mgmt
Kholoud Al Zahrani
Instructor: Anna Phillips
22nd /09/2020
Company’s Environment and Resources
INTRODUCTION
This paper seeks to explore both the external and internal factors that allow managers to apply strategies and evaluate strategies that will most likely place any company over their rivals.
For any organization to enjoy longevity, innovation, and market dominance, they must evaluate their environment. A good manager ensures that they both have strategized to cope with the ever-changing landscape and tools to sustain their competitive niche. However, it is not enough to focus on the external company environment. Still, one must focus on the internal factors and what competitive edge sets your company apart from your rival or unique element, not forgetting your weakness.
CHAPTER 3: EVALUATING A COMPANY’S ENVIRONMENT.
AN ANALYSIS OF FACEBOOK’S ENVIRONMENT AND RESOURCES
LO1. How to recognize the factors in a company’s broad macro-environment that may
have strategic significance.
I. Political factors.
The four major factors that affect Facebook Inc. politically are 1) political stability in developing countries (2) popular governmental support in developing countries, (3) political barriers in some markets (4) political action on online data. Developed countries ' political stability creates opportunities for Facebook Inc. to diversify its business in these markets. The business also can extend its social media and display advertising services internationally, based on government support for globalization. In nations such as China, where there is censorship Facebook Inc. will suffer from global growth due to its stringent regulations on the use of the internet. Also, governments are now working towards reducing the amount of data collected by Facebook and other social media sites, which will significantly affect the growth of Facebook Inc.
II. Technological Factors
Facebook is synonymous with technology due to the fundamental fact that there would be no Facebook without the advancements in technology. Thus technological advancement to date determines the growth of Facebook Inc. From search engine optimization to social networking, technology impacts everything, and all that is on the internet. The following technological external factors affect Facebook Inc: 1) the use of mobile devices, (2) the Growing number of online social media companies, (3) Diversification of online retail firms. The increased use of mobile devices creates a market for Facebook to increase its reach to a more broad audience, including developing worlds with a record-high number of new smartphone mobile users. Facebook has, however, maximize these opportunities by having most, if not all, smartphone dives coming with a pre-installed Facebook app. In the same breath, the increase in the growing numbers of social media companies and online retail firms pose a threat to Facebook; they offer advertising spaces at a lower rate and are eating into the marketing space dominated by Facebook.
II. Sociocultural factors
Sociocultural factors are a huge part of Facebook growth in the market, from setting trends to online businesses' growth. The following sociocultural external influences are most notable in the case of Facebook Inc: 1) Growing preference for high-quality services (2) Increase in online transactions (3) Growing support for corporate social responsibility. With growing financial ability and improving living standards, the high quality of its users is increasingly demanding. Such a social situation allows Facebook Inc. to enhance its quality of service levels to please and retain consumers who pay for its display advertisement services. Also, Facebook continues to thrive due to its increasing improvements geared to improve the user interface.
LO 2. How to use analytic tools to diagnose the competitive conditions in a company’s industry.
I. Threats of new entrants
A high risk of new entrants makes an industry less competitive, with low entry barriers. Therefore, new competitors can quickly enter the industry, compete with existing firms, and take market share. For a while, Facebook enjoyed a monopoly of the social media market, and after several purchases of Instagram, WhatsApp, and Facebook messenger, their dominance increased. However, it is relatively easy for anyone with programming knowledge to come into the market and share in the social media space. With the increase of such players, Facebook shares have unfortunately been taking a hit, but that doesn't take away the fact that new generations of users discover Facebook every day.
II. Facebook's Threat of Substitutes
Facebook has a large user base, but social networking as a whole is quite sensitive to emerging patterns and new technology. If social networking becomes unfashionable, Facebook will lose all of its existing members. However, Facebook user's niche is that it is one of the most trusted sites where, over the years, family members have reconnected. It is also important to note that Facebook offers a more personalized experience than other social media sites with no limitations to the characters' posts or photos. Also, the fact the Facebook is always rolling out new features set them apart from their competitors.
III. Facebook's Customer Bargaining Power
Facebook customers have a lot of bargaining power because they can have multiple accounts on a different platform. However, for Facebook Inc. to generate revenue, the company needs the users to be actively using the site if it is to make any money on ad space or the market research that can come from all the data Facebook collects. Like most social media sites, Facebook doesn't require its users to pay any fee to have an account meaning that the total number of users does not equate to the revenues generated.
CHAPTER 4: EVALUATING A COMPANY’S RESOURCES, CAPABILITIES, AND COMPETITIVENESS
LO3. How to assess the company’s strengths and weaknesses in light of market opportunities and external threats.
I. Strengths
It is essential both for stability and long-term sustainability to have a strong brand. In 2019, Forbes rated Facebook as the # 5 most valuable brand. Facebook is the biggest brand in the social media industry worldwide, with $88.9 billion in brand equity. Also, having a strong brand works to build customer recognition. New social media users are most likely to choose Facebook as their social media platform because of the brand. The trust attached to the brand Facebook allows them to have an unprecedented niche when it comes to their users, which is seen through the 2billion user's Facebook boost. Lastly, Facebook's strong brand allows them to introduce new products and features in the market more efficiently.
II. Facebook’s Weaknesses
According to the business strategy hub, Facebook faces criticism for spreading fake and misleading information. Facebook’s inability to control misleading information can be very detrimental to society at large. For example, Myanmar's massacre was propagated on Facebook through fake news, hate speech against the Rohingya and other Muslim groups. The massacre bore similarities with the same techniques used by leaders to further their hateful messages, and unfortunately, Facebook was used as a tool to further that hatred. The lack of any measures to filter out hate speech and fake news on the platform has increased over the years, blaming the lack of accountability on Facebook's negligence for policing the platform.
III. Facebook’s Opportunities
With the technology boom happening day by day, Facebook continues to have increasing opportunities in integrating different users with different platforms. For example, Facebook can integrate its platform with games, surveys, blogs, and ecommerce to provide their consumers with a one-stop-shop experience. The merging of different sites can also prove to be an opportunity for Facebook to tap into a new audience, expand their reach, and grow their brand. Facebook reliance on collective intelligence means that they are pioneers in the innovation spectrum they have managed over the years to remain a giant in the social media space.
LO5: How a comprehensive evaluation of a company’s competitive situation can assist
managers in making critical decisions about their next strategic moves.
I. Strong customer loyalty.
About 40% of the world population uses Facebook and its family products (Instagram, WhatsApp, Messenger), putting Facebook in an irreplaceable position. People's emotional ties with Facebook spill over to their actives on the site and their growing trust in all of Facebook's other affiliate sites (Instagram, messengers, WhatsApp). Also, Facebook has a strong history of how it was founded that both inspire and resonate with consumers. Over the years, they have managed to hold a monopoly in the social media market. In addition, Facebook has established itself as a reliable site because it comes pre-installed in the phone, unlike other apps.
II. Continued innovation
Facebook has been one of the world's most creative companies since its inception in 2005. They have masterfully used their reach as the number one social network, developing into a brand ecosystem-Instagram, WhatsApp, Aquila (the Internet plane of Facebook). They are all aligned to give people further the power to create community and get the world closer. From the early stages of realized that for them to grow and be more innovative, Facebook allows taps into their teams/employees' collective intelligence and does not depend on one individual's intelligence. For example, the famous "like"button resulted from a hackathon, and now it is one of the main features on the Facebook app.
III. Product differentiation
With over two billion users, Facebook has a unique advantage that allows businesses to advertise and market their products to diverse consumers. For the first quarter of 2020, Facebook raised $17 billion in advertisement revenue. And 22 percent of the global online advertising market is accounted for by the social media giant. Due to the access to the user data Facebook has offers business target marketing that proves to be a more efficient way to advertise. Thus most businesses are aware of Facebook's access to user data and seek to advertise with the app placing Facebook in a unique position as a product.
CONCLUSION
In conclusion, three key aspects that stand out in both internal and external factors that affect Facebook Inc. are continued innovation, product differentiation, and brand equity. It is important to note that even though Facebook is considered to the application that frontier social media, they still have game-changing innovations that solidify their position in the industry. Facebook Inc. has stayed true to its mission of bringing people together through their social media platforms, which governs all decisions.
Reference
https://www.investopedia.com/articles/markets/111615/analyzing-porters-5-forces-facebook.aspnce
http://panmore.com/facebook-inc-pestel-pestle-analysis-recommendations
https://bstrategyhub.com/facebook-swot-analysis/