The Analysis of Facebook Activities
Nowadays, Facebook is a social network running into billions dollars and known all over the world. Initially, the purpose of launching such a company was connecting people and enabling them to interact with each other. The goals of the company underwent a series of changes within its development process. However, the essence of the main Facebook mission was preserved. Key elements of company’s mission statement are connection and sharing. In such a way, Facebook helps people to share information with others and to be connected with them on a global scale. Facebook, due to its mission, throws the world open to people (Reagan, 2009). The vision statement of Facebook was phrased by its founder Mark Zukerberg and posted on his profile. He claimed that Facebook enables people to stay in touch with their friends and families, to keep track of events and to share meaningful things with others. The company has been following its vision and mission statements from its foundation till nowadays; that could be a good explanation for its smashing success. According to current statistics, Facebook has about 845 million users per month and approximately 443 million users every day. In 2011, Facebook incomings comprise $3, 7 billion. Furthermore, it was reported that the value of Facebook public offering is approximately $75-100 billion. Due to this fact, Wall Street Journal considered this network as the biggest stock exchange in the USA (Vakil, 2012).
It was claimed that the most effective method of investigation company’s activities is Porter’s model for competitor analysis. Therefore, applying this method to analyzing Facebook could reveal competitive potential of the company and point out the ways to further development. Porter’s model is based on the theory of five competitive forces defining organizational structure of every modern business. These forces include threat of entry, power of buyers, power of suppliers, threats of substitution and competitive rivalry (Porter’s Five Forces for Competitor Analysis & Advantage, 2012). The analysis of Facebook by Porter’s method sheds the light on the real state of company’s affairs. The main newcomer, which can constitute a menace to Facebook, is Google+. This new networking launched by Google tries to substitute Facebook as it offers similar to Facebook options and applications. However, Google+ is not consummate and still needs some improvements. Besides, Facebook reputation tells its own story, and its users regard it as the most private network. Facebook administrators pay keen attention to the site users and appreciate their support as users’ power is significant to the company’s development. Therefore, the network constantly analyses its user’s activity and adds updates, new applications, and features to the site. Another force that influences Facebook activities is its developers. The high priority for Facebook always remains uniqueness. Therefore, the competition among its developers is tough. For example, after launching Open Graph and Timeline on Facebook, there was a considerable increase of rivalry among developers. Facebook collects 85% of its revenue from advertisement and 12% from a game development called Zynga. Facebook profits from Zynga at the cost of selling virtual goods and shops with virtual and real goods. Furthermore, the network has astonishing well-developed advertising platform. These factors all together make Facebook a worthy rival to YouTube, Amazon.com, Google and Twitter. However, regarding networking characteristics the main competitor of Facebook remains Twitter. The competition between these two networks is not intense as the traffic density on Twitter is lower than on Facebook, and the number of Facebook’s users is bigger (Vakil, 2012).
Another effective tool applied in business analysis together with Porter’s model is SWOT analysis. SWOT analysis assists in making an investigation of external and internal factors which influence company’s development. The results of SWOT analysis applied to analyzing Facebook define strong and weak points of the company. To Facebook strengths belong to substantial number of users, which nowadays reaches 845 million, and raising revenue with the tendency to grow on 50% every half a year. In spite of successful business activity, the company still has a number of weaknesses. High valuation, uncontrollable amount of accounts for one real person, unfavorable conditions of employees, whose salaries are depended on stock price are considered to be Facebook disadvantages. The opportunities of Facebook include innovative applications, which constantly change one another, discovering new target market in China, the possibility to turn into a brand new operating system. The main threats posed to Facebook are similar networks such as MySpace, Luluvise, Google+. Moreover, Facebook is depended on profitable companies, which operate at the Facebook system. The company from which Facebook benefits the most is Zynga, and to lose Zynga for Facebook will mean to lose the biggest source of revenue (A SWOT analysis: Is Facebook a good investment - or not, 2012).
Taking into consideration the results of both analyses, many business experts make their predictions about further development of Facebook. It is suggested that in order to surpass Google, as one of Facebook’s main rival, the company’s marketing strategy will include the creation of retrieval system, on the basis of “Likes”. Furthermore, it is also rumored that Facebook developers also plan to design a social Smartphone. As 30% of profits brought by online games belong to Facebook, another tendency of company’s development is supposed to be directed on improvements in the gaming platform. Therefore, the network’s revenue is predicted to increase from $4 billion in 2012 to $20 billion in 2016. Regarding further market penetration, a target market for Facebook could become such countries as China, North Korea, Iran and Syria. In spite of the fact that the citizens of these countries comprise 22,7% of the Internet users on the globe, even after conquering this market the growth of Facebook potential profits will be limited, as only 2,1 billion out of 6,8 billion Earth population use the Internet (Hunter, 2012).
All in all, in spite of the recent incredible growth of Facebook, the company is assumed to reach its limits soon. The above mentioned experts’ suggestions are mostly based on Facebook ability to monetize successfully its users, and on the direct relation between the growth of market share and increase in profits. Therefore, the high priority for Facebook should become the creation of such revenue models, which will justify the $70 to $100 billion valuation of the company.