COMM5615 - Facebook Growth Analysis and Dynamic Hypothesis Report

This report provides a comprehensive analysis of Facebook's growth, focusing on its user base, revenue, net income, and marketing expenditure from 2008 to 2019. The assignment involved developing a dynamic hypothesis to explain Facebook's growth over time, presented through a causal loop diagram. The report explores the feedback loops responsible for generating this growth, incorporating variables such as user engagement, customer satisfaction, marketing strategies, and competitive landscape. It also discusses the impact of Facebook's services, product lifecycle, and marketing efforts on its financial performance, along with the digital economy and the importance of understanding industry trends. The analysis incorporates various graphs and diagrams to illustrate key findings and relationships, drawing upon references from academic sources to support the arguments presented. The report also provides an overview of Facebook's business operations, including employee growth, and its position relative to competitors, such as Alibaba.com. The report concludes by emphasizing the factors behind Facebook's success and its position as a leading social site.

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Name:
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Professor’s name
University name
City, State
Date of submission
Introduction

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Facebook is one of the leading technology companies in the world. It is an American
based social media company based in California and its function is mainly a social
networking site. Facebook.Inc was founded in Harvard dormitories by Mark Zuckerberg and
other college students who included roommates Andrew McCollum, Eduardo Savarin and
Chris Hughes. It was initially limited to Harvard students only and membership was only
expanded to other Ivy League universities like MIT some months later. Since its prototype
become successful, it later expanded to other institutions including high schools in the USA.
In 2006, the company allowed anybody above the ages of 13 years to be members of the
social site. The name Facebook comes from the Face book directories found in America
(Francesco, 2017).
1. Model conceptualisation using systems thinking mapping and diagraming
tools (Model Conceptualization)
Its accessibility is through the internet connectivity via personal computers, smart
phones and tablets. The process of its membership is registering a profile with the company
and revealing all the information deemed necessary to the other viewers such as the names,
school attended or even the work place. This makes it easier for connecting with people who
may know you on a personal basis or have proxy interaction with your profile.
Loop diagram showing the hypothetical growth of Facebook as a social site

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Since then, Facebook has more than 4 Billion users in it with 2.45 Billion active monthly
users as of December 2018.
Facebook users according to country, New registration and user quit rate
The graph above shows that India has the largest number of Facebook users followed
closely by the US. The profile can reveal all the necessary information including multimedia
photos and texts that one can post and shared with friends. One can also join common
interest groups and the application can also act as a market place for buying and selling of
items and services. More and more people are getting connected via the internet than
anything else (Haberfellner, de Weck, Fricke, and Vössner, , 2019).
Although Facebook has been through a lot of negative media coverage and controversies,
its popularity around the world continues to sore having gained more users than any
technological companies including Twitter, Instagram, Amazon, Apple and even its sister
company Whatsapp. Although the rate of quiting facebook is low, the dormancy of users
profile remains high.

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Controversies include breach of privacy and users data through an English company
Cambridge Analytical. They data mined from Facebook was used for political manipulations
by various regimes around the world. It has also led to addictions, self-esteem issues and
some contents that some of the users find objectionable (Naim, et al,, 2019). These are
some of the psychological issues that are associated with the use of Facebook. Fake news,
copyright infringement and conspiracy theories have all been associated with Facebook
which has started a crackdown of people who are perpetually spreading fake news and false
information. Facebook has been the most downloaded mobile app of the decade and its still
having a lot of people joining its social network.
Experienced Consultants, Novice Consultants, Recruitment, Novices Quitting,
According to Data, Facebook had the biggest number of social network users n the
world at 2.7 Billion and had generated a revenue stream of US$ 70 Billion=. The revenue
had grown by more than 37.5% from the previous FY 2018 to FY 2019. The rate is faster
than Twitter, Netflix, Apple, Google and Amazon. Most of its revenues is generated via

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advertisement where it has invested more than US$10 Billion annually for sales and
marketing. It has invested over 10 billion in office operation in over 70 countries across the
world where advertisement can become easily accessible. Many business are moving
towards social media advertisement since a lot of people have become too much into social
media than traditional advertising platforms like televisions. Through its investor website
(https://investor.fb.com//home ), the annual business reports future annual investor’s
business prospects and wealth information of the company.
Facebook operations
According to the expenses for Facebook using the normal operational costs, the
number of employees continued to rise from 2009 -2019.
Managers "brew" in their own routine to clear up the huge flow of information that falls on
them daily. Keeping track of volatile trends in Internet marketing in this mode is almost
impossible. (Rangone, and Mella, , 2019).
2. Modelling Business Growth and Testing Alternative Strategies
A well-designed strategy in Internet marketing contains the necessary elements, which will
be discussed later.Consideration of industry specifics of the client’s business in Facebook
Marketing

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Total revenue and advertising from 2007 to 2018 by Facebook. The graph also
shows total net income most of which comes from advertising income. It is important to
consider not only the macro industry, but also the micro industry in which the company
operates. The category “micro industry” is akin to the concept of company specialization.
The company is engaged in trade. Trade is the macro industry, and food is the micro
industry, that is, the specialization of the company. In addition, an understanding of industry
trends will help to further understand who are the real competitors of the company, and not
just the top ten sites appearing in the top search engine results.

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Facebook vs competitors like Alibaba.com.
The site of the company today performs many important functions:

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Therefore, a self-respecting expert will always honestly tell you who can best
implement this or that plan. Therefore, analysis of enterprises operating in this environment,
identification of their strategies and key success factors becomes especially important
(Rebs, Brandenburg, and Seuring, 2019). The digital economy implies economic activity
associated with millions of everyday online communications between people, business,
which means the growing need of people, organizations for the exchange of information that
can be realized only through the Internet, mobile technologies, etc. We can conclude that the
digital economy is it is a virtual environment that complements our reality with technological
digital innovations.

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1. Systems thinking and business dynamics final project
Abroad, a huge amount of money is spent on social media marketing. Social media
advertising spending tends to increase. Revenues from advertising on selected social
networks in the United States from 2015 to 2018 (in millions of dollars). These statistics
reflect data on ad revenue on selected social networks. Revenue from advertising on
LinkedIn amounted to $ 731 million, Facebook - $ 15 193.8 million. According to forecasts,
the total amount of advertising revenue in the USA on these social networks at the end of
2018 will be 20,950.8 million dollars. The process of its membership is registering a profile
with the company and revealing all the information deemed necessary to the other viewers
such as the names, school attended or even the work place.In 2017, global revenue from
advertising on all existing social networks amounted to approximately $ 41 billion
Converting causal loops into stock and flow diagrams
In foreign literature, social media refers to any form of Internet communication (social
networks, blogs, sites) in which users can create online communities, exchange information,
ideas, private messages and other content (for example, video). This marketing environment
is different from traditional channels of disseminating information in terms of breadth of reach
and frequency.

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This is the customer delight casual loop diagram
According to the loop diagram in reference to Facebook, quality services leads to
customer satisfaction and therefore a lot of customer commitment leading to an increase in
contribution and profit margins. Facebook has developed system that are customer centric
leading to more and more users entering the social site and more and more traffic for
advertisement (Williams,, Kennedy, Philipp, and Whiteman, , 2017). The result is an
increase in revenue and therefore income margins continue to grow. The system thinker
product life cycle shows how Facebook as a product has made an impact from its
introduction to people buying its products and finally an increased customer base.
System thinker product lifecycle

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The system thinker product life cycle shows how Facebook as a product has made
an impact from its introduction to people buying its products and finally an increased
customer base (Saviano and Caputo, 2017). Due to aggressive marketing, the net income
and revenues growth is shown in the diagrams below. Total revenues and income continued
to rise from 2009 to subsequent years and has shown a tremendous increase in revenue
gained.

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4 . Conclusion/ evaluations
Facebook has grown in leaps and bounds since its inception in 2004. As a result of
quality services, innovation and systemic approach to competition, it has become the biggest
social site in the world with a big revenue base from its advertisements. The digital economy
implies economic activity associated with millions of everyday online communications
between people, business, which means the growing need of people, organizations for the
exchange of information that can be realized only through the Internet, mobile technologies
References
Francesco, C., 2017. Reflecting upon knowledge management studies: insights from
systems thinking. International Journal of Knowledge Management, 8(3/4), pp.177-190.