Please make a peer-review of this two papers

Mikayla Hagerman

Dr. G

BUAD455.50A

Strategy and Policy

21 May 2023

Strategic Audit- Facebook

1. History and Background Information about the Company

Timetable:

2004, February 4: Facebook launches.

2004, April 13: LLC is formed.

2004, June: First official investment.

2007, January: Facebook goes mobile.

2008, October: International headquarters in Dublin.

2009, February: The “Like” button is introduced.

2011, November: Facebook Timeline is introduced.

2012, April: Facebook acquires Instagram.

2012, May: Facebook goes public.

2015, May: Announces support for GIFs.

2021, October: Facebook Inc. renamed as Meta Platforms Inc.

2021, November: Shutdown of face recognition.

!!. Current Situation

1. Current Performance

In the past year, Facebook did not do well. Facebook had decreased for the first time in the company’s history. It dropped from $117.9 billion to $116.8 billion. Facebook’s return on investment for 2022 was -101.7%. Right now, Facebook’s market share is down 36.64%. In 2022, the net profit was $23.1 billion, however it was a decline from the previous year.

1. Strategic Posture

1: Mission: “Facebook’s mission is to give people the power to build community and bring the world closer together. As our company grows, we have five strong values that guide the way we work and the decisions we make each day to help achieve our mission” (Facebook, 2015).

2: Objectives: Facebook has several objectives. The first objective was to be able to spread it to other educational institutions. Facebook also wanted to stay independent from the start of the company and did not want to collab with anyone else. An expansion objective that Facebook has is to build new data centers.

3: Strategies: Facebook’s marketing strategy is to continuously engage people so that people can share their thoughts and connect with others. They also use an online channel to deliver its services. Another strategy that Facebook uses a positive word and a top of mind awareness compared to the competitor’s offerings.

4. Policies: The policy of Facebook is to “avoid creating an advertisement that promote products, services, pr schemes that scam people of their money or personal information by misleading them to complete an action.” (Facebook, 2023).

5. The current mission, objectives, strategies, and policies do reflect the corporation’s international operations because they want to help everyone not just the people in the states. The company consistently makes changes to help the people that use Facebook have an easier way to navigate the site.

1. Corporate Governance

Facebook’s board of directors consist of Mark Zuckerberg, Peggy Alford, Marc L. Andreessen, Kenneth I. Chenault, Houston, Peter Thiel, Jeff Zients, and Sheryl Sandberg. However, the top management of Facebook is Mark Zuckerberg. He is a computer programmer who is also the founder of Facebook. He attended Phillips Exeter Academy and then enrolled in Harvard. He is from the White Plains, New York. In 2015, his network was $19 billion.

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

1. Societal Environment

1. The environmental factors that are currently affecting both the corporation and the industries are data center and emissions. They both present current and future threats because most of the emissions that Facebook uses are from the American data centers. Also, for the data center, Facebook uses coal power to generate power, as well as gas and nuclear.

1. Economic Trends

   1. An economic trend that Facebook experiences is a decline in net income.

   2. They want to expand their VR and AR offerings.

1. Technological Trends

   1. Facebook reels are staying which is one of the new technological trends.

   2. Live shopping is done fore which is another trend that Facebook has.

2. Political-legal Trends

   1. The spreading of fake news is a political trend that can hurt Facebook in the future.

3. Socio-cultural Trends

   1. A lost cure value which connects people with people they have not seen in a while.

   2. Loss of quality is another socio-cultural trend that Facebook experiences.

1. The forces talked about in these trends are not forces that are different in other regions of the world. Around the world, everyone experiences these different trends at different levels.

1. Task Environment

1. The Threat of New Entrants

The threat of new entrants in the Facebook industry is high. There are new social media platforms being created every day. With advertising cost being low, this makes it easier for the new platforms to access the market. The new entrants understand how to gain customers' attention to show them their new product. An existing supply chain makes it easier to produce the product if it is related to another product.

1. Bargaining Power of Buyers

The Facebook industry provides power to individual consumers that can discuss different brands on their social media platforms. It does not have to be specifically one brand; it can be multiple which could end up hurting the other brands. This results in these businesses to cater to those who show their brand off for them, respond to them voicing their concerns, and in the end potentially provide them with free stuff. 

1. The Threat of Substitute Products or Services

When starting up a social media website, there are a tremendous number of threats of substitutes for products. Each social media mainstreaming platform will always have an alternative platform. These substitutes, however, will not be as successful as the mainstreaming ones, but could eventually take the customers of the mainstream if they advertise the right way. 

1. Bargaining Power of Suppliers

In the Facebook industry, the bargaining power of suppliers is moderate. The suppliers of the social media industry are normally just data, storage, software, servers, and power. Social media has a high level of consumer involvement which means all of those are significant for the providers. Social Media cannot function without suppliers or else social media would not exist. 

1. Rivalry Among Competing Firms

The Facebook industry consists of several very popular social media platforms. The platforms serve customers from all over the world that include but not limit to, actors, politicians, businesses, and start-up companies. To have social media, there needs to be technology and there are always new technological innovations being created. However, if one of the popular social media platforms fail, the customers may resort to another social media platform. Most platforms target younger audiences.

There are several key factors within customers, competitors, suppliers, creditors, labor unions, governments, trade associations, interest groups, local communities, and shareholders. With suppliers and competitors there’s that chance of having to share competitors with your suppliers. Within the social media industry that Facebook is included in the customers can fluctuate frequently because of how many social media platforms that there are.

Opportunities and Threats that are Facing the Organization.

By adding this table of the SWOT of Facebook, it explains in each individual section what takes place within the company.

Table of External Environment

In the PEST Analysis of Facebook, it explains the external environment of the social media, Facebook.

Summary of External Factors

With all the forces and factors that are listed, the one that is most important to the corporation and the industries it competes with is the threat of new entrants. This is the most important in the present because it is so easy for a new social media platform to join the industry. In the future, the force that will be most important will be the rivalry among competing firms. Rivalry continues to grow within the social media industry which can cause Facebook to have more competition in the future.

1. Internal Environment: Strength and Weaknesses (SWOT) and SWOT Analysis

Structure of the Company

Facebook is a social media and a technology company, which means the company has several strengths and weaknesses. The company also comes up with strategies to manage external threats and utilizes opportunities that come its way. Facebook is considered a social networking website. One of many strengths that Facebook has is that it is a well-established brand. All over the world, Facebook has roughly over a billion users which has helped the company become well established. Another strength that Facebook has is it offers several diverse products. The company does not limit the number of products which resulted in it developing a diverse portfolio. The biggest strength that Facebook has, is its strong leadership. Mark Zuckerberg had goals that he would not stop working until he met them. Along with strengths, however, comes weaknesses. The biggest weakness that could hurt the company tremendously is the privacy issues. The privacy issues in the past years have caused Facebook to lose around 15 million users. Another weakness that Facebook has is that it is a source for fake news. Many users go to Facebook to find out news, but sometimes they see something that looks like real news, and it ends up being fake.

Culture of the Company

Since Facebook is a big company, they have a lot of employees to help run the company. Having multiple employees can be difficult because you have different people with different backgrounds. However, the culture within the company is filled with extroverts. Facebook is filled with young employees since Mark Zuckerberg started the company being young. It is a very casual work environment for the employees. A strength within the culture of Facebook is that everyone is mission-driven to have the company succeed. The employees strive to bring the world together. Another strength is that the employees are mostly Type A personalities, goal-oriented, risk takers, and strong under stress. One weakness however is that there are lower-level employees compared to managers and supervisors. This could make the employees believe that they have more power over the supervisors and the managers, which could result in them making decisions for the company themselves instead of consulting with them.

4 PS of Marketing

Facebook itself is the product because it is an app that is used around the world. The first P is product strategy. The product strategy of Facebook is about the connectivity through texts, videos, and images. Another product strategy is they help other major companies to expand their base. The next P is pricing strategy. The price of the Facebook app in the social media market was a huge decision to made by the company. The competition is high within the segment that Facebook is in. If Facebook increases the price for anything, it will make its customers move from one product to another. Another P is the place. Since, Facebook is an online social media service makes it that anyone around the world can access it. Facebook can be found everywhere. The last P is promotion. The promotional strategy that Facebook uses is in the rise of the usage of net. Another promotion they use is through the words that are spoken and the different advertisements that the company posts.

Financial Resources:

Facebook the platform and apps are all free. Which brings up the question of how does the company make money? The company gets its revenue mostly from online digital advertising. The advertisements are either self-serve or targeted ads. The strength would be that they advertise frequently to keep producing revenue for the company. A weakness, however, is they must rely on the advertisements as income. The biggest competitors of Facebook are Twitter and Instagram. Like Facebook, Twitter and Instagram also get most of their revenue from advertisements. This is a strength and a weakness just like Facebook.

When looking at the ratios, there is a difference between all three of the companies. Twitter, however, stands out the most. Most of the ratios for twitter are in the negatives which makes the company look bad. Facebook is the front runner of the three groups with having high ratios which proves that the company is more successful than the other two. Facebook has a competitive advantage over Twitter and Instagram because the ratios show that Facebook is making more profit compared to Twitter and Instagram which shows that Facebook has more customers. A strength for Facebook would be its gross margin and the weakness would be the cash per share ratio.

The trends for the last three years that show indicators of financial position have been similar. To help with financial positions, the trend of having more paid ad spending since Facebook gets most of its revenue comes from advertisements. Another trend that will help Facebook with their financial position would be Facebook live because it will attract more customers which would lead them to create more advertisements. Another trend would be page customization because it would lead users to create their own pages how they would like, which would result in attracting more users.

Analysis of Strategic Factors (SWOT) – Situational Analysis

1. Strategic Alternatives and Recommended Strategy

As provided in the image above, there are quite several weaknesses compared to the strengths. As well as one more threat compared to the opportunities. The biggest strength that stands out is the understanding of user’s needs and behaviors. This strength allows the company to provide its users with whatever they need. A weakness that was brought to my attention was that there is a weak CTR of advertisements. With advertisements being their biggest income, this is a weakness for sure. An opportunity that will be good for Facebook is the expansion to China. Expanding to China will grant Facebook to continue to get more users. Threat that could severely hurt Facebook would be the users using ad-block extension. This threat would result in Facebook losing money.

Review of Mission and Objectives

1. 1. 1. The current mission statement of is Facebook, “Give people the

power to build community and bring the world closer together. That reflects that we cannot do this ourselves, but only by empowering people to build communities and bring people together. Our lives are all connected.” This mission statement and the objectives do relate to the critical strategic factors and the problems. This mission statement shows that above all the factors that could hurt the company, the company only wants what’s best for its users and society.

1. 1. 1. The mission and the objectives could be changed slightly to make the Facebook users feel that it is a safe place to be when they are on their app. Also, to show the users that they respect their needs and wants for their app.

      2. The changes that could be made to the mission and the objective would benefit the company.

Strategic Alternatives

Pros: The strengths outweigh the weaknesses, the strategies to help reduce the threats with the internal strengths are important for Facebook so that they do not lose customers, and the internal strengths create opportunities for Facebook.

Cons: The weaknesses could hurt the company when it comes to the threats because it could hurt the revenue that Facebook makes.

1. Recommended Strategy

1. Of the strategic alternatives the recommendation for Facebook would be to focus on the threats for the corporate, business, and functional levels because the threats are what would hurt the company the most. For the business, functional, and corporate level I would suggest the same strategy.

2. To resolve long-term problems, the focus should be the threats because they can be harmful to the company for as long as it is around. For short-term, the focus should be on how the company can become stronger for itself and its users.

3. The policies that should be developed to guide effective implementation would be to change their privacy policy to make it that other users or other people cannot find out other people’s information easily.

1. Implementation

1. The program that should be created to implement the strategy would be to focus on the threats and to come up with resources that could make the threats less of a threat.

   1. The CEO or the managers of Facebook should develop these programs.

   2. Again, the CEO or the managers should then oversee these programs.

2. Yes, the program would be financially feasible because Facebook could use the profit, they make to create the resources needed for the program. Pro form budgets could be developed and agreed upon. Priorities would be recommended to focus on the biggest threats first. Timetables could be recommended if the company focuses mainly on one threat for a long period of time.

1. Evaluation and Control

A method for evaluation of the financial position of the company would be to have a financial group within the company to focus on what hurts the company the most. This group would be able to analyze what helps the company and what hurts the company. They would use their knowledge then to come up with solutions for what is hurting the company. This financial group would focus on how the profit they make can be useful to help the company in places that it struggles in.

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