FACEBOOK

I. CASE BACKGROUND
Mark Zuckerberg founded Facebook in February 2004 with his Harvard University
roommates.
The Facebook grew popular as the founders gave access to different universities even at
Boston area high school students. It has grown into a phenomenon and anyone over the age of 13
can have access to it.
Three Harvard University seniors accused Mark Zuckerberg of taking their idea to create
a social network called HarvardConnection.com after launching his initial website which is
Thefacebook.com to create a competitive product. An investigation was initiated and a lawsuit
filed after the three individuals made a complaint to Zuckerberg and it was settled in 2008 for
1.2 million shares ($300 million) of Facebook’s IPO offering.
The co-founder of PayPal, Peter Thiel gave Facebook’s initial big investment and in
2005, the company bought the domain name facebook.com for $200,000 and dropped “the” from
the original name. The investments began to grow in 2005, as Accel invested $12.7 million, and
Jim Breyer added $1 million of his own money. When talked about percent in market share and
number of users in the social media industry, Facebook has recently surpassed both Google and
Amazon.

II. ENVIRONMENTAL ANALYSIS:

A. EXTERNAL ENVIRONMENT ANALYSIS
A.1 GENERAL ENVIRONMENT (PEST ANALYSIS)
GENERAL OPPORTUNITIES THREATS
ENVIRONMENT
Political/Legal Facebook created a political Possible government
action committee in 2011, restrictions on stored users
named FB PAC with the data in the light of
Federal Election Commission exponential growth of social
media

Economic Suppliers are increasingly

posting product ads on social
media which FB capitalized
by introducing FB
Professional service with
tools to share & store
documents, taking aim at
products & services from
Microsoft, Google &
 Salesforce.com

Socio-Cultural  Social media use is growing

exponentially

Technological New trend of using social For a decade, digital

media platforms to create a marketers have been
person brand or image that constrained to an increasingly
directly relate to future outdated technology known
employment as the cookie, which are still
Facebook-owned Atlas aims used to measure and target
to take digital marketing digital ads.
beyond the cookie which for
a decade, was an outdated
technology

A.2 INDUSTRY ENVIRONMENT (PORTER’S FIVE FORCES)

INDUSTRY ENVIRONMENT OPPORTUNITIES THREATS
Rivalry Google and FB are Growing popularity of
increasingly major competitors like
collaborating with each Snapchat, LinkedIn,
other Twitter

Bargaining Power of Consumer Users on platforms Marketers could start

including Facebook, gravitating more
Twitter, Instagram and towards other social
marketers advertising on networking platforms
these platforms, represent when Facebook starts
customers for Facebook. increasing ad pricing
significantly.
Bargaining Power of Supplier Social media users
increasingly feel
commercialized when
pop-up ads cover their
computer screens while
surfing social media
platforms

New Entrants & Entry Barriers New entrants will post

threat to market share

Threats from Product Substitution

B. INTERNAL ENVIRONMENT ANALYSIS
B.1 The Functional Areas
FUNCTIONAL AREAS STRENGTHS WEAKNESSES
Finance Net income more than
doubled in 2014

Advertisement is the major

source of income of
Facebook

Marketing FB’s wide following

translates to large network
effect in business and
economics

Organization & Management The company structure is a Too complex, with

hybrid, being divisional by overlapping duties
region and by product

Production
HR Facebook has a code of
conduct being applied to
all its personnel including
its members of the board,
contractors & consultants
 

R&D Facebook has a dedicated

R&D with capital outlay
of 29% of its revenue

Information Tech Facebook & Google are More than 10% of

finding new ways to make Facebook accounts are
more people online by fake.
selling smart phone data
plans, using solar powered
drone aircraft as floating
cell towers, to partnering
with telcom providers in
the developing countries to
get people hooked on apps
C. INTERNAL AND EXTERNAL ENVIRONMENT ANALYSIS (SWOT ANALYSIS)
STRENGTHS WEAKNESSES
1. Net income more than doubled in 2014 1. Organizational structure is too complex,
2. Advertisement is the major source of with overlapping duties
income of Facebook 2. More than 10% of Facebook accounts are
3. FB’s wide following translates to large fake.
network effect in business and economics 3. Privacy issues of Facebook users
4. The company structure is a hybrid, being
divisional by region and by product
5. Facebook has a code of conduct being
applied to all its personnel including its
members of the board, contractors &
consultants
6. Facebook has a dedicated R&D with
capital outlay of 29% of its revenue
7. Facebook & Google are finding new ways
to make more people online by selling smart
phone data plans, using solar powered drone
aircraft as floating cell towers, to partnering
with telcom providers in the developing
countries to get people hooked on apps

OPPORTUNITIES THREATS
1. Facebook created a political action 1. Possible government restrictions on stored
committee in 2011, named FB PAC with the users data in the light of exponential growth
Federal Election Commission of social media
2. Suppliers are increasingly posting product 2, For a decade, digital marketers have been
ads on social media which FB capitalized by constrained to an increasingly outdated
introducing FB Professional service with technology known as the cookie, which are
tools to share & store documents, taking aim still used to measure and target digital ads.
at products & services from Microsoft, 3. Growing popularity of major competitors
Google & Salesforce.com like Snapchat, LinkedIn, Twitter
3. Social media use is growing exponentially 4. Marketers could start gravitating more
4. New trend of using social media platforms towards other social networking platforms
to create a person brand or image that directly when Facebook starts increasing ad pricing
relate to future employment significantly.
Facebook-owned Atlas aims to take digital 6. New entrants will post threat to market
marketing beyond the cookie which for a share
decade, was an outdated technology
6. Google and FB are increasingly
collaborating with each other
7. Users on platforms including Facebook,
Twitter, Instagram and marketers advertising
 on these platforms, represent customers for
Facebook.

III. CENTRAL PROBLEM

Strategy that will improve the security features of Facebook to protect its subscribers and
advertisers

A.1 SUPPORT THE PROBLEM

• Privacy issues of Facebook users
• Advertisement is the major source of income of Facebook
• Roughly 50% of FB’s revenues come within US & Canada
• Organizational structure is too complex, with overlapping duties
• Social media users increasingly feel commercialized when pop-up ads cover their
computer screens while surfing social media platforms
• Growing popularity of major competitors like Snapchat, LinkedIn, Twitter
• Fake news can be easily spread
• Possible government restrictions
• Negative impact of social media addiction usually attributed to FB

A.2 TIME CONTEXT

2015
A.3 VIEW POINT
Chairman and CEO-Mark Zuckerberg
IV. ALTERNATIVE COURSES OF ACTION
Quantitative Strategic Planning Matrix (QSPM)

KEY FACTORS Weight ACA #1 ACA #2 ACA #3

Market Development Market Product Development
Penetration

OPPORTUNITI AS TAS AS TAS AS TAS

ES

1 Google and FB 0.15 3 0.45 4 0.60 4 0.60

are increasingly
collaborating with
each other

2 Users on 0.10 3 0.30 3 0.30 4 0.60

platforms
including
Facebook, Twitter,
Instagram and
marketers
advertising on
these platforms,
represent
customers for
Facebook.

3 Social media 0.20 3 0.60 4 0.80 4 0.60

use is growing
exponentially

4 Expansion to 0.05 2 0.10 2 0.10 2 0.10

China

THREATS

1 Possible 0.10 2 0.20 3 0.30 3 0.30

government
restrictions

2 Growing 0.08 3 0.24 3 0.24 3 0.24

popularity of
major competitors
like Snapchat,
LinkedIn, Twitter

3 Privacy issues of 0.15 3 0.45 2 0.30 4 0.60

Facebook users

4 Negative impact 0.17 4 0.68 4 0.68 4 0.68

of social media
addiction usually
attributed to FB

SUB TOTAL 1.00 3.02 3.32 3.72

STRENGTHS

1 Net income 0.12 4 0.48 4 0.48 4 0.48

more than doubled
in 2014

2 Advertisement 0.15 4 0.60 4 0.60 4 0.60

is the major source
of income of
Facebook

3 Facebook has a 0.10 3 0.30 4 0.40 4 0.40

dedicated R&D
with capital outlay
of 29% of its
revenue

4 Increasing 0.13 3 0.39 2 0.26 4 0.52

revenue each year

WEAKNESSES

1 Organizational 0.10 1 0.10 2 0.20 3 0.30

structure is too
complex, with
overlapping duties

2 More than 10% 0.20 4 0.80 3 0.60 4 0.80

of Facebook
accounts are fake.

3 Privacy issues 0.20 3 0.60 3 0.60 3 0.60

of Facebook users
 Sub total 1.00 3.27 3.14 3.70

SCORE 6.29 6.46 7.42

V. RECOMMENDATION:
RECOMMENDATION ACA # 3

The QSPM results indicated that ACA #3 Product development

which is the Product development is the best
option.

List of possible ACA’s

1. Market Development
2. Market Penetration
3. Product Development
4. Horizontal Integration
5. Forward Integration
6. Backward Integration
7. Related Diversification
8. Unrelated Diversification
9. Diverstiture
10. Liquidation
11. Join Ventures
12. Retrenchment
13. Liquidation
VI. ACTION PLAN

Activity objectives Person/dept Time frame budget

involve
1. Submit  To present Top 1 week $1,000
proposal the proposal Management,
or strategies Board of
formulated Directors
to develop
the website.
2. Review and  To be able to Product 2 weeks $3,000
Analysis of the assess the Development
proposal impact of the department
proposal
3. Present to the  To be able to CEO 1 week $1,000
management for have approve
approval proposal and
to get
executive
support
4. Evaluation  To be able to Product continuous $100,000
see the result Marketing Dept,
of the project Platform
Marketing dept
REVLON

I. INTRODUCTION