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Part 1– Strategic Audit Paper – BUAD 455

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Part 1– Strategic Audit Paper – BUAD 455

I. History and Background information about Facebook

Timetable:

1. 2004: Mark Zuckerberg launched Facebook as a social networking site for college students

2. 2006: Facebook was opened to anyone with a valid email address

3. 2012: Facebook went public with a $16 billion IPO

4. 2018: Facebook faced a major data scandal involving Cambridge Analytica and its use of user data

5. 2021: Facebook changed its name to Meta and announced its vision for the Metaverse

II. Current Situation

A. Current Performance

Facebook is well-positioned for continued strong financial results in 2022. Revenue could increase 15-20% to $99 billion-$103 billion. It is driven by advertising growth on Facebook and Instagram. Net income may increase 20-25% to $35 billion-$36 billion.

Facebook's ad platforms have significant room for growth. More businesses advertise on social media making growth likely. Facebook is improving ad targeting and expanding ad offerings. It is focusing on different customer segments (Tien, 2022). New e-commerce features may drive more retail ad spend. Revenue per user and average ad pricing is being targeted to grow.

However, revenue growth may decelerate from prior years. It is due to the economic impacts of COVID-19 and privacy changes. Stricter limits on certain ad targeting techniques could curb the effectiveness of Facebook's ad tools (Tien, 2022). It will also reduce ad pricing and spending. Competition from other platforms is also intensifying.

B. Strategic Posture

Mission: "To give people the power to build community and bring the world closer together." (Facebook, 2022)

Objectives:

1. Corporate Objective: To maintain its position as the leading social media platform.

2. Business Objective: To expand its reach to emerging markets and diversify its revenue streams.

3. Functional Objective: To enhance user experience and engagement on its platform.

Strategies:

Growth Strategy: Expand into emerging markets and diversify revenue streams through acquisitions, such as the acquisition of Instagram and WhatsApp.

User Engagement Strategy: Enhance user experience and engagement through personalized content and features, such as the news feed and groups.

Data Strategy: Collect and analyze user data to improve targeted advertising and user experience.

Policies:

1. Privacy Policy: Facebook collects user data to improve user experience but also has policies to protect user privacy. It gives users control over their data.

2. Content Policy: Facebook has policies to regulate content on its platform. It removes harmful or misleading content.

3. International Operations: Facebook operates globally. It has adapted its policies and strategies to local regulations and cultures.

III. Corporate Governance

Facebook's top executives include:

1. Mark Zuckerberg, CEO and Chairman of the Board

2. Sheryl Sandberg, COO

3. David Wehner, CFO

4. Mike Schroepfer, CTO

5. Chris Cox, Chief Product Officer (previously)

IV. External Environment: Opportunities and Threats (Part of SWOT Analysis)

A. Societal Environment

General Environment Forces

Economic Trends: The rise of e-commerce and online advertising presents opportunities for Facebook to increase revenue. It threatens its advertising business model if users become more privacy-conscious.

Technological Trends: The increasing use of mobile devices presents opportunities for Facebook to enhance user experience and engagement. It poses a threat if new technologies disrupt its platform.

Political-Legal Trends: The increasing scrutiny of social media companies by governments and regulators threatens Facebook's business model and reputation. It presents opportunities for Facebook to show its commitment to user safety and privacy (Swathi and Sujatha, 2022).

Socio-Cultural Trends: The increasing awareness of social issues. For example, diversity and mental health, presents opportunities for Facebook to address these issues on its platform. However, it also poses a threat if users perceive Facebook as not doing enough to address these issues.

Regional Differences: Facebook operates globally and faces different societal and environmental forces in different regions (Kraus et al., 2022).

B. Task Environment

Competitive Forces: The social media industry is highly competitive. Competitors like Twitter, Snapchat, and TikTok. The relative power of customers and suppliers also affects Facebook's competitive position.

Key Factors in the Immediate Environment: The key factors that currently affect Facebook include:

1. Customers: The increasing awareness of privacy and security issues among users.

2. Competitors

3. Suppliers: The increasing demand for high-quality content to keep users engaged on the platform.

4. Governments and Regulators (Larson and Vieregger, 2019)

Opportunities and Threats

Opportunities: Facebook can expand its reach to emerging markets. It can also diversify its revenue streams beyond advertising. In the long run it can address social issues on its platform.

Threats: Facebook faces threats from competition, privacy concerns, and regulatory scrutiny that could limit its ability to collect and use user data.

Strategic Group Analysis

Summary of External Factors

1. The increased scrutiny of social media companies by governments and regulators

2. The competition from other social media platforms

3. The privacy concerns of users

In conclusion, Facebook is a dominant player in the social media industry. It has a diversified revenue stream and a strong strategic posture. However, it faces challenges from regulatory scrutiny. Others include competition and privacy concerns (Kraus et al., 2022). To maintain its position as the leading social media platform strategies need to change. Facebook must continue to adapt to changes in the external environment issues. It should maintain user trust and privacy.

References

Kraus, S., Kanbach, D. K., Krysta, P. M., Steinhoff, M. M., & Tomini, N. (2022). Facebook and the creation of the metaverse: radical business model innovation or incremental transformation? International Journal of Entrepreneurial Behavior & Research.

Larson, E., & Vieregger, C. (2019). Strategic actions in a platform context: what should Facebook do next? Journal of Information Systems Education, 30(2), 97-105.

Swathi, P. K., & Sujatha, K. S. (2022). Comparative Case study analysis of Social Media Platforms-Instagram, Facebook, and Snapchat.

Tien, N. H. (2022). Analysis of employer branding strategy of Facebook and experiences for Vietnam high-tech corporation.