Facebook Company’s External and Internal Environments

Introduction

Since business organizations operate in complex environments, they should implement powerful strategies and models in order to succeed. Each segment or environmental factor will influence organizations differently. The managers at Facebook Incorporation focus on the opportunities and changes experienced in its industry. This practice makes it easier for the company to maintain its competitiveness. However, there are some weaknesses, threats, and gaps that have the potential to affect the company’s performance. This paper gives a detailed analysis of Facebook’s external and internal environments and strategies that can sustain its performance.

Segments of the General Environment

Facebook Incorporation operates in the global Internet industry. Facebook’s business model has made it for the company to compete in its sector and realize its potential. Facebook and the other players in the Internet industry are influenced by different segments of the general environment. The segments that would rank the highest in their influence on Facebook’s performance include technological and economic forces. Facebook’s business is founded on modern technological developments. The Internet, for instance, dictates the manner in which the corporation offers new services, identifies emerging needs, and meets its customers’ needs.

The segments of the general environment affect the corporation in a number of ways. Technological factors present numerous opportunities that can support the corporation’s model (Carboni & Maxwell, 2015). For instance, the increasing number of smartphones and handheld devices support its business aims. The revolution of the Internet and other technologies makes it possible for Facebook to achieve its goals. On the other side, Facebook has encountered numerous threats from the increasing number of competitors focusing on technological developments. E-marketing and online advertising platforms have been fueled by technological advancements. Such changes affect the performance of many corporations in this industry.

The second factor of the general environment that appears to dictate Facebook’s performance revolves around economic conditions. The growth of the company and its competitors in the industry is shaped by economic forces. For instance, Facebook is benefiting significantly from the increasing number of people with better incomes. Third world nations are experiencing positive economic gains. The developing world is also becoming stable. These changes explain why the company has been widening its market penetration (Bowen & Ozuem, 2015). More people in different parts of the world now have access to Facebook’s media and social networking services. These indicators show conclusively that different companies in the industry should be aware of the emerging economic conditions in order to expand their business operations.

Forces of Competition

Most Significant Forces

Porter’s model identifies five powerful forces that dictate the nature and level of competition in a given industry. The most significant forces for Facebook Incorporation include competitive rivalry and an increased threat of substitutes. To begin with, competitive rivalry is used to examine the superiority and capability of different players in a given industry. The level of rivalry is extremely high since there are specific companies that offer similar services (Bowen & Ozuem, 2015). For instance, Twitter, Amazon, Instagram, and YouTube focus on the same market segment. Facebook analyzes the business models of these competitors in an attempt to attract and retain its customers. Online advertising has also become a common practice due to the increasing number of mobile-based apps and social networking sites.

The second force of competition that is significant for Facebook Corporation is the threat of substitute services or products. In the recent past, Facebook has faced stiff competition from different upcoming or niche sites. Companies such as Amazon and Google have developed superior platforms that make it easier for customers to share messages and instant photos. Carboni and Maxwell (2015) strongly believe that Facebook might lose its business if social networking becomes less fashionable.

Addressing the Forces

Facebook Incorporation’s managers have implemented effective strategies to address these two forces of competition. To begin with, Facebook has expanded its model in such a way that it attracts more “Friends” who eventually become critical stakeholders (Bowen & Ozuem, 2015). Different stakeholders are identified and supported to ensure the company realizes its goals. The company also updates and identifies new services or offerings that can minimize competition (Antheunis, Abeele, & Kanters, 2015). Such measures explain why Facebook is still a leading player in the industry. The threat of substitute services is addressed using different strategies. In the recent past, Facebook has been monitoring the changes experienced in the world of technology (Antheunis et al., 2015). This study led to the development of new apps that supported the needs of its customers. The company has gone further to introduce new features such as videos, news feeds, and ads to attract and retain more customers. The company acquired Whatsapp and developed Messenger with the aim of minimizing this threat (Carboni & Maxwell, 2015). Such measures have continued to support Facebook’s business model.

Addressing Forces of Competition in the Future

Competitive Rivalry

As described earlier, the level of competitive rivalry is high in the global Internet industry. Although most of the strategies implemented in the past have been fruitful, the corporation should come up with better initiatives to tackle this source of competition. Nitschke, Donges, and Schade (2014) argue that the company’s platforms do not appeal to every age group or demographic equally. This is the case because professional users might focus on Facebook Pages and LinkedIn, while young individuals will prefer Whatsapp. The company should, therefore, customize its platforms in such a way that they have something to offer to every demographic or group. This approach will attract more users and minimize the existing competitive rivalry from platforms such as Twitter and LinkedIn. Studies can also be done to identify the emerging needs of different users and develop superior services or platforms that can empower them. The company can emulate the models associated with social networking sites such as Tumblr and Google Plus. Such platforms are full-featured, thereby making them appropriate ad useful to many people.

Threat of Substitutes

The leaders at Facebook Incorporation should acknowledge that the current business model can be disoriented by emerging trends or technologies. Facebook should improve its model by identifying new avenues or platforms for ads. Additionally, advertisers should be encouraged to use the company’s platform since they dictate their profitability. The current trend of improving its platforms will make it easier for Facebook to attract more social network users (Carboni & Maxwell, 2015). This achievement will minimize the threat of this force and eventually make the company successful. Facebook should also identify and purchase emerging niche sites. This move will minimize this level of competition and support the current business model.

External Threats and Opportunities: Dealing With Threats and Opportunities

Facebook faces three major external threats that might disorient its business performance. The first one is that of replication. It is agreeable that emerging companies and small firms might develop apps and products that are capable of cannibalizing its leading platforms (Antheunis et al., 2015). The second one is the threat of phishing and cybercrime. These issues have been observed to threaten the attractiveness of its services. Many people have been concerned about cybersecurity in the recent past. Additionally, market saturation (or flooding) can disorient Facebook’s growth rate. Facebook Incorporation can focus on two unique external opportunities in order to remain competitive. To begin with, business diversification is an opportunity for the company; it is to reduce the threats posed by new competitors. The corporation can identify different market segments and acquire more companies to achieve its goals (Nitschke et al., 2014). For example, its acquisition of Oculus VR appears to support this diversification strategy. The second opportunity emerges from the economic developments recorded in different regions. The company can penetrate such markets using new products, social networking sites, and apps that resonate with the needs of the targeted customers.

The company should address the most serious threat using appropriate techniques. The major threat is the one posed by replication. The corporation should identify emerging technologies to develop new services and products. The strategy will widen its competitive advantage and make the industry less attractive to new entrants (Antheunis et al., 2015). This approach is recommendable since the provision of new products and services will make it impossible for new entrants to replicate its business model. The most promising opportunity is that of emerging markets across the globe. The economic growth experienced in different nations justifies the need to focus on these markets.

Strengths and Weaknesses: Maximizing Advantages and Fixing Weaknesses

There are specific factors that have managed to support Facebook’s competitiveness in its industry. The first internal strength is its brand image or equity. The popularity of Facebook.com has resulted in a powerful brand name that is embraced by many people across the globe. This brand image encourages users to join the site while at the same time attracting more online advertisers. The second strength is that of its revenues. The company’s financial capability supports its research and development (R&D) and expansion strategies (Yang, Dehghantanha, Choo, & Muda, 2016). Such strengths show conclusively that Facebook Incorporation will maintain its lead and competitiveness in the future.

On the other hand, there are several internal weaknesses that make it hard for the company to achieve its full potential. For example, the company’s model explains why its services and products are easily imitated by emerging firms. Such companies develop powerful websites and use them for advertising practices. The second weakness arises from the organization’s inability to improve its diversification strategy (Nitschke et al., 2014). This failure can explain why the company encounters numerous challenges and risks from its immediate competitors.

The best strategy for Facebook to benefit from its strengths is embracing the power of diversification. This approach will be supported by its current asset base and revenues. The company’s brand image will support every new service or product associated with the company. It needs to borrow a lot from Google. The company began as a search engine provider and eventually diversified to offer apps, social networking services, and Google Maps. The strategy will also be supported by the company’s R&D initiatives and eventually remain competitive (Nitschke et al., 2014). The same strategy of diversification can also be embraced to deal with Facebook’s major weakness: inability to implement a powerful diversification model. Consequently, the company will produce new products and compete in different segments. The move will minimize the threats of business model replication and competitive rivalry. The diversification strategy is viable since it will be supported by the current strengths. I will also mitigate the major internal weaknesses disorienting the company’s performance.

Resources, Capabilities, and Core Competencies

The success of Facebook is attributed to its capabilities and resources. The corporation boasts of different resources such as a strong asset base, capital, over 1.2 billion Facebook users, and technical equipment (Bowen & Ozuem, 2015). These resources have been used to support new innovations, objectives, and business aims. The company’s capabilities include the power to design superior models and their ability to identify the most appropriate firms or businesses to acquire. These abilities explain why Facebook has managed to acquire different companies, such as WhatsApp, Face.com, and Instagram. It is notable that these companies appear to support Facebook’s original business model and mission statement.

Bowen and Ozuem (2015) indicate clearly that Facebook succeeds by implementing and supporting its powerful core competencies. The first unique competency is the company’s decision to say something and pursue a totally different obligation. For instance, Facebook promises people that its agenda is to connect and build global communities. However, the reality is that the company uses private information to monetize its operations (Yang et al., 2016). The second competency is the corporation’s ability to develop a network that brings together many people through its platforms such as Messenger, Instagram, and WhatsApp. Such competencies have made it easier for the corporation to achieve its business aims.

Value Chain Analysis

Facebook’s inbound logistics include technologies, hardware, and office supplies. The primary resources that attract customers include online content or information uploaded by different users. In terms of operations, the company has offices in over 30 nations. Local languages are used to streamline communication. The site has become the most popular across the globe. Outbound logistics for Facebook focus on the provision of content or information via different platforms. Under marketing and sales, Facebook uses a powerful mix to attract more customers and meet the needs of diverse users (Nitschke et al., 2014). In terms of service, the company has a Customer Support team that addresses the needs of different customers.

Value chain analysis.
Fig 1: Value chain analysis.

From the above analysis, it is clear that Facebook can use its resources, competencies, and capabilities to create value in different activities. The acquisition of Whatsapp and Instagram is a competency that can support the “service” and “Marketing and sales” functions. Additionally, its ability to capitalize on user’s information to make money can support its outbound logistics and operations (Yang et al., 2016). Facebook’s resources and assets can also be used to support its inbound logistics. Its capabilities to design superior models and acquire the right businesses can be considered to improve its marketing and sales operations, improve its services, and maximize profitability.

Conclusion

This discussion indicates that Facebook is a competitive player in the Internet sector. This performance is attributable to the company’s internal strengths, capabilities, competencies, and business model. The company has been analyzing emerging opportunities and threats in order to improve its business practices. However, the company continues to face numerous challenges, such as the threat of new entrants and ineffectiveness of its business model. Facebook should, therefore, redesign its model by diversifying its operations and products to minimize the level of competitive rivalry. This strategy will ensure the company stays relevant in its industry.

References

Antheunis, M. L., Abeele, M. M., & Kanters, S. (2015). The impact of Facebook use on micro-level social capital: A synthesis. Societies, 5, 399-419. Web.

Bowen, G., & Ozuem, W. (2015). Computer-mediated marketing strategies: Social media and online brand communities. Hershey, PA: IGI Global.

Carboni, J. L., & Maxwell, S. P. (2015). Effective social media engagement for nonprofits: What matters? Journal of Public and Nonprofit Affairs, 1(1), 18-28.

Nitschke, P., Donges, P., & Schade, H. (2014). Political organizations’ use of websites and Facebook. New Media & Society, 18(5), 744-764. Web.

Yang, T.Y., Dehghantanha, A., Choo, K. R., & Muda, Z. (2016). Windows instant messaging app forensics: Facebook and Skype as case studies. PLoS ONE, 11(3), 1-29. Web.