Strategic Analysis: Facebook's Positioning and Crypto-currency Venture

This report undertakes a strategic analysis of Facebook, examining its current strategic positioning and its proposed venture into the crypto-currency market, specifically focusing on Libra. The analysis begins with an introduction to Facebook's mission and revenue model, followed by an examination of its external environment, including a detailed PESTEL analysis. The report then delves into Facebook's strategic intent regarding crypto-currency, outlining its plans for Libra and its potential impact. A significant portion of the report is dedicated to identifying and explaining the barriers to entry Facebook will encounter in the crypto-currency market, considering factors such as regulatory hurdles, security and privacy concerns, and building consumer trust. The report concludes with a summary of the findings and a discussion of the overall potential for the success of Facebook's crypto-currency venture. References to academic journals and the subject textbook support the analysis.

Facebook: Strategic Positioning
Running Head: Facebook0

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Table of Contents
Introduction...........................................................................................................................................2
Facebook External Environment...........................................................................................................2
PESTEL Analysis..............................................................................................................................3
Crypto-Currency Strategic Intent...........................................................................................................5
Crypto-currency Barriers to Entry.........................................................................................................6
Conclusion.............................................................................................................................................7
References.............................................................................................................................................9

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Introduction
Facebook is an American social networking company founded by Mark Zuckerberg. The aim
of Facebook is to connect many users around the world, to help people to bring themselves
closer to each other and share the things that matters to them. Company was found in 2004,
the mission of the company is to build community online, stay connected with their friends,
family and discover what is happening worldwide. Mostly Facebook make most of the
revenue by advertisement appears onscreen and the News Feed of the user (Patel, 2019). The
description in the following is about the external environment of the company and its current
strategic positioning, the proposed venture of Facebook into crypto-currency, and barriers to
the entry Facebook will be encountering.
Facebook External Environment
The External Environment of Facebook includes the outside factors of a business that makes
an impact on its business. Moreover, the components include political, social, economic,
legal, environmental and technological environments (Holste & Mayer, 2019). Facebook has
some positive factors, which enhance its strength as it is free of the charges, it can also be
used for the purpose of advertisement. It is a leading website of social media. However, it
also face challenges in terms of its ability improving the monitoring of the users that mean
negative or bad with the Facebook page, For example-rapist, stalkers and child molesters.
The website is open up to many businesses and people no matter who the user may be. Thus,
Facebook must need to work on blocking those users that do not mean well. It also holds
some weak points as it also allow the minors to use invalid information for signing up,
security risks and cyber bullying. Moreover, not fixing these issues is the cause of Facebook
losing its user because of not feeling safe and they move on to a more comfortable social

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media website. However, Facebook is still one of the strong brand names. The external
factors of Facebook are considered the elements that are affecting the company and also
functions or operations from the external or outside environment of the company/firm or
enterprise. The external factors that are affecting Facebook can also slow down its growth
(Young, 2019). As well as it also helps the company to grow through the demand of the
current environment.
PESTEL Analysis
Facebook affected by its external factors of environment for maintaining the position in the
market through development and technology improvement, and for analysing the factors
including political, economic, social, technological, environmental and legal are need to
discuss (Young, 2019).
Political factor-
Government shows its concern about Facebook in a form that the data of a specific person
should be secure properly like their personal info. Facebook has also announced that it will be
restricting political ads which are being brought by the non-Australian during the election but
it will not roll out the other political ads transparency features which are used in the other
countries until and after the election (Theguardian, 2019). In addition, Government has
restricted social networking to generate the illegal actions like numbers of increasing
accounts which are fake and personal information hacking.
Economical factor-
Facebook needs to analyse upon the economic factors because its growth will shape by
economic factors and conditions. Gross Domestic Product (GDP) growth is amongst the most
important economic factors.

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According to Australian economist, Kevin Fox, there is a way to measure the ‘free’ activity
and this result in it being included in the GDP (Tett, 2018). Facebook collects the money with
its advertising model, and those transactions does not capture its value of utility to
consumers. The growth in usage of Facebook for business has enabled SMBs (Server
Message Block) to connect with the customers and grow the revenues, both internationally
and locally. This enables the existing businesses to grow as well as new businesses to be
build, creating new opportunities of employment (Hutchinson, 2018). Also Facebook can
enhance global operations if market pushes in, because of the economic stability. Moreover, a
growth of GDP of Australia by 0.5% in the first quarter of the year shows another positive
reason for Facebook to be in Australia (as both the company and nation are growing due to
support of each other).
Social factor-
The social situations affect Facebook’s global reach. As Facebook is a social networking
website, it is very important to analyse the behaviours of the people to accept the personal
network. Regarding personality and society, a study over one thousand Australians
reported-‘Users of Facebook tend to be more narcissistic and extraverted, but they less
socially lonely and conscientious, than the nonusers’ (Jarrett, 2015). Further, the popularity of
Facebook across all age groups shows that the social factors favour the company; and this is
true for majority nations, including Australia.
Technological factor-
Technology directly makes an impact on the business of Facebook. In addition, issue of basic
security regarding information hacking, demand use of updated technologies to make
customers safe. Competition regulator of Australia, Rod Sims says that the website has
capability to deal with proliferation of the fake news on platform, but instead, social media

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behemoth “palming off responsibility” in order to protect its bottom line (Theguardian,
2019).
Environmental factor-
Social business of Facebook does link with the natural environment. Moreover, Ecological
issues and trends affect Facebook’s macro environment. The sustainable situation of the
business of the social media will satisfy and improve concerns of the natural environment.
With power of social media, Facebook can work (and even shift the attention) towards the
recent environment issues and problems, that threaten the environment.
Legal factor-
Law impose limitation on Facebook’s business. Regulations and law set by some regulated
bodies in terms to operate the social networking websites are also crucial. In December 2018,
The Australian Competition and Consumer Commission (ACCC0 has released the
preliminary report of its Digital platform inquiry; it tabled a series of bold proposals
including the concerns of data privacy and security of websites like Facebook and Google
(Molitorisz & Wilding, 2019). Moreover, the privacy breach concerns faced by the company
across the globe present a tough challenge for the company.

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(Source: Kotler, 2015)
Crypto-Currency Strategic Intent
In June 2019, Facebook announced the intention of launching its crypto-currency Libra-
Facebook aimed to release that digital money in the first half of the year 2020. To be certain,
people barely knows yet what is Libra (vision of Facebook and Libra to have so far given to
all over the world which is very immature, and with a very few specifics and quite a little bit
of fluff), but people already know that the oversight of US will be an effort to multi-agency
(Silva, 2019). Facebook is also having some big takeaways as mentioned here:
Facebook is in plan to launch a big network, which is of fully paid (rather than only
remittance), and also in the discussions with the Visa and the MasterCard kind of payment
networks, payment processors like giant First Data and also large merchants of e-commerce
for supporting launch. Facebook is also seeking up to the amount of $1 billion as collective
investments from the firms in the order to act like collateral to the bolster and stable back
coin with which payments networks will be associated. A stablecoin will be existed as the

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payment system’s currency in order to minimize fees of the credit cards for the merchants
and for avoiding volatility of several another crypto-currencies like ether and bitcoin. The
company Facebook.Inc is also considering to tying coin to the core one ads engine of
Facebook, rewarding the users for viewing the ads and then after purchasing goods, very
similar to how work is rewarded by the loyalty points (theblockcrypto, 2019). Marcus, recent
head of Facebook Messenger, describes that Facebook began marshalling resources as the
crypto-currency plan, which is most ambitious since Bitcoin (Lacey, 2019).
Crypto-currency Barriers to Entry
Facebook has entered to the big leagues with announcement of crypto-currency Libra.
Facebook’s entry to the market of crypto-currency means that every single of the company
now has to take the crypto-currency seriously. The companies all over the world have now
considering their strategy crypto-currency, Libra (Yago, 2019). The mission of Libra crypto-
currency is that it is simple currency and infrastructure, which is global, that empowers many
people. The crypto-currency of Facebook, Libra, is going to be used in an application of
standalone, or the messaging platform of its own, China popular WeChat. If greenlit by the
regulators that pushes the technology world past a dangerous and significant threshold- it will
be powerful already (Lou, 2019).In December of 2018, Bloomberg reported that the company
intended to build stablecoin. Stablecoin are kind of controversial crypto-currency that has
comparatively frictionless settlements like classic crypto-currency, without the volatility of
price. Rumours swirled that the company was seeking the investors in terms to back the
crypto efforts of it (Dale, 2019). One challenge and barrier is its poor record of
accomplishment of the security and privacy. Not just because the crypto-currency could hold
up so much of the value to be stolen, but also because a number of the troll would also get off
for screwing up the company’ currency. That is why the Facebook has open sourced crypto-

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currency Libra Blockchain; it is offering a proto-type in the pre-launched testnet. This has
meant to surface all the vulnerabilities and flaws before the crypto-currency go live with the
real money that is connected (Constine, 2019). There are three more major factors, Facebook
must solve in respect of its proposed venture into crypto-currency. These are as follows- How
to bring regulators and government on board; How to rebuild the trust of consumers around
the data privacy; Analysing if Facebook is social enterprise or power monger (Liu et al.,
2019)
Conclusion
Based on the above description, it can be conclude that Facebook is the one among top social
networking service websites that has many factors that relates to its external environment and
make a direct and indirect impact on it. For instance, it has a number of opportunities that
have proved the external strategic factor of Facebook and are available for the Facebook to
grow its business of social media internationally. Different external factors of Facebook was
also analysed in PESTEL framework. Facebook is heading up to launch its crypto-currency,
Libra. There, it has several expectations from the project and it is expected that there are
many external and internal challenges the company would be facing in present and upcoming
times in terms of seeking investments and operations as well. In addition, it may be facing a
lot of strategically and analytical challenges in terms of launching crypto-currency, and its
proposal into venture the crypto-currency market.

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References
Constine, J., 2019. The real risk of Facebook’s Libra coin is crooked developers. [Online] Available at:
https://techcrunch.com/2019/06/18/libra-analytica/ [Accessed 02 September 2019].
Dale, B., 2019. Libra: Everything We Know About Facebook’s Cryptocurrency. [Online] Available at:
https://www.coindesk.com/everything-we-know-about-facebooks-cryptocurrency [Accessed 02
September 2019].
Holste, B. & Mayer, T., 2019. Libra is a Challenge for Europe. Wirtschaftsdienst, 99(8), p.567.
Hutchinson, A., 2018. Facebook Releases New Report Underlining the Economic Benefits of the
Platform. [Online] Available at: https://www.socialmediatoday.com/news/facebook-releases-new-
report-underlining-the-economic-benefits-of-the-platf/530928/ [Accessed 09 September 2019].
Jarrett, C., 2015. How Facebook is changing our social lives. [Online] Available at:
https://www.weforum.org/agenda/2015/10/how-facebook-is-changing-our-social-lives/ [Accessed
09 September 2019].
Lacey, E., 2019. The Ambitious Plan Behind Facebook’s Cryptocurrency, Libra. [Online] Available at:
https://www.wired.com/story/ambitious-plan-behind-facebooks-cryptocurrency-libra/ [Accessed 02
September 2019].
Liu, M., Ensor, B. & Giron, F., 2019. 3 tough challenges Facebook must solve for its Libra
cryptocurrency. [Online] Available at: https://www.siliconrepublic.com/enterprise/facebook-libra-
cryptocurrency-challenges [Accessed 02 September 2019].
Lou, E., 2019. Facebook cryptocurrency: dawn of the corporation-government. [Online] Available at:
https://www.theguardian.com/commentisfree/2019/jun/19/facebook-cryptocurrency-libra
[Accessed 02 September 2019].
Molitorisz, S. & Wilding, D., 2019. The law is closing in on Facebook and the ‘digital gangsters’.
[Online] Available at: https://theconversation.com/the-law-is-closing-in-on-facebook-and-the-
digital-gangsters-112232 [Accessed 09 September 2019].
Patel, N., 2019. 5 Steps to Creating a Profitable Facebook Advertising Campaign. [Online] Available
at: https://neilpatel.com/blog/5-steps-to-creating-profitable-facebook-advertising-campaigns/
[Accessed 07 September 2019].
Silva, M.D., 2019. What are the odds Facebook’s Libra launches on time? [Online] Available at:
https://qz.com/1671887/facebooks-libra-cryptocurrency-could-be-delayed/ [Accessed 02
September 2019].
theblockcrypto, 2019. Project Libra: Facebook to launch stablecoin-based payments network.
[Online] Available at: https://www.theblockcrypto.com/tiny/project-libra-facebook-to-launch-
stablecoin-based-payments-network/ [Accessed 02 September 2019].

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Theguardian, 2019. Australian election: Facebook restricts foreign 'political' ads but resists further
transparency. The guardian.
Yago, E., 2019. Facebook’s Cryptocurrency Is a Nail in the Coffin for ‘Blockchain Not Bitcoin’. [Online]
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