Analysis of Business Environment Essay
Added on 2020-07-23
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ANALYSIS OF BUSINESSENVIRONMENT
Table of ContentsINTRODUCTION...........................................................................................................................11 Macro environment in which Facebook Inc. operates and impact on its performance................12 Analysis of Micro environment in which Facebook Inc. operates...............................................43 Internal analysis of Facebook business.........................................................................................84 Facebook SWOT analysis...........................................................................................................10CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONBusiness environment analysis is important for any firm in order to identify theinternal and external factors that has impact on business operational activities whichcan be positive or negative. The report will demonstrate macro environmental factors inthe context of Facebook Inc. and its impact on business performance. Microenvironmental factors will be identified from the use of Porter's five force analysis.Internal analysis associated with resources, capabilities, core skills and corecompetencies will be discussed in this report. Finally, the report will cover the SWOTanalysis with recommendations to improve business growth and profitability. 1 Macro environment in which Facebook Inc. operates and impact onits performanceFacebook is an American social media platform which provides online socialnetworking services based in Menlo Park, California. The business was founded inFebruary 2004, Cambridge, Massachusetts, United States. The headquarter is locatedin California, US. Mark Zuckerberg is the CEO of firm since 2004 and CFO is DavidWehner. There are a lot of subsidiaries such as WhatsApp Inc. Instagram, Oculus andOnavo effectively. The total assets of firm in 2017 is US$84.524 billion and approx 2.2billion monthly active users. Users are from all over the world and it is a easy platformfor them to share photos, videos and other online activities. The business is growingfast and earning so much revenue with increasing number of users. There are someenvironmental factors which affect the operations and other activities of Facebook Inc.which is discussed below in terms of PESTEL analysis:PESTEL analysis of Facebook Inc.PESTEL analysis is a strategic tool which stands for political, economical, social,technological, environmental and legal factors which has a significant impact onbusiness. Political factors: It can be said that political factors has a wide range such as freedomof press, stability in region, state of human rights and many other factors which has aimpact on Facebook Inc. in both direct and indirect ways effectively. The socialnetworking site Facebook is often used by millions of people as a platform to voicedisagreement with government policies and corrupt practices all over the world (Beske,1
Land and Seuring, 2014). This has caused a restriction in number of developing nationsof the social networking site. There are some human rights issues in some nationswhere the government is afraid of Facebook uses from their people that it can spreadinformation and data for their cause. For an example, China, Iran and North Korea are some nations where theFacebook access is currently restricted due to the same reason effectively. Along withthe political factors the business has its own impact on the political landscape formationin the US and anywhere else. “Ever since the so-called “Facebook election” of PresidentObama in 2008, the social media giant has been a political reference point for citizens,politicians and media alike” Economical factors: The Facebook long term growth prospects are paramount fromthe implication of economical factors. For an example, strengthening of the USD hasnegatively affected Facebook revenues due to the global scale of its operations.However, the business foreign currency faced losses of USD66 million in 2015, USD87million in 2014 and USD14 million in 2013 respectively and effectively. In addition tothis, Facebook Inc. revenues is subject to the cost of human resources, inflation of taxrates, the macro economic climate of nation and availability of credits (Bhattacharyya,2015). Facebook has also similar macro economic climate impact of its own likepolitical factors that scope and nature is a matter of debate in business. According tothe Deloitte report as commissioned by Facebook, the business is responsible for globaleconomic impact for USD227 billion and 4.5 million jobs in 2014 year ended. Thus, It isnecessary for Facebook to analyse economical factors and Gross Domestic Products isone of them which is important. Nations where the economic stability is developing mustprovide a chance to Facebook in order to improve telecommunications andinfrastructure. Social factors: There are some certain social factors that affects and influence globalreach. It is crucial for the business to analyse behaviour of people in order to accept thepersonal network effectively. Facebook should ensure that people will feel comfortableand secure while operating social site and uploading the personal information. This willhelp to increase number of active users which leads towards profitability. In this modernworld, people are improving their life by using high quality products and services that it2
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