Facebook: A Strategic Analysis

The assignment content discusses the concept of hospitality, Facebook's vision and mission statement, Porter's four quadrant model to understand competition, PESTLE analysis to examine macro-environmental factors, financial ratios for 2015 and 2016, and recommendations for growth in new markets and introducing new features in Facebook.

Hospitality

Table of Contents
Essay one.........................................................................................................................................1
Essay two.........................................................................................................................................1
Essay three.......................................................................................................................................3
Essay four........................................................................................................................................4
Essay five.........................................................................................................................................5
REFERENCES................................................................................................................................6

Essay one
Facebook is a social networking site launched in the year 2004 Februrary 2004. The
company was mainly founded by Mark Zuckerberg. In the year 2005 the site expanded to the
twenty one universities that are present in the United Kingdom (Phillips, 2007). This network
was extended to the other Boston Universities and in the year August 2005 it became
Facebook.com. The site is free to be joined and majority of the profits are mainly earned with the
help of advertising revenue. Mainly the two companies Yahoo and Google have shown high
interest in buying Facebook. In the year 2007 the site remained to develop where different
options have been provided to the users such as sending gifts to friends, advertisements can be
posted etc
The vision statement of Facebook is “People use Facebook to stay in touch with their family
and friends, to know what’s going on in the world and sharing matters that are most relevant
for them”. So this vision represents that company is building social network in between the
individuals living in the society.
Mission of the company is “to give power to the people to share and make the world more open
and connected”. This mission statement clearly states that company believes in developing
strong relationship in between the people of the society through sharing ideas and thoughts.
Essay two
Porter’s four quadrant model is effective enough in understanding about the ways through
which company can tackle competition and can lead in the market (Porter’s Four Corners
Model, 2015). The main competitors of Facebook are Google+, LinkedIn, Twitter, Groupon and
Tumblr.
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Motivation drivers where the main goals of competition in case of Facebook are
enhancing market share and customer base of the firm. Further, the current position of
competitors such as Google, Twitter etc are also strong in the market where they are also
focusing on increasing customer base. This represents that market is competitive and bargaining
power of buyer is high as many options are present with the buyer in case of social media.
Motivation-management assumptions where the competitor in the market such as Google
perceives it as superior. Competitors such as Google, LinkedIn perceives them as the top in the
market. This is representing that the threat of substitute is high where almost every company is
operating on same platform.
Actions-Strategy where it indicates that competition in the market is leading to
introduction of new services. Due to this reason Facebook is bringing new features in its
application such as Instagram so as to stay ahead with its competitors (Instagram, The $50
Billion Grand Slam Driving Facebook's Future: The Forbes Cover Story, 2016)
Actions-Capabilities where Facebook holds capability to develop new application so as to
beat its major competitor. This is one of the main strength of the firm.
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(Source: Chaffey, 2017)
Essay three
PESTLE
Political: majority of the politicians have adopted this platform for influence the individual
opinions so that they can vote for them in elections.
Economical: Facebook adds have contributed 15.3 billion dollar to the economy of Europe. The
facebook app has provided 29,000 jobs on an average
Social: It is an effective portal for socializing where individual can built better connection with
other people in the society
Technology: Facebook depends on different tools, programming like its serves runs at MYSQL,
Php etc
Legal: The present laws may not be able to control behavior on facebook
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Environment: The factors such as more emphasis on business sustainability, climate change and
waste disposal standards. Facebook is indulged into various sustainability practice.
SWOT
Strengths
 More than billion active users
 Proper understanding of customer
requirement
 Proper integration with websites and
other type of applications
Weaknesses
 Only one source of revenue i.e
facebook
 Not proper protection of user
information
 Lack of some features
Opportunities
 Expansion in China
 Open facebook marketplace
 Rise in the number of individual who
prefer to access facebook through
mobile
Threats
 Rise in the number of mobile internet
users
 Very weak business model
Three strategies
 First strategy is expansion in the Chinese market with additional feature like user
information protection system
 Facebook can diversify its operations like it can develop new platform such as sharing
email like google email
 Development of new system so that user private information cannot be easily accessed by
all and other unethical activity can be avoided like hacking, development of fake account
Essay four
Financial ratios
Ratio 2015 2016
Operating margin 34.72 44.96
Asset turnover 20.47 36.86
Return on equity 9.14% 19.70%
Current ratio 11.25 11.97
Quick ratio 10.91 11.63
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Above shown is the financial ratio analysis of Facebook Inc where ratios of the year 2015
and 2016 have been taken into consideration. In the year 2016 the overall performance of the
company has increased as compared with past (Facebook financial ratio analysis, 2017). The
company has strong liquidity position and its profitability level after deducting all the expenses
has raised in the year 2016 as compared with the past. All the above ratios are representing
growth of the firm.
Stock information
(Source: Facebook, Inc. Analyst P/E Ratio Growth Rates, 2017)
Above data provides stock information where high P/E growth in the year 2017 is
60.15% which is representing high value of the firm where stock selection can be easily done as
company is growing.
Essay five
Growth in the new market
It is one of the recommendation to Facebook where Facebook can target new market such
as China where new application can be launched that will be quite safe and secure to access. The
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management expert Jack Welch has said that company with its innovative service can surely
progress in the new market.
Introducing new features in the Facebook so as to retain users
It is the next recommendation where Facebook has to bring some new features that are
linked with security so that private information of the users cannot be accessed by other along
with account hacking which normally takes place in Facebook. As per Daniel Goleman the
management expert it is necessary for every company to ensure that its products and services are
satisfying the need of the target market. So, in case of Facebook also it is required for the
company to satisfy safety and security needs in proper manner.
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REFERENCES
Chaffey, D, (2017). Global social media research summary 2017. [Online]. Accessed through
https://www.smartinsights.com/social-media-marketing/social-media-strategy/new-
global-social-media-research/. [Accessed on 15th Nov 2017].
Facebook financial ratio analysis, (2017). [Online]. Accessed through
<http://financials.morningstar.com/ratios/r.html?t=FB>. [Accessed on 15th Nov 2017].
Facebook, Inc. Analyst P/E Ratio Growth Rates, (2017). [Online]. Accessed through
http://www.nasdaq.com/symbol/fb/pe-growth-rates. [Accessed on 15th Nov 2017].
Instagram, The $50 Billion Grand Slam Driving Facebook's Future: The Forbes Cover Story,
(2016). [Online]. Accessed through
<https://www.forbes.com/sites/kathleenchaykowski/2016/08/01/instagram-the-50-billion-
grand-slam-driving-facebooks-future-the-forbes-cover-story/#4b89711a4a97>. [Accessed
on 15th Nov 2017].
Phillips, S, (2007). A brief history of Facebook. [Online]. Accessed through
<https://www.theguardian.com/technology/2007/jul/25/media.newmedia>. [Accessed on
15th Nov 2017].
Porter’s Four Corners Model, (2015). [Online]. Accessed through <http://www.free-
management-ebooks.com/news/porters-four-corners-model/>. [Accessed on 15th Nov
2017].
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