Facebook

McDonald’s

GROUP 5 – AT45

Abadingo, Japeth James L.

Engreso, Princess L.

Ortua, Jeneth A.

Pada, Ritchievy M.

Tan, April Rose P.

 FACEBOOK

1. SHORT HISTORY

Facebook, American company offering online social networking services. Facebook was
founded in 2004 by Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz, and Chris Hughes,
all of whom were students at Harvard University. The company has a complicated early history.
It began at Harvard University in 2003 as Facemash, an online service for students to judge the
attractiveness of their fellow students.

In February 2004, Mr Zuckerberg launched "The facebook", as it was originally known;

the name taken from the sheets of paper distributed to freshmen, profiling students and staff.
Within 24 hours, 1,200 Harvard students had signed up, and after one month, over half of the
undergraduate population had a profile.

The network was promptly extended to other Boston universities, the Ivy League and
eventually all US universities. It became Facebook.com in August 2005 after the address was
purchased for $200,000. US high schools could sign up from September 2005, then it began to
spread worldwide, reaching UK universities the following month.

As of September 2006, the network was extended beyond educational institutions to

anyone with a registered email address. The site remains free to join, and makes a profit through
advertising revenue. Yahoo and Google are among companies which have expressed interest in a
buy-out, with rumoured figures of around $2bn (£975m) being discussed. Mr Zuckerberg has so
far refused to sell.

The site's features have continued to develop during 2007. Users can now give gifts to
friends, post free classified advertisements and even develop their own applications - graffiti and
Scrabble are particularly popular.

July of 2007, the company announced that the number of registered users had reached 30
million, making it the largest social-networking site with an education focus.

In February 2012 Facebook filed to become a public company. Its initial public
offering (IPO) in May raised $16 billion, giving it a market value of $102.4 billion. By contrast,
the largest IPO of an Internet company to date was that of the search-engine company Google
Inc., which had raised $1.9 billion when it went public in 2004. By the end of the first day of
the stock’strading, Zuckerberg’s holdings were estimated at more than $19 billion.
2. STRENGTH AND WEAKNESSES

Strength:

With the growing use of mobile phones and introduction of Facebook app, a precedent
increase is seen in the overall usage has occurred. According to FY2015, Facebook had about
169 million daily account users which is a big number as compared to the previous years.
It also captured major markets in US, Brazil and India.

Another thing that goes in the favour of Facebook is the fact that it has a loyal customer
base, means every user regularly has their personal data and applications set up on Facebook
which they regularly update and thus are active users. Thus, Facebook enjoys the status of non-
replicable competitive advantage.

Their goal is to offer developments on day to day basis, such that user engagement is
achieved at maximum level. This attracts advertisers on the large scale too. Given that Facebook
is known for making the user experience better, we see different new products offered by
Facebook. The concept of 360 degree photos, Notify and Facebook live are best examples of
how well their user engagement has developed over the years by offering innovation.

Facebook has another competitive advantage of collecting lucrative databases.

Information regarding the user’s location, interests, connection is valuable for advertisers as they
can target the right target audience. The company also has a record of strong financial
performance which makes it resilient in the market.

Weakness:

Facebook generates its revenues only through advertisement and thereby it is one of its
weak points. These advertisers allocate a small budget for Facebook advertising and their
commitments are also short lived.

Along with that the marketers may not like some of the products offered by Facebook
and the may be willing to quitdoing business with Facebook or pay less than the due amount for
advertising. The company must sign long term commitment deals with advertisers in order to
grow.

3. STRATEGIES BEING EMPLOYED

Facebook has a generic strategy and intensive growth strategies that maintain business
competitive advantage based on efficiency and accessibility of online social media services.
Michael Porter’s model for generic competitive strategies indicates the company’s approach and
strategic direction for business growth. In this business analysis case, it is determined that
Facebook’s generic strategy ensures growth and competitive advantage through the social
network’s features and ease of access to capture a bigger share of the market, addressing
competition against companies like Google, Twitter, and Snapchat, which have significant
presence in the online advertising market. In relation, based on the Ansoff Matrix, Facebook’s
intensive strategies emphasize the use of market penetration as the primary thrust to grow the
business. The company’s generic strategy and intensive growth strategies align with business
strengths and enable the company to keep its market position as one of the world’s leading online
social networking firms.

4. THE PRIMARY REASONS FOR BEING A GLOBAL BRAND

I. Connecting the world and the community

II. Connecting commerce

The company develops its business as a reliable social media service provider. In
relation, the company’s large consumer base is a strength that brings a number of beneficial
externalities. For example, the large number of users or members makes Facebook’s social
networking website and mobile apps more attractive to potential new members, more attractive
to advertisers, and more difficult for new social media companies to compete with. Moreover,
high revenues are a beneficial internal strategic factor that supports the company’s financial
capacity for research and development (R&D) investments for new products and new business
ventures. Also, Facebook’s organizational culture contributes to innovativeness in the workforce.
This internal factor enables product development, which is a growth strategy.

Sources:

Hall, M. (2007). Facebook – American Company. Encyclopaedia Britanica. Retrieved from

https://www.britannica.com/topic/Facebook

Phillips, S. (2007, July). A Brief History of Facebook. The Guardian. Retrieved from
https://www.theguardian.com/technology/2007/jul/25/media.newmedia

Greenspan, R. (2018). Facebook Inc.’s Generic Strategy & Intensive Growth Strategies.
Panmore. Retrieved from http://panmore.com/facebook-inc-generic-strategy-intensive-
growth-strategies