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Introduction

Facebook was founded in February 4, 2004.  It is a social networking site which was founded by Mark Zuckerberg alongside his college roommates from Harvard University. They include Andrew McCollum, Dustin Moskovitz, Eduardo Saverin and Chris Hughes. Its mission is to make the world more open and connected. This is achieved through giving people the power to share whatever they want to whoever they want no matter where they are. Over the years, Facebook has gained popularity all over the world and millions of people use it every day to connect with friends, upload photos, share links and videos among other social things.

According to Zuckerberg, he said his three pillars towards achieving this mission is to build the best and most appearing mobile product, to build a platform where every new application that is created can be social and enable people to share, and to build strong monetization and economic engine that will eventually build Facebook into one of the world’s most valuable companies.

Pestle analysis

An external analysis of the most important factors in a company’s remote environment is done through this model. Facebook being a top player in social media market, its market capability can be maintained through popularity, brand development and R&D investment. However, this model shows that Facebook Inc. needs to adjust its strategies to ensure that its products remain competitive enough so as to maintain their lead in the market. This work will now put its focus on the factors that affect Facebook

  • Political factors. Under this we have; political stability in developed countries, that is an opportunity, governmental support for globalization (opportunity), political barriers for example in Chinese market (threat). These however are just a few among other political factors.
  • Economic factors. They include; it has the opportunity that can increase its market penetration efforts in the developing and stabilizing countries. Another opportunity is that the rapid development of these developing countries also increases the telecommunication factor which is an added advantage for Facebook Inc. when a country develops, the disposable incomes of that country increases. This means that more people are able to by gadgets with better features for internet connection and this is an opportunity for Facebook.  
  • Social/social cultural factors. Among them include; the preference for high quality services. This happens when there is increased financial capacity and improved living conditions. Increased online buying creates an opportunity for Facebook to retail some of its products online since purchasing is easy.
  • Technological factors. Among them is the increasing worldwide use of mobile devices, this is a great opportunity for Facebook. The advancement in technology has also led to the increase in social media companies which are a big threat for Facebook. Another big threat for Facebook business is the fact that some online retailers have diversified their business and are now offering advertising services.

Some other factors include; environmental factors and legal factors. This analysis recommends that Facebook should address some major opportunities as well as threats so as to reach more people and the result is increased revenue.

Porter’s 5 forces

This analysis deals with five forces that shape industry competition. They include: competitive rivalry, bargaining power of suppliers, bargaining power of customers, threat of new entrants, and threat of substitute products. We will now look at how each of this affect Facebook.

  • Understanding current competitors. Currently, Facebook is facing competition from social networks such as Google plus, Tumblr, twitter, LinkedIn among others. Facebook Inc. faces direct competitions from these sites which pose a moderately high risk.
  • Customer bargaining power. If all Facebook customers ceased to use the social site today, nobody would pay for their advertisements to be done on Facebook. For this reason, Facebook must work extra hard to make sure that most of the customers are not just checking in for a while but they are also actively using the site. When more users stay active, Facebook makes more money through ads and market research.
  • New entrants’ assessment. Most Facebook customers are the youth. If a person today comes up with an app that would be addictive to them more than Facebook, then that person would have beaten the odds. Unfortunately, getting enough brand recognition would be the biggest challenge. For this reason, Facebook remains unchallenged and the risk is low.
  • Supplier bargaining power. Here we are talking about the people who build and maintain the servers, software developers and anybody else who contribute to make Facebook run properly. For example, if the internet providers would make internet extremely expensive today, this would reduce the amount of time people spend on Facebook and others would also stop using it.
  • Threat of substitutes. In terms of new technologies and shifting trends, social networking is very vulnerable. If a certain feature on Facebook becomes outdated or unfashionable, many users will shift to the up-to-date substitute. For it to stay in business it must keep pace with the changing technology.

Strategic Capability Analysis

Concerning face book’s resource view, its biggest recourse is the over 1 billion users’ information stored in its database. It also had a million business pages, which allowed companies to attract potential customers and tell about themselves. Facebook home is the mobile experience that connects people with their friends using a mobile device. Facebook messenger is a messaging app that is used for texting friends on Facebook for free. Facebook Inc also uses Instagram app which it acquired to increase its value. It is also the owner of whatsapp, a free messaging app. It also bought face.com a face recognition platform enabling auto-tagging feature on shared pictures. All these resources allow Facebook to have a competitive advantage over other imitator