Business Environment Evaluation: Facebook Inc. Report - BUS101

This report provides a comprehensive analysis of Facebook Inc.'s business environment. It begins with an introduction to the concept of the business environment, highlighting the significance of macro and micro factors, and introduces the PESTLE and Porter's Five Forces frameworks. The report then delves into a detailed evaluation of Facebook's macro environment, examining political, economic, social, technological, environmental, and legal factors. It also explores the micro environment, applying Porter's Five Forces to assess competitive rivalry, the threat of new entrants, bargaining power of suppliers and buyers, and the threat of substitutes. Furthermore, it investigates the internal environment of Facebook Inc., identifying its strengths, weaknesses, opportunities, and threats (SWOT). The report concludes with a summary of findings and offers insights into the challenges and opportunities facing Facebook in the current business landscape. This report is a student submission on Desklib, a platform offering AI-powered study tools and resources.

Introduction to Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASKS.............................................................................................................................................1
1. Evaluation of macro environment wherein Facebook Inc. used to operate............................1
2. An investigation of the micro environment whereby Facebook Inc. operates........................5
3. Investigation of internal environment of Facebook Inc..........................................................7
4. Identification of strengths, weaknesses, opportunities and threats of Facebook Inc..............9
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................13

INTRODUCTION
Business environment simply refers to an area which includes collection of external and
internal factors (Boons and Lüdeke-Freund, 2013). Each and every venture used to operate in a
specific business environment. It has been recognised that this surrounding consist of different
macro and micro elements which is having impacts on entire functionalities of all companies.
Pestle analysis is considered as one of the way of discovering these effects. This is to be
conducted prior to making any policies and starting any business at new location. After that,
there is necessity of designing proper strategies in order to so that such influences can be
minimised in effective manner. So, it can be said that this tool helps in dealing with every type of
conflicts or problems which may emerge during running business actions. Additionally, it is also
vital for corporations to do evaluation of micro factors. For performing the same, they can
enforce porter's five forces as this is a good technique for determining about circumstances
related with internal industry and for knowing about essential constituents such as key
stakeholders. The present report is based on the Facebook Inc. In this project, pestle analysis has
been carried for the referred organisation so as to reveal the effects of external factors. Apart
from this, each aspects associated with business environment is also going to be described.
TASKS
1. Evaluation of macro environment wherein Facebook Inc. used to operate
Facebook is an American online enterprise which is dealing with services inter- linked
with social networking and are owning different social media applications including Facebook,
Oculus, Instagram, Messenger and WhatsApp. These apps are assisting in connecting whole
world in single chain like with the help of such digital applications people living across entire
globe can connect themselves with their relatives, friends and distant family members. Besides
this, civilians can share their views, personal messages as well as images with whom they want.
Its webpage was designed by Mark Zuckerberg and his colleagues and room mates in the year of
2004. The name of these supporters are Andrew McCollum, Eduardo Saverin,Chris Hughes and
Dustin Moskovitz (Chen, Chiang and Storey, 2012). This company falls under one of the top
most player in the field of societal media marketing. From a survey , it has been found that they
comprises of vast man – power and an estimated quantity is 25, 105 in year of December 2017.
In addition to this, their income ratio was reported as US$15.934 billion in same time period.
1

Facebook Inc. requires to understand concepts regrading macro analysis. For this, they
need to take assistance of an important tool named as PESTLE framework. It refers to political,
economical, social, technological, environmental and legal factors. By applying it , Facebook
Inc. could recognise about affects of those competences on their working and then can act
accordingly. Constructs associated with such factors can be understood effectively by following
points :
Political factor : Commercial activities of Facebook is completely inter- liked with
political circumstances of nation. For referred venture, legal bodies are showing their worries by
giving security to people regarding their personalised data. The main reason of doing this is to
reduce the level of stress of all individual who are using social media apps since there is more
chances of leaking of information. So, government are trying their best in resolving this kind of
issues and keeping personal messages and pictures of citizens in appropriate as well as secure
style (Cuervo‐Cazurra, 2011). Apart from this, it has been observed that higher authorities in
several countries are banning unfair actions like creation of fake account, hacking of
personalised information, leaking of videos and MMS and so on. For this they also have
designed certain rules & regulations which must be followed by each and every people of
specific nation. If violation of these norms is done by any individual then he or she would be
treated as guilty in the eyes of law and punishment will be given as per the severity of such
action. It is to be noted that governing system of China is acting as hindrance for Facebook and
are confining it in taking entrance into its market place. This is considered as main concern.
Economical factor : It is most vital element of business environs because its impacts are
viewed in terms of development and growing of particular firm. Here – in, concept of Gross
Domestic Product (i.e. GDP) comes into picture. The main purpose of conniving this ratio is to
find out the total expenditures relating to investment as well as income that is gained after
serving users. Thus, helps in determining about strength of an enterprise and purchasing
capabilities. It has discovered from a survey that Facebook Inc. had added economic value of
around 15.3 billion dollars to the economical system of Europe and as a result they are offering
jobs to numerous of jobless person. It has provided occupation to near 232,000 individuals
(Briscoe, Tarique and Schuler, 2012). Apart from this, a drastic growth in the engagement of
employees of this organization for the job of advertising & user recommendations is examined
which in turn accrued their brand worthiness and bring it close to 7.3 Euro. In addition to this,
2

there has been recorded increment in incursion along with stableness of marketing economical
situation in most of developing states and countries. This is offering an opportunity to mentioned
company as their fast ontogeny will aids in improvement of monetary fund as well as
telecommunications. Hence, Facebook Inc. could enlarge its world – wide operations if the
penetration occurs in market – location due to stability in economy.
Social factor : This component is also effecting performance of Facebook Inc. in greater
extent since behaviour and attitudes of common people are changing day by day. Now- a – days,
they are showing more interest towards social networking sites. Almost all individual in all over
globe are having an account on above defined digitalised applications as they are actually
enjoying such facilities and feeling relaxed by taking with their long – distance colleagues,
friends and families. Therefore it can be said that social factor is influencing positively and
helping refereed corporation in attaining large sum of profits. Yet few citizens specially females
are facing issues in context to leakage of personal images, video clips, information and different
facts which they are not wishing to share with an unknown person. But due to apps like
Facebook and Whats app, these things are being viral and reaching to each and every individual
who are using similar application (Ishengoma and Kappel, 2011). This is major concern of
females, due to it ; most of women or girls are not feeling safe and secure. Thus, they fear to use
social networking sites and this action is treated as an adverse impact of society since number of
clients are lowering on constant basis.
Technological factors : In present era, the universe has been becoming totally digital and are
offering various benefits to not only companies but also to every individual who are surviving on
this earth. Facebook Inc. is utilising contemporary techniques in their commercial activities and
improving the same easily. For example, programming languages such as Apache, MySQL,
Linux, PHP, etc. are being used for the purpose of framing core structures especially front end
framework (Dumas, La Rosa, Mendling and Reijers, 2013). Apart from that, numerous of
languages liked with coding like java, python, C++, Erlang and many more for creating web
based services. Hence, technological aspects are impacting in affirmative way to refereed
organisation.
Environmental factors : The societal activities of Facebook is closely affiliated with
natural surroundings. This has been noticed that ecological traditions as well as problems
connected to that are affecting overall macro environment of given firm. The sustainability
3

situation of cultural media would be upgraded and as a result can every concerns happened in
natural environs could be resolved. Good waste management principles as well as standards may
deal any type of complexity which rises in western locations. By this way, threats of climate
modifications can be reduced easily that Facebook Inc. has to face.
Legal factors : There are so many norms and standards imposed by government bodies
of specific nation. Since, Facebook Inc. is operating its business in almost all states or locations,
thus they have to follow legalisations made by each governance (Pestle analysis, 2017). This is a
very complex task as breaching of even a single rule may put a question mark on the image of
this venture. Some laws are giving optimistic influences also. For example, government of
specific country has made certain jurisprudence for protecting innovations done by ventures by
forming patent law. By this way, none of the firm could use or claim for its ownerless of
particular merchandises or processes innovated by any company.
Illustration 1: Pestle analysis
(Source : Pestle analysis, 2017)
4

2. An investigation of the micro environment whereby Facebook Inc. operates
Micro environment analysis is nothing but the analysation of nearly constituents which
would affect capabilities of a venture in terms of its users serving ability like such as
organisation itself, marketing intermediators, consumer markets, public and suppliers as well.
For doing the same, Facebook Inc. is needed to apply Porter five forces model as from this tool
they can easily realise their conditions or level of competence and could easily adopt specific
strategies for improving its weak parts. In addition to this, by using similar method, refereed
corporation can attain idea about existing competitors. By this, Facebook can effectively made
proper decisions in terms of investment so as to compete with their expected rivals. At the same
time, there is necessity of determination of prospects associated with stakeholders. They are
considered as an important part of organisation who either effect venture or get impacted by the
business activities of specific association (Commander and Svejnar, 2011). Thus, it can be stated
that such persons completely influence entire targets, aims, goals, plan of action, policies and
objectives in both positive as well as negative mode. The key share holders linking with
Facebook Inc. are legal body, customers, workers, directors, suppliers, society and many more.
The conception of Porter's five forces theory for refereed corporation can be easily
understand by below listed points :
 Competitive Rivalry – Medium : This has been recognised that in beginning Facebook
was not facing any rivalry. But in this modern world, competition is increasing on
continuous basis and different rivals are also noticed such as Snapchat, Twitter and many
more. Social media marketing thus full of challenges and in order to tackle this,
innovation needs to be enforced. Hence, referred company requires to perform
innovational works and provide some unique facilities to common people so that they get
attracted towards their services and do not try to move to other companies. It has been
observed that few attributes or services which is bing offered by Google + and Twitter
are not present in apps of Facebook Inc. Hence, users of this venture is declining day by
day. For handling this situation, Facebook Inc. have to take help of niche marketing since
from that they can target especially to youngsters and could catch opportunities of
owning more market sharing efficaciously. In addition to this, this enterprise is also
giving its best by acquiring power over different apps like Orkut and Whatsapp. Through
5

it, they may retain dominance in current market place. Thus, competitory rivalry is found
medium against Facebook.
 Threats of New entrants – Low : Establishing a social media webpage like Facebook
Inc. and its relating applications is very costly as well as complex work. Thence, newer
associations can not be entered in market easily. If any new comes wishes to take entry in
existing social marketing network, it has to bear lot of difficulties in respect to money,
funds, raw materials, work- forces, developers, and so on. Apart from this, the main issue
is associated with trust or loyalty. This can not be gained easily by any ventures.
Facebook is treated as trustful organisation since its presence is very old as well as
reputable. More than billions of citizens are using applications of referred firm, so it is
not easier to any company to compete with this as creation of its good image would
consume long period of time. Hence, it can be said that internet business could be
characterized by lower barriers to entrance.
 Bargaining Power of suppliers – Moderate : The providers or suppliers of mentioned
organisation is those people who are supplying them developers and modern
technological instruments and they are assisting in creation of different apps and assorted
software. Facebook Inc. is considered as the bulk acquirer of such technologies; but the
matter of concern is that only few reputable suppliers are present that are Ericson and
IBM (Savrul, Incekara and Sener, 2014). Hence, the choices in this regard is limited in
nature and fairs related to switching is also very expensive. Thereby, bargaining
powerfulness of the suppliers for the given organisation is average.
 Bargaining power of Buyers – High : The consumers or purchasers of Facebook Inc.
involves many users who are having accounts on messenger, Whatsapp, Facebook,
Instagram and its various app. As there is surveyed wider range of rivalry, thus buyers
comprise of different choices; additionally no costing associated with switching incurs by
doing so. Another purchaser of refereed company is those marketers who used to run
advertisement on their webpage. They could also migrate to other social media websites
if they feel high prices in Facebook for acquiring better publicity. Thereby bargaining
power of purchasers are also treated as high (MARKETING THEORIES - EXPLAINING
PORTERS FIVE FORCES, 2017).
6

 Threats of Substitutes – High : There are different secondary applications related with
platform of social media are available which act as substitutes for the Facebook Inc. like
Twitter and Google +. Besides it, large number of innovational apps are being presented
in market on regular basis, such things are greatly impacting working of this company in
adverse manner. Substitute for marketers which are utilise Facebook for the intent of
publication are television, blogs, newspapers and many other websites. Hence, it can be
said that there is high level of substitutes for Facebook Inc. since similar activities are
being carried on market of social network.
Illustration 2: MARKETING THEORIES - EXPLAINING PORTERS FIVE
FORCES
(Source : MARKETING THEORIES - EXPLAINING PORTERS FIVE FORCES, 2017)
3. Investigation of internal environment of Facebook Inc.
Facebook Inc. was set up in the year of 2004, by Mark Zuckerberg. Analysis of interior
environs is a crucial term which comprises of several prospects like resources, capabilities, core
skills and core competencies too. This prospects can be better understood by following
discussions :
Resources : Resources simply described as usage of few specific assets as per the need of
an organisation. Key resources for the Facebook Inc. include man - power, intelligence team,
technical devices such as software, hardware and so on. Without these commodities, any of the
commercial activities could not be carried on (Popescu, 2013). They are having resources like
7

human resources. Administration group who used to manage whole work. Members in this team
are involving workers such as software engineers, web developers, debuggers, testers, servers
checkers, risk handlers, etc. Such all staffs are performing for attaining every aims & objectives
of Facebook. From a survey, it has discovered that personnels working here – by is
approximately more than 25,105. in addition to this, incorporation is enclosed by top – most
share – holders and executives. They are comprising of unit of stakeholders wherein chief one
are clients or users, publishers, work – forces, government body, communities.
Capabilities : Capability is nothing but the ability of performing something which make
any individual or an enterprise unique in nature. This could not be come alone but it is
considered as labour of overall team. The monetary value of Facebook Inc. is being increased by
13 % per annum and now reached to approx, US$15.934 billion in the year of 2017. In addition
to this, this venture has also owned different apps like Instagram and Whatsapp. By this way,
number of consumers of referred organisation is enhanced in drastic form (Solomon and et. al.,
2014).
They are also including turnkey services associated with parse which requires authentication of
users , pushing notification, consolidation, info related to location, social media and data
analytics into an application. Apart from it, they have also founded a way of creating
profitability from sales of Android apps. Freshly, Facebook Inc. has launched its own platform
for hosting videos and publishing of updated news.
Core skills : Facebook is recruiting their workforces by focussing on core skills.
According to them, their workers should have different attributes or should have knowledge in
terms of web development technology, problem solving approach, designing, artificial
intelligence, cloud computing, distributed system. In addition to this, candidates have to be
affable with several programming language such as C++, Python, Git, PHP, Java, Paysa,
algorithm and cloud computing, distributed systems (Sekaran and Bougie, 2016).
Core competencies : Core competencies could be defined in context of having several
criteria which helps in proving any venture better in relation to another corporations. Prospects
associated with advertising is the key characteristic role ; on the basis of that contest between
Facebook & Google is occurring. Facebook Inc. is performing in good manners in this regard
and thus giving great competition to Google since its gross income coming from mobile
advertisement is around 73 % which is overmuch in compared to Google's. It includes its
8

personal SSO (single sign-ons) system, which is helping in tracking record of marketers such as
purchasing rate. Apart from this, referred enterprise is also offering safe and secure means of
sharing data. They have recently updated their security system and now concentrating more on
the same so that proper services could be delivered to potential users.
4. Identification of strengths, weaknesses, opportunities and threats of Facebook Inc.
Facebook Inc. is a famous global corporation that is used to offer services inter –
connected with societal networking. They are having large number of users in all over the globe.
So, several rivals are keeping their eyes on working of this venture and try to move forward in
relation to it. Thus, it is vital for referred enterprise to investigate about their own abilities which
helps them in knowing its capabilities, power, opportunities, weakness and threats. By doing so,
venture could implement such types of strategies which in turn aids in improving their existent
situations. After evaluating, above discussed analysation macro and micro environmental factors,
it is recommended to use a tool named as Swot analysis for revealing facts affiliated to Facebook
Inc. This aspect is described as follows :
Strength :
 By the increment in utilization of mobile phones and representation of applications of
Facebook, there has been recorded a preceding modification in terms of number of users
of given company. As per the report of FY2015, Facebook comprised of approximately
169 million regular account users which is treated as huge number in comparison to the
former years. It is also capturing leading markets in United States, India and Brazil
(Tayur, Ganeshan and Magazine, 2012). Some other thing which is going in the favour of Facebook Inc. is nothing but the fact
which is existence of allegiant client base. This shows that all users are regularly
updating their personalized information. As per the request of their possible customers,
apps set up on Facebook are constantly updated so that more and more people get
attracted towards them and by doing do activistic users of referred corporation could also
be increased. Hence, Facebook Inc. is enjoying the position of non-replicable competitory
advantages.
Weakness :
9

 Absence of better promotional technique : Facebook Inc. is not incorporated with
CPM advertising system and thence including few number of clicks, so far larger number
of customers are making accounts regularly on its different social media apps.
 Lack of honoured e - mail address : The mentioned company is also not having famed
and safe email addresses in relation to some others. Corporation such as Google is
catering better identical gmail services. This is impacting negatively on the image of
Facebook. Thus, they need to improve these circumstances and offer more safer emailing
to their expected users. Absence of client's privacy : This has been seen that it become very easy work of
hacking some one's account or personal infos. Thence, in position of security,Facebook is
still not comprising of good reputation (Yu and Ramanathan, 2012). Case affiliated with
leakage of personalised data like images, videos, messages and so on is increasing on
continuous basis. This is one of the great weak point of given company. But instead of
this, more than billions of users are present in this world who are using applications of
Facebook Inc.
Threats :
There are mainly five threats to Facebook's dominance that is social network site these must be
address by them form no stop in future.
 Newsfeed Confusion : Facebook have to modify their newsfeed algorithm on regularly
basis to keep their users happy. Apart from this when tweaks are badly received it
damage credibility of social networks.
 People stop using Facebook : this is going on because people are founding more
interesting social networks. Because it look less attractive to developer, advertiser which
gives negative impact on revenue, business, financial condition and major impact on
operations.
 Privacy concern : people feel that are have privacy issues when they are using Facebook
because everyone can see images uploaded by person. This issue is becoming serious
from last few years.
 People have fear of hacking accounts and even some of the person can make their fake
accounts. This decline credibility level of Facebook as well from last few years they are
10