Facebook Inc. Business Environment: A Detailed Analysis

This report provides a detailed analysis of the business environment in which Facebook Inc. operates. It begins with an introduction to the social media market and its significance in modern business promotion. The external environment is examined through a PESTLE analysis, covering political, economic, social, technological, legal, and environmental factors impacting Facebook's operations, including the effects of Brexit and technological advancements. The microenvironment is analyzed using Porter's Five Forces, assessing the competitive intensity and attractiveness of the industry. An internal environment analysis identifies Facebook's resources, capabilities, and core competencies. Finally, a SWOT analysis summarizes the strengths, weaknesses, opportunities, and threats faced by Facebook Inc. in the global market, offering insights into strategic challenges and potential growth areas. Desklib provides access to this and other solved assignments for students.

INTODUCTION TO BUSINESS ENVIRONMENT

Table of Contents
Introduction......................................................................................................................................3
1. External Environment analysis within which Facebook Inc. operates........................................4
Political Factors...........................................................................................................................4
Economic Factors........................................................................................................................5
2. Microenvironment (Industry environment) analysis within which Facebook Inc. operates.......8
Conduct an analysis of the internal environment of Facebook Inc...............................................10
4. Identifying the strengths, weaknesses, opportunities and threats faced by Facebook Inc.........16
Conclusion.....................................................................................................................................18
Reflective Log...............................................................................................................................20
Reference List................................................................................................................................29

Introduction
In this age of globalization and modernization, social media market plays a predominant role in
the promotion of a particular product and service. A social media market incorporates elements
like e-marketing and digital marketing. The different social media platforms implements built in
data analytic tools that ensure the tracking of the success and progress of the ad campaigns. With
the advent if social media market a strong network has been established between the companies
and their potential customers.
In this report a detailed analysis of the various factors that impact the business of Facebook Inc
has been conducted. The factors both external and internal affects the growth and progress of the
company and also portrays the key drivers that changes the ways people share their views,
photos, ideas and the regular activities that they do with their friends and the general public. The
report will also illustrate the challenged faced by Facebook Inc in the competitive global market.

1. External Environment analysis within which Facebook Inc. operates
Facebook Inc, a social media organisation deals with those products that help people to connect
and share through their computers, mobile devices and different surfaces that enables the public
to share their videos, photos and other activities with different forms of audiences that can be
their friends or general public(Hayden, 2016 ).The products the business incorporate are
Facebook, WhatsApp, Messenger, Oculus and Instagram.
The social media market operates globally and the operation and functioning of the business
depends largely if not wholly on the external factors that tend to affect the functioning of the
company. In this context a thorough analysis of the macro environment gains a priority.
The Pestle Analysis model portrays external analysis of the essential and important factors in
the remote and the macro environment of the company. The analysis will help the company to
understand and adjust the different business strategies to maintain their market position and
popularity. The factors can be the key drivers of change for the business. To understand the
macro environment impacts on the company’s operation, The Pestle Analysis has been discussed
here.
Political Factors
The business of the company is related to the political scenario of the country. The different
government policies and the governing bodies of the country play a pivotal role in the business
progression. The major factors in the country’s politics can be the political stability of a
developed country like United Kingdom. The support given by this country’s government for an
advanced globalization and social media marketing in this place plays a crucial role for Facebook
(Tuten, 2017). The diversifying business of the company can also gain opportunities to expand
their business with the varied bilateral ties. The bilateral ties play a crucial role of a key driver in
the business. In United Kingdom due to lesser risk of the invasion of the military the political
scenario can avoid unrest and conflicts. These factors help the business of Facebook Inc to
expand and grow.

However, it is immensely remarkable to mention the Brexit impact and the risks involved in the
expansion of the business in this part of the world (Del Vicario et al., 2017). The decision of UK
to leave the EU has brought a radical change in the world of global business. United Kingdom
has been giving 1.3 % of revenue for Facebook and with the Brexit a swing in the exchange rates
and the rise of inflation has proved to be a threat to the business of Facebook not only in Europe
but also in the major geographic territories.
Economic Factors
UK has been considered as the leading power in the trade industry and the different financial
centers. In the year 2018, the economy of the country has been in a better health. The economic
growth has started to rebound in the year 2018 after slowing down in 2017.This has enhanced the
business of Facebook in the growing economy of the country (Albarran, 2016).The overall
strength of the global economy and the advantages of the British exports from weak pound will
help in increasing the GDP Growth and this in turn will enhance the business of the social media
marketers like Facebook Inc. The inflation is also being expected to fall in this year which paves
the path for the rebound in the spending of the customers. This also acts as a key driver of
change in the business model of the company. This can be helpful for a social media market as
low inflation can empower the customers with more buying power of tablets, computers, Mac
books and this in turn can help the business get a rapid speed.
In spite of the different opportunities created by the healthy economic growth still there can be
some risk factors involved in the country’s economy. The concerning factors like the fiscal
crises and the asset bubbles can foster a hindrance for the business progression of Facebook.
The inability of filling the gap between the tax revenues and the expenditures can create a risk
factor for the company.
Social Factors
To maintain a balance in the social media markets it is significant to understand the social factors
and the social framework of the country that can affect the business of an organisation that
incorporates the social being called Man. In this context it is noteworthy that the income and the
wealth of the people of UK have progressed a lot from the previous years. The employment rate

has also taken a rapid speed which in turn has enhanced the earnings of the people. The general
public forms the market of the social media sites (Kabadayi and Price, 2014 ). Hence their
income and earning power will always act as a boon in the development of the business of
Facebook because the customer’s capability to make a valid use of Watsapp Facebook,
Messenger and other applications becomes much more relevant. The education rate of the people
have also shown a rise in the graph and the rising education rate will enhance their usage of the
different social media applications with more knowledge and skills in the digital world.
However the health status of the country has decreased in percentage and the overall ageing rate
of the citizen is also growing and this will create a threat to the business of Facebook because
with ailing and ageing citizens the business cannot prosper much as the applications developed
by Facebook is meant largely for the youngsters.
Technological Factors
This factor plays an accelerating role in the overall business progress of the business. The
technological progression of UK with various tech investment projects taking a crucial part in the
improving markets of the country (Chang et al., 2015). The tech lead operation In UK has
created a platform for the social media market to gain a booming success. Information and
Communication Technology has become a part and parcel of the social fabric of UK.UK offers a
perfect technological infrastructure for the growth of the social media market. The tech business
of UK values a minimum of 1 billion dollar and the technological advancement has also been
experienced in the digital world. Facebook thereby can gain immense opportunities to work in
complete alignment with the advanced technological framework.
Although the technological progression has been creating a ground for Facebook but the security
issues also gets challenged because of this. Majority of the world population have an account on
Facebook, Watsapp that can be a threat to their personal details. The information of the general
public can get hacked and even be shared to construct terrorist attacks. It has been found in the
past that the Facebook details that have forming a biased voting activity.
Legal Factors

The legal policies and acts also define the macro environment for a business to grow. The
improvement in the patent laws can definitely help the business grow without any fear of getting
replicated by another organisation. Moreover the regulatory support provided by different
regulatory acts for free Wi-Fi has brought the business of Facebook to its zenith. Free Wi-Fi can
ensure that the use of different applications like Watsapp, Facebook, Instagram becomes more
regular and prevalent among the citizens. This can also expand their social media reach in all the
parts of the world.
The legal policies and acts in UK can also project some risk for the business. The social media
mass surveillance and the online interception policy of UK can hinder the growth of the social
media markets because the public in general will not like the fact that their communications are
put under surveillance.
Environmental Factors
The emphasis on the sustainability of the business is very significant and Facebook can create an
opportunity in UK, to accelerate the business sustainability conditions by enhancing the
awareness related to the natural environment. In the recent times Greenpeace have been doing a
praiseworthy job of informing the general public about the different environmental impact. This
project can also have an opportunity to get publicized in UK and bring a change in the overall
environmental condition there.
However in UK more use of the social media sites has been creating health and environmental
hazards. The use of mobile phones, tablets, and computers leads to the emission of dangerous
radiations that can bring health hazards ( Yadav,et al., 2015). The human brain can also get
affected with the radiation ad this can be a hindrance for a county like UK where people are
immensely conscious about their health and well being.

2. Microenvironment (Industry environment) analysis within which Facebook Inc. operates
Apart from the macro environment that has been affecting the business of Facebook there are
some internal or more precisely micro environmental factors that can influence the business of
Facebook. To analyze the micro environmental factors affecting the business a thorough analysis
of the Porters Five Forces can be discussed in details.
The Porters Five forces are the five key drivers that can have both a positive and negative
impact on the business. The Porters Five Forces is considered as a tool that helps in analyzing
the competition of any business (Dobbs, 2014). The Five forces involved determine the
competitive intensity of the organisation and also identifies the attractiveness of the business
related to the profitability of the organisation. The Five forces are:
Current Competitors: The Porters five forces concentrate on the latest competition in the social
media market. Facebook has to compete with a number of social networking sites like the
Google Plus or the Tumblr and also has to compete to such niche sites like LinkedIn and Twitter
(Turban et al., 2017) With varied platforms Facebook can compete in a more direct manner with
their competitors but it has been observed that the business does not appeal equally to all the
demographics. For an instance the younger generation prefers to use Facebook and Watsapp
whereas the professionals make use of the LinkedIn ,Twitter and one can analyze that in the
competitive market Facebook has been facing a moderately a higher risk. Facebook has to
undertake various policies and develop business strategies to enhance on their professional
features.
Supplier power of bargaining
The suppliers of Facebook also have bargaining power. Suppliers are the external stakeholders of
the business who are responsible for building and maintaining the servers that are associated with
the varied medial platforms of Facebook (Schleper et al., 2017). Facebook being a business giant
that can overpower the supplier bargaining to a greater extent .However, in this genre supplier
can also be those complements that help Facebook to operate the way it is such as Internet. For
an instance if the internet usage becomes capped people will also limit their usage of the social
media even if Facebook operates in its best form. The cost as well as the speed of internet can
increase the time allotted by the users on the site. The suppliers being a key stake holder can

thereby regulate the use of Facebook by the varied range of the customers all over the world. The
different sites and the services are also the key stakeholders that offer the Facebook Login for the
purpose of identification. This allows Facebook to acquire new information whenever an user
logs in or out the site. These key stakeholders have immense power in controlling the
progression of the business.
Customer’s Bargaining Power
The bargaining power of the customers plays a major role in the determination of the business of
the organisation. Many people use and have accounts on different social media platforms. It is
important to mention that people getting engaged outside the Facebook family will endanger the
chances of spending their time on Facebook (Hajli, 2014). This factor can bring the bargaining
power of the customers who are also the key stakeholders in the global social media markets.
Facebook is a free application and it takes nothing for the customers to change their networking
sites. Facebook makes the users check their account any time but the company has to make the
customers spend more time on their sites if they want to make money on the market researches
and the ad spaces that will come from all the data collected by Facebook. Facebook has to make
the customers remain more engrossed in the services provided by them.
New Entry Threats
The use of varied forms of smart phiones and online platforms has become inexpensive and this
can be a threat to the organisation. The company has to bring their customers into confidence by
providing absolute security to their personal information and thereby creating the economies of
scope and scale to get a competitive advantage (Singla, 2015). Facebook till now has been the
heart and soul of the media platforms but one new entry can beat all the odds and the game gets
over. The main users here id the teenagers and every time the Facebook share price dips when a
new report comes that the teenagers are not at all active on social sites. New app imposing a
magnetic pull on the customers can have an adverse effect on the business of Facebook. The risk
is although moderately low here.
Substitutes Threat

Facebook has gained immense popularity but the social media site as a whole is vulnerable with
changing technologies and digitalization (Basak and Calisir, 2015 ). It takes no time for the
people to switch to a substitute.
For an example new parents would love to share their photos on a parenting site rather on
Facebook. Organisation like Apple led to the development of closed knit groups that may not
feel to use Facebook as their medium of communication.
Conduct an analysis of the internal environment of Facebook Inc.
Internal environment consists of the factors, which exit inside an organization. Organization has
more control on internal environment in comparison to the external environment. The business
planners should focus on these factors in order to identify the strengths and weaknesses.
The resources, capabilities, core skills and core competencies in Facebook Inc have a strong
effect on performance of the organization. These are indentified by analyzing the internal forces
in order to match with the opportunities, which will b identified by considering the external
forces.
Resources: Resources are considered as the properties of an organization. These include the
individuals, skills, equipments, managerial resources and capital. Resources are two types. One
is tangible and another is intangible (Kuratko, 2014).
Resources Meaning Types And Examples
Tangible These are physical resources.
The market value of tangible
assets is easily determined.
The types are as follows.
 Physical: Plant and
Equipment
 Financial : Funds and
borrowing capacity
 Technological:
Trademark and copy

rights
Intangible These are Non-physical
resources.  Human: Organizational
plans, knowledge and
skills
 Reputational: Brand
value, customer
services and quality of
product and services.
 Innovational:
innovative skills and
ideas
The physical resources of Facebook like network equipment, computer software and leased
equipments have increased 40% in 2017 as compared to the previous years. The brand value and
customer service of facebook is highly visible to all, as it has used many innovative skills from
time to time. The employees of Facebook Inc are trying their best to make the facebook page
better and customer friendly. Each year more than 20,000 people are hired by company in order
to drag the new generation skills in the business process.
Capabilities: This is the collaboration of all tangible and intangible assets to achieve a visible
business goal (Appiah-Adu et al., 2018). The key components of capabilities are:

 Advocacy: This is all about improving the contents and allowing the customers to know
about the new stuffs. Facebook has adopted many strategies to align with global brand
value. The continuous improvements in the online pages have allowed the customers to
use different tools of facebook.
 Cost Control: According to Murnane and Thornley (2017), the management of facebook
Inc. has a system to review the accurate costs billed for the pay application from
contractors. The average project costs are maintained and reported on a daily basis.
Facebook has its own advanced, energy and water efficient data centers all over the
world. The data centers are powered by renewable energy, which has enabled the
organization to save the cost.
 Communication: The facebook Inc has made its page customer friendly. The company
communicates with customers to know their future requirements and issues by
conducting online surveys.
 Compliance: facebook Inc is subjected to comply with certain rules and regulations as
per the company act. The organization is also liable to adhere with Government policies.
It has rules to keep the customer data private.
 Efficiency: According to Appiah-Adu et al., (2018), the efficiency of an organization
depends on its work force, technology and infrastructures used by it. Facebook Inc. has
allowed the customers to use the application on less data and power. This efficiency has
achieved by the company with effective utilization of all the resources.
Core skills: The core skills of Facebook Inc. are highly organized and valuable for the
employees and customers. The leadership skills of employees to perform a task are highly
remarkable. They work with proper plans and motivate their subordinates to work as per the
plan. The employees give priorities on the tasks, which are more viable and productive. Another
core skills adopted by the organization is time management. In order to complete a task proper
time management is highly necessary. The employees use a planner to complete each project in a
particular period. The employees are very detail oriented. They believe that, minor errors can
cause a huge loss. They go through a task in detail in order to avoid each risk associated with it
(Wood et al., 2016). The important traits of Facebook employees are describes below.