Global Business Environment: Risks for Social Media Firms and Impact of President Trump's Policies

1
GLOBAL BUSINESS ENVIRONMENT
BM413
CW2: GLOBAL BUSINESS ENVIRONMENT PORTFOLIO
PAPERS 2, 3 & 4.

2
Contents
Topic a........................................................................................................................................3
Topic b.......................................................................................................................................4
Topic d.......................................................................................................................................5
Reference....................................................................................................................................7

3
Topic a
The risk of global social media firms face from the policies of the government and the
impact on the operation of the firm.
Social media nowadays has become an integral part of human life. Almost all the users of the
smartphone in the world have a profile in social media. Social media has become so
important in a different aspect of the life that the current government policies concentrate
specifically on social media (Song and Lee, 2016). Government policies are one of the
external factors that influence the operation of social media companies. Thus, the policies of
the government pose a great risk for social media companies.
First and the most important risk that the firms face is the abrupt termination of the usage.
The users of social media are the one who makes it a grand and successful business. Social
media companies run on the advertisement revenue (Falco, Kleinhans and Pereira, 2018). It is
a huge platform for the companies to put across their message to customers of the market.
Therefore, if the government bans the use of social media like Facebook and Twitter in the
country, the firm will lose all the businesses from the advertising companies and the firm will
go out of business. For example, the government of China decided to ban Facebook in the
year 2009 and the company wrapped up its business from the Chinese market (Meijer and
Torenvlied, 2016).
Apart from that, government and its tax rate influence the profit margin of the social media
firms as well. Like all the companies operating in the economy, social media firms are also
required to pay the taxes. If the tax rate is increased by the government the overall net margin
of the social media firm would go down. Lastly, government policies can regulate the rules
and the regulations of digital ads that may not be favourable for the social media firm. For
example, after the scam of Cambridge Analytica last year most of the European countries
including the UK made a stricter data privacy act for social media companies (Porumbescu,
2016). This affected the operation and the profitability of the company. Social media firms
such as Facebook take the advantage of loopholes in digital laws and regulations and hence
their operation is very much vulnerable to the amendments in the laws and the regulations of
the government. Their business operation becomes risky each time the government come up
with a robust set of digital policies.