Business Report for Facebook

01 /12/2011

Group members:
Ying Huang 1033113 Lupeng Tang 1123942 Qiwen Fan 1033112

Executive Summary
Facebook is the website has the largest number of users among the social media industry, which have tremendous market share. The company's aim is to make closer to each user, which is the competitive weapons of the company in the social media market.

The company's current strategy is the growth strategy, and it is going to develop more functions of the website base on a large number of users, thereby creating more profits out. In terms of resource, this includes physical resource, financial resources, human resource and intellectual resources. facebook for globalization, has a large number of funding and acquisitions, to attract more skillful and professional person into the company, and has the most competitive market share started to reputation. Even though there are many competitors in the social media want to take the market share.

Table of content
1. Introduction ....................................................................................................................................1 2. Company description ......................................................................................................................1 3. Internal analysis...............................................................................................................................3 3.1 Strategic capabilities.............................................................................................................3 3.1.1 Physical resources......................................................................................................3 3.1.2 Financial resources.....................................................................................................4

3.1.3 Human resources........................................................................................................4 3.1.4 Intellectual resources..................................................................................................5 3.2 Strength.................................................................................................................................5 3.3 Weakness...............................................................................................................................6 4. External analysis.............................................................................................................................7 4.1 Porters five forces analysis..................................................................................................7 4.1.1 Threat of new entrants................................................................................................7 4.1.2 Threat of substitutes...................................................................................................8 ............................................................................................................................................8 4.1.3 Bargaining power of buyers ......................................................................................8 4.1.4 Bargaining power of suppliers...................................................................................9 ............................................................................................................................................9 4.1.5 Current rivalry ..........................................................................................................9 4.2 Opportunity.........................................................................................................................10 4.3 Threat...................................................................................................................................10 Reference ..........................................................................................................................................11

1. Introduction
Media industry is to point to of all kinds of information, knowledge of transmission media entities made of a part of the industry group, it is the production, spread to all sorts of text, graphics, art, language, images, sounds, digital, symbols and other forms of the existing information products and provide all kinds of service for the special industry.

2. Company description
Our group is going to analysis of a firm with the media industry, facebook. Facebook is a social networking service website which is the most used social networking website in the world now. It is begun in the February the 4th of 2004. Obviously, this popular company has a long climbing distance. Form September of 2006 to September of 2007. This website has climb up 7 to 60 in top U.S web site. Also facebook is the top of the U.S photo sharing site. In the march of 2010, facebook have already climbed up the visitors than Google. As July 2010.it has got 600 million users. Look up the future. The target of face book has been change to another area, the internet search.

The founder of facebook is a student of Harvard University. Who always wears as normal students, Mark Elliot Zuckerberg. At the beginning of facebook, mark has been supported by Andrew McCollum and Eduardo Saverin. In nearly one month The facebook has been used by half student of Harvard University. Look back the years of the development in Facebook. We can strongly believe that, even though facebook have faced lots of problems, but, it has never stopped to achieve the better future. For example, in the September 11th of 2006. Although facebook has opened to
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the entire internet user, it caused a lot of protest by old user. But, after two weeks, face book still open for the entire email user. Lets look at the other example. During the years of 2008, facebook has release different language. Such as, Germany, Spanish, French and Chinese. It let face book quickly became popular in these countries. In 2010, the founder has been to visited china, after the visit, facebook has valuation of 50 billion U.S dollar. Year after years, even though many big companies want to purchase facebook, but the founder of facebook still hope to keep the independent. There are a lot of interesting and useful functions in facebook. Many people like facebook is not because the reputation, but also the function.

Be one of the famous functions, The Wall. The wall is place let the people to leave a message. But it has a little bit different, the content can also shows in your friends walls. So many users like to leave a shot message on the wall that can help them keep more close relationship with the friends. It also can be choosing for if you want all the people to see your wall or just for your friends.

Status is the functions can let the users to put their status. For instance, if you in the place around the London eyes. You just get on your facebook to post it, and then your friends can see it on the update distraction about this status.

Events, is the place that for the people to notice your friends the events which going to start. it also help the people to organizing the social events.

Facebook video sharing is the functions for the user to sharing their videos. The people can use the clients on their mobile phone to post their video. It is more easy for the people to use it , and it can post wherever you are.

Marketplace is the space for the users to left the advertising for free. Such as finding the jobs, sell the second hand product and for rent.

3. Internal analysis
3.1 Strategic capabilities
This part aims to analyze the strategic capability of facebook as the internal analysis, the strategic capability can be determined as competitive weapons of a company needed to develop and to gain the profits. (Kjell and Trond, 2010) The strategic capability is inclusive physical resources, financial resources, human resources and intellectual resources.

3.1.1 Physical resources

Facebook, the product, is made up of core site functions and applications. In the social media industry, Facebook has Over 800 million active users, which is became the top 3 website and the social media networking services over the world. There is one headquartered of facebook in Palo Alto, California, United State. The function of headquartered is to control the operation of facebook and make the main decision of company. And there are also two offices which called U.S. offices and Austin International offices in different countries and cities. Such as the U.S. offices have a distributed in Atlanta, Birmingham, and Chicago and so on. The Austin International offices including the located at Dublin, Hamburg, Hong Kong and so on. Overview, there are more than 20 offices around the world. The advantage of having one headquartered and some offices in different places is that the offices are able to deal with the different problems of facebook quickly base on the diversity culture of the country due to the increasing number of users over the world. For example the problem of facebook from the users in Taiwan and HongKong can be solved by the office in Hong Kong. ( http://www.facebook.com/press/info.php?factsheet)
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3.1.2 Financial resources

In the financial part of the company is named facebook, It has been carried a number of investment and acquisition. These actions will help facebook to develop the technology and the company then achieves the purpose which gaining profits. The following is the 3 rounds of funding which can be checked in facebook website, Round one: $500,000 from Peter Thiel, Summer 2004; Round two: $12.7 million from Accel Partners, April 2005; Round three: $27.5 million from Greylock Partners leading the round, Meritech Capital Partners participating, and Accel Partners and Peter Thiel increasing their investment in the company. In addition to these funding, there is several investment can be researched. For example in 24th October in 2007, Facebook and Microsoft these two companies established their partnership of advertising and that Microsoft took a $240 million equity stake in Facebooks round of financing at a $15 billion valuation. Under the expanded strategic alliance, Microsoft became the exclusive third-party advertising platform partner for Facebook, and started to sell advertising for Facebook internationally in addition to the United States. This activity makes the companies of industry to pay more attention to facebook, and also affect the development of facebook in a positive way. (http://www.microsoft.com/Presspass/press/2007/oct07/10-24FacebookPR.mspx)

3.1.3 Human resources

There is over 3000 employees work in facebook, those of them are with high education background and having the professional skill in the social media industry. From the news, the most acquisition of facebook is for the person who with the

professional ability. The board member of facebook is Members: Mark Zuckerberg, Marc Andreessen, Jim Breyer, Don Graham, Reed Hastings, Erskine Bowles and Peter Thiel; Observer: David Sze; Observer: Paul Madera. Especially, Mark Zuckerberg who is the CEO of facebook, graduated from the University of Harvard. Facebook was found by Mark Zuckerberg during his studying in University of Harvard. The strong team of employee will be a positive aspect for facebook. (http://www.facebook.com/press/info.php?factsheet)

3.1.4 Intellectual resources

There is one main point will be mentioned at the intellectual resources part. The huge market share is the main point. Over the world, facebook has Over 800 million active users. And the number of user has been a sharp increasing number in the social media industry. It built a global audience before working out how to make money, proving that if you
can attract a big enough audience, there will always be ways to "monetise". Ad revenue per user can be tiny and still add up to huge figures. So Facebook's current 800 million users are an extraordinarily valuable asset.And Facebook has a couple of trump cards over Google.It's the ultimate "sticky" site, with users spending much longer on it per session - about 30 minutes on average - than people do on Google. That's more time to see and respond to ads.Everything Facebook is doing to develop as a business, such as the forthcoming personal Timelines, is designed to get people even more hooked. ( http://www.bbc.co.uk/news/business-15962476)

3.2 Strength
Giving people the power to share and make the world more open and connected. this is what facebook post on their facebook wall. To be a famous social networking

service website, facebook has got much strength to let it successes; the user of facebook is one of the big strength. The target of the user in facebook ,University students and white-collar is their core users. Easy to use, easy to go. The most important things is that the fancebook has been provide what he said and done what he said. You just need to go to facebooks website sign up your name, email, new password, sex and birthday foe the registration. wherever you are,It can removes the isolation of the users form different place, Also the functions are the biggest strength of facebook, it can let facebook to get a lot of money and be famous. Any activities the organization does well or any unique resource is called strength (Robbins and Coulter, 2009, p213) We can say that strength is a special resource. it is very important for a company who want to successes.

3.3 Weakness
Weakness are activities the organization doesnt do well resources it needs but doesnt posses. (Robbins, and Coulter, 2009, p213) the security and privacy of facebook let people have many questions, when people registration . facebook can go to the users email to get their information or contacts, that is a functions to let the users know if they have friends are using facebook too . but people dont know that what facebook will do when they using their password .also if your are facebook users you should write your real name , if it is not , facebook will freeze users account. So how can the users trust facebook . Users confidence is low in facebook. How to save users the security and privacy is facebooks constraints.

4. External analysis
4.1 Porters five forces analysis 4.1.1 Threat of new entrants
New entrants to an industry often bring new capabilities to it, the desire to seize market share, and a lot of resources. (Wheelen and Hunger, 2004). Meanwhile, the Facebook Company aims to carve up the market of existing enterprises to win a place, which may occur with the existing business of raw materials and market share competition, leading the industry to reduce the existing level of corporate profits, the worst case, there may endanger the survival of these enterprises. Facebook is not just a social network - this is just a starting point, and its scope is far more than social network so simple. However, operators are currently insufficient understanding of the ambitions of Facebook, most of them think that social networking is a benign, nonexistence of competition, and dedicated to this partnership. In order to share the market of mobile operators, Facebook has taken several actions as a new entrant. For example, the service site to complete the integration of voice communication with Skype deal and to provide services to send and receive messages. Also look through the Places platform gradually shift its location-based services (LBS), and to Facebook Deals of the 'registration' services to drive mobile advertising. Most Facebooks applications are sold, which is used for smart phones.

4.1.2 Threat of substitutes

Wheelen and Hunger (2004) mentioned substitute product is those products that appear to be different but can satisfy the same need as another product. The most important functions with facebook are communication and disseminating information. So, facebook has a lot of substitutes, such as Twitter, Msn, Google and so on. Facebook is planning to acquire more companies to improve their website design, promote and enhance the quality of services to enhance the functionality of its mobile products - which is partly due to better deal with from Google and Twitter challenge. Currently Facebook is facing Google and Twitter, the increasingly fierce competition, companies need to improve on the platform to ensure the healthy operation of the site, and thus contributing to the rapid development of the company.

4.1.3 Bargaining power of buyers

Bargaining power of buyers means buyers mainly through their requests for lower prices and higher quality products or services, order to affect the enterprise. As we all know, the facebooks customers are mainly come from the internet users. And the Facebook Company main source of income is advertising, paid surveys, and thirdparty applications. Facebooks customers have great bargaining power, because the strength of facebooks competitors is very strong. Thats the most important reason why the Facebook Company is still providing many services to their customers for free charge.

4.1.4 Bargaining power of suppliers

Supplier primarily through its increased investment in quality and price and reduce the unit value of the ability to influence industry profitability of existing enterprises and products competitiveness. Supplier depends on the strength of the power they provide to the buyer what inputs, when the supplier inputs provided by the buyer of its value constitutes a large proportion of the total cost of the product, the production process is very important to buyers, or seriously affect the quality of the products the buyer, the supplier for the buyer's bargaining power is greatly enhanced potential. For example, the Mircosoft Company as a supplier who provides very advanced technology for facebook, order to keep facebooks platform more stable.

4.1.5 Current rivalry

As we all know, from 2004 to 2011 the Facebook Company has developed for 7 years. But nowadays, with the development of technology, the international market continued appearing new entrant to threaten the Facebook Company. Such as the Myspace, QQ, Msn, Twitter, Sina Weibo and so on. They are not only new entrants to the market, but also continuously develop new applications and function to compete with the Facebook Company. For example, the Sina Weibo (2009) is a new micro blog which is produced in China, has more than 200 million users includes many famous people as sports star, singing stars and politicians. Sina Weibo is providing services like the Facebook site. Users can upload WAP page, SMS / MMS messages or pictures released. The Sina Weibo can be understood as a "micro blog" or "word blog." You can see, hear, think of the
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things by written word, or send a picture, by computer or cell phone anytime, anywhere to send to your friends. Your friends can see you the first time the information published at any time to share with you to discuss. You can be also concerned about your friends, see friends, and immediately release the information. Sina Weibo who is as a competitor has shared most of the markets with Facebook in Asia. Although Sina Weibo is very likely to Facebook, its also attracting more and more people to join.

4.2 Opportunity

Opportunity are positive trends in external environmental factors. (Stephen P. Robbins, Mary Coulter, Management Ninth Edition.p213)Even though facebook got many successes, but it still has got many opportunities. In Company description it is introduce that in the future target is the internet search. Advertising is the income of facebook, even though the website is free for the user. there income is more than 1.5 million U.S dollar. the value of the advertising in facebook is getting bigger and bigger. so facebook can add more service of the internet, also the appreciation of the service.

4.3 Threat
Threats are negative trends. (Stephen P. Robbins, Mary Coulter, Management Ninth Edition.p213) We can say that the famous of the facebook is the strength but also the threat. Nowadays there are many similar social networking service website appear.

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For example, in china we have renren website and weibo. we all know that facebook is not allow to be use of some place in china. So many people use this two kinds of website to substitute facebook.China is a big market. days go by weibo are been use not just in china but many different country .also the service in facebook is not enough for user. If there is another new service appear, the user of facebook will be easy to lost, so how to bring more new service to let the user stay is a big threat of facebook .

Reference
About Facebook (2011) http://en.wikipedia.org/wiki/Facebook. [201130th, November]

Facebook

2011

The

facebooke

factsheet.

http://www.facebook.com/press/info.php?factsheet [201130th, November]

Facebook

(2007)Facebook

and

Microsoft

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Strategic

Alliance.

http://www.microsoft.com/Presspass/press/2007/oct07/10-24FacebookPR.mspx [2011,30th ,November]

Kjell, T and Trond, H (2010): Niche marketing and strategic capabilities: an exploratory study of specialized. Marketing intelligence and planning, Vol. 28, NO.6, p736-753

Miller,C (2011) Can Facebook turn 800m users into a $100bn business?

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http://www.bbc.co.uk/news/business-15962476 [20111st December] Robbins, S. P. And Coulter, M. (2009).Management.(9th edition). China: Pearson Education Asia LTD., and Tsinghua University Press Wheelen, T. L. & Hunger, J. D. (2004), Strategic Management and Business Policy. (9th edition)Pearson Prentice Hall, Upper Saddle River

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