MBA 5513 Spring A-18: Facebook Strategic Resource Allocation Plan

This case study provides a strategic analysis of Facebook, examining its general environment, industry position, and internal strengths and weaknesses through a SWOT analysis. It covers technological, demographic, economic, political/legal, socio-cultural, global, and physical environment trends impacting Facebook. The analysis includes competitor assessment and culminates in a proposed strategic action plan focused on identifying demanded content, building relationships with subject matter experts, and effectively disseminating expert advice through the platform. The study aims to provide a long-term strategic plan for sustainable growth, placing the reader in an executive leadership role to aid in the company's future direction. The proposed plan involves adding a feature for expert advice to enhance user engagement and knowledge acquisition.

Facebook
Strategic Resource Allocation and Planning

STRATEGIC RESOURCE ALLOCATION AND PLANNING 1
Table of Contents
Introduction................................................................................................................................2
Overview of Facebook...........................................................................................................2
General Environmental Analysis...........................................................................................2
Technological Trends.........................................................................................................2
Demographic Trends..........................................................................................................3
Economic Trends...............................................................................................................3
Political/ Legal Trends.......................................................................................................3
Social-cultural Trends........................................................................................................4
Global Trends.....................................................................................................................4
Physical Environment Trends............................................................................................4
Industry Analysis...................................................................................................................5
Competitor Analysis...............................................................................................................6
Internal Analysis....................................................................................................................6
SWOT................................................................................................................................6
Strategy Formulation..............................................................................................................8
Strategic Action Plan..............................................................................................................8
Identification of demanded content by the users................................................................9
Searching and building relationships with the Subject experts..........................................9
Proofreading and editing of the matter offered by the expert............................................9
Posting the articles, reviews, etc........................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

STRATEGIC RESOURCE ALLOCATION AND PLANNING 2
Introduction
Environment analysis is said to be a strategic tool. It is a procedure to recognize all the
internal and external elements which can have an impact on the performance of the
organization (Pestle Analysis, 2015). The analysis includes evaluation of the level of
opportunity and threat involved in an environmental factor (Hussain & Kharisov, 2016). This
report is being prepared in order to analyze the case based on Facebook. In this, the analysis
of the external environment and internal environment will be done. Along with this the
detailed analysis of the industry and competition will be performed. Further, the report will
make a long-term strategic plan for the Facebook.
Overview of Facebook
Facebook is a well-known American company of social networking and social media service
based in California (Newsroom, 2018). In 2004, the website of Facebook was launched by
Mark Zuckerberg. He was a computer science student at the college. The roommates of Mark
Zuckerberg were Dustin Moskovitz, Eduardo Saverin, Chris Hughes and Andrew McCollum
who gave strong support in creating Facebook (Elhuda & Dimetry, 2014). In 2009, Mark was
ranked at 23rd position in Vanity Fair magazine.
General Environmental Analysis
Technological Trends- There is a huge impact of technology on the business of Facebook
because it is based on online technologies (Haseeb, 2017). In the initial journey,
CourceMatch program was written by Mark who allowed students to organize and tactically
select their classes. After that Facemash was created by him. This technology offered the
opportunity to students to rate other people depending on their looks. After working with the
roommates Mark invented Thefacebook which was renamed Facebook.

STRATEGIC RESOURCE ALLOCATION AND PLANNING 3
Demographic Trends- The user count of Facebook is so big that it is good to say that
everybody is on Facebook.
Women Facebook user is more compared to men- Facebook is used by approx. 83% of
women whereas only 75% of men use Facebook (Hicks, 2018).
All the age group people are involved on this platform- Most of the Facebook users are from
the age group of 18-29 which is approx. 88%, 84% people are from 30-49 age group and 72%
are of 50-64 age group.
Source [http://www.effectivespend.com/understanding-the-audience-of-each-social-media-
platform/]
Economic Trends- In 2012 Facebook filed its initial public offering. In the details of the
filling Mark had 22% ownership share and owns 57% of voting shares. The value of the
shares was $38/share and the value of the company was at $104 billion which is considered
as the highest valuation for a newly public company (Rusli & Eavis, 2012). Recently, the
market cap of Facebook exceeded $64 billion and reflected a periodic growth rate of about
2%.

STRATEGIC RESOURCE ALLOCATION AND PLANNING 4
Political/ Legal Trends- The business of Facebook is directly linked to the political
situations. About Facebook, the government states its worry in the way that the personal
information of the particular candidates must be properly secured. Issues related to the
customer’s privacy increases the company’s cost (Dudovskiy, 2017).
A limitation is imposed by the law in the business of Facebook. Laws and regulation which
are set by numerous regulated businesses to drive the social networking are very essential.
Social-cultural Trends- Facebook operates in a developer-centred culture where the
attention is minimum on the flashy features of an innovative product and maximum on the
material involved in the manufacturing of the product.
Global Trends- On 30 January 2013, Facebook declared that it had exceeded numerous
milestones which are reflected by the increase in the number of mobile users i.e. more than
680 million. Along with this, the firm has exceeded 1.06 billion MAUs. However, the firm
faces several unique challenges.
Source [MarketingCharts staff. (31 Jan 2013). Facebook's Mobile User Base. Marketing
Charts. http://www.marketingcharts.com/wp/direct/facebooks-mobile-user-base-and-share-
of-ad-revenues-keeps-growing-26610/]

STRATEGIC RESOURCE ALLOCATION AND PLANNING 5
Physical Environment Trends- Despite the scope and size of the business, Facebook never
releases its annual report of corporate social responsibility. The company has a separate page
for it i.e. Green on Facebook which regularly announces its charitable programs and activities
of CSR (Dudovskiy, 2017).
Source [https://research-methodology.net/facebook-csr-overview/]
Industry Analysis
Facebook is affected by various factors, especially by the customers. Customers are of two
types: users and advertisers.
Users have great power over Facebook as they continuously ask for new invention or
innovations and Facebook cautiously attends their requirements, keeping in mind that there is
no cost of switching to the different social network.
Whereas the influences of the user are high, the opposite is realized with the advertisers. At
initial glance, it can be said that the power of the advertiser is high because Facebook is based

STRATEGIC RESOURCE ALLOCATION AND PLANNING 6
on them for profit. On the other hand, it is a bit contrary. As Facebook supplies a productive
base of customer and in spite of assumption around the assessable influence of advertising on
the Facebook, the power detained by the advertisers is really low (Hitt, Hoskisson & Ireland,
2014).
Competitor Analysis
Facebook races against direct and indirect competitors with the capability to influence its
customers. The example of the Facebook’s direct competitor is Twitter, on the other hand,
Facebook's indirect competitor is Google. The industry is developing fast, cost of imitation is
low, and it is tough for companies to shelter their competitive advantages for a lengthy
period. There are four key players who give strong competition to Facebook: LinkedIn,
Google Plus, Twitter, and MySpace.
Googl
e
LinkedI
n
Faceboo
k
Revenue 50.18B 972.31M 5.09B
Quarterly Revenue Growth 36.2% 81.0% 40.1%
Gross Profit 29.54B 846.79M 3.72B
EBITDA 16.28B 125.51M 1.19B
Net Income Available to Common
Shareholders
10.79B 21.61M 32.0M
Market Cap 257.98
B
19.63B 63.42B
Profit Margin 21.4% 2.2% 1.0%
Operating Margin 26.7% 5.9% 10.6%
Return on Assets 10.1% 3.2% 3.1%
Return on Equity 16.6% 2.8% 0.6%
Total Cash 48.09B 749.55M 9.63B
Total Debt 7.21B 0

STRATEGIC RESOURCE ALLOCATION AND PLANNING 7
Source [Yahoo! Finance. http://finance.yahoo.com/]
Internal Analysis
SWOT
Strength- Web2.0 in one roof’s integrated features is the Facebook’s strengthening factor.
The “Like” button is a feature which influences people to love it and it is said to the reason
behind the comments of the users and negotiation behind a particular message, status, videos,
post, and photos (Bhasin, 2018).
Weaknesses- Verification of the users is an actual problem in the matter of any social
networking sites, including Facebook. The number of fake users is more on Facebook and
due to this user should manage his/her information from hackers. Besides this to join
Facebook the minimum age is just 13 which are not considered as an ideal age for children to
involve in Facebook.
Opportunities- As per the statistical report which was projected by Facebook reflected that
there is an increase in the revenue of the company. 158% of growth was shown in 2010. The
company has many opportunities in the upcoming future as it is growing with time. Mark
Zuckerberg and the team have planned to invest some amount in the R&D dollars in order to
generate extra value for customers. Along with this Facebook has initiated various
acquisitions which have resulted in different business opportunities.
Acquisition
Date
Company Business
Acquisition
Date
Company Business
23 Aug 2005 Facebook.com AboutFace
19 Jul 2007 Parakey Offline applications/Web OS
23 Jun 2008 ConnectU Social networking

STRATEGIC RESOURCE ALLOCATION AND PLANNING 8
Acquisition
Date
Company Business
Acquisition
Date
Company Business
10 Aug 2009 FriendFeed Social networking aggregator
19 Feb 2010 Octazen Contact importer
2 Mar 2010 Divvyshot Photo management
13 May 2010 Friendster
patents
Intellectual property
26 May 2010 ShareGrove Private conversations/Forums
8 Jul 2010 Nextstop Travel recommendations
15 Aug 2010 Chai Labs Internet applications
20 Aug 2010 Hot Potato Check-ins/Status updates
29 Oct 2010 Drop.io File hosting/sharing
Source [http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Facebook]
Threats- The crimes on social networking sites and imitation have augmented due to the
negligence of the user in handling their information or content. Whatever is available in the
market has to change and the interest of the user will decrease which will result in the
entrance of new players in the market and they might take over Facebook.
Strategy Formulation
The process through which a company selects the suitable ways of action in order to realize
its distinct goals is known as Strategy Formulation. This process is vital to the success of the
company because it offers an outline of the activities that will be performed for achieving
expected results (Karami, 2016). Facebook should add one extra icon of expert advice near to
the search icon in which the expert can offer their advice in some particular subjects such as

STRATEGIC RESOURCE ALLOCATION AND PLANNING 9
expert advice on General Knowledge (impact of IT, experiences of Hotel, study material of
different subjects, etc.).
Strategic Action Plan
The method through which organization makes sure that its vision is made concrete is known
as Action Plan.
Identification of demanded content by the users - At this stage, Facebook will first identify
the most demanded or least aware topics in the society which are important for the growth of
the country.
Searching and building relationships with the Subject experts - After the initial stage the
concerned department of Facebook will search the experts who can offer their suggestions or
reviews on the social networking site which can result in influencing or increasing the
knowledge of the user.
1 Identification of Most demanded contents
2
Searching and Building Relationships with the
Experts
3 Proofreading and Editing of the Expert's Content
4
Posting the Expert's Article, Reviews, etc.

STRATEGIC RESOURCE ALLOCATION AND PLANNING 10
Proofreading and editing of the matter offered by the expert - At this stage proofreading
and editing of the article or reviews of the experts will be performed and important points
will be selected which are important as per the demand of the customer.
Posting the articles, reviews, etc. - In the final stage, the article will be posted on the
Facebook’s additional icon of expert advice.
Conclusion
Facebook is a well-known social networking site which is preferred by most of the population
in order to express their feelings and interacting with their friends and family. In the
conclusion, it can be said that the above suggested strategic plan will help Facebook in
attracting more users for the sake of gaining knowledge and advice of the renowned lecturers
or experts.

STRATEGIC RESOURCE ALLOCATION AND PLANNING 11
References
Bhasin, H. (2018). SWOT of Facebook. Retrieved from: https://www.marketing91.com/swot-
facebook/
Dudovskiy, J. (2017). Facebook CSR Overview. Retrieved from: https://research-
methodology.net/facebook-csr-overview/
Dudovskiy, J. (2017). Facebook PESTEL Analysis: Two-Way Relationships Between
External Factors and Social Media Giant. Retrieved from: https://research-
methodology.net/facebook-pestel-analysis-two-way-relationships-between-external-
factors-and-social-media-giant/
Elhuda, D.A., & Dimetry, D.A. (2014). The Impact of Facebook and Others Social Networks
Usage on Academic Performance and Social Life among Medical Students at
Khartoum University. International Journal Of Scientific & Technology Research,
3(5), 41-46.
Haseeb. (2017). Pestle Analysis of Facebook. Retrieved from:
http://marketingdawn.com/pestle-analysis-of-facebook/
Hussain, M.C., & Kharisov, B. (2016). Advanced Environmental Analysis: Applications of
Nanomaterials. U.K: Royal Society of Chemistry.
Hicks, K. (2018). Who’s On Facebook? Retrieved from:
http://www.effectivespend.com/understanding-the-audience-of-each-social-media-
platform/
Hitt, M.A., Hoskisson, R.E., & Ireland, R.D. (2014). Strategic Management: Competitiveness
& Globalization: Concepts & Cases. U.S: Cengage Learning.