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Analysis of Business Environment of Facebook Inc

   

Added on  2020-06-06

19 Pages5053 Words431 Views
ANALYSIS OF BUSINESSENVIRONMENT

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Impact of macro environment on Facebook Inc. performance...........................................12. Analysis of micro environment on operations of Facebook...............................................43. Analysis of the internal environment of Facebook Inc......................................................74. SWOT analysis of Facebook Inc......................................................................................11CONCLUSION..............................................................................................................................15REFERENCES..............................................................................................................................16

INTRODUCTIONBusiness environment consists of many factors which affect strategic decision makingand scale of operations of business units. It comprises both internal and external forces whichaffects business organisation’s performance. Facebook Inc. is an American based social networking provider situated in Californiafounded in 2004 by Mark Zuckerberg. It comprises more than 2 billion customers accessingsocial media sites such as Instagram, Facebook Messenger, WhatsApp, Oculus etc. 1. Impact of macro environment on Facebook Inc. performance.Facebook Inc. operates in a diverse environment full of opportunities and threats and isaffected by the major macro environment which hinders its performance (Li and Calantone,2011). Users can operate Facebook website from various devices using internet technology suchas laptops, desktops, mobile phones and tablet. It has earned a revenue of 17 billion US$ in 2015which rose in 2016 to around 18 billion US$. The macro environment of Facebook is affected by many factors such as changes inpolicies, confidentiality of user’s information, breakdown of systems due to viruses etc. 1Illustration 1: PESTLE Analysis of Facebook Inc.(Source: Marketing theories – PESTLE analysis, 2018)

However, the company emphasises on protection of user’s personal details so as to makethem comfortable while sharing information on Facebook (Biggadike, 2010). These factors areexternal to organisation and affects decision making and performance of company. These are:Political:Political imbalances and changes affect Facebook and its operations directly. As thecompany operates in various regions is prone to restrictions imposed by political environment.The government intervene as a result of checking privacy policy of the company so as to protectusers and their personal information. It restricts illegal acts such as multiple fake accounts andhacking of personal accounts (Li and Calantone, 2011). All these government restrictionsincreases cost for company to function. Both the government and users are particular aboutsafety and security of their personal details which if hamper may result a huge loss for thecompany affecting its overall revenue. The government in developed countries allow various services to expand operations anddiversify business of Facebook by rendering services such as stability, opportunity and support.Thus, before entering into a diverse market, the company should identify various threats andopportunities available such as legal framework, invasion by military, importance of internetinformation providers, tariffs and trade regulations, technology, trading partners, Anti-trust laws,regulations on prices and taxation policies. Economic:Economic conditions are specific to countries and include those factors which affectgrowth aspects of an organisation. Economic factors are important for growth and success ofFacebook which is related to Gross Domestic Product. The increase in GDP is related topurchasing power. Furthermore, the market penetration with the increasing economic stability indeveloping countries provides growth to the company. The development of countries providesopportunities to improve infrastructure and telecommunication services which will enhancegrowth of Facebook (Marketing theories – PESTLE analysis, 2018). However, the company has grown tremendously in few years with increase in revenue to88% in 2016. Facebook being a social networking provider has growth potential and being aleader could penetrate in different markets having growth factors (Chesbrough, 2009). Since thecompany experiences low expenses, it has more possibility to gain higher revenue. The companyenjoys competitive edge over others due to low expenditure and higher growth rates which has2

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