Comprehensive Analysis: Facebook Business Model Canvas Report

This report provides a comprehensive analysis of Facebook's business model using the Business Model Canvas framework. It begins with an introduction to the core purpose and organizational structure of Facebook, followed by a detailed examination of the nine key elements of the Business Model Canvas: key partnerships, key activities, value propositions, customer relationships, customer segments, key resources, channels, cost structure, and revenue streams. The report explores each element in the context of Facebook's operations, providing insights into how the company generates value, engages with customers, and manages its resources. Furthermore, the report includes an analysis of Facebook's value proposition canvas, examining customer profiles and value propositions. The report concludes with a summary of the key findings and references cited throughout the analysis.

Developing Enterprise

Table of Contents
INTRODUCTION ..........................................................................................................................1
Core purpose and organizational structure......................................................................................1
Business Model Canvas ..................................................................................................................2
Key Partnership...........................................................................................................................3
Key Activities .............................................................................................................................3
Value Proposition........................................................................................................................4
Customer Relationship................................................................................................................4
Customer Segments.....................................................................................................................4
Key Resources.............................................................................................................................5
Channels......................................................................................................................................5
Cost Structure..............................................................................................................................6
Revenue Streams.........................................................................................................................6
Value Proposition Canvas ...............................................................................................................6
Customer profile .........................................................................................................................6
Value proposition .......................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES .............................................................................................................................10

INTRODUCTION
Now a days there are many ways available for the development of the business
enterprise. Among them there is a business model canvas which is used by the business
enterprise in order to propagate and establish there business and achieve there organizational
goals. The report studies the business model canvas of the company Facebook. Facebook is
widely known company and having billions of users. As the level of business is very high there
is need to study and evaluates the elements relating to the functioning of the company.
The business model canvas comprise of various business elements like- cost structure,
key activities, key resources, customer relationship, value proposition, revenue schemes,
customer segmentation and the companies partners and the various channels of business.
Thereafter the report will study the value proposition canvas of Facebook which consist of the
value propositions and the customer profile. The canvas are defined through the use of tables in
the report.
Core purpose and organizational structure
Facebook is an American company. The company deals with social media and social
networking service. Facebook was founded by Mark Zuckerberg, along with his room mates
Eduardo Saverin,Andrew McCollum, Dustin Moskovitzand Chris Hughe sand the college
fellows of the Harvard college. Facebook is considered among the Four big companies which are
Google, Amazon and Apple.
Initially the face book's membership was limited to the students of the Harvard College.
Than face book expanded to the other universities and high schools. The Initial Public Offering
of the company came in Feb 2012, and valuing the company at $104 billion(Antikainen and
Valkokari, 2016).
Facebook can be accessed by its user through the internet connection with the help of
personal computers, tablets and smartphones. Facebook users can connect to the other Facebook
user by sharing photos videos and text messages. Facebook have more than 2.3 billion monthly
active users as per the data revealed in December 2018.
Business Model Canvas
Business Model Canvas is the visual chart presentation of a strategic management and
also a lean and brief template about any business. This model is used for developing new or
documenting the existing business models. It comprises of 9 headings of the structure of
1

business which are key partnership, key activities, value propositions, customer
relationship,customer segments, key resources , channels and cost structure , revenue streams.
Through the use of this model a company can align its resources and activities to see its
potentials(Blasi, Caruso and Viganò, 2017). The business model of the company FACEBOOK
comprise all the elements of the model and it is very important for the business. The model acts
as the outline of the business and studies the key factors of the company face book. For face
book in making the effective business model canvas it needs to evaluate the customer segment,
proposition, building customer relationships and various key resources and the cost structure.
FACEBOOK BUSINESS MODEL
Key Partnerships
~Content Partners
~Advertise agencies
Key Activities
~Product
Development and
enhancement
~Operation
management
Value Proposition
~ connect, share,
discover and
communicate each
other.
~Reach, relevance,
social context,
engagement
~ Development
tools and payment
infrastructure.
Customer
Relationship
~ same side
network effect
~ cross side
network effect
Custome
r
Segment
s
~ global
internet
users
~market
ers
~
Develop
ers
Key Resources
~Data centres
~ Brand and IPs
Channels
~Website and
mobile apps
~ Global sales
force
Cost Structure
~ Data centre costs
Revenue Streams
~ Free
2

~ Research and development costs
~ Marketing and sales costs
~ Credit card fees
~ Advertising revenues
~ Payment fees
Key Partnership
Partnership is combining of two or more firm to operate a business collectively. The
partnership helps in the reducing of the risk associated with the company and sharing of the
profit. The partnership assists the company to work effectively in the market and allocate there
resources. IN the company Facebook partners include content partners and the advertising
agencies which form a major part in the revenue of face book(Caetano and et. al., 2017).
Facebook along with its partners is the brand which deals with online services. The content
partners are responsible for providing the contents for the sites and advertising partners ,
advertise on screen of the face book sites.
Key Activities
Key activities relates to those operation which a business undertake in there normal
course of business. It defines the core areas of the company doing the business. The company
have to focus on its key activities in order to become successful and complete all the task
effectively. In face book the key activities are product development and enhancement and also
operation management of the data. The function product development and enhancement refers to
the development and evaluation of the existing products by the company and also creating the
new product for the users like apps and advanced feature in the existing apps(Dudin and et. al.,
2015). Operation management deals with the operating of the business function in order to meet
the daily requirements of the company Facebook and it also includes pricing , distribution and
diversification of the product.
Value Proposition
Value proposition helps to ascertain the needs of the customer and thus producing those
goods which are essential to the customers. The value proposition models is a important part of
the business which helps to direct the company in the direction where there is more profit. It
evaluates the extra value which a customer gains and the disadvantages of the products which
could be improved by the company. Facebook uses the value proposition by connecting,
sharing, discover and communicating with their customers and collecting feedbacks on the
3

product and implement them in the new products(França And et. al., 2017). The company
Reaches to its potential customers and get the relevant information, social context and
engagement. The company adopts the development tools and payment infrastructure.
Customer Relationship
The customer relationship is the relationship and bounding of the company with its
customers. The customer good relationship are the most important part of the business. This
helps in the successful achievement of the company goals and ascertain that there is proper flow
of services to the customers . The customer relationship can be categorised as personal
assistance, self- service, co-creation, dedicated personal assistance and the problem solving of
the customers. In concern with the customer relation of the company Facebook has two types of
the relationship with customers that are -same side network effect and cross side network effect.
Facebook is benefited by same side network as the addition of more users are beneficial for the
company Facebook(Joyce and Paquin, 2016). On the other hand the users connect through the
developers are also beneficial to the Facebook which creates the cross- side network effects. As
more apps become available, the Facebook platform becomes more useful to the users of the
company Facebook.
Customer Segments
Customer segments is also a valuable part of the company which distributes and
segments the customer according to there needs. The customer segmentations helps in the
fulfilment of the needs of the customer according to there specific needs. Thus customer
segmentation helps the company in profit maximisation with the selling and manufacturing of
the relevant goods by the company. In face book the company segments its customer in three
categories global internet users, the market users and the developers. The global internet users
are the users which are on international level and uses internet services along with face book this
a major segment and given a special attention(León And et. al., 2016). The market users are the
customers who uses Facebook in local boundaries and uses Facebook as there source of earning
too. The last are the developers which helps in developing the company through the
advertisements these are also important for the company as a great source of revenue.
Key Resources
Key resources are the resources used by the company in order to produce the product
according to the customer segmentation and satisfying its customer according to there needs. The
4

key resources are also used in the value propositions of the company. It is a major component in
the company as the company uses these resources to produce the produce efficiently and useful
in performing the key activities of the company. The key resources are mainly diversified
according to there needs in the production process and then used in the different sectors. Than
there is allocation of the resources and there usage in the company(Lima and Baudier, 2017). In
Facebook the key resources are- Data centres are the main source of data providing the ample
amount of the data to the company. The company than uses this data in its apps and Facebook
accounts. Brand and IPs are also the resources which are used by the Facebook in there efficient
working.
Channels
Channels are the medium through which the company reaches its product to there
customer. The channels in the business models are also refereed to the medium between the
company and the value prepositions. For a business there can be various channels available such
as distributors, store fronts and partners etc. a company uses this channels for the flow of
services through them. For all the company there is a need of 1st identification of the customer
channel to contact with the customer and the contact point where the company and the customers
both agrees(Ojasalo and Ojasalo, 2018). In the company Facebook the channels used by the
company are website and mobile apps and the global sales force. The website and mobile apps
are the main channels through which the services are transferred by the company to its users.
These apps and websites of the Facebook company is accessed by the user through the internet
connections.
Cost Structure
Cost structure are the expenses or cost incurred by the company in order to run its
business. The company incur cost in the production of the product and services. The cost
structure includes the cost of goods sold, and also the cost incurred on the companies
infrastructure like staff , real state, capital expenditures, transportation, administration and
advertising cost. The Facebook has the following cost structure -
 Data centre costs
 Research and development costs
 Marketing and sales costs
 Credit card fees (Onken and Campeau, 2016)
5

Revenue Streams
Revenue streams are basically the the sources of revenue earned by the company. This is
a methodology which a company uses in order to sale the goods and services of the company.
This creates a consumer base for the company. Revenue streams segments can be explored and
actual revenue can be calculated by the deduction of the cost in the total revenue earned through
the customer. The revenue streams can be usage fee, licensing, sale of assets, advertising, renting
, leasing and brokerage fees earned by the companies. In the Facebook company the major
revenue streams are – Free Advertising revenues, in this revenue is generated by displaying ads
of the advertising companies in the websites and mobile applications of the Facebook. The
advertisements are displayed in the Facebook, Instagram and Messenger. Payment fees is the
fees received by Facebook from the developers using its payments infrastructure(Pedersen,
Gwozdz, and Hvass, 2018). And also there is revenue earned by Facebook through delivery of
virtual reality platform devices and various other sources.
Value Proposition Canvas
Customer profile
Customer jobs
The customer jobs describes the specific thing which a segment of customer is trying to
achieve. Each of the customer may have different expectations from the company. Each
customer may be satisfying its own need and competing there own work. The company
Facebook focus on the customer segment satisfaction so that every segment of customer is
satisfied by the services of Facebook. For example young people may want the Facebook with
advance features whereas the old and less educated people may want that the features of the
Facebook is easy and comfortable(Toro-Jarrín, Ponce-Jaramillo and Güemes-Castorena, 2016).
Pains
These are the situation which are related to the customers desired situations, the negative
impact and the risk factors which a customer could experience while using the product and
services. These are the issues comes complementary to the products and services which may
occur or not. In Facebook there is negative impact on the users mainly to the young generation
who gets diverted by the use of Facebook apps and websites. There is risk of hacking of the
6

information of the users by the hackers. There can be negative impact on the adolescent by
contacting with the wrong persons(Antikainen and Valkokari, 2016).
Gains
This can be defined as the benefit received by the customer from the product and
services. These can from the product and services can be by functional utility, social gains and
the positive gain from the usage of that product. These gains can be accomplished by the
customers by quality product, timely delivery of the product and services, and after sales service
of that product. Facebook users gain from Facebook by connecting with many people at a time
and also sharing there thoughts and views which is social and emotional gain to the customers.
Value proposition
Facebook is the most popular social networking service company. In the recent time most of
the consumers use Facebook to make connection with their friends and families. Value
proposition can be defined as values that are promised to deliver by business to its respected
clients. Value proposition can be defined as business strategy that aids the firm in satisfying its
consumers and retaining them in organisation for longer duration(Blasi, Caruso and Viganò,
2017). It is treasured tool that assist enterprise in gaining competitive advantage and making
potential buyers loyal towards brand. It is very important for marketing planners of Facebook
that to create significant value proposition in order to accomplish organisational goal
successfully. This kind of plans help business in creating unique brand image in the mind of
consumers. There are two major parts of value proposition canvas: customer segment and value
proposition. Customer segment is the element for which company create value and value
proposition is the strategy that supports in attracting more consumers towards the firm(Caetano
and et. al., 2017).
Products & Services Gain creators Pain relievers
Cloud integration
Faster shipping
Cost effective products
Helpful for SME’s for
expanding their business
Express yourself
Real time analytics
Online sales channels
Social engagement
(França And et. al., 2017)
Economic of scale
Provide better communication
opportunities
Social experiences
payments
7

Products and services
It is the item that is provided by company to its consumers, firm designs and offers such
products and services that are able to meet the needs of consumers to great extent. Products of
Facebook are dynamic in nature and are able to fulfil requirements of different type of users.
Facebook offers mobile apps, portal branded devices, Spark AR studio, audience network,
software etc. many items and services. By using these services customers can easily make
connection with friends and families. This is beneficial tool that is helpful in making smooth
communication between users that are located at different locations(Joyce and Paquin, 2016). All
the goods of Facebook are able to satisfy social, emotional or functional requirements of internet
users. In addition, Facebook platform is also interlinked with many other online platforms
through which many small or big business can advertise their products and can spread
information about their services. This type of facility aids in raising their sales to great extent
(Business model canvas, 2019).
Gain creators
It is another most important element of value proposition that helps in alleviate the pains
of consumers. Facebook always believes to create gains for the buyers or users so that they
become more committed or loyal towards the brand. Real time analytics, online sales channels,
social engagement are main gain creators of Facebook(León And et. al., 2016). Facebook is
required to ensure whether its services are able to create value for consumers or not. If not, then
enterprise has to make changes in its services or strategies. This may support in accomplishing
the goal of business unit successfully and entity will be able to retain its consumers for longer
duration. Users can use Facebook and its related social sites or services at minimum cost thus, its
products are able to create value for money and it offers quick services to consumers.
Pain relievers
Pain relievers are the ways in which the company can relieve the customer from the
problem occurred through the use of the product and service(Lima and Baudier, 2017). Through
this the company ease to lessons the pain of the customer by providing the suitable remedy.
Within this segment Facebook uses many plans to assist the users from the problems. It includes
the use of highly protective user profile which is accessed by the user itself and no one else.
There are many privacy policy to block the person causing trouble to the users of the
Facebook(Ojasalo and Ojasalo, 2018).
8

CONCLUSION
Facebook is among the biggest companies. Facebook uses many plans and policies in
order to develop and propagate its business. The plans regarding the functioning of Facebook can
be studied through the use of business model canvas which illustrates the various elements in the
business. The report contained the business model canvas of Facebook which explained the
various areas of the company like parters of the company which are content partners and
advertising agencies and the key activities performed by the company. the value proposition,
customer relationship contains same-side network effects and cross- side network effects. There
are three segments of customer which are global internet users, marketers and developers.
Furthermore cost structure defines the cost incurred by the Facebook. The key resources are data
centres and brand and IP s. also the channels used by Facebook are Facebook website and mobile
apps and the global sales force. Thereafter reports studies the various revenue streams of the
Facebook which are free advertising revenues through depicting the ads in the websites of
Facebook and other payment fees by the software developers who uses Facebook interface.
9

REFERENCES
Books and journals
Antikainen, M. and Valkokari, K., 2016. A framework for sustainable circular business model
innovation.Technology Innovation Management Review.6(7).
Blasi, G., Caruso, A. and Viganò, E., 2017. Participatory design of a sustainable school canteen
through the development of a Business Model Canvas.Economia agro-alimentare/Food
Economy.18(3).
Caetano, A. and et. al., 2017. Representation and analysis of enterprise models with semantic
techniques: an application to ArchiMate, e3value and business model canvas. Knowledge
and Information Systems.50(1). pp.315-346.
Dudin, M. and et. al., 2015. The innovative business model canvas in the system of effective
budgeting. Asian Social Science.11(7). pp.290-296.
Dudin, M. N. and et. al., 2015. Business model canvas as a basis for the competitive advantage
of enterprise structures in the industrial agriculture. Biosciences Biotechnology Research
Asia.12(1).pp.887-894.
França, C. L. And et. al., 2017. An approach to business model innovation and design for
strategic sustainable development. Journal of Cleaner Production.140.pp.155-166.
Joyce, A. and Paquin, R. L., 2016. The triple layered business model canvas: A tool to design
more sustainable business models. Journal of Cleaner Production.135. pp.1474-1486.
León, M. C. And et. al., 2016. Designing a model of a digital ecosystem for healthcare and
wellness using the business model canvas. Journal of medical systems.40(6). p.144.
Lima, M. and Baudier, P., 2017. Business model canvas acceptance among French
entrepreneurship students: Principles for enhancing innovation artefacts in business
education. Journal of Innovation Economics Management.(2).pp.159-183.
Ojasalo, J. and Ojasalo, K., 2018. Service logic business model canvas. Journal of Research in
Marketing and Entrepreneurship.20(1). pp.70-98.
Onken, M. and Campeau, D., 2016. Lean start ups: Using the business model canvas. Journal of
Case Studies, 34(1), pp.95-101.
10