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Evaluation Of Strategic Choices made By Facebook

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Strategic Decision Making

3060 Downloads 7 Pages 1753 Words

Introduction

Strategic decision making id complex and critical business function and it is required that systematic and organized approach should be adopted for making action plans for the enterprise. Present report describes about Strategic choices adopted by Facebook for gaining accomplished goals and targets of enterprise. Moreover evaluation of strategic choices and recommendations for making improvements have been mentioned.

1. Strategic Purpose And Introduction Of The Organization

Facebook is a multinational company that was incepted in the year 2012 and it was founded by Mark Zuckerberg. The company provides internet services in large number of countries and more than 5000 employees are working under it (Facebook . 2016). More than 1 billion people across globe are availing internet services that are offered by Facebook. It is a social networking sites which provides medium to users for getting connected with friends, family members and their fellow group members (Acquisti and Gross, 2006). People are allowed to create profiles, post updates, make interaction with friends and exchange videos and messages. Company also started for public offering in year 2012 and it supported in maximizing capitalization of the company.

2. External Environment Analysis

Political

Facebook provides social networking services in diverse countries across globe and many privacy issues are faced by the company from the side of users and government. Many financial damages have been faced by the company and it aided in reducing the overall performance of the enterprise.

Economical

Company has gained strong growth rate and it supported in achieving huge profitability and revenues for the enterprise. Facebook Gaines higher margin returns on a low expenses base (Zhao, Grasmuck and Martin, 2008).

Social

Facebook company is facing diverse range of social issues due to high rate of competition that is faced in industry. Moreover culture and trends that are running in a company also affects the working operations of enterprise.

Technical

Frequent advancements that are made in technical sector also gives impact on overall working of system. Use of advanced technical methods will support for gaining competitive advantage for business and adopting all this supports facebook for ensuring growth and success for the business.

Environmental

Company sometimes faces network related issues sue to bad climate and environmental conditions.

Legal

It is assertive that Facebook should comply with legal guidelines that are rendered by government of an nation.

3. Competitive Industry Analysis

Porter's five forces will aid in assessing competitive industry analysis and it is as described :-

Threat of new entrants

Due to high success and growth opportunities that are offered by this industry threats of new entrants is high.

Competitor rivalry

Facebook is facing competition from many rival firms including Twitter, You-tube, Linked and Myspace.

Bargaining power of buyers

Buyers have many options to avail superior quality social networking services and it increases bargaining power of buyers. It makes competition ion the industry as vary high (Valenzuela, Park and Kee, 2009).

Bargaining power of suppliers

Bargaining power of suppliers is low as there are many options for suppliers to sell their services and due to that it is vital for Facebook to maintain effective relations with suppliers.

Availability of substitutes

There are many substitute available and due to that it becomes essential for Facebook to offer superior quality services as compared to rival firms availability of substitutes is moderate to high in this sector.

4. Swot Analysis

Strength

More than 1.3 million users are availing services provided by Facebook and it aids in providing superior quality internet services to users.

Weaknesses

Facebook company's advertising and promotional strategies are not effective and due to that company is facing difficulty in gaining competitive advantage (Hewitt and Forte, 2006).

Opportunities

Company has opportunity for spreading operations of enterprise in large number of countries and doing globalization of business.

Threats

Company is facing threats sue to increasing number of competition that is faced in the industry. In addition to that problem is also faced due to increasing theft and security related issues that are faced by the company.

5.Strategy Clock; Porter’s Generic Strategies

Facebook is a leading social networking company that provides internet services to large number of people. Porter's generic business strategies for Facebook are as described :-

Cost leadership strategy

Facebook offers method of connection to people through its social media platform. Company has opportunities for entering into a new market area and for expanding existing base by adopting cost leadership strategy (Waters and Lucas, 2009). Facebook generates maximum of its revenue from advertising and promotional messages that are got from it. Moreover company also earns financial revenues by Zynga which is a social networking game developer site. Cost sensitive and price conscious consumers can be attracted by making use of cost leadership strategy. There are large number of companies that are offering services in this industry and big market share and large consumer base can be gained by making use of this approach. It also supports in gaining economies of scale and entry barrier can be created for potential consumers (Raacke and Bonds-Raacke, 2008). In addition to that middle and lower income group are provided better services by making use of this approach.

Differentiation strategy

Facebook has adopted differentiation strategy for creating a unique image of the firm in market area. It aids in promoting services of the company to a larger market area and broader market area has been captured by Facebook by making use of this strategy. Company has taken initiative for launching its own self advertising platform and it supports for competing with Amazon.com, You -tube and Twitter. Facebook is dealing in cloud marketing which is a low cost oriented industry. Use of this strategy supports in maintaining a unique position in market and differentiating the services from other rival firms.

Safe Analysis

Safe analysis for evaluating effectiveness of strategic choices that have been selected by Facebook for managing its operations and stimulating the company towards growth. SAFe analysis of Facebook is as mentioned :-

Suitability

Facebook has adopted cost leadership and differentiating strategy for acquiring large market share and it aids in accomplishing desired goals of the organization (Valenzuela, Park and Kee, 2009.). Adopted strategies aids in addressing the key opportunities that are available for the company and moreover constraints will also be removed by the methods that have been faced by the company. Huge potential for business has been gained and various tools such as Cost per click (CPC) and Coat per impression has provided an effective medium for making and developing an attractive user interface and Facebook has became capable for launching free social media services that are integrated with highly valued websites.

Acceptability

Proposed strategy supports in meeting the expectation of consumers, buyers and other people that are associated with the business. All the stakeholders have shown a positive attitude for accepting the strategy and probability for getting likely returns is also vary high. Facebook has became capable for building a strong brand loyalty and gaining support of all the stakeholders of the organization (Hewitt and Forte, 2006).

Feasibility

The proposed strategy of Facebook works actually in practice and it has supported in achieving the long term and short term objectives of the organization. It is also required that strategy should be financed and Facebook has allocated budget and resources for implementing the strategies in effective manner. Moreover required resources for employing the action plan and strategy has been allocated in proper manner. Existing staff members are having appropriate skills and capabilities for implementing the strategies in proper and effective way.

Selection and Justification of the Optimum Strategy

Cost leadership strategy is the best method that can be adopted in Facebook for ensuring growth and success of the enterprise. More innovative and advanced technical tools can be adopted by Facebook for improving the strategic choices that are made by it (Acquisti and Gross, 2010). Most of the rival firms in social networking industry are providing services at vary lower price and majority of revenues are generated from advertisements and promotional offers received by the company. More than 85 % of revenue earned by Facebook comes from advertising opportunities got by the company and company can take significant initiates for modifying tools such as Cost per capabilities and Cost per impressions. Recently Facebook launched free social media services that and these are integrated with highly valued websites (Dwyer, Hiltz and Passerini, 2007). It provides options for gaining exposure for carrying out business activities in effective manner. Research and development department of the company can take crucial steps for making more innovation and adding new attributes and features in existing services that are offered by the enterprise.

Conclusion

Summing up the present study it can be concluded that strategic choices adopted by Facebook are effective for ensuring long term growth of the enterprise. Moreover it is vital that some necessary modifications can be made so that customers can be provided with better social networking experiences.

References

  • Acquisti, A. and Gross, R., 2006, June. Imagined communities: Awareness, information sharing, and privacy on the Facebook. In International workshop on privacy enhancing technologies (pp. 36-58). Springer Berlin Heidelberg.
  • Dwyer, C., Hiltz, S. and Passerini, K., 2007. Trust and privacy concern within social networking sites: A comparison of Facebook and MySpace. AMCIS 2007 proceedings, p.339.
  • Hewitt, A. and Forte, A., 2006. Crossing boundaries: Identity management and student/faculty relationships on the Facebook. Poster presented at CSCW, Banff, Alberta, pp.1-2.
  • Raacke, J. and Bonds-Raacke, J., 2008. MySpace and Facebook: Applying the uses and gratifications theory to exploring friend-networking sites. Cyberpsychology & behavior. 11(2). pp.169-174.
  • Roblyer, M.D. and Witty, J.V., 2010. Findings on Facebook in higher education: A comparison of college faculty and student uses and perceptions of social networking sites. The Internet and higher education. 13(3). pp.134-140.
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