Strategic Management Report: Analyzing Facebook's Strategies

This report provides a comprehensive analysis of Facebook's strategic management. It begins with an introduction to strategic management, its core concepts, and the strategic management process, including environmental scanning, strategy formulation, implementation, and evaluation. The report defines Facebook's vision, mission, and values and explores different approaches to strategy formulation, such as process vs. content and external vs. internal approaches, along with the impact of external factors like economic conditions, competition, technology, and laws. The analysis delves into Facebook's competitive environment, differentiating between direct and indirect competitors, and examining social and technological trends, economic dimensions, and political-legal dimensions. Internal and external environments are evaluated using SWOT and PESTLE analyses, respectively, providing insights into Facebook's strengths, weaknesses, opportunities, and threats, as well as political, economic, social, technological, legal, and environmental factors. The report discusses how Facebook can leverage these insights to formulate and implement effective strategies to achieve competitive advantages and organizational goals.

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
1.1...........................................................................................................................................1
1.2...........................................................................................................................................1
1.3...........................................................................................................................................2
1.4...........................................................................................................................................3
1.5...........................................................................................................................................3
SECTION 2......................................................................................................................................4
2.1...........................................................................................................................................4
2.2...........................................................................................................................................4
2.3...........................................................................................................................................6
3.1...........................................................................................................................................7
3.2...........................................................................................................................................8
3.3...........................................................................................................................................8
SECTION 3......................................................................................................................................9
4.1...........................................................................................................................................9
4.2.........................................................................................................................................10
4.3.........................................................................................................................................10
4.4.........................................................................................................................................11
4.5.........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Strategic management Is the process of continuous planning, monitoring and analysing
the assessment which helps the firm to meet the defined goals of the firm. The report main aim
is to determine the scope of strategic management in the context of the firm. The chosen firm for
this report is Facebook which is an online social media and social networking company which
work at global level. The report will cover strategic management process, concept, mission,
vision, approaches and external environment impact on business. General competitive and
internal environment and tools for analysis of these environments within business will be
discussed in this report. Different approaches to formulate strategies to achieve competitive
advantage and process for implementing strategies will be discussed. Strategic control, reward
system and role of administrative managers to implement strategies across functional area of
organisation will be covered in this report.
SECTION 1
1.1
Strategic management is known as the process in which a company creates and
implements a plan that supports the goals and objectives of the firm. The strategic management
process is continuous as one it changes the firm goals and objectives change. One of the key
concepts of strategic management is that it analyses organization’s strength and weakness. Along
with this internal analysis, it also includes external analysis of different factors such as new
technology and competition in the market etc. In the same way, Facebook is also develop the
strategy that helps a firm to attain the aim and objectives in defined way. One of another concept
of strategy is monitoring after implementation of the strategy (Cania, 2014). Through
monitoring, it becomes easy to identify changes and make modification in the strategy in respect
to its successful completion.
1.2
Strategic management process is considered the philosophical approach of a business
and It helps to clearly define the vision and mission. That is why, it is essential for Facebook to
understand the strategic management process so that it can successfully implement the strategy.
Strategic management is broadly related to the way the organisation’s leader creates and
implement goals. There are four key elements of strategic management process that are as
follows:
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• Environmental scanning: In the environmental analysis, it includes both internal and
external factors that can impact the firm. For internal analysis, company can conduct SWOT
analysis to gather information related to company’s weakness and strengths and further to
determine the external factor, company may uses PESTLE analysis (Duygan and Meylan, 2015).
• Strategy formulation: After conducting environmental analysis, company can focus on
formulation of strategies which can help in improving the factors outlined in SWOT analysis.
Such that Facebook may continually changes its management structure that helps to cope with
the internal and external environment.
• Strategy implementation: After formulating strategy, it is essential to create an action plan
for implementing it. For instance, Facebook wants to introduce new software that helps to grab
attention of many customers towards it and that is why, it make strategies and them implement
them as well.
• Strategy evaluation: At last, it is essential to evaluate it so that changes can be made in
strategy is required. It will help in successful implementation of the plan. Thus, in the context of
the Facebook, company should regularly exercise the strategic control techniques that helps to
manage the work accordingly. Further, company may also uses KPI in order to review the work
in regular basis.
1.3
Vision: Facebook vision is to stay connect with people using social media and they keep
sharing the views with each other.
Mission: Facebook mission Is to provide people the power in order to build the
community so that it will help to bring the world closer and
Values: Facebook is based upon the five major core values such as be bold, must focused
on the impact and move fast with the world and always build the social values for the
community.
It is critically analysed that roles, vision and mission statement help in guiding the
organization in its pursuit of strategic opportunities (Johnsen, 2015). Also, they help in
communicating the purpose of the organization to its stakeholder, developing a measurable goal
etc. Along with this, mission and vision statement help in creating targets for strategic
management. Hence, as per the company's values, mission and vision, it has been analysed that
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firm mainly work to stay connected with people and also makes sure that it enrich the society as
well.
1.4
There are various approaches in formulating a strategy that is processed vs. content
approaches, external vs. internal approaches etc. In an external approach, the firm focus on
formulating strategies which are based on the analysis that affect the external environment of the
company. Thus, these are the factors which affect the firm's profit and sales, therefore, it is quite
essential for Facebook to overcome this with the help of strategies. The external environment
consists of different factors such as political, social, technological etc. which can impact the firm
directly and indirectly. It is evaluated that strategies which are formulated on the basis of internal
and external approach helps in understanding all the factors that can negatively impact the firm
to overcome them. Through using internal and external approach, firm can focus on formulating
strategy accordingly and accomplish its goals and objectives (Joyce, 2015).
Apart from this, for identifying the internal environment, company has to perform SWOT
analysis that support to determine the strength and weakness of Facebook. It is consider one of
the most effective strategy to determine the internal factors. Hence, it will be effective for
Facebook to understand different approaches so that they grab new opportunities.
1.5
Economic condition: Economic factors such as interest rates, unemployment etc. has a
great impact on business strategy formulation. For an example, when there is a inflation and
customers are not ready to spend high amount. This affect the performance of the company in
negative way and thus, the sales of Facebook also decline.
Competition: In this global world, competition is increasing day by day; thus, strategies
and plans formulated by business should be strong enough to compete with others’ strategies in
order to increase profitability and production effectively (Juma and Okibo, 2016). currently,
Facebook also faces tough competition with Instagram and Snapchat that is why, the firm has to
formulate the strategy to stay ahead in this competition.
Technology: Technology is also going innovative day by day as the latest techniques and
innovations are taking place in this world. Thus, Facebook should make strategies by acquiring
new techniques and technology so that the profitability and development can be maximised.
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Laws and regulations: Taxation is one of most dramatic change in laws through
legislations. The taxation changes affect the strategies and plans formulated by business that
sometime, there is plenty of time to manage the changes and sometimes, changes occur overnight
with little warming effectively. In the same way, Facebook is also affected through legal laws
and make sure that it comply with all the laws prescribe by the government of country.
SECTION 2
2.1
The competitive environment encompasses all external factors that compete with the
products and services of business effectively.
Direct and Indirect competitors: The competitive environment is full of direct competitors.
This will include all the elements in the same business. Organisations which produce same
products and services are known as direct competitors (Loon, Evans and Kerridge, 2015).
Indirect competitors refer to same type of businesses but are competing for the same
customer dollars.
Social and technological trends: The business competitive environment is altered because the
changes in technologies changes the way people purchase products and services. Innovation also
affects the business competitive environment effectively.
Economic dimension: This refers to the overall economic environment in which the business
operates its operational activities. The main economic factors for businesses are inflations,
interest rate and unemployment.
Political-legal dimension: Political and legal dimension such as government law and overall
legal and political situation of nation which has an impact on business in both positive and
negative terms (Merigo, 2015).
2.2
To determine the internal environment, SWOT analysis is used which is as mention
below:
Strength: Facebook has string brand image at international level and also have strong
financial performance at international level. Such that in this modern era, Facebook had about
more than millions of daily account users as compared to its competitors (SWOT analysis of
Facebook, 2018). Currently, Facebook has string base and consider one of the best bridging
messaging platform for its customers.
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Weaknesses: The quoted firm generate its revenue through advertisement and this is
consider its weak point. Further, this advertisement sometimes creates negative impact upon user
experience and it leads to decrease the customer base. Apart from this, low diversification of the
business is also consider company's weaknesses which needs to be improved.
Opportunities: By introducing the same services to other market also provide an
opportunity for the company to generate more income. Further, Facebook may also generate high
income by introducing innovative products for their customers at different market which provide
an opportunities to the firm (Aguinis and et.al., 2017). Moreover, by diversify the product is
consider another option for Facebook such that company acquired Oculus VR which is virtual
reality technology that provide an opportunities to expand its business.
Threats: Facebook faces tough competition from its competitor which is consider he
biggest threat and apart from this, cybercrime is another threat that also affect the business in
negative way. Moreover, Facebook is the large number of spammer who make the user
experience unattractive and this is another threat face by Facebook.
To determine the external environment of the firm, PESTLE analysis is used which is as
mention below:
PESTLE analysis
 Political factors: It will help towards government stability and likely changes such as tax
policies, freedom of press, trade control and competition regulations. Such that the
political factor mainly deals with the tax and political stability of the country . Such that
if the government raise the tax rate then it affect the Facebook sales directly and as a
result, it affect the entire performance in negative way.
 Economical factor: Fluctuation in the currency rate of the country also affect the
company in negative way such that strong US dollar has a cost Facebook millions in
foreign currencies and if the cost an expenses are on the rise then the firm is also expand
its business (Baker, 2014). Currently, Facebook also tries to improving the economy and
also provide different employment opportunities to the people that creates positive impact
upon the firm.
 Social Factor: As Facebook is large social media platform and always try to connect
with people and friends. Sometime these social factor affect the business in negative way
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such that loss of quality affect the user and the data breaches affect millions of user in
negative way.
 Technological Factor: Facebook continually adopt new and advance technology in its
working place that helps to grab attention of many customers towards it. But on the other
side, the security breaches also affect the business in negative way and these hacking
attempts and data leaks creates negative impact upon the firm.
 Legal factor: In this, business has to follow all the laws and legislations formulated by
government from which the business environment can be managed effectively (Powell,
2014). such that Facebook comply with all the employment law, company laws in order
to smooth running its business.
 Environmental Factor: A small carbon footprint affect the business in negative way
such that company still uses coal power to generate the power and also put more effort in
order to generate the renewable sources that did not affect the environment of the country
in negative way (Merigo, 2015).
2.3
In order to identify various external factors or elements that influence the organisations the
above-mentioned tools can be used such as Pestle and Porters five forces analysis. Pestle analysis
helps to identify how six forces such as Political, Social, Economic, Technological,
Environmental and Legal affects the business. On the on the hand Porter’s five forces analysis is
applied in different situations in an organisation to identify the balance of power within a
situation such as power of supplier, power of buyer, competitive rivalry, threat of substitution
and threat of new entry.
Porter's five forces analysis: The five forces analysis will help to analyse profitability and
competitive strategy of business in order to increase production and profits effectively. This will
include bargaining power of suppliers and buyers, threats of new entrance and substitutions.
Rivalry force (Moderate force): At beginning, Facebook did not face any competition
but as the time emerges, currently Facebook has so many strong competitor such as Twitter,
Instagram. But the quoted firm has variety of techniques that helps to grab attention of many
customers and firm also has low switching cost so that it make easier for the advertisement that
helps to shift away from the company.
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Bargaining power of buyers (Strong): Facebook has a strong customer base because it
continuously provide best variety of products to their buyers at minimum cost that helps to
attract wide range of customers towards it. Further, it also keep checking the needs of the
customers then apply the same into its working area which grab attention of many users. The
research and development department of the company also robust the features and working hard
in order to create the integration with Facebook (Bryce, 2017).
Bargaining Power of suppliers (weak): Though Facebook, has large and enough
suppliers but it does not mean that company neglect this factor. Its suppliers are belongs to large
firms which exert a moderate force for the company and they are also available for the firm as
well. For instance the high cost of Internet decreases the time of spending the user times on
social media and that is why, customers stop using Facebook. Thus, to maintain this, Facebook
has to maintain the relation with suppliers for its smooth functioning.
Threat of substitution (Strong): There are various factors that can be considered as
strong threat for Facebook. Example of these factors are availability of large number of
substitutes, cost of switching to other firm is low for customers. Due to availability of substitutes
strategic management of Facebook is facing.
Threat of new entrant (weak): New entrants means new companies that may enter in
the industry. There are various factors due to which threat of new entrants for Facebook is weak.
New firms acts as a strong force because of low cost of switching to advertisers from moving
from one service organisation to another.
3.1
Process vs. content approach:
These are the two most common methods that companies adopt to formulate their
strategies. In this, business is able to formulate strategies in a series of activities. Process
approach is related with content of the strategy. Content approach is related with determining the
practises for improving business performance.
Economic vs. business approach:
According to experts, the approach of formulating business strategy is wide. An effective
approach towards strategic management cannot be formulated by simple approaches that
economic and business approach will help to manage strategies and plans in order to raise
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profitability and production. (White and Bruton, 2014). The process includes operations,
direction, resources, internal and external environment and whole business.
Competitive advantage approach:
The approach mainly focuses on resource of business and capability to improve and
develop and formulate strategies and plans effectively. If a business resources and capabilities
are scare, durable, defensible or hard to imitate, it will help towards sustainable competitive
advantage effectively. Company should identify the resources that are available before
developing the strategy.
Market also affects the development of business strategies. There are different factors
existing in external environment which can influence strategy formulation such are technological
political environmental, legal factor etc. At the time of making strategic decision, manager of the
firm should consider present and future opportunities and threats that are present in the
environment (Cania, 2014). For Example- New technology can help Facebook to achieve the
aims and objectives of the firm by developing strong strategy. Along with this, the environment
holds potential sources of innovation for an entrepreneurial venture.
3.2
Strategic management refers to the management of business resources such as raw
materials, human resource as well as products and services which also helps to increase business
profitability. Strategy is the road map for attracting target customers, to improve financial
strength of the firm.
Business strategies plays an important role gaining competitive advantage. It helps to
improve the profitability and production capacity of the firm that supports to compete with other
companies in the market. For Example- Proper financial planning will help Facebook to manage
various resources under the budget that helps to enhance capital which also provides strength
towards competitive advantage effectively.
3.3
There are various factors that may affect the performance of the business. Macro factors
like Political factors that include stability of political party and likely changes in tax policies,
freedom of press, trade control and competition regulations. Firm should follow all the laws and
legislations formulated by government so that, it does not negatively impact the performance of
organization. Economic factors such as growth rates, interest rates, exchange rates and labor
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costs etc. will affect cost of operations of the business. Company should focus on Social and
culture factors such as education level, lifestyle etc. Technological changes such as infrastructure
changes, techniques and market penetration will provide significant benefits effectively.
In addition to this, SWOT analysis helps to evaluate strengths, weaknesses, opportunities
and threats will help to make effective changes in business strategies to gain profitability and
production. Finally, Porter's five force analysis will help Facebook to analyse the most important
force affecting the intensity of competition in an industry and its profitability level. This will
help to manage business environment effectively and efficiently.
SECTION 3
4.1
The strategic implementation is the main process because at this stage, real action of the
management takes place. This strategic implementation helps to address “what” and why”
decisions can takes in management and “who” will takes decision in the organisation and “how”
the activities will be perform at different levels of the organisation (Baker, 2014). Director of
Facebook can take strategic decision according to following basic strategy involve in business:
 Formation of annual objectives.
 Allocation of resources.
 Actual performance and task and activities.
 Formulation of policies for execution of strategy.
There are various factors that supports the implementation of strategy in Facebook and all
these factors must be present in order:
 People- Director of Facebook will take decisions regarding effective implementation of
business strategies.
 Resources- Allocation of resource such as financial or non-financial in different
departments will play support in implementing the strategies.
 Structure- According to the Director of Facebook, the structure of organisation should
be clear cut regarding the authority and responsibilities of the people working in
organisation.
 System- System, tools and capabilities of Facebook will support in implementing
organisation strategy.
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 Culture- Beliefs, attitude of employees of Facebook will impact successful
implementation of business strategy.
4.2
The evaluation of strategy is as important as strategy formulation. It helps to determine
efficiency and effectiveness of plans to achieve the objectives of the firm (Rothaermel, 2015). In
the stage of evaluation, Director of Facebook specifies that the multiple decisions and directions
are taken step by step over time or working through self-contradictory opinion and new
directions are the change process participating. According to directors, the leaders can take
strategic decisions under all the Agendas. The evaluation of different approaches for strategic
change are as follows:
 The value of leadership and relationship.
 Necessity of proper structure, shape and process.
 Changes in how people think that leads to development of innovation strategy in
business.
 Concerning various new ideas and attractions for different categories of people.
 Understanding that changes in firm are constant.
 The value of inspiring experiments, creative ideas and seeking evidence.
 Understanding that small scale changes may have long term impact on the business
(Purce, 2014).
 Management of Facebook should time-to-time change the policies. So that, employees
will be attracted towards it and the requirement of people also get fulfilled.
4.3
The evaluation of the place of strategic control:
Strategic manager of Facebook has refer that, Manager should ensure proper control over
the strategic management process. Under this, Manager said that the proper plans should be
formulated and implemented and various corrective actions can be taken to improve performance
(Lasserre., 2017). Manager plays an important role to determine whole process of strategic
evaluation that how can strategic plans are progress. After evaluating the result, management of
Facebook will decide the suitable action. The evaluation provides the direction for management
and workers that they will learn what is happening and their performances will be compared
with each other (Rugman,. and Verbeke., 2017).
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