed. According to subsequent news articles, members have widely regarded the additional privacy options as an acceptable compromise.

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c) Inability to voluntarily terminate accounts

Facebook had allowed users to deactivate their accounts but not actually remove account content from its servers. A Facebook representative explained to a student from the University of British Columbia that users had to clear their own accounts by manually deleting all of the content including wall posts, friends, and groups. A New York Times article noted the issue, and raised a concern that emails and other private user data remain indefinitely on Facebook's servers. Facebook subsequently began allowing users to permanently delete their accounts in 2010. Facebook's Privacy Policy now states: "When you delete an account, it is permanently deleted from Facebook."

d) Per formative surveillance

The notion that people are very much aware that they are being surveyed on websites, like Facebook, and use the surveillance as an opportunity to portray themselve...