Maintaining competitive edge: A case study

of facebook

By

DAWIT GEBEREKIDAN KEBEDEW

L0155FSFS0412 / UOG STUDENT NUMBER

Presented as part of the requirement for the award of MBA at University of

Gloucestershire (UOG)

July 2013
TABLE OF CONTENTS
ABSTRACT ................................................................................................................................. I

ACKNOWLEDGEMENTS ................................................................................................... II

DEDICATION ...................................................................................................................... III

LIST OF FIGURES ............................................................................................................. IV

LIST OF TABLES ................................................................................................................ V

CHAPTER 1: INTRODUCTION ......................................................................................... 1

1.0. Introduction ............................................................................................................... 1

1.1. Back ground to study ................................................................................................. 1
1.2. Rationale of the study ................................................................................................ 2
1.3. Aim of the study ........................................................................................................ 2
1.4. Objectives of the study .............................................................................................. 2
1.5. Research Questions ................................................................................................... 2
1.6. Methodology.............................................................................................................. 3
1.7. Data Analysis............................................................................................................. 3
1.8. Organization of the study .......................................................................................... 3
1.9. Conclusion ................................................................................................................. 3
CHAPTER 2: CASE BRIEF WITH THE RELEVANT LITERATURE......................... 4

2.0. Introduction ................................................................................................................... 4

2.1. Facebook.................................................................................................................... 4
2.2. A Brief History of Social Networking Sites .............................................................. 4
2.3. Facebook’s Early Years ............................................................................................. 5
2.4. Facebook Ads ............................................................................................................ 5
2.5. Facebook Platform..................................................................................................... 6
2.6. Facebook for Websites .............................................................................................. 9
2.7. Privacy Concerns ..................................................................................................... 10
2.8. Competitors ............................................................................................................. 10
2.9. Conclusion ............................................................................................................... 11
CHAPTER 3: PROBLEM STATEMENT AND PLAN OF THE ANALYSIS .............. 12

3.0. Introduction ................................................................................................................. 12

3.1. Advertising offered limited growth opportunities ................................................... 12
3.2. Facebook faced competition from other internet companies .................................. 14
3.3. Privacy violation issues ........................................................................................... 16
3.4. Plan of the analysis .................................................................................................. 18
3.5. Conclusion ............................................................................................................... 18
CHAPTER 4: FINDINGS, ANALYSIS, AND SOLUTIONS ............................................................ 19

4.0. Introduction ................................................................................................................. 19

4.1. SWOT analysis ........................................................................................................ 19
4.2. BCG Matrix ............................................................................................................. 23
4.3. Blue Ocean .............................................................................................................. 24
4.4. Benchmarking.......................................................................................................... 25
4.5. Ansoff Matrix .......................................................................................................... 26
4.6. Delta Model ............................................................................................................. 28
CHAPTER 5: CONCLUSION, RECOMMENDATION AND LIMITATION OF THE
STUDY .................................................................................................................................. 31

5.0. Introduction ................................................................................................................. 31

5.1. Conclusion ............................................................................................................... 31
5.2. Recommendation ..................................................................................................... 32
5.3. Limitations ............................................................................................................... 34
5.4. Need for further research ......................................................................................... 34
CHAPTER 6: APPLICATION OF THE CASE TO OTHER COMPANY ................... 35

6.0. Introduction ................................................................................................................. 35

6.1. Facebook main operation ........................................................................................ 35
6.2. MySpace main operation ......................................................................................... 36
6.3. MySpace vs. Facebook ............................................................................................ 36
6.3.1. Music ................................................................................................................ 36
6.3.2. Email ................................................................................................................ 37
6.3.3. APIs and Applications...................................................................................... 37
6.4. Conclusion ............................................................................................................... 37
REFERENCE ....................................................................................................................... 38
ABSTRACT
Social media websites are one of the modern world phenomenon’s that are derived by
Information Communication Technology (ICT). Because of social media website growth and
popularity more business want to enter the market and the existing ones want to expand. The
case book deals with Facebook. The case study attempts to show the existing strategies of
facebook which made the company one of the leading social media company in the market.
On the other hand considerations to be made on formulation and implementation of
strategies that would overcome the challenges the company facing such as competitions and
existing or potential competitors, internal operation problems and customer related
problems. Since Facebook is in a technology related business where the business
environment constantly changing the study attempts to show the importance of strategies and
also to follow up the changes and update the existing strategies the company is pursuing.
The following tasks are performed on the study finding of or problems, an analysis on the
case using various kinds of business models, recommendations based on the analysis made
and applicability of the case of facebook to other companies has been discussed in detail in
the study.

I
ACKNOWLEDGEMENTS
I would like to take this opportunity to acknowledge first and for most the almighty God for
sparing my life and bringing my dream to reality; Second Special thanks goes out to my
parents, whose have supported me throughout my years of education, both financially and
morally. Last to my advisor Dr. Lawrence Akwetey for going through with my research, for
his comments, encouragements and support

II
Dedication
I would like to dedicate this work for my beloved father GEBEREKIDAN KEBEDEW. For
his constant support and help in my whole life.

III
 LIST OF FIGURES

Figure 2.5.1: Facebook Platform……………………………………………………………7

Figure 2.5.2: Pie chart Social Media Market Share in 2007………………………………...8

Figure 3.1.1: CTR comparisons……………………………………………………………..13

Figure 4.1.1: Market share of MySpace……………………………………………….........22

Figure 4.2.1: BCG Matrix…………………………………………………………………...23

Figure 4.3.1: Blue ocean strategy……………………………………………………….......24

Figure 4.5.1: Ansoff Matrix………………………………………………………………....26

Figure 4.5.2: Unit Cost vs. to total unit produced graph……………………………………27

Figure 4.5.3: Product innovation Vs. Innovation rate………………………………………28

Figure 4.6.1: The Triangle: Opening the mind-set to a new set of strategic options……….29

IV
 LIST OF TABLES
Table 4.1.1: SWOT Analysis…………………………………………………..19

Table 4.1.2 Facebook vs. MySpace……………………………………………22

Table 4.2.1 BCG Analysis……………………………………………………..23

Table 4.6.1 Delta Model Analysis……………………………………………..30

V
CHAPTER 1: INTRODUCTION
1.0.Introduction

The case study will discuss about how facebook keep its competitive advantage on the
highly competitive and changing environment of social media industry. It further talk about
the problems and threats that are faced with in facebook itself and from competitors like
Twitter, Google and MySpace, as well as the solution given and the opportunities that are
presented to facebook to reach where it is now.

1.1.Back ground to study

According to (facebook newsroom 2013) facebook is founded in 2004 by Mark Zuckerberg.

Head quartered Menlo Park, California and opened international offices all over the world.
Face book has got 4,619 employees as of December 31, 2012. The mission of the company
is “to make the world more open and connected.” Facebook is used by people to stay
connected with friends and family, to discover what is going on in the world, and to share
and express what matters to them. The statistical report of the company as stated (facebook
newsroom 2013) as of December 2012 show that it has more than a billion monthly active
users, approximately 82% of the monthly users are outside the U.S. and Canada, 618 million
monthly active users on average, 680 million active users who used facebook mobile
product.

As to (Forbes 2013) facebook had generated revenue of $5.09 B and has got a total asset of
15.1 B. The company is also listed in forbs magazine as number 73 among the world most
powerful brands. Facebook enjoyed success in its business even though there were
challenges along the way in the complex, highly competitive and changing environment of
the social networking industry. Facebook was successful by formulating and implementing
strategies at different level which in retune make the company market leader.

1
 1.2.Rationale of the study

The rationale of this dissertation is how facebook handle and achieve its goal of high
business growth and profit at the same time solve the challenges that are faced by facebook
to achieve the goal in highly competitive and changing environment.

1.3.Aim of the study

The aim of the case study is to explore how facebook is successful in business and media
market by overcoming the threats or challenges faced and sustain its competitive advantage
to become market leader in social media industry. It also examines the strengths, potential
and possible risks of Facebook.

1.4.Objectives of the study

The research has the following objectives:

1. To examine current literatures about facebook strategies to be competitive in the

market.
2. To find out the problems and challenges that are faced by facebook in achieving its
objectives
3. To conclude how face book achieve its goal using strategies.

1.5.Research Questions

The research questions of the dissertation are:

1. What is the current position of facebook with regard to high competition and

changing environment in the social media industry?

2. Which strategies help facebook to create and keep its competitive advantage in the

market?

2
 1.6.Methodology

The dissertation will assume primarily a secondary method in that most of the information is

from the case study. Likewise books, magazines, journals are used for references.

1.7.Data Analysis

Analysis of data will be made using pie-charts, graphs, flow-charts, tables, etc.

1.8.Organization of the study

The study is organized into six chapters as follows:

Chapter 1: Provides the background, aims and objectives and rationale behind conducting
this research.
Chapter 2: This part talks about the case brief with the appropriate literatures that sum up
the existing scenario of facebook.
Chapter 3: show the problem statements and plan of the research by raising issues related
to the company, using different methods to conduct the study, that arise from the Business
theories and concepts by means of literature review.
Chapter 4: Provides the analysis using the tools mentioned in chapter three, displaying the
appropriate results and alternatives.
Chapter 5: Offers the conclusion, recommendations and limitations of the dissertation. It
concludes up with achieving the answers for the questions that were initially defined.
Chapter 6: At last this part suggests application of the case to another company or
organization.

1.9.Conclusion

It concludes up with providing the answers for the questions that were initially defined. In

addition to the conclusion, it shows how competitive advantage could be achieved by

implementing the right business strategies.

3
CHAPTER 2: CASE BRIEF WITH THE RELEVANT LITERATURE
2.0. Introduction

This chapter talk about the facebook case study in brief. In addition, it provides the
appropriate literature at the proper place.

2.1.Facebook

The organization is established by Mark Zuckerberg in 2004 with the aim of supporting
people to link and share information among themselves. According to (kincaid, 2001) at the
moment facebook is the largest online social media in the world with about 800 million
users. Facebook enjoyed a high economic growth and success in the social media business.
As stated by facebook newsroom (2013) facebook has got the finest and high profile
management team like the founder and Chief Executive Officer (CEO) Mark Zuckerberg,
Chief Operating Officer (COO) Sheryl Sandberg, Chief Financial Officer (CFO) David
Ebersman etc. On which much of its success attributed to management abilities. Although,
the company has got problems or threats such as competition, its business model which
depend on advertising in its future prospect of the business as the business is planning to go
public, therefore the company need to address the issues which in return boost the initial
public offering(IPO). The Longman Business English dictionary (2007) defines IPO as an
occasion when a company issue or make available shares on a stock market for the first time.

2.2.A Brief History of Social Networking Sites

As stated by Ellison and Boyd (2007) the social media sites enable users to create their own
profile, view other people or friends profile, network and share information privately or
publicly among themselves. SixDegrees, established 1997 was the first modern online site,
but it has got complains from its users, therefore it does not stay long in the market.
Net comes Friendster, which at the beginning used by many users, but could not manage the
delay on its sites, as a result it frustrated the users.
Then comes MySpace founded by Chris Dewolfe and Tom Anderson in 2003 emerge as the
market leader in the social media industry. After MySpace between the 2003 and 2005 many
new and existing internet companies like Google, Yahoo!, LinkedIn and MSN joined the
social media market.

4
 2.3.Facebook’s Early Years

Even though facebook had similarity with social media sites in its earlier times when it was
developed by its founder Mark Zuckerberg and his two friends as an option for Harvard’s
printed student directory it had also difference that are: One it had membership restrictions
with website extension for instance “.edu”, which means “education” and the NetLingo:
Internet Dictionary (2002:153) defines ‘.edu’ as ‘one of the top-level domains assigned to
access resources on the internet of academic nature, generally for colleges and universities’.
So that it made the connection among people based on the real world relationship; two
during its earliest periods facebook had also put restrictions to members within the same
university were not visible to each other that created trust on the system to share
information. These activities helped the company to expand in getting recognition by users
and registering more users on many college campuses.
Its expansion attracted investors that the company used it to its benefit to raise capital from
various sources. Also got an offer to sell the company by internet companies like of yahoo,
although facebook declined the offer.

The success of the company was attributed to its creative workings of the website by in the
introduction of NewsFeed in September 2006, which shows the latest activities of friends. In
addition it had introduced open registration functionality to enable users register their work
places. With functionalities added like discussion boards, groups, events, messaging, video
sharing, blogging and mobile access.

2.4.Facebook Ads

As stated by Weinberg (2009) Facebook Ads are one of the most well-known kinds of ads
on the service and are noticeable on the side bar of many profiles and Facebook Groups. Ads
are main source of revenue for facebook. Therefore, the company follow its own scheme to
develop its own advertising known as facebook Ads which was introduced in fall 2007.
Facebook Ads includes Facebook pages, display Ads and Facebook Beacon. In order to
generate highest revenue facebook used two methods that are: One it uses Ads that are
frequently clicked by users. Two Ads that are relatively offered highest price by advertisers.

5
One component of facebook Ads that is Facebook pages has got the capabilities that enable
the different categories of users to create their own Ad page that resembles facebook page.
So that these activities where considered by the company as the basis for user experience and
the beginning of business dealings with facebook.

The other component Facebook Beacon had faced challenges as it tried to advertise facebook
users online product purchases to their friends that lead to violation or exposing users
personal data or their online activities on facebook to their friends, which makes users
uncomfortable and at the end made face book liable followed law suit and pay
compensation.

Despite the challenges faced through time the company improved the Ad products with
capabilities of Ads for events, Ads for pages and Ads for API for large advertisers. In
addition facebook brought in sponsored stories and Ads for Applications that have the
capabilities to change the activities of users into advertisements.

2.5.Facebook Platform

During the same period of the release of Facebook Ads the company also introduced the
Facebook platform. It is a collection of resources that allowed third party application
developers to create programs inside the facebook environment. Figure 2.5.1 show Facebook
platform in brief:

6
Figure 2.5.1 Facebook Platform

Application on Data on Facebook Third-party

facebook website

User’s Uses the

Uses the
Demographic data
data
s

User’s Social
Data transfers Network Data transfers
with user’s with user’s
permission User’s Pictures permission
and Status
Updates
Asks users
to post back Asks users
to post back
User’s “Likes”

User’s
Location
Check- ins

Source: author

Since the release of Facebook platform it facilitated the growth of application every time.
For instance, one of the applications was iLike. As stated by Funk (2011) iLike is a “Social
music discovery service” that was bought by MySpace in 2009 with more than 60 million
user, it‘s a destination in itself, but more importantly it’s the leading music application on
Facebook, Google, Orkut, hi5, and Bebo. It is a great distribution channel for musicians that
make it popular and used by many users along with other applications like Slide and Rock
which had an impact in an increased users for facebook.

Even though there were an increased number of users of these applications there was also
criticism. One a few number of applications was used for many of the online activities,
which were developed under contract before the Facebook platform was released. Two, there
were many applications that are considered useless by the users.

7
Three, not following the platform rules by developers as a result making users’ unhappy and
made facebook liable to the privacy violation. Packard (2013) refers to privacy violation
related to social networking range from information shared without the user's permission to
data security lapses to simple errors in user judgement. The growth of the application created
an increased on number of users that stay on the website. But still facebook was behind in
the total number of users than its competitors. MySpace was market leader by the end of
2007. The pie chart shows the market share of social networking websites.

Figure 2.5.2 Pie chart Social Media Market Share in 2007

Social Media Market Share in 2007

Myspace Facebook Others

16%

20%
64%

Source: author

Even if facebook was not a market leader during that time the growth in the number of users
enables the company to attract other information technology companies like Microsoft which
help the company to grow further internationally.

8
As the popularity of Facebook platform increased the number of users which later on became
its main business activities. Using the platform Facebook is able to create different products
that involve in social gaming such as Zynga and others. According to Zinga (2013) ZNGA
Inc is one of the top company’s in social gaming services with more than 240 million regular
users in the company’s games, which incorporate games like Zynga poker, CityVille,
FarmVille etc. The games are accessible on many platforms, such as Facebook, Apple iOS,
Google+ and Android. And also finance like the Facebook credit.

2.6.Facebook for Websites

After the release of Facebook platform, Facebook introduce another product that has got the
capability to integrate with other systems known as, Facebook for website. This provides the
functionality for users. One can use Facebook login user and password on other websites and
share the activities or information between Facebook, other websites and among users. Two
Facebook collected a lot of information from its users, like first name, last name, age, user
relationship status etc. also information in the “About Me”. So that Facebook for websites
enable the users to save time using the “Connect with Facebook”. According to
facebook(2008) Facebook Connect would market it much simpler for the users to use their
internet identification with them throughout the Web, share what one does on the internet
with their friends and remain updated on which they are doing. You won't have to make
different records for every web page, simply use their Facebook login in wherever login is
readily available on other website. It also enable the company to share the information
collected by facebook from its users based on the users authorization and other websites
information need by defining rules of operation that other websites to follow to avoid the
companies previous problems of mishandling of users data.

The introductions of Facebook for website functionality produce results in increasing

involvement of users with the website and become popular. Despite the fact that competitors
like MySpace tried to mimic the product but fail to follow, which created an opportunity for
facebook the product functionality to smart phones like iPhone expand its user base and
become market leader.

9
In addition, as the company becoming financially strong the company continued to create
new products like “Like” button. As stated by Facebook (2013) The Like key is an easy plug
in that will let people easily share material with their friends on Facebook which was a
successful functionality in increasing the terrific of the site.

2.7.Privacy Concerns

Facebook had problems in handling user’s data confidentially. Many times users personal
information, photo where exposed without the users permission. These problems lead
facebook to user’s complaint and sometimes to law suit. Further the new features developed
by the company to handle this issues where unproductive because of the features where
unfriendly and the company policy on privacy of users.

2.8.Competitors

Not many years from its establishment face book faced completion from other internet
companies. First competition was from Twitter which offers functionality and flexibility on
its site that were missing on facebook and able to attract many users. For example, big
networks like CNN and celebrities. Twitter growth even attracted facebook to offer for
acquisition of the company though it was not realized. But facebook responded to the
completion by doing and improving what Twitter does. For instance, facebook mimic
Twitter’s “follow”. As stated by Twitter (2013) the follow button is a small gadget which
enables users to simply follow to a Tweets account from any web site. The follow button
uses the same execution design as the Tweets button.
With that facebook added it own functionality like “tag”. Facebook (20013) states a tag is a
unique type of weblink. Whenever you tag anyone, you make a weblink to their timeline.
The publish you tag the individual in may also be included to that individual's timeline. In
addition, facebook improved its “Search engine”. According to George (2005) search engine
is a web page that allows keywords or phrases to be entered and returns results based on the
relevance of the documents it holds in its index. To have Twitter’s functionality along with
its giving ability to share facebook updates to all, which enable to search facebook updates
by other search engines like Google and Yahoo.

10
The other competition was from Google that was not that much bother facebook. Google
was striving to emulate facebook by lunching social networks called Orkut and Friend
Connect, which was difficult for Google. It had also constant problem of handling user data
or violating user privacy that made Google follow law suit.

Yet Google launched a new social network site known as Google+ with functionalities that
are not on facebook like video chatting with groups of more than 10 people and more
flexible and improved privacy controls for user. Google+ showed early growth in user
acceptance, but it is not a real threat to facebook.

2.9.Conclusion

In the social network websites facebook is the market leader with high number of users using
the site frequently. The success of the company is attributed to the constant innovation of
new features and following competitors closely and responding to their action that makes it
hard for competitors to coup up with facebook. However, there are issues that needed be
addressed by facebook to continue and sustain its growth in the future that are using
advertising as main source of revenue for future growth of the company, which needs to look
at the business model. The other issue is finding a lasting solution to users privacy concerns.

11
CHAPTER 3: PROBLEM STATEMENT AND PLAN OF THE ANALYSIS

3.0. Introduction

This chapter states the problems in the case and also discusses the plan of solution to the
problems in the following chapter: 4.

3.1.Advertising offered limited growth opportunities

Even though many business wanted to show their ads on facebook. In comparison to other
internet giant companies, like Google facebook ads are becoming ineffective. According to
Edwards (2012) holds the view that facebook is a far less efficient medium of advertisement
than Google. In addition Facebook has got less coverage in terms of users reach, as results
its ads are less efficient, than previous methods of web promotion. Iwanow and David
(2010) suggest that the most important statistic that shows and need to pay attention to put
ads on a website is the CTR or Click-through rate. CTR measures the percentage of times
visitors click, and can be broken down on the basis of what is being clicked in to the page
CTR (page percentage click-through rate), Ad Unit CTR (ad unit percentage click-through
rate), and AD CTR (the percentage of times an individual ad is clicked). As stated Edwards
(2012) most worrying for Facebook: The average click-through rate (CTR) on an ad online
usually is just 0.1 %. At Facebook, it is even lower: 0.051 %. Google CTR is 0.4 %. Figure
3.1 chart shows the CTR comparison.

12
Figure 3.1.1 CTR comparisons

CTR Comparison
1.2

0.8
CTR
0.6

0.4

0.2

0
Google Facebook Average
Series1 0.4 0.051 1

Source: author

Leggatt, (2007) states that many reasons are put ahead as to the reasons the CTR are so low.
Some think that a lot of tech-savvy learners on Facebook are utilizing ad-blockers and some
that young people are good at disregarding business messages information.
Nevertheless, although MySpace as well as other social media are about material, Facebook
is much more of an interaction device, like IM or a shut private forum for friends. On
MySpace take time on surfing around through material on various websites while Facebook
users take their time consumed in conversation. The distinction in user’s behaviour might
take into account the different click-through rates.

The comparison in other aspect according to Edwards (2012) for instance in the total reach
of all internet users facebook reach 51%, while Google is 90%. Also revenue wise Facebook
had $1.06 billion, a decrease in 6.5% every year consecutively, were as Google $2.9 billion,
up 1% every year and increased to 0.7% consecutively.

Edwards (2012) Facebook ads target on location, likes, workplaces, education,

demographics which might have an impact on its ads growth. As Google ads target on
location, interest, keywords, remarketing, demographics one of the reasons for a decrease in
the growth of ads for books might be its targeting area of ads.

13
Furthermore, because of facebook policy companies or advertisers cannot require or get
control where their ads to be shown. According to BBCNews (2007) about six major British
companies the Prudential, Halifax, Vodafone, the AA First Direct, and Virgin Media.
Withdraw their ads from facebook because it was mixed up with BNP (British National
Party). For instance Virgin gave reason because it had to "protect its brand".

Despite the drawbacks seen on facebook some scholars argue that there are other factors
beyond the control of the company. Heussner (2012) argue that there is a softening on the
growth of internet ads revenue in recent years because primarily linked it to the overall
macroeconomic situation. In fact, the economic system was particularly poor, making
development look especially slow. And doubt in the present economic system could be
pulling down investment.

From the above discussion it can be understood that facebook policy was not satisfying
advertisers requirements and desires for ads on facebook. Which can be one of the prime
reasons for the decline on it ads growth other than other factors, like the slowdown of the
overall economic system.
According to Edwards (2012) Thus far, Facebook’s marketing system has not kept pace with
the extreme growth of its network, and it remains to be seen if Mark Zuckerberg the CEO
even wants to concentrate on ads as main source of income for the company.

3.2.Facebook faced competition from other internet companies

According to Heussner (2012) Facebook joined the markets with big players with its $5
billion IPO, and among these giant companies are: Microsoft, Google, and Twitter. But also
facebook is preventing smaller social networking sites by competing them for ad dollars.

Facebook will face major competition in pretty much every aspect of it business, like from
companies like Google, Twitter and Microsoft, that provide various kinds of internet
services, products ,content, products and internet ads offerings and also mobile firms and
smaller companies that got functionality or offering that is similar with facebook.

14
Facebook recognized that Google social networking site Google+ one of the biggest
competitor. So the company generally competes with Google with social networking
products such as Google+ that already built in with certain applications, such as Android and
search.

In fact, Google+ is far behind than facebook for the 90 million users to Facebook's 845
million; however it has shown high increase in the number of user after it has been released
to the public. Considering the Google great resources at its disposal Google might have
competitive position in some of the markets than Facebook Heussner (2012).

Hempel and Helft (2011) expresses the view that Google+ initial success show that facebook
should be careful in handling its users Google+ would be there when there is unhappy
facebook user to switch to not only them but also a risk of taking their friends with them.
Therefore, it is very important for facebook to address user issues as soon as possible or
before it surfaces.

A number of competitors, such as Google, could use its robust or prominent position in
many aspect of the industry to acquire competitive advantage against facebook in areas
where the company function including: by developing competitive social media systems or
features into products Google control such web browsers, search engines, and mobile phone
operating-system ; by acquiring the companies; or by creating access to Facebook more
challenging, Consequently, facebook competitors may acquire and interact with users at the
price of the growth or involvement of facebook potential users, that may adversely impact
facebook financially and the business in general Heussner (2012).

As stated by Heussner (2012) Facebook also has got other regional public networking sites
like , Mixi in Asia, Cyworld in Korea,Google owned Orkut in South America and Indian,
and vKontakte in Russian federation. So as more and more companies launch a new social
networking sites facebook book would be liable to additional competition.

15
Facebook has not yet entered the china but the company may face competitors from china
such as Sina, Tencent, and Rnren by the time the company joined the China social network
site industry. Though (Moore, et al., 2010) argue that even though most countries having a
home-grown service the competition seems favorable for facebook than the local social
networking sites. For example facebook is now closing the gap in number of users with
competitors local competitors like SKYRock and Bebo in France and Ireland, respectively,
and recently overtaken local competitors Hyves, meinVZ, and Impulse in the Netherlands,
Germany, and Bulgaria, respectively. Even CYWorld which has dominated the South
Korean Market for a decade is now seeing competition from Facebook which have lowered
into the top 20 sites for the country.

Around the business side, facebook also encounter competitors from conventional website
companies share of ads costs and in the development of the resources and techniques for
handling and improving promotional initiatives.

3.3.Privacy violation issues

As stated Angwin and Raice (2011) the problem with of privacy violation arise in December
2009 when the company changed the privacy setup of facebook that would expose user’s
profile like their picture, name, friend list and gender seen by all its users in 2009.
Telecommunications (2011) reported that According to telecommunication (2011) report
facebook also violets it user privacy by its facebook secret tracking of the post log out
activities of the facebook users. The report also includes that facebook use of cookies to
track post-log-out internet activities which violets both the reasonable expectations of
consumers and the company’s own privacy statements.
Even if facebook fixed the problems caused by its tracking cookies, the company still places
persistent identifiers on users’ browsers that collect post-log-out data and could be used to
identify users.

When all these privacy violation by facebook were known its users were very angry and
brought their complaint to the Federal Trade commission which charged facebook for its
changes in the privacy setting that partially in danger the "health and Safety" of its users, by
revealing "potentially sensitive affiliation" like sexual orientation, political views, business
connections etc. as a result.

16
As one aspect of the settlement, Facebook agreed decided to publish to separate privacy
audits every two years. If it goes against the agreement, it can be penalized $16,000 per day
per breach. The need to ask for authorization could compel facebook to become less
aggressive in terms of how that it comes out new functions. In the past, Facebook has
combined out functions such as face identification by asking its users to turn new functions
"off" instead of asking them to turn them "on." Angwin and Raice (2011).

After the accusations made by the customers on facebook and the FTC charged facebook by
eight issues of breach of its privacy like facebook involved in misleading actions when it
guaranteed users privacy protections that it didn't meet. Especially, the agency said
Facebook guaranteed that third-party applications would only have accessibility to is users
details they needed, when in many cases, applications had unlimited accessibility to users'
personal information. In the same way, the agency said Facebook's "verified apps" program
did not verify the security of applications. The FTC also claimed Facebook didn't cancel
users' pictures and videos when customers removed their records, even though it stated to.
The FTC also said Facebook, which has long stated it doesn't give away users' particular
private details with promoters, was in fact giving a particular customer ID to promoters that
could be along with a the users internet surfing history, letting for a more unique recognition
of users. The FTC didn't have any particular accusations as to how the details were used by
promoters Angwin and Raice (2011).

In the suggested settlement, Facebook says it accepts the facts in the FTC's issue but
particularly declines the FTC's accusations of the law has been breached. Facebook agreed to
most of the same terms that relating to Google Inc. agreed to in April when it resolved the
charges that it had tricked its clients by informing Gmail users that their details would only
be used for email, when it actually was used by a social-networking service called Buzz
Angwin and Raice (2011).

17
 3.4.Plan of the analysis

The study will use the following theories and concepts in the analysis in chapter 4
1) SWOT Analysis
2) BCG matrix
3) Blue ocean strategy
4) Benchmarking
5) Ansoff Matrix
6) Delta Model

3.5.Conclusion

The main problems for facebook as it is discussed above are competition from other internet
companies like Google, Twitter etc., the other problem was related to its business model
where the growth of ads are slow for the future prospect of the company and also there was
complaint of privacy violations by its customers. Therefore, different kinds of business
models and theories would be applied for the analysis of these problems in the next chapter
of this study.

18
CHAPTER 4: FINDINGS, ANALYSIS, AND SOLUTIONS

4.0. Introduction

On this chapter findings from the case will be discussed with its appropriate analysis. And
also solutions will be suggested based on the analysis made.

4.1.SWOT analysis

Table 4.1.1 SWOT Analysis

Facebook SWOT analysis

Strengths Weaknesses

1. Facebook integration with other sites 1. Advertisements the only source of

and applications. revenue for Facebook
2. Active users of 800 million. 2. Approach to users privacy
3. Outstanding users attraction and
experience
4. realizing users requirements and actions

Opportunities Threats

1. Diversify sources of revenue 1. Online advertising slow growth

2. Open Facebook marketplace 2. Competition from other internet
companies

19
 Strength

1. Facebook integration with other sites and applications. To enhance consumer experience
and interact with more users to use Facebook , the company has released numerous functions
that could enable better integration with other sites and applications that run by using Facebook
or . For example one of the tools is Facebook Platform according to Kirkpatrick (2008) is a set
of tools that allows third party developers to develop application in a facebook environment.
Easy incorporation and use of programs leads to competitive advantage than other social media
sites that are striving to provide similar service.
2. Active users of 800 million. As stated by (Kincaid) face book has got more than 800 million
active users. The amount of users facebook got is enormous which as the same time very
important for a social media to grow. It enables the company to link up users not only on
national level but also on an international level.
3. Able to attract investment. Womack (2011) states that because of the company had positive
cash flow and estimated revenue of $4.27 billion in 2011. It was able to attract investors. The
company was able to get of $2.3 billion from venture and private investors, which in return
increased the value the company to $50 billion.

Weaknesses

1. Advertisements the only source of revenue for Facebook. As stated by Carlson (2009)
almost 90% of facebook revenue is from advertisement on the site. In order for the company to
increase its income it needs a significant amount of users. As a result the company would be
liable on the growth of users. This gradually is only minimal as the social media attract more
people to its site.
2. Attitude towards users’ privacy. User’s details are collected by facebook either to store it and
use it for its own purpose or to sell it to another party. As pointed out by Opsahl (2010)
Facebook's regular changes in privacy settings reportedly made increasingly more user
information public by default. Such kind of approach would create negative image on the
company and diminish its popularity.

20
 Opportunities

1. Broaden types of income. As the company intensely rely on ads on the website as source of
income. With a large number of active users and becoming market leader on the social media
industry, facebook could look for other ways or opportunities of generating income.
2. Start Facebook market. With its large number of users and wide coverage of many countries.
It is important to work more on opening a marketplace on its social media site. For instance
facebook could use as stated by Liu (2011) facebook credits which accounted for over 70% of
all the virtual transactions on facebook. These kinds of activities would enable the company to
generate more income increase growth and sustain in the future.

Threats

1. Online advertising slow growth. Even if there is growth in an online ads the rate of growth is
slowing down, which as a result has got an impact on the advertising income of facebook.
According to Lipsman (2011). In case of online ads Facebook has got only 30% of the market
share which slows down the opportunity of growth for facebook. In order to avoid the limited
growth in advertising facebook need to create new ways of advertising, understand advertiser’s
needs and attract them to the site.
2. Competition from other internet companies. Since its establishment facebook faced
competition from other internet companies continuously. Especially the threats from MySpace
in its early years were significant. According to the case in 2005, Rupert Murdooch’s News
Corp acquired MySpace for $580 million. As a result the site boosts its U.S.users to 32%. Other
social media companies’ including facebook which is a limited percentage to share 68%.
Figure 4.1.1. Shows the market share of MySpace and other social media. It can be shown that
MySpace has got more market share than facebook which impose threat to facebook.

21
 Figure 4.1.1 Market share of MySpace

Market Share
MySpace Others

32%

68%

To improve its market share facebook needs to attract more investment from different kinds of
investors and increase its revenue sources.

In addition as stated by Arrington (2007) in 2007 facebook was in direct competition with
MySpace where facebook having only half of MySpace 100 million user base, 20% of
MySpace users had facebook, while 64% of facebook users also had MySpace. Facebook was
also able to attract an investment of $240 million from Microsoft for 1.6% equity of Facebook.
Table 4.1.2 shows the competition between facebook and MySpace also the advantage taken
from the opportunities presented.

Table 4.1.2 Facebook vs. MySpace

Variables MySpace Facebook Advantage

1 User base 100 million 50 million MySpace
2 User Accounts 20% FB users 64% MS user MySpace
3 Investment N.L $240 million Facebook
from Microsoft
4 Company Valuation N/A $15Billion Facebook
5 Book sale NL $15o million Facebook

The table show that although MySpace takes the upper hand in the user base and user
accounts which are very important for a social media site, Facebook has the upper hand in
attracting investment which is also has an equal importance to expand the company or
increase the number of users.

22
 4.2.BCG Matrix

Figure 4.2.1 BCG Matrix

High

Market growth
rate

Low

High Relative market share Low

Source: (Griffin, 2013)

The BCG (for Boston Consulting Group) matrix provides a framework for evaluating the
relative performance of businesses in which a diversified organization operates. It also
prescribes the preferred distribution of cash and other resources among these businesses
(Griffin, 2013). According to the case study the BCG matrix evaluation of facebook will be
as follows:

Table 4.2.1 BCG Analysis

Star The star product for facebook would be its Ad product as it continues to
evolve and the company kept on innovating.
Cash cow The cash cow for facebook would have been their adverstisment stategy. This
is due to the number of users facebook has.
Question Product that facebook should put question mark would be it facebook
mark platform, where many compittors entered the market have impact on the
revenue of facebook.
Dog The dog would be its Mini-Feed product which shows all users recent
activiteis as result users where unhppy by the product and costed the company
$9.5 million law suit because of violation of users privacy.

23
 4.3.Blue Ocean

As stated by Kim,C.W. and Mauborgne, R. (2005) Blue Ocean is all about finding out a
market space by avoiding the stiff competition by way of reducing cost and adding value to
customers which requires innovation of products or service, so it could be done also in the
terms of differentiation or cost leadership strategies. As it is pointed out on the case
segmentation of the market was made by facebook which enable it to concentrate on
students, at first which enable it to create its own market space where other internet
companies like MySpace and Google not utilized. The following diagram shows how the
three companies: MySpace, Google and facebook using same strategy cost leadership but
facebook was able to diversify its market that is linked to blue ocean strategy.

Figure 4.3.1 Blue ocean strategy

The diagram shows that facebook was able to apply blue ocean stategy and get benefited
through constantly innovting new products as others where not using blue ocean stategy and
competing by becoming cost leaders in the market.

In addition, blue ocean is also about creating new maket or a demand for product or services
which was not there before. This is shown in the diagram and indicated in the case study
facebook was able to create an online gaming market by coperating with Zynga which makes
facebook suceessful and popular.

24
As stated by Kim,C.W. and Mauborgne, R. (2005) the blue ocan stategy will affect an
organization cost structure and value creation to its customers. In summary blue ocean
stategy dectates that through innovation a firm need to reduce cost, create value reduce risk ,
create the market and make a significant amount profit out of it. According to the case study
face book was appling a blue ocean strategy as its competitors trying to mimic its offeing to
its users.

4.4.Benchmarking

In order to survive in a highly competitive market benchmarking is one of the tools used.
Facebook has competition from Google, Twitter, etc. globally. According to Cheney (1998)
benchmarking has many advantages primarily taken as "shortcutting the slow steady path of
incremental improvement and leading ahead of the world competitors". In the case study
facebook has extensively used this approach in many occasions.
The benchmark tool can help to understand the strategic capability of firms from the inside
Johnson et al (2008). As stated by Zairi (1996) the tool also helps to find out the best
practice in the industry and using that strategy in the future. These could be "Maintaining
quality, customer satisfaction and continuous improvement" Kozak (2004). As it is shown in
the case facebook was implementing this approach by keeping to innovate new and quality
products as a result its customers were satisfied and help to beat its competitors like
MySpace. The various types of Benchmarking are:
1. Internal Benchmarking

This can be used for determining which product or service has the capability to undertake
effectively for instance “advertisement strategy”.

2. External Benchmarking

In this case it requires firm's to think out of the box. As it is pointed out in the case study
facebook used it to create products like "like button".

3. Competitive Benchmarking

This is used by all firms. Simply because it enables you to assess your competitors’ item and
allows you to recognize your rival's item weak point. As a result these details could be used
to develop firm’s competitive advantage.

25
 4.5.Ansoff Matrix

Figure 4.5.1 Ansoff Matrix

Source: Angwin et al (2011)

Marketing penetration
As stated by Whittington et al (2008) Market penetration involves widening the market share
the firm have in the industry. As it can be seen on the case study Facebook was penetrating
the social media industry by innovating new products like the Facebook Platform. This
means according to Whittington et al (2008) enable Facebook to “increased share of its
existing markets with its existing product range”. This strategy is useful for facebook
because facebook does not need to diversify to other market and achieve this strategy by
innovation and as it is pointed out on the case study that is what facebook has done.

Product development
Whittington et al (2008) states that when firms develop new product or modify an existing
one that is called product development. Facebook was developing new products and
modifying existing ones. For instance, it developed the “iLike Button” and continuously
modifying the website features to suit user experience.

26
Therefore, as facebook continuously developing new products to the market it help the
company to operate in lesser risk and increase its market share. As figure 4.5.2 shows to
develop face book may has higher unit cost when developing a new product but due time the
unit cost decline drastically.

Figure 4.5.2 Unit Cost vs. to total unit produced graph

Source: Mankiw (2012)

Market development
Market development deals with looking for new market using the existing products
Whittington et al (2008). As it is indicated on the case study facebook was looking and
finding markets globally using the same product for example by expanding globally by
registering users in different countries with different language and culture by making the
website suitable for its users. As diagram 4.5.3 shows as a firm has the ability to innovate the
more it finds and stays on in the market.

27
Figure 4.5.3 Product innovation Vs. Innovation rate

Source: Whittington et al (2008)

Diversification
Diversification involve with the development of new product for a new market (Lomax and
Stokes, 2008). This is the riskiest strategy of the four. And in the case study facebook does
not seem to apply or follow this strategy. This strategy requires firm’s structural change and
resource to apply. As well as both the market and the product will be new. Therefore
facebook did not diversify they were focusing on developing new product or modify existing
products as well as looking for new market using their existing product.

4.6.Delta Model

This model is developed by Dean Wilde. It enables managers to articulate and implement
effective firm’s strategies Value based managemen, (2013). According to Hax (2010) has got
three kinds of strategies these are: System Lock-in, Total customer solutions, and Best-
Product Figure 4.6.1 shows the delta model framework strategies. So, it is claimed that if a
firm has got these three strategies of delta model it enable the firm to have a huge market
share and became market leader eventually. It is indicated on the case study that Facebook
was using these strategies which helps the company due time become market leader.

28
Figure 4.6.1 The Triangle: Opening the mind-set to a new set of strategic options

System Lock-In
 System economics
 Market Dominance
 Achieving Complementor Share

Enabled Through
Effective Use of
Technology

Total Customer Solutions Best Product

 Customer economics  Product economics
 Cooperation  Rivalry
 Achieving product share
Source: Hax (2010)

The following table 4.6.1 shows how facebook used this strategies based on the case study
improved its market share and become market leader.

29
Table 4.6.1 Delta Model Analysis

Best product
Low cost and The best product involves setting the product improving on the
differentiation product to be a low cost or differentiated. These were noted on the
case study where facebook for example facebook was improving
security of users, Like button and different ads. Regarding low cost
facebook was offering a 30% commission to the platform sale, even
offered it for free to its users.
Total customer solution
Changing In the case study it was pointed out that facebook was trying to
experience of change users experience in the privacy of their data by customizing
customers the site to suite its users.
Users integration Because facebook able to integrate its customer. As a result it enables
it to grow fast, generate high revenue and an increased market share
which made the company market leader later on.
Changing As it is shown on the case study facebook was redefining customer
experience of experience for example by creating with collaboration of Zynga and
customers enable users to play the game each other without the limitation of
location. The introduction of “Like Button” was also was redefining
of its user experience on the site.
System lock in
Limited access As facebook become market leader with 800 million active users
which results in a huge amount of capital and dominated the market
by the resources it got. It has the ability restrict or limit others to enter
the industry using the resources and the knowledge it has accumulated
from the industry.

30
CHAPTER 5: CONCLUSION, RECOMMENDATION AND LIMITATION OF
THE STUDY

5.0. Introduction
A conclusion and overview of the findings will be made on this chapter with the appropriate
recommendation to Facebook. Also the limitation of the study will be discussed.
This chapter is put into three key sections:
Section 5.1. Talks about the conclusion of the research, as well as the findings of the study.
Section 5.2. Covers the recommendations made by the research for Facebook.
Section 5.3. Mention the limitations encountered in relation to the research.

5.1.Conclusion

5.1.1. As to the analysis made on the case study it can be concluded that Facebook
has been successful in formulating and implementing strategies despite the
setbacks encountered on the process. The successful strategies that are
implemented by Facebook which were crucial for its success were: firstly,
according to Facebook (2009) its constant innovation to create something new.
Secondly, its ability to follow its competitors closely and tries to mimic or
improve their products and offers it to its users. Thirdly, having high standard
management that could understand the business environment very well and
react to the situation accordingly. All this and other business related strong side
contribute its success which adds up the strategies that are followed by the
company to achieve its objective. However, as stated by Facebook (2009)
Facebook become market leader in the social media industry by using by
properly implementing its strategies along with the lack of responses from its
competitors such as MySpace.
5.1.2. Even though the company enjoyed success in the market there is always room
for improvement that needs to be looked at that are causing problems and
challenges such as competition from other internet companies, handling of user
information and its business model. These issues need to be addressed by

31
 Facebook. And also the challenges demand for formulation of new and very
important strategies. To address its problems Facebook need to develop a
strategic capability. The strategic capability deals with the capability of the
company to have a competitive advantage in order to have competitive
advantage expand or survive in the market Johnson et al (2008). Having
strategic capability is very essential because it enables to endure or win over it
competitors for example as pointed out by Parker (20011) Facebook was
charging 30% commission on its platform sales, were as Google provides
similar service for free. As result Facebook need to adopt a sustainable strategy
to be competitive.
5.1.3. The research covers the importance of having strategies or formulating and
implementing strategies to tackle challenges. So Facebook was a company that
has got a working strategy for most of its functions on the other hand the
company also need to develop new strategies that can stand the challenges like
the competition, its business growth using ads as revenue and user privacy
issues.

5.2.Recommendation

From the analysis made on the case study the following recommendations are outlined for
Facebook:
5.2.1. In case of its limited growth opportunity on ads according to Johansmeyer
(2011) it is recommended that Facebook to diversify its source of income. The
following income sources could be developed:
5.2.1.1. Start offering a premium account because this feature has been tested
and worked for LinkedIn it is suspected that it could work for Facebook
too. It has got the feature of referral which makes it easier for communities
to access and enable them to grow their business on the social media, than
compared to using Facebook ads.

32
 5.2.1.2. Selling of data is also another source of revenue. As Twitter practice
this business model and got successful by selling of data. Because
companies need data whether for their own consumption or to study their
market. Indeed Facebook faced privacy issues with its user, but there is an
opportunity in this respect without exposing much data of its users and
some of the users are does not care much if their information is exposed.

5.2.1.3. Providing better analytics business would pay more if Facebook able to
target potential customers of a particular business and build a metrics
without interfering with the user experience on the website.
5.2.1.4. Other ways of advertising in fact ads has got limited growth on
Facebook however if Facebook able to offer premium display ads, it could
be one source of revenue.
5.2.1.5. To use Advertising networks. As Google ads are seen on other websites
and it’s from Google. The same could be done for Facebook ads like
Facebook itself does with the “like” and “recommended” buttons on its
site the same could be done for facebook ads to be displayed on other sites.
Because most of the publishers could use as the ads are from Facebook
and its cheap and easy.

5.2.2. For the growing competition from Google on its social media site known as
Google+ which is getting popular recently. Google strategy is to integrate its
social media venture with search. Since users also use Facebook for search. It
would be recommended that Facebook to consider to develop it more. Since
Microsoft is also competing with Google it is recommended that establishing a
strategic alliance with Microsoft, that has got a more advanced search engine
called BING, so that it could be integrated with Facebook. This approaches
would help Face book address the competition from Google (Crum, 2012).

5.2.3. Recommendation with regard to users privacy according to Ray(2010) are:

5.2.3.1. Facebook also need to have a strong position about privacy, so that
every stakeholder knows it and comply with it. For example irrespective of

33
 he is right or wrong or the company follow this policy Mark Zuckerberg
promotes his vision and stand by saying privacy is dead.
5.2.3.2. Facebook need to involve its user with regards to user privacy. It should
be able to determine the user’s expectation and got ample knowledge
about privacy issues.
5.2.3.3. Facebook also need to be transparent to its user what information are
disclosed and in what situations.
5.2.3.4. The company also has to improve the privacy settings. Make it more
manageable for users, which is complex most of the time for most users.

5.3.Limitations

The limitations related with the case study are outlined as follows:
1. The case study has limited coverage of the business functions like Human Resource
(HR), Finance and Marketing aspects of the company in detail.
2. Since this case study attempts to research technology which is related to social media in
general and Facebook in particular the literature reviewed could be regarded as dated.
3. Most of the figures used for computation are collected on the American market, which
might not be applicable for other companies in different economic situation.
4. The case study does not talk about the economic situation of the world which is the
macro economic situation that affects the company and the industry as a whole.

5.4.Need for further research

The current business environment is very dynamic. Especially for business engaged in
information technology. It is very important to follow up and update the existing studies,
theories and concepts. Social media websites are evolving from being just a place for contact
with people to a platform where to define the political, economic and social aspects of the
society. Further research need to be made on how social media websites could be used to
enhance the lives of human beings, reduce its negative influence on its users, make it more,
educational, recreational etc.

34
CHAPTER 6: APPLICATION OF THE CASE TO OTHER COMPANY
6.0. Introduction

This chapter attempts to compare and contrast the case of Facebook to MySpace. And also
this chapter show the similarity and differences on the operations and application of
facebook with MySpace.

6.1. Facebook main operation

Facebook has several functions by which users may have interaction. They consist of the
Walls, a place on each users profile page allowing friends to share information to the user to
view Der (2007); Pokes, that enables customers to send out a digital "poke" to one another
(a notice then informs a customer that they were poked) Facebook (2013); Photos, where
users can upload photos and albums Beaver (2007); and Status, which enables users to
notify their friends of their location and activities. Based on privacy configurations, any
individual who can see a user's profile also can view that user's Walls (Ramadge, 2007).
In addition, Facebook has got the functionality of trusted authentication that is users can
use their Facebook user and password to connect to other websites and get authenticated;
Real identity since facebook require users to provide their real names, so that users can take
their real identity to other website and interact; Friend linking users use facebook to stay
connected with their friends and relative. Using the Facebook Connect functionality to move
around the web them even other site developers have the option to show facebook users
which of their friends or relatives already on their website; Dynamic privacy when use link
to other website via facebook their privacy setting will follow them. Even when there are
changes on their privacy setting it automatically update the changes; and Social distribution
as users browse around the internet using facebook connect have the ability to share
information or their actions on the web to their friends (Ciccone, 2009).

35
6.2. MySpace main operation

There are various functionalities related to MySpace. That includes: Bulletin board this is
the place where user posts for their friends to see; Group page this allows users to share a
page in groups; MySpace IM it is an instant messenger, that enables user to send messages,
requests and notification on the site; Video Sharing used for sharing of videos; MySpace
News shows news to the users; Moods allow users to show their emotions; Comments it
enables users to put in a comment to be seen by all users; Profile customization gives the
ability to customize, change the look of users page using the tools such as HTML, CSS; and
Music using this functionality it promotes music, look for talents on the entertainment
industry and a place of interaction for musicians with their fans (Sellers, 2006).

6.3. MySpace vs. Facebook

Both Facebook and MySpace have required user registration and currently active social
media websites. The differences between Facebook and MySpace are the features consist of
wall, uploading photos, Pokes, Status, whereas MySpace has got music, profile
customizations, moods, MySpace news and MySpace IM functionalities. As stated by
(Ciccone, 2009) another distinction is Facebook's need that users give their real
identification, a requirement that MySpace does not ask. MySpace enable user to change the
look of their page their information using HTML and Flowing Design Linens (CSS), were as
Facebook enables only simply written text. However the main differences are seen on the
following functionalities:

6.3.1. Music
In the music part of MySpace it enables musicians to upload their work on the MySpace
page which in turn facilitate the access for many users. The artists also can sell their work on
the site. MySpace also has got the function of MySpace record which uses it to look for new
talents. On this music section of MySpace new features are frequently added such as
archiving old music, playlist etc.

36
It has got also MySpace Transmission which is a live studio recording for famous artistes.
Even though Facebook enable videos and music to be uploaded on its site, this aspect is not
well defined and detailed as MySpace website.

6.3.2. Email

This feature is launched by MySpace in 2009 the users would have their own email address
@myspace.com with no limit to storage. This service was used by 15 million users. This
service is not provided by Facebook.

6.3.3. APIs and Applications

MySpace has opened it plat form for third party websites or developers. Facebook was the
first social media website to open its platform for third party websites and developers.
Compared to Facebook MySpace has lesser number of third party applications.

6.4. Conclusion

On this chapter the case study attempts to show the functionalities of Facebook and
MySpace. And also compare and contrasts the functionality of both social media companies.
Even though there are some similarities in operation between facebook and MySpace. The
functionalities of facebook, such as Facebook Connect which my allow MySpace users to
connect to their party websites using their MySpace user id and help the company expand its
user base;

37
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