Detailed Analysis of Facebook's Business Environment and Strategies

This report provides a comprehensive analysis of Facebook's business environment. It begins with an introduction to the business environment, differentiating between micro and macro factors and highlighting the importance of environmental analysis for strategic decision-making. The report then employs the PESTLE framework to assess the political, economic, social, technological, environmental, and legal factors impacting Facebook. Following this, Porter's Five Forces analysis is used to evaluate the competitive landscape, including competitive rivalry, the bargaining power of buyers and suppliers, the threat of substitutes, and the threat of new entrants. An internal analysis is then conducted, utilizing the VRIO framework to assess Facebook's resources and capabilities. Finally, a SWOT analysis is presented to identify Facebook's strengths, weaknesses, opportunities, and threats, culminating in a conclusion that summarizes the key findings and strategic implications. The report is based on the current business environment and provides insights into Facebook's strategic positioning and challenges.

Introduction to Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
PESTLE FRAMEWORK................................................................................................................1
PORTER'S FIVE FORCES ANALYSIS........................................................................................4
INTERNAL ANALYSIS.................................................................................................................5
SWOT FRAMEWORK...................................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment will be classified into two sectors, one is micro and another is
known as macro. It is required for an organisation to examine their surrounding as it enables
them to formulate proper strategies as well as policies for an organisation (Johnson, 2016).
Therefore, they will be able to conduct business in an effective and efficient manner. Present
assignment is based on Facebook, which is a leading social networking site in the world. It is
required for them to evaluate environment as this enables them to take an appropriate judgement
for business. To know strengths and weaknesses of an enterprise, they will conduct SWOT
investigation. Along with, to know capabilities, core competencies and resources of firm they
will take support of VRIO analysis. There are many competitors of association at marketplace,
such as Instagram, Snapchat etc.
TASK
PESTLE FRAMEWORK
Each kind of company needs to evaluate external environment in a proper manner
because this will provide impact to entire business activities directly or indirectly (Galí, 2015). It
is totally uncontrollable by firm and for this, they will organise PESTLE investigation. This will
be mentioned as below:
Political Factors: Business of Facebook is directly is association with political
circumstances in a direct manner. If it is stable in nation then, this will create more opportunities
for firm as they will be able to diversify business in marketplace. Along with, they are having
some chance to enlarge their social media as with help of this, they will display ads which will
access by individuals globally. For above stated aim, regulatory body will cater support to them.
Moreover, various political obstructions are facing by enterprise in China. Thus, there success
rate is restricted due to censorship of Chinese. Hence, it is required for firm to bargain with
ministry body of China so that they will openly exhibit ads in nation. This has been analysed
that, they are having proper support of government so that they will easily demonstrate
advancements and in addition determine some opportunities for services (Belás and et. al., 2015).
There are some prohibitions which restrain individuals from illegal actions, for example:
enhancement of fake accounts, hack personal information and so forth. Therefore, it is needed
for affiliation to spend more fund on privacy for users.
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Economic Factors: This kind of element will assist company into their success as well as
development. To enhance market share, organisation will obtain support of market penetration
because this assists to maintain economical condition of country. As purchasing power of people
is high then, they will be able to buy more devices so that they will easily access many social
sites like Facebook. This will cater growth and improvement to an association. Hence, this has
been examined that, if nation's GDP is high then buying power of individuals will automatically
maximum. In recent times, infrastructure as well as telecommunication of country is improving
continuously which will render growth to them. Therefore, due to more stability in economic
organisation will enlarge their operational activities with assistance of market penetration
(O’Leary, 2017). With help of many advertisement, Facebook will improve their revenues in an
effective manner. Besides this, there are some more elements which will include into this, like
growth patter, interest rate, exchange rate and so forth.
Social factors: This has been analysed that, Facebook is much popular amongst the entire
world. They will get affected by this component either directly or indirectly. Market trend and
preferences of people will modify according to time. If income of individuals get enhanced then,
their standard of living will automatically get improved. People always want qualitative services
from company. Henceforth, firm is having an opportunity to increase their quality standard;
therefore, they will be able to retain users for maximum period of time. Along with, by providing
best kind of advertisements they will gain attention of numerous individuals towards them. On
the other hand, there is an another opportunity for Facebook that, they will improve online
behaviour because this assist in improvisation of profits. They will generate sales via some
application which are connected with mobile. It is required for organisation to accomplish CSR
activities in an effective way; thus, they will be able to cater maximum satisfaction to their users.
This will help them to sustain at market for maximum period of time and in addition, they will
obtain competitive benefits from rivals. They need to conduct market research to know about
needs and wants of people because this enables to increase their experience. In recent time, there
are some e- commerce services developed by Facebook which help them in increment of
revenues. As this helps them to improve number of active users; as a result, they will generate
profits automatically (Epifanova and et. al., 2015).
Technological Factors: Mark Zuckerberg has founded Facebook on online tool. There is
an opportunity for company to increase experience of people as they will provide best and
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effective services to individuals if they are using application on mobile. It is much significant for
them, because utilization of mobile is enhancing rapidly. Moreover, there is wide competition for
enterprise at marketplace as there are many other sites are developing to gain attention of
numerous individuals towards them which will affect customer base of Facebook. There are
major competitors of this, Snapchat, Instagram, Google and many others. Along with, there are
many online retail organisations which are considered as a threat for them as well. For example:
Amazon.com is affecting their market share because they also do advertisement like Facebook
Incorporation (Prajogo, 2016). Therefore, it is must for firm to increase quality of ads as this aids
to increase experience of users. It is essential for affiliation to use latest techniques as well as
methods so that they will be able to protect privacy of users. This will help to make them more
comfortable for using Facebook. Along with, it is must for them to add some more features into
their application as this will make experience of people more appropriate and significant.
Environmental Factor: As Facebook is a social media network; thus, it is much
connected with natural surrounding. They are having chances to increase business to maintain
their sustainability at market for longer period of time. Enterprise will apply many policies or
rules to reduce wastage, such as disposal policy. It will assist them to keep up operational
activities of firm in an effective manner. There is a threat for company, i.e. change in climate
which will encourage some equipment in other place in upcoming period of time. Along with
this, it is required for an enterprise to enhance policies, strategies as well as standard of corporate
social responsibilities. Therefore, it is must for manager of an enterprise to examine extrinsic
environment of country so they will operate business in a professional way (Hillary, 2017).
Legal Factor: It is essential for company to implement requisite laws and legislation into
business. Facebook will introduce new or latest item for individuals and launch it globally.
During that time, they need to apply acts into firm so that they will conduct operations in an
ethical manner. Organisation will provide free Wi-Fi to persons; therefore, they will gain
attention of numerous individuals. This has been analysed that, FB is banned in China; thus, they
are having an opportunity to bargain with their regulatory body and modify their services
according to them. Henceforth, they will easily enlarge their business over there in a proper
manner. By conducting business ethically, they will be able to run or regulate association in a
smooth way. The major advantage of it, clients will accept this without any conditions. This will
help to protect data and information of persons from hackers or any unethical use (Demil and et.
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al., 2015). Therefore, by conducting proper research in market, they will improve their business
operation in an appropriate manner (PESTEL analysis of Facebook, 2018).
PORTER'S FIVE FORCES ANALYSIS
Company needs to conduct Porter's five force analysis as this will assist them to maintain
position at marketplace for maximum time span. This will stated as beneath:
Competitive rivalry or competition: Facebook Incorporation is one of the leading firm at
marketplace. In recent times, there are various small associations who are offering advertisement
services to people. Along with, there are many enterprises who conduct online ads which is
considered as foremost competitor of firm. Rivalries are providing this kind of services to
individuals at lower cost which will gain attention of numerous people towards them (Sekaran
and Bougie, 2016). Thus, it is must for manager to formulate some strategies which will aid them
to compete with contenders at market. Along with, there are more rivals of association, such as
Snapchat, Instagram etc.
Bargaining power of buyers: Services regarding social media is providing by company
to their users. Moreover, they gain profits through advertisement of many businesses. Thus,
advertisers are having many options for advertisement. This will comprise print media, TV, radio
and many others. Therefore, they will be able to target maximum number of people at a single
time. Person will obtain method as per their charges. But, it has been analysed that online ads are
much helpful to gain attention of numerous individuals towards them. To retain users for longer
period of time, it is require for an association know needs and requirements of individuals on
regular basis. Along with, it is required for affiliation to use more tool so that they will be able to
improve their privacy. There are many option which will be used by persons other than Facebook
is, WhatsApp, Messenger and so on. Henceforth, it has been comprehended that, bargaining
power of purchasers is much high (Doh, McGuire and Ozaki, 2015).
Bargaining power of suppliers: This will include developers as well as technology which
assist company in enhancement of application and in addition software for Facebook
Incorporation. Ericson and IBM are considered as a foremost suppliers of association. Therefore,
it has been understood that their bargaining power is less as if they switch to others then this will
acquire high cost.
Threats of substitutes: There are many social sites which are having same kind of
features like Facebook, this will comprise, Twitter, Google+, Instagram and so forth. These sites
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are also providing a feature to individuals i.e. photo sharing, video call, chats and many more.
On the other hand, many new applications are launching by distinctive people in market; thus, it
has been comprehended that substitute threat is strongly high. Along with, advertiser will use
some other tools for advertisement, for instance: TV, radio, print media etc.
Threats of new entrants: In modern era, more social sites are developing by persons
which will gaining their attention. It has been analysed that, switching cost is much less so that
individual will easily move from one site to other (Kolk, 2016). Similarly, it is not easy for an
association to gain trust and loyalty of advertiser because if someone is providing them same
services at less price then they will switch to there. But, as Facebook is giving their services to
people from past many years; thus, it is not easy for others to break their clients. Thus, threat of
new entrant is less of Facebook Incorporation.
INTERNAL ANALYSIS
VRIO stands for Value, Rarity, Imitability and organisation. This is considered as a
significant techniques which needs to be examined by superior through developing proper
policies or strategies. This aids organisation to maintain position and in addition growth at
marketplace. In context of Facebook, with assistance of VRIO analysis manager will examine
their firm deeply. As indicated by Moutinho and Vargas-Sanchez (2018), firms want to take
benefits from their contenders; therefore, they will obtain trust and loyalty of users. If quality of
services are much appropriate then, this assists them to maintain client base for maximum period
of time. For attainment of this, enterprise has to taken into under consideration rarity and in
addition value of capabilities and resources; thus, they will arrange and utilize available
resources effectually to create appropriate items or services for users.
Wallace (2017), evaluated that affiliations who are having rare and valuable assets,
possess some capabilities or competencies so that they will use them to attain coveted targets and
objectives in an innovative or creative way. As a result, desired goals will achieved within set
time span. It will aids them to compete with contenders at competitive place. In relation to
Facebook, they have accurate capabilities and along with resources which help them to fulfil
requirements and wants of individuals in an effective manner. The main reason behind this, they
are having maximum competencies which enable them to accomplish targets within time.
Henceforth, they will take benefits from Google+, MySpace etc.
Summary of Facebook’s VRIO analysis:
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Basis Valuable Rare Costly to
imitate
Exploited by
organisation
Competitive
implication
Physical
resources and
efficiency
YES YES YES YES Sustainable
competitive
benefit
Financial
resources
YES YES YES YES
Management
and Training
YES YES YES YES
Brand YES YES YES YES
Social trend YES NO NO YES
Facebook
home
YES NO NO Not yet
identified
 Valuable: This factor will help to present capability of an organisational resources as
with help of this, firm will able to determine more opportunities or chances for
themselves at marketplace. This will assist affiliation to acquire protection from rivals
and in addition help in enhancement of value of customers effectually (Georgescu and
Popescul, 2015). In the year of 2016, as per the quarterly report Facebook has earned
almost 60 billion. By having proper resources as well as capabilities, an enterprise will be
able to explore more opportunities for them which help them to gain more profits and
users. Along with, FB is considered as a most valuable social networking sites as
comparison to others across the world. Rarity: This component will assist to demonstrate those resources which will be obtained
by some enterprises only. It will be available rarely for firms and assist them to take
benefits from contenders at marketplace. Besides this, when two or more organisations
will access similar kind resources then, they will easily take support of market
penetration. In context of Facebook, they are having rare as well as unique resource in
cyberspace. On the other hand, some another sites, for example WhatsApp, LinkedIn and
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so on, provide a facility of real time chatting. Some extra features like, image sharing,
ads, flyers, chats etc. make them unique. This will also considered as a core competencies
for them (Sodeyfi, 2016). Imitability: As stated by Khan and Quaddus (2015), this will contain higher cost but if
any substitute is available at marketplace at affordable value then, firm will obtain it. This
has been analysed that imitation will happen by the direct substitution as well as
duplication. In relation to Facebook, they are having copyright and in addition patent
which help them to secure them from being stolen by rivals. Henceforth, this sort of
unique attribute assist them to take benefits from contenders at marketplace and will be
considered as a competencies as well.
 Organisation to capture value: It is required for an association to draw framework; thus,
they will be able obtain their value in market. Along with, manager of an enterprise need
to formulate some strategies and policies so that they will be able to maintain growth and
success. In context of Facebook, they are maintaining proper structure and their
fundamental aim is to concentrate on clients' satisfaction. They are providing additional
services to consumers, such as chats, photo sharing and so on. It helps to improve
interaction level of individuals (Wheelen and et. al., 2017).
Facebook was launched in the year of 2004 and they obtained growth very quickly. In
recent time, they are considered as a second popular social networking site across the world.
They are having clear business strategy, that they want to focus on clients requirements and
desires. Their mission is to provide an appropriate power to individuals so that they will share
things with others and maintain contact with them. Almost 1000 millions users are having their
account on Facebook. Financial condition of affiliation is much adequate; thus, they will easily
improve features of application on regular basis. It aids them to take benefits from contenders at
marketplace.
Henceforth, it has been understood that resources, as well as capabilities of an enterprise
will assist them to analyse intrinsic environment (Pearson, 2017). For this, VRIO analysis will be
done by superior as these factors include into this.
Instead of some resources and capabilities, there are many core competencies of
Facebook which are stated as beneath:
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 They are having large client base; therefore, many advertiser will do advertise on
Facebook. This will help to capture attention of numerous individuals towards them.
 It is a well known brand which help to make connection with friend at global or local
level.
 This is best place, with help of this any individual will begin their business as well
(Johnson, 2016).
SWOT FRAMEWORK
Company has to determine their strengths and weaknesses; therefore, they will formulate
strategies in an effective manner. By determining opportunities, they will be able to reduce their
threats proficiently (SWOT analysis of Facebook). For above stated aim, they will conduct
SWOT investigations which will be understand by the following description:
Strengths: Integration with websites and applications: To capture attention of numerous individuals,
social sites need to implement new features; this aids to enhance experience of users.
Several websites are integrated with Facebook which are running through their assistance
(Galí, 2015). People will easily use their application that assist them to take competitive
benefits from contenders. More than a billion active monthly users: For development and growth of any social
networking sites, they require numerous users. Individuals will connect with each others
via Facebook at local as well as international level. This has been analysed that almost
one billion users are active monthly on this site. Excellent user experience: Persons will operate app on mobile and computer as well.
They will easily use it into more than 68 languages which improve user's experience.
Along with, they are having numerous features which are not available into other
applications. Understanding of user's needs and behaviour: There is no association who gather data
and information of their consumers regarding requirement, likes, desires, dislike etc.
except Google. In the context of Facebook, they are having much knowledge about their
clients so that by implement new feature they enhance their experience on continuous
basis (Belás and et. al., 2015).
Weaknesses:
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 Weak CTR of advertisements: Here, CTR stands for Click through rate; this has been
evaluated that Facebook is not having high CTR as comparison to other websites.
Therefore, if they want to gain more profits with assistance of advertisement then, it is
required for them to modify they way of displaying it. But for this, they will not affect
experience of users either in a direct of indirect manner. Social network lacks of some features: It has been assessed that, Facebook is having
maximum features as comparison to other sites. But, there are some attributes which is
not present into this, which will comprise dislike button, lack of privacy and so on. One source of revenues – advertisement on Facebook: They generate almost 82% profits
with support of ads. Growth rate of firm is highly associated with customer's growth
(O’Leary, 2017). Attitude towards users' privacy: Individuals will save their personal data or information
into their Facebook account. They will use this for their own aim and sell it. This will
render an adverse affect on users and as a result, popularity of company will get
diminished. Lack of website customization: There are numerous people who spend their maximum
time on many social sites. They want that they will easily save their person data over
there and other persons will know them through this easily. But, they are not providing
any customization services to individuals. As compare to Google+, they are having many
features in respect to personalization of information (Epifanova and et. al., 2015). Weak protection of users' information: Many persons update their personal data on
Facebook on regular basis. There are some people who stole their data and use it for their
beneficent. In recent days, hackers are stealing more than thousand of users password;
this will show lack of security.
Opportunities: Increasing number of people using Facebook via mobile devices: Approximately 590
million individuals are using Facebook through mobile. Thus, they are having a chance to
improve their profits, like they will do advertisement which will be access by people by
mobile. It will assist to increase revenue of company (Prajogo, 2016). Expansion to China: There are some strategies which will be formulate by an association
to take an entry into the market of China.
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 Diversity sources of revenue: To generate profits, organisation is much rely on
advertisement. They are on number two and having more than 1000 million users.
Therefore, it is required for them to identify more opportunities through which they will
gain more money (Hillary, 2017). Open Facebook marketplace: This has been analysed that, they are having an adequate
position in marker which assist to take advantages from others. To boost their success
and development, they have to find out more ways to generate profits.
Threats: Increasing number of mobile internet users: In modern era, numerous individuals are
operating Facebook by their mobile. Company is doing advertisement which will be
access by people of they are log in on PC. This will reduce their income so it is required
for firm to do ads more which will be access by persons on mobile. Users using ad – block extensions: Many users install some extensions which will block
ads. This is considered as a threat for enterprise because individuals will not be able to
see advertisement or click on it as well (Demil and et. al., 2015). Slow growth rate of online advertising: This has been analysed that, due to online ads
success rate of other kind of advertisement is diminishing which will be a major threat for
Facebook. Identify thefts: Recent time, it is much easy to determine stealer on FB. If it is high then,
this will provide impact to the brand image on association either in a direct or indirect
manner.
 Weak business model: The fundamental target of company is to gain attention of
numerous individuals towards them. For this, they will display some ads and take some
amount as a charge from businesses. In today's era, lots of troubles are facing by them
which are not controllable by them. This will comprise new social sites, online ads,
enhancing amount of mobile user and many others. Therefore, it is not easy for an
organisation to diversify their income source (Sekaran and Bougie, 2016).
CONCLUSION
From above assignment it has been analysed that it is required for an affiliation to
evaluate business environment as this will affect entire operational activities either in an direct or
indirect manner. PESTLE analysis is conducted to evaluate extrinsic surrounding. Therefore,
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