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Comprehensive Analysis of Facebook Incorporation

Company Background

Facebook Incorporation has been the world’s largest and most popular social

networking services provider. Facebook Inc., is also one of the world's top digital firms and

the undisputed champion in the online social space. The social network service was originally

developed to let university students to communicate with their classmates, co-workers, and

relatives over the internet. Its goal was to provide a forum for individuals all over the world

to share their thoughts, promote new and creative ideas, share and collect ideas. The social

media giant has effectively used its capacity to gather, analyse, and share customer

information among advertising partners to develop extensive innovative methods for

businesses to promote and promote a variety of products and services to a particular

demographic.

I. Internal Situational Analysis

Products

Facebook Incorporation owns several networking services among other products. This

section will mainly focus on the major subsidiaries, Facebook.com, WhatsApp, Messenger,

and Instagram.

i. Facebook

Facebook has grown in popularity, strength, effectiveness, and influence as an

advertising medium for fulfilling a business's strategic goals. Because everyone is available

on the internet these days as they continuously buy and sell items / solutions, surfing the web,

watching various content, blogging, or researching, it has become critical for every company

to have a Facebook profile that reflects its operations online.

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According to the above explanation of Facebook's efficacy on businesses, having an

official Facebook page is extremely helpful for any organization. Firstly, it is the largest

social networking site, with approximately 1.8 billion active users per day and about 2.5

billion monthly users. Furthermore, the site sends around 100 billion messages each day and

shares over 1 billion stories per day. As a result, it is safe to conclude that Facebook is a great

resource for consumer analytics, personal branding, and targeted advertisements.

additionally, it provides businesses with possibilities to create and sell a branding that drives

the market and attracts new customers.

ii. Instagram

Instagram was bought for one billion dollars by Facebook Incorporation in 2012. It is a

popular social networking platform that allows people to express feelings, experiences, and

stories through photographs, and it is available in over 30 languages. However, in recent

years the app has adapted to consumer behaviour and introduced video sharing. The app has

over one billion active monthly users and over 500 million daily users, with the majority of

them being teenagers. Since the network's inception, upwards of 50 billion photos have been

exchanged. It is important to note that Instagram does not compete with Facebook in terms of

income, but it does compete with it in terms of users and time spent on social media.

iii. WhatsApp

WhatsApp presents users with a convenient, reliable, and secure way to send and receive

messages for free. Facebook Inc., acquired WhatsApp in 2014 in cash and stock, paying

around 19 billion dollars. Currently, WhatsApp has over 1.5 billion active users. However,

the application has presented several problems with monetization as it is not among

Facebook’s top income generators.

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iv. Messenger

Messenger is a bit similar to WhatsApp and is mainly used for sending messages. It was

split from Facebook.com in 2014 to enhance its growth as an independent social networking

service. Today, the service has more than 1.3 billion active users with most users coming

from the United States of America.

Company Leadership

The rise and success of Facebook can be attributed to its leadership. Mack

Zuckerberg, the company’s founder and Chief Executive Officer has had a significant role in

guiding the company and developing strategies. Under his guidance, the company has grown

and made strategic acquisitions to cement its position as a leader in the social media industry.

With experienced and talented employees like Sheryl Sandberg (Chief Operating Officer) and

Dave Wehner (Chief Financial Officer), Facebook’s leadership team is very much effective

in guiding the company to achieve strategic goals.

Facebook’s Value Proposition

A value proposition is one of the most important components of a business that aspires

to be a dominant player in the market and profitable in the foreseeable future. The value

proposition of a firm is the worth of a product or service that the company guarantees. A

company's value proposition is critical since it assists consumers in making purchase

decisions. Furthermore, the company's marketing performance is entirely reliant on the value

proposition of its products and services. The value proposition of a firm may be improved in

a variety of ways, including more efficient and effective product and service development,

enhanced corporate social responsibility, and expanded output.

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Facebook has had tremendous success in recent years. Facebook touts itself as a social

networking platform that allows users to connect efficiently with their friends, family, and

coworkers. It has created technologies that allow for seamless information exchange across a

social network and the digital mapping of a user's real-life social relationships. Despite the

fact that the majority of their goods are free, the firm has been able to establish a complete

connection with its consumers. The value propositions by Facebook include:

i. Free membership: All of Facebook's services are available for free. This provides

consumers with a compelling incentive to utilize Facebook, resulting in a strong

preference for Facebook over other social networking sites due to the superior user

experience at no cost.

ii. Customization: Users and consumers may personalize their company pages and

accounts on Facebook according to their preferences. Users have complete control

over what appears on their sites and may delete or add anything to their accounts at

any time.

iii. Convenience: Facebook supplies its users with a wealth of updated knowledge,

including headlines, flow of products and services, and a variety of other analytical

tools that help marketers succeed.

iv. Performance: Facebook's success and productivity has been excellent since it

became the most popular social networking website. Companies that have used

Facebook as a marketing tool have seen significant revenue increases. Customers

might be more confident in utilizing and working with Facebook as a result of this.

v. Risk reduction: The risk of sensitive content has been significantly decreased. There

are a variety of measures in place to guarantee that sensitive information is deleted

and closely monitored. The significance of safety and security is emphasized.

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vi. Company Brand and Status: Facebook has firmly established itself as a key player

in the social media space. Currently, over 65 million firms utilize Facebook business

pages actively. Facebook is regarded as a prominent corporation due to the large

number of businesses, including major brands, who use it as a marketing tool.

Facebook’s Revenue Model

Every business must have an elaborate revenue model to ensure it can essentially

sustain its operations and long-term business growth. The chosen revenue model and streams

have to guarantee the ability of a business to sell its products and services to its targeted

customers. As of 2020, Facebook was valued at 528 billion US dollars with 70.7 billion US

dollars in revenues. This shows the success Facebook has had over the past years. The

company went for public listing in 2012 in an IPO which became one of the biggest in

technology and Internet history, reaching an ultimate market capitalization of over $104

billion. Facebook mainly uses an Ad based revenue model where companies advertise on

Facebook platforms to increase their customers and sales volume.

The main source of facebook’s revenue is from adverts which account for more than

80% of its total revenue. The features of the monetized Facebook ads include;

i. They target potential customers by using age, gender, physical location, interests

among other factors

ii. They have alternative payment methods, that is, cost per click (CPC) and

Impression based (CPM)

iii. Trusted referrals; Ads are displayed to users whose Facebook friends recently

visited a company’s Facebook business page or the company’s website.

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Facebook additionally makes revenue from other segments which include the

distribution of hardware devices to consumers and net fees it receives from Facebook for

developer’s API platform. This accounts for the remaining percentage of Facebook’s

revenue.

Facebook additionally promotes B2B marketing with an approximate 65% using

Facebook as their digital marketing tool. 75% of people said they use Facebook for

professional purposes which increases the likeliness of contact with their favored brands.

Most Facebook internet users have an improved impression of a brand when they reply to a

post from their favorite companies.

Facebooks revenue model has been a huge success over the past few years. The major

reasons for growth have been attributed to the ever-growing user base. The increase in user

base has continued to lure advertisers and brands to work with Facebook. Therefore, the main

basis for Facebook revenue is the users who are part of the social media giant for free.

II. External Situational Analysis

Government Policies

Regulations and limitations imposed by the government Official sources are perhaps

Facebook's most significant threat. As governments tighten their grip on technology, social-

media companies like Facebook need to cautiously negotiate the shifting terrain to guarantee

that their revenue tactics are not jeopardized. From the Antitrust Case against it by the

United States Department of Justice and Federal Trade Commission to the significant

changes to the Copyright in the Single Market regulations by the European Union. Although

Facebook is focusing on adhering to the laws of each country they operate in, these
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governmental regulations and interferences have a greater potential of disrupting revenue

generation.

SWOT Analysis

Strengths

i. It has the largest number of active users in the world.

ii. Efficient strategies for monetization and financing.

iii. Strategic acquisitions of rival small companies.

iv. Presence in most countries in the world.

v. Presence of high number of talented employees.

Weaknesses

i. Monetization problems in WhatsApp and Messenger.

ii. Poor public image after scandals like Cambridge Analytica issue.

Opportunities

i. Expansion of monetization to WhatsApp and Messenger.

ii. Future strategic acquisitions of high potential start-ups.

iii. High user monetization due to its large user base.

Threats

i. Aging population.

ii. Excess and stiff competition.

Competitive Environment

Social media platforms have continued to be a key aspect of the interaction between

brands and their customers. Through the resulting digital experience majority of the brands
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can advertise and promote their brands and communicate with their customers. Facebook also

has a competitive environment that includes the following competitors;

i. Twitter

Twitter is among the leading social media sites and competitors to Facebook. Twitter

mostly competes with Facebook for users and social media engagement time. The social

media site was founded in April 2006 and boast a user base of more than 320 million monthly

users. More than 150 million people use Twitter in a day with more than 500 million tweets

posted every day. Twitter mainly makes its revenues from sponsored tweets and

advertisements which reported a 3.5 billion US dollars revenue in 2019.

ii. LinkedIn

Linked in business-oriented and professional social media platform that was created in

2003. It was purchased by Microsoft Corporation in 2016 for about 26.2 billion US dollars.

The platform mainly provides its users with an easier option of looking for employment

opportunities. Through the site, recruiters post job opportunities and employment seekers to

post their academic and professional qualifications. LinkedIn provides a communication

platform for its users, marketers, and companies to create a brand and communicate with

Linkedin users concerning their products and services. Linkedin competes with Facebook for

users and engagement time. The site averaged more than 600 monthly users in over 190

countries as of December 2019. In the year ended 2019, the site generated a revenue of $6.8

billion US dollars.

iii. Snapchat

Snapchat is one of the latest entrants in the social media space. It was created as a

platform for sharing photos and short videos in 2011. The platform is popular among the
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youth and boasts over 200 million daily users, with over 4 billion snaps sent daily. It is

favored mainly for its privacy policies such as the disappearance of photos and videos after

they are viewed by the recipient.

v. YouTube

The video sharing platform was created in 2005 and has continuously grown to become

the second largest social networking site. The platform has more than 1.5 billion mothnly

active users. In as much as the platform provides different services, its focus on social media

makes it a direct Facebook competitor.

vi. WeChat

WeChat is a Chinese messaging platform created by Tencet Group. The platform is

unique as it additionally offers services like online payments and scheduling appointments.

The platform has more than 700 million users.

vii. TikTok

TikTok is a short video sharing site created in 2016. It went international in 2017

becoming available for free download in Apple Appstore and Google Playstore. Despite

being a newcomer in the social networking industry, the app has over 700 million monthly

active users. It is worth noting that TikTok may become a serious competitor to Facebook’s

major social networking services due to its rapid growth and success.

Competitive Advantages of Facebook

Essentially of Facebook

Facebook is a multi-blogging site where emerging discussions, posts, and arguments

are presented on daily basis. Facebook has been a long-term online marketer for various
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business personnel who use it to advertise their properties on sale. Facebook provides the best

platforms for different customers to poach the best goods from specified marketers. Business

people also help to get the feedback of their goods and services from the customer's

customers' reactions thus help them improve on it. Furthermore, with the world full of

celebrities and every celebrity got various fans all over the globe, Facebook provides

platforms where the celebrities can meet up with the fans and share on various issues and also

release their new hits to them. Many celebrities also gather fame and followers' customers by

advertising their works on Facebook.

Facebook has undergone a progressive development since its first launch in 2004, by

Mack Zuckerberg while in Harvard University. It was first created for college students to talk

online while in school but later advanced and many universities started using it. In the year

2006, anybody above thirteen years of age was able to access Facebook. Facebook added the

news feed page feature in the platform where users could see the news from various areas. In

2008, Facebook released the Facebook chat where people could secretly and privately have

conversations with their friends and loved ones. In 2015, the Facebook live feature was

introduced where users could video call and record live videos. With this incorporation of

different features on Facebook, it has helped it expand rapidly.

Why is Facebook better than other platforms?

Facebook is the largest and one of the prominent recognized social media platforms

making it a very vital point where any business which looks to marketing its products online

very successful. Facebook has more followers than both Instagram and Twitter. Instagram is

typically used by friends and family members to share photos while Twitter people use it to

express their ideas through tweeting and especially what they think is better for them to be

done. On the other hand, Facebook crowns it all by offering its users to not only post photos
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and receive comments from friends but also, can video call, record live videos, create blogs

and discussion groups, sell and buy items, and also plan events and invite people to come and

party together.

What is a Competitive Advantage?

Competitive advantage involves the various factors which allow a certain business to

be superior to the others in the market in terms of offering quality services and goods to its

clients and also new members. The competitive advantage offers the business the ability to

formulate more sales and gather further customers. Facebook's uniqueness appears in that it

has the capability of allowing people to connect and share their various ideas and also

moments at the same time. The 'connect and share' the uniqueness of Facebook has made it

have more users than any media platform. Furthermore, Facebook is easy to use and handle

as even those who are not that much educated can also manage their accounts effectively.

Competitive advantages Facebook has over other platforms:

Advertising

The Facebook platform has a wide variety of users making it suitable for any business

that would like to venture into digital marketing to use the platform. Many small and local

businesses have widely adopted digital marketing especially with Facebook and are greatly

making huge profits thus attracting the large business to use Facebook as a marketing

platform. In the year 2020, first quarter Facebook received seventeen billion dollars from

advertisements (Runge, Geinitz & Ejdemyr, 2020). With Facebook accumulating various

masses of people from different parts of the globe, it has become easy to communicate and

sell goods to one another. Having everything computerized in this digital age and the world

made just simple as one city then the customer and the seller agree the fee is electronically

paid. Therefore, Facebook has played a key role in digital marketing.

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Mobile trends

With the various applications in place, the messenger has helped in the rapid

expansion of the Facebook platform as people can privately talk to their peers through the

application. With many people spending most of their time on mobile during the day and

night most of them show to be more interested in Facebook services rather than competitors

like Twitter. Most people like Facebook as it's not limited to the people you know but you

can make friends with anyone and share different ideas and perspectives.

The Bottom line

Facebook has utilized various features that make it more attractive and user-friendly

than other social media platforms, for instance, Twitter and LinkedIn. Facebook services

incorporates both texts, videos, and photos and does not limit itself to specific features

(Srinivasan & Venkatraman, 2018). Facebook has raised a huge revenue from its

incorporation of features that tend to outdo other applications that only have a few of the

features it incorporates.

A helpful platform for the Job listing

As many people search for jobs and employees find it difficult to source the

applicants just in the formal way, many employers have opted to advertise their job vacancies

on Facebook applications where they can have applicants faster and fill in space, they needed

in just a short duration of time (Vinerean, 2017). Many people create accounts with Facebook

or Instagram to follow up any company likely to post job vacancies to ensure they get the

first opportunities.

Engagement
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Many people spend time reacting to the photos of their friends and adverts and reply

appropriately unlike in some applications where you can only speak to one person without

any third party coming through. Therefore, Facebook creates diversity within different

cultures and genders across the globe from one's comfort.

Conclusion

Facebook is still growing seventeen years after its inception. The company is still

successful, the commercialization strategies are still successful, and the future seems

promising. As a result, notwithstanding its declining appeal among youthful viewers,

Facebook Inc., remains a social networking sites powerhouse. As a result, Facebook's

business strategy doesn't have to be reinvented. Only if it purchases small firms with lesser

customer bases and more potential for growth, the company's development will be sluggish,

as it is with most major corporations. The company's fundamental strengths and competitive

advantages, that includes its capability to commercialize its sites while providing quality

services.
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References

Runge, J., Geinitz, S., & Ejdemyr, S. (2020). Experimentation and Performance in

Advertising: An Observational Survey of Firm Practices on Facebook. Expert Systems with

Applications, 113554.

Srinivasan, A., & Venkatraman, N. (2018). Entrepreneurship in digital platforms: A

network‐centric view. Strategic Entrepreneurship Journal, 12(1), 54-71.

Vinerean, S. (2017). Importance of strategic social media marketing. Expert journal of

marketing, 5(1).