Facebook Company Case Analysis - Essay Example

? Business environment challenges or trends that threaten the long run performance and survival of Facebook Businesses face various challenges from different sources than never before due to the globalized economy. All the businesses are still determined to compete effectively and are ready to do whatever it takes to get ahead of their peers. The businesses are thus facing discomfort and an uncertain future because of various business environmental challenges and trends that threaten the long run survival and performance of the company. The changing regulatory framework is always a big concern for most businesses as they are not sure how the economic climate is likely to change against them. The businesses are also tasked with corporate social responsibility issues and the same time expected to observe business ethics in their daily operations. Facebook Company Case Analysis This company is situated in the United States and it serves over a billion clients in the internet, making it the largest social networking site. Its an internet corporation company that runs the social networking site whereby people express their views and communicate all over the work. By the year 2012, the company had over 4500 employees working on various capacities in the company. The main competitors of Facebook are MySpace, Twitter, LinkedIn, IGLOO, among other companies that offer internet social services (Strategic Management Insight, 2013). STEEPLE Analysis of Facebook SOCIAL TECHNOLOGICAL ECONOMICAL ENVIRONMENTAL POLITICAL LEGAL ETHICAL Lifestyle changes New inventions and development Economic growth Sustainable energy Trade polices Employment laws Reputation Career and leisure attitudes Industrial focus on technological effort Taxation Global warming International trade regulations Contract laws Business ethics Labour and social mobility Rate of technological transfer Competition Threats from natural causes Political stability Consumer protection Client confidentiality From the STEEPLE Analysis, the challenges facing Facebook range from social, technological, economical, environmental, political, legal, and ethical problems. The users and the governments have been expressing privacy concerns leading to legal suit against the company (Marketing Mix, 2013). The privacy issues have made most consumers to question the business ethics of the company resulting to reduced confidentiality. Facebook being the market leader in social networking services enjoys the benefits that come with economics of scale, but the company profits are also subjected to global economic performance. The lifestyle changes and social mobility of most users is also affecting the company since some begin to see Facebook as a social interaction site for the younger generation. Facebook pays tax from their businesses with rates changing from time to time thus largely consuming their profits. There is stiff competition from related companies like Twitter and MySpace who have launched aggressive campaigns and products to outshine Facebook. Facebook was a result of technological invention and others are also exploiting the same to come up with other related services that are likely to give Facebook a strong competition. Facebook being a company with global footing is vulnerable to problems with corporate social responsibility being a major concern facing most companies and Facebook is not exempted. All businesses are expected to practice business ethics in their daily operations to avoid conflicts and hence Facebook must abide by it. Competition is a major threat to all businesses as Facebook is facing competition from MySpace, Twitter, and LinkedIn. Challenges facing Facebook Corporate Social Responsibility (CSR) The role of the business is critical in ensuring that the corporate social responsibility is well taken care of since businesses can only flourish when the communities around them and their ecosystems are well taken care of (Hart, 1995). There is growing recognition that everything we do has a positive or negative impact on the environment in which its located (York, Rosa and Dietz, 2003). According to Shapiro and Varian (1991), most executives are still divided on what percentage of their budget should be allocated to corporate social responsibility. Most of these global challenges to be addressed by Facebook range from globalization, resource depletion, climate change, poverty, and demographic shifts; hence, they represent a big threat to businesses (Porter and Van der Linde, 1995). Governments are increasingly becoming aware of the national competitive advantages of responsible business and they are keenly watching as they operate their activities. They are thus putting a lot of pressure on businesses to devise ways and means of ensuring that their businesses are safe and they contribute positively towards the development of communities around them. Facebook risk losing their trust from the government and the members of the public if they fail to systemic approaches in place that ensure continued positive performance. The tarnished reputation of one firm can also extend to damage the reputation of the related industries within the same line of operations, in as much as they may be innocent (Hamel and Valikangas, 2003). There is a close relationship between CSR and the law since this is the main instrument used by the government to address social, environmental, and economic impacts. Facebook should thus apply CSR in their operations to avoid conflict with the law. The CSR is thus to address problematic conduct before it attracts legal action and hence eroding the company’s integrity (Porter and Van der Linde, 1995). Coca-Cola Company faced various challenges related to corporate social responsibility when it operated in India. Coke was also accused of depleting the water sources in the process of manufacturing their drinks, thus exposing the country into a water crisis. Another challenge coke faced in the course of operating operation in the Indian environment is that they were supplying poisonous waste to the local farmers as fertilizer as they contained dangerous chemicals (IBS, 2013). Business and Ethics The social contact between business and society can be greatly enhanced by the presence of business ethics. The terms in the contact of employment should represent good business ethics in a company to avoid unnecessary complications (Spar, 2002). Facebook has to balance between their profit making activities and the obligations of their employees. The employees have economic and social burdens that they expect their companies to help them take care of in order to improve their working relationship. Due to tough economic times and the ever-changing environment, the companies are pressured to put proper working conditions for their workforce. Facebook can address ethical issues affecting the company by the use of various ways. Corporations are also hiring corporate responsibility managers and devising training programs in order to avoid negative issues that may affect the company. Understanding the landscape of business ethics can be problematic since the field is so vast since it deals with most of the sectors of the company. The ethical approach to a business is fundamental for the sustainability of the business and thus companies should avoid acting purely on profit making motives (Elms, Brammer, Harris and Philips, 2010). A company that applies ethical approach in its businesses underpins the structures and systems used to guarantee noble governance. Business sustainability comes with ethical long terms vision that caters for all the stakeholders thus reducing costs and risk incidences (Griseri and Sepali, 2010). The earth has limited resources, which can greatly be depleted in the interest of selfish business gain without practicing proper business ethics. Businesses are thus required to apply proper business ethics by safeguarding the rights of the employees and stakeholders to ensure smooth functioning of the company (Snyder, 2010). Nike has been a corporate success for many years thus making it compete successfully with its competitors. Nike managed to compete fairly with its competitors like Reebok and Adidas due its trendy fashion it sets on the market. The death of workers in the Nike contracting factory was the beginning of the misfortune, which hit the company. The period between 1980s and the 1990s saw the corporation facing a series of challenges arising from labour incidents (Spar, 2002). Nike was also accused of dangerous working conditions in china, overtime working conditions in Vietnam, among other series of labour accusations. Facebook should carefully address matters of corporate social responsibility fully in order to avoid challenges like those experienced by Nike Company. Alliances, ecosystems, and competition Competition in businesses is shaped various factors that range from the environment, political agendas, technological changes, increased customer expectations among other things (Rumelt, 1991). For Facebook to challenge their competitors, they have to increase their efficiency, improve on their effectiveness, and capitalize on their competitive advantage. The key elements needed by a business in any competitive environment are human resources, capital, and technology. Facebook will greatly gain in the competitive advantage when they provide value to their customers with their products most of the time. Therefore, a company is thus required to clearly understand their customer requirement to enable them devise ways and means of providing the products and services they like. A company is also required to the strengths and weaknesses of the company in order for them to devise their strategies of winning the competition. The ability of a company to achieve a competitive advantage is highly based on the role played by the home country of the industry. Competitiveness is the most important aspect a business has to deal with in order to realize profits (Sullivan-Taylor and Wilson, 2009). The firms enter into alliances when they realize that such moves are likely to create huge benefits for the company. Alliances can enable a company reduce competition and enjoy the benefits that come with the monopoly of the market. Facebook must be very careful when they enter into alliances since they do not necessarily guarantee success in the long term. Alliances may lead to legal hurdles that may hinder the smooth operations leading to losses. The differences between the merging companies may also hinder implementation of various activities thus leading to losses. Differences are likely to emerge as alliances are based on working with an organization within the organization. McGee and Thomas (1986) studies suggest that most of the alliances result in failures, and thus Facebook should be cautious when designing such moves. There are also high costs involved in the negotiating and monitoring stages, thus depleting the resources of the company involved. The level of trust while constructing the alliances is also a major concern since it determines the extent of success of the companies involved (Rumelt, 1991). Competition is the major concern for Facebook since it has a direct impact on the profits made by the company. It occurs when two or more companies act independently to supply goods and services to the same market. Competition can never be avoided by businesses and the only way for a business to survive is to come up with unique methods that attract customers (McGee and Thomas, 1986). Competitions sometimes make businesses to form alliances to reduce competition between them, and instead enjoy the benefits that come with economies of scale (Sullivan-Taylor and Wilson, 2009). The Apple competitive environment changed drastically when IBM entered the PC market in 1981 with open systems that either produces could clone. Apple failed to provide the necessary products required by the first changing world thus making their profits to fall drastically by 1980s. Most of the company workers left the company on realizing that it has a dwindling future and thus their services were untenable (Adner, 2012). Online music stores put more pressure on Apple due to their easy song downloads and discount prices that attracted a good chunk of buyers. Due to increased competition, Apple introduced the iPhone in their bid to reinvent the phone (Yoffie, 2011). Apple suffered a challenge when it restricted the use of iPhone to single network operators, while its competitors provided for multiple operator services. Facebook should thus be very careful in designing their competition strategies so that they evade challenges faced by Apple. Strategic Plan for Facebook Introduction This strategic plan provides for a structured and coordinated approach for developing long-term organizational objectives as well as strategies for completing them within good time. This strategic plan therefore provides a framework for planning, development and policy description of the Facebook Company in the next 20 years, hence is a product of continued consultation. In the wake of the various challenges facing the social media companies, Facebook is at the forefront and is committed to playing a leading role in providing a reliable access to social networking site. The planning was subjected to Strengths, Weaknesses, Opportunities, and Threats (SWOT) scan, which lead to the identification of the vision and mission statements the company, requires achieving its objectives. SWOT Analysis Company strengths The greatest strength of Facebook is its wide and big network of subscribers in all parts of the world. Most of the Facebook subscribers come from the college and post college group with the highest spending demographics. With such a highly extensive and detailed data, it is easy for this company to tailor the products and services in such a manner as to initiate profitability for the company. Apple’s relationship with other companies with great potential such as Amazon and Microsoft gives them a good advantage over other companies. This reduces the level of competition between them and enables them to take advantage of the company strengths. The skilled relationships of this company and other established and gainful companies like Amazon and Microsoft make them to develop into a profitable venture in the future. Weaknesses of Facebook The greatest weakness for this company is that it has always failed to generate as much revenue as expected from its potential of the large user base in all parts of the world. The company has a large user and corresponding user profile information that can greatly enable it to deliver a targeted advertising for the company. The main difficulty faced by this social networking site is that they suffer from extremely low click through rates on their ads. The revenues generated by this company in the ear 2007 were as low as 2.2 dollars per user in the whole year. This is quite unexpected since other social networking companies could make as much as 3.5 dollars per user every year (Gallaher, 2009). Another major weakness of this company is the issue of privacy since they are exposed increasingly negative publicity of personal information online. Opportunities There is increasing internet connectivity even in the remote villages thus providing a base for new entrants on a daily basis. Most companies are moving away from physical ads to targeted online marketing thus Facebook provide a good platform for them to launch their initiatives. Facebook Company possesses a large database of information of the users that is of great benefit to marketers to launch their marketing strategies. The company can also take advantage of their databases to link with other companies like Amazon to offer a list of favorite books, movies, and music to the users. Facebook in exchange would gain information on the items users are reluctant to buy thus allowing for more specific and targeted marketing thus generating a lot of revenue for the companies. The company has the ability to harness friend’s lists that can be used for peer influence in conveying certain information of great benefit for marketers, considering the peer pressure that can be generated by the use of Facebook as a potential marketing tool for marketers. The company is also able to offer targeted advertising thus streamlining the purchase system thus encouraging users to make quick choices. The company should thus work closely with advertising companies and agencies to present a quick and effective means of purchasing products. The company has the potential of charging commissions on profits generated by the use of it in order to increase its productivity. Threats The biggest threat to this social networking site is that it has low entry barriers thus enabling anybody to join any time with minimal restrictions. This encourages the entry of both positive and negative motives with the potential of damaging the company profile. The main threats to this company come from users who may outdo Facebook and improve some critical new feature therefore draw clients away. Other threats also come from the competitor like MySpace who are continually developing new strategies to wrestle customers away from Facebook. Action Plan for Facebook Business and environment Facebook operates in all corners of the globe and is thus more likely to be affected by environmental issues than any other company is. The key strategy for this company is to maintain control over the social networking market and to develop a collaborative relationship in all every environment. Facebook is sometimes considered by some school administrators to be a waste of time even though there can be numerous benefits if they begin collaborating. The administration and students are likely to benefit from organization of clubs and events, advertisement of various issues and properties, among other benefits. The community should be made to understand that Facebook is a social networking site with potential benefits and should not be viewed as wasting time in schooling environment. The business and the surrounding environment should learn ways and means of tolerating each other to avoid unnecessary understanding between them. Facebook is thus ready to inform the schools the benefits students and administrators can enjoy when they are freely allowed to take advantage of the social networking sites. The company is also ready to travel in all countries to ensure that regulations in those particular countries are those that favour its growth and development. This is because some countries have regulations that are prohibitive to the growth and development of foreign companies and this may negatively affect Facebook. Some of the strategies that will be employed by the Facebook Company are to strengthen the public relation function in order to avoid any negative response from individuals or institutions in every environment. The company is also ready and willing to prepare a service delivery charter that will spell clearly the motives and intentions of its operations. The company shall also establish a mechanism for effective and immediate communication in response to any critical issue that may arise during the operations of the company. The company also plans to enhance social responsibility involvement of everybody in all parts of the world through selected outreach programs. Due to the company love for healthy ecosystems, the company pledges to promote environmental sustainability by funding programs that reduce global warming. Business and Ethics The issue of online privacy is a matter of great concern for Facebook as it threatens the existence of this company. Facebook plans to carry out research on ways and means to enhance their security issue concerns to avoid accusations. The company is also aware of that they have to treat their workers with respect and dignity in order to avoid conflicts that may lead to industrial unrest. The company thus promises to review all the workers’ salaries and working conditions to ensure that they are of good standards and is acceptable by the international labour organizations. The company thus plans to identify, recruit and retain relevant staff who undersigned’s proper business ethics and to review the policies for human resource management to make them as effective as possible. Continuous development of skills and regular workload distribution is amongst the company mandate to avoid work related problems. The company also plans to introduce yearly awards for the best performers to encourage hard work within the company. The company also plans to promote participatory and consultative management together with its workforce at all times of their duties. Alliances, ecosystem, and competition The Facebook Company intends to remain the world leader in the provision of social networking services to all people in all parts of the world. The company plans to achieve this by forming alliances with potential companies to gain a strong foothold and reduce he levels of competition between them. The company intends to increase its level of creativity to offer more unique but lovely services to attract more customers thus increase their profitability in the competitive environment. Implementation of the Action Plan The full and active support is required for the proper implementation of the action plan for this strategic plan. A blue print is created and the goals of the strategic plan are translated into real action. Effective communication is necessary in the entire department to ensure smooth running of the strategic objectives. Employee engagement is required for the full and coordinated implementation of this plan. The finances are then aligned to ensure that all the objectives are implemented to their fullest. Evaluation The first goal of the evaluation process is to determine the goals of the strategic plan and review them according to the steps that are already taken. The plans should be reviewed to determine whether it is connected to the company mission and vision. All elements of the plan should be integrated to ensure that they support each other and that they are realistic. The progress of all the plans is constantly monitored to ensure that they are followed to the latter; lastly, the plan should be reviewed to ensure that they are complete. Bibliography Adner, R. 2012. Amazon vs. Apple: Competing Ecosystem Strategies. Harvard Business Review. [Online] Available at At Read More