Strategic Management Case Study: Analysis of Facebook

This assignment presents a strategic analysis of Facebook, examining its current position and future prospects. The analysis begins with an introduction that outlines Facebook's mission and vision, followed by a comprehensive SWOT matrix, identifying its internal strengths and weaknesses, as well as ...Read More

FACEBOOK STRATEGIC MANAGEMENT 1
Facebook Strategic Management
Student’s Name
Course
Professor’s Name
Institutional Affiliation
Date

FACEBOOK STRATEGIC MANAGEMENT 2
Introduction
The primary objective of this assignment is to generate Facebook's strategic analysis.
At first this social networks giant was developed only for Harvard students; however, today
the site has been translated to over 70 languages and is now open for everyone. The mission
of the organisation is to empower its users to share as well as connect and open the world.
With this mission, Facebook works to make the world a global village by enhancing
globalization through increased connectivity. Facebook lacks a clear vision statement, but
the founder explained that the company aims at ensuring that people are always connected to
the rest of the world, offer a platform for free expression and enable individuals to understand
what is happening in around the world. Nonetheless, Mark Zuckerberg, the founder of
Facebook and own the majority of the shares at the organization. The founder, his former
roommate, Dustin Moskovitz and other Facebook employees own more than half the shares
of the company.
SWOT Matrix
External Opportunities External Threats
1. There are market potentials for mobile
payments transactions
2. Brings the internet to all the developing
and third world nations
3. Stabilize the cost of energy with clean
energy through research and development
4. Increased advertisement to increase the
cash flow
5. The lower power of the consumers
6. All Chinese Citizens blocked from
Facebook.
7. Increased diversity of the sources of
revenue
1. The privacy rules in European nations
2. Reduced revenue growth
3. Blockage of Chinese Citizens from
Facebook
4. The development of Ad-block
extensions for all the websites browsers
5. Lack of monetizing the business model
of the company
6. The decrease in of growth of revenue
from 2011
7. Revenue generation overly dependent on
ads
Internal Strength Internal Weakness
1. Facebook has a monthly user based on
close to 1.35 billion
2. The culture of the company is leaned
towards innovation
1. General believes that social media has
to be free
2. The organization sells user information
to advertisers

FACEBOOK STRATEGIC MANAGEMENT 3
3. Increased click-through rates of
advertisements in the newsfeed section.
4. The site is translated into over 70
languages across the world
5. User-friendly and can be operated in all
mobile devices
6. Allows firms to study customers through
surveys and polls of consumer’s data
7. Advertisements do not interfere with the
user's experience
8. Facebook acquired Oculus in 2014.
3. All ads not placed in the newsfeed and
non-mobile platforms receive a low
click-through rate
4. Overly dependent on ads revenue
5. Missing many features
6. Hackers could steal personal information
SPACE Matrix
Summary: From the SPACE matrix Facebook Company is expected to utilize an aggressive
strategy. The organization has strong competitive advantage in the social media industry and
is indicating rapid growth. Therefore, Facebook should utilize the internal strength it poses
fort market development and penetration strategies. These strategies can include acquisition
of competitors like for the case of “WhatsApp,” and product development.

FACEBOOK STRATEGIC MANAGEMENT 4
IE Matrix
External Opportunities Weight Rating Weighted
1. The revenues growth rates 0.08 4 0.32
2. Increased number of mobile
users across the world
0.10 4 0.40
3. Increased diversity of sources
of revenue
0.14 3 0.42
4. Open Markets for Facebook 0.10 3 0.20
External Threats
1. The increase in the number
of smartphone users
0.08 2 0.16
2. Ad-block extension on web
browsers
0.06 3 0.18
3. Slow click-through rates of
ads
0.14 3 0.42
4. A weak Facebook business
model
0.10 2 0.20
5. Identity theft threat 0.20 2 0.40
TOTAL 1.00 2.70
Internal Strength
1. The reputation of the
Facebook brand
0.10 4 0.40
2. Diversified Portfolio 0.1 4 0.40
3. Facebook’s Strategic
acquisitions
0.10 3 0.30
4. Great User experience 0.14 3 0.42
5 Over 1.35 billion users 0.15 3 0.45
6. A class of loyal users 0.07 3 0.21
Weaknesses
1. Limited features 0.08 2 0.16
2. Weak CTR of Ads 0.10 2 0.20
3. One Platform of
advertisement (Facebook
only)
0.06 2 0.12
4. Lack of protection of user’s
information or weaker
0.06 2 0.12

FACEBOOK STRATEGIC MANAGEMENT 5
protection
5. Lack of customization of the
website
0.04 2 0.08
TOTAL 1 2.86
Summary: For the external factors analysis the score of 2.7 is above 2.5 which is the required
score. It is a clear indication that Facebook is at a better positions concerning market survival
advantage. On the other hand, the total weighted score for internal factors was 2.86 shows
that Facebook Company has a stronger internal position. Therefore, the organisations internal
strategies can be used to exploit all the opportunities and defend the organization from
threats.
Business Level Strategy of Facebook
The business level strategy for Facebook is more aggressive than competitive. From
the SPACE matrix, internal-external matrix and the SWOT matrix it is imperative to note that
strategy to be used by Facebook could never are competitive since it is a market leader in the
respective industry. The company, business level strategy, is inclined towards rapid and
continuous innovation. This has seen more funds channeled towards the research and
development sector of the organization. Through research, Facebook realizes the language
barrier as a challenge in social media platforms and developed both language translation
features and multiple language features in their platforms. Facebook utilizes the strategies of
absorbing its competitors such as “WhatsApp” to increase the diversity and access to many
users. Finally, as a profit maximization company, Facebook has managed to add revenue
generation features and partnership in terms of advertisements.