om now, this essay will provide the readers with insightful map to explain the firm’s business model followed by discussing its strengths and vulnerabilities as a globally known social network. In the light of the business model, risk factors that Facebook is currently exposed to will be identified. Eventually, the underlying drivers behind the company’s current risk factors will be tackled in details. This information is useful in terms of enabling the company forecast its future risks.
This essay will also examine the appropriateness and effectiveness of Facebook’s risk management strategies in terms of making the company survive the global challenges of social networking sites 10 years from now. In order to prevent the development of potentially new risks as a result of implementing the company’s current risk management strategies, some of the recommended proactive and holistic risk management strategies which can be used in allowing the company monitor and manage its risk exposure will be tackled in details.
Although Mark Zuckerberg – the founder of Facebook admits that the company is still searching for a business model that will enable the company have a clear path to profitability (Manjoo, 2008), the business model of Facebook seems to be based on network effects business model. It means that the company is using networking effect by inviting individuals more than 13 years old to register with the social networking website. In line with this, the higher the number of individuals who register with Facebook would mean an increase the company ability to earn from investment value and advertising gains. Since the goal of Facebook is to increase the number of its online users, the company decided to include Digg in its new business model (ONeil, 2010).
According to Nicole Ozer – technology and civil liberties policy director for ACLU of Northern California, “Facebook is in the business of making money, not protecting privacy” (Swartz, 2010). In