3.

What industry and competitive considerations are most relevant for the

company’s strategic planning purposes? By Chen Chen

Facebook operate in social media industry, which is rapidly changing, fast

growing, dominated by a few giant companies, and hard to entry. The industry

environment can be subdivided into five factors that make up the five forces model of

competition. The five forces are the threat of entry, the power of suppliers, the power

of buyers, product substitutes, and intensity of rivalry among competitors.

Five Forces Analysis of Facebook

Threat of entry

It is very hard to develop a popular and reliable social media brand similar to

Facebook’s, and Facebook’s user base is too huge for newcomer to compete with, so I

think the threat of entry force is weak for Facebook to take into consideration.

Power of suppliers

Facebook’s suppliers include manufacturers of net server equipment, computer

equipment, office supplies, and network providers. There are many alternatives choice

for Facebook, so the power of suppliers is also weak.

Power of buyers

Facebook’s main source of income come from advertisement. Those advertisers

have strong bargaining power because there are many alternatives, both in social

media industry and traditional media industry, for them to buy advertisement, like

YouTube, Twitter, TV, radio, newspaper, etc. The power of buyers is a very strong

force against Facebook, so it is one of the most relevant considerations for Facebook’s
strategic planning purposes

Product substitutes

There are a few other very popular social media platforms available in the

market, such as Twitter, LinkedIn, YouTube, Tik Tok, that can provide entertainment,

communication service, and advertisement service to Facebook’s customers. The

force of product substitutes is also very strong, so it is one of the most relevant

considerations for Facebook’s strategic planning purposes

Intensity of rivalry among competitors

The users of different social media are not exclusive, and many users used

different social media at same time. The number of competitors in this industry is also

limited to a few giant technology companies, so I think the intensity of rivalry among

competitors are not very strong.

Based on the analysis above, I think substitutes and costumers are the most

relevant consideration for Facebook’s’ strategic planning purposes.

What are the trends and conditions in the external environment that will have a

dominant influence on the firm’s strategic actions? In what ways (if any) should

Logitech change its strategic direction? By Chen Chen

1. The declining PC market

The global PC market have been slowly declining for many years. As a company

whose core business is computer peripheral, Logitech’s business is highly related to

the overall PC market. The declining PC market will have a dominant influence on

Logitech’s business’s strategic actions.

2. The growth of E-sports industry

The E-sports, or competitive video game, industry is booming for the last ten

years, which lead to higher demand for gaming equipment and products. Logitech

created a sub-brand Logitech G for its gaming products and invested a lot of money in

sponsoring professional E-sports teams and events. Logitech’s actions bring it a very

good reputation among gamers. The growth of E-sports industry will have a positive

influence on Logitech.

3. Potential of VR equipment

VR, which stands for virtual reality, is the next frontier for the entertainment

industry. It will change the way we interact with digital world, and it is also

revolutionary for the entire computer peripheral industry. Some big companies like

Sony, Facebook, HTC and Valve are already developing their own VR equipment. If

Logitech is left behind in this area, its business may face destructive damage in the
future.

4. The U.S.-China trade war

Most of Logitech’s manufacturing center is in Suzhou, China. The ongoing U.S.-

China trade war may have significant influence on its business in the U.S. Logitech

will need to consider moving part of its manufacturing to other countries to avoid

tariff if the U.S.-China trade war doesn’t end well.