Strategy: choices and change Bista, Susan

Module Code: MC6003

Student ID: 17031073

Submitted by: Submitted To:

Student Name: Susan Bista Mr. Laxman Pokhrel (module Leader)

BA (Hons) Business Administration Lecturer, BBA Faculty

Student Number: NP01BA4A170062

Group: L3F2

Words Count: 1700

Strategy: choices and change Bista, Susan

Contents
Introduction .................................................................................................................................................. 3

Facebook V/s Myspace ................................................................................................................................ 3

Facebook’s Strategy ..................................................................................................................................... 4

Generic strategy ....................................................................................................................................... 4

Intensive strategies .................................................................................................................................. 4

Mergers and Acquisitions ........................................................................................................................ 5

BCG Matrix................................................................................................................................................ 5

Competitive Advantage ............................................................................................................................... 7

Core competence ..................................................................................................................................... 7

Comparative Advantage........................................................................................................................... 7

Recommendations ....................................................................................................................................... 8

Bibliography ................................................................................................... Error! Bookmark not defined.

Strategy: choices and change Bista, Susan

Introduction
A connection is a very core what makes us human and the very means by which we express our
humanity (Rice, 2009). If the brain does not get the stimulus it needs, it begins to turn to slush. Cut off
from connection and our ability to cope with reality quickly dissolves and it was well understood by
Mark Zuckerberg, a dropout from Harvard University with a grand idea that has somehow changed the
world. He debuted with Facebook in 2004 with three other college pals with an aim to socialize college
students, now the world’s largest social networking site with more than 2 billion active users monthly
and 70 billion revenues ( (Yahoo Finance, 2019) In an interview with 60 minutes in 2007, Mark told: “we
are going to be pretty universal soon if we can keep our growth going.” And as predicted, now it has
been a chosen place for every person to live their different styles of life under digital roof.

Facebook V/s Myspace

Myspace, founded in 2003, was the overwhelming worldwide leader, boasting tens of millions of
members before Facebook was even born. Both Facebook and Myspace were targeted to the same
category of audiences. Myspace was purchased by News Corporation, a powerhouse media company
with a too high amount of investment ($518m), and was given professional managers to escort for
growth (Hartuung, 2010). But the glory didn’t last long as the sustainability parted its way with Myspace.
Myspace used professional managers which had increased the cost of the company, while Facebook was
owned by few groups of college students and operated in a small space and focused to add users with
the utmost use of technology, as more user means more growth. This shows that the starts-up without a
plan but can succeed with the right strategies in hand. A strategy is not a plan but is a framework for
decision-making, a set of guiding principles that can be applied as the situation evolves. If startups don’t
have a comprehensible strategy contrasting with the situation, it will lead to poor decision making which
will not only mean the falling of revenues but also the death of the company. Contrasting with
Myspace, Facebook did many things right that set the preparation for the tremendous worldwide
development that followed as they kept Facebook's interface basic, spotless and uncluttered. Mark
Zuckerberg’s international strategy has been to build the best simplest product that lets people share
information as easily as they can. It is Facebook's personality based nature that separated it from the
earliest starting point from most other interpersonal organizations and empowered it to turn into a one
of a kind worldwide marvel. Data is the center of their business model and their income is based upon
the monetization of that data. Myspace also had a huge amount of investment so to earn the revenue it
Strategy: choices and change Bista, Susan

had given too much of spaces for advertisements and the young generation started getting distracted
and it also had technical instability, as well as spam, had been a headache for Myspace users.

Due to their positioning in the market and user data, hand handling that information made them so
desirable from the perspective of advertisers. Facebook allowed third-party developers apps like social
games, parties, etc., to use their platform as Facebook was managed in White Space whereas Myspace
focused on developing a plan and run like a professional business which made them slow to react in the
marketplace. Facebook allowed peer to peer interaction with posts and news feeds but Myspace didn’t
allow itself to change. It’s the ability to connect friends and family around the globe turn out to be one
of its tempting features which allures them to live more and more of their lives on Facebook. Allowing
people to tag and share photos changed the dynamics as it turned out to be the most used part and
single biggest driver of growth of Facebook and it turned out to become a basic form of communication.

Facebook’s Strategy
Facebook kept its “going global” strategy unchanged while ignoring surface noise and this has helped
Facebook succeed over long-term using digital technology which is used as a means for collecting,
storing and using information. A strategy is about what we are doing now in order to shape the future to
advantage side. Facebook’s strategy was to get users first and profit later. The strategy was captured in
the imperative: ‘Cut-price and add capacity’ developed by BCG founder Henderson (Bungay, 2019).

Generic strategy
Facebook uses a low cost generic competitive strategy, reducing its price competitively, helped in
expanding the social network base of Facebook by adding features and develop its cores.

Intensive strategies
Market Penetration

Facebook primarily achieved its growth through the market penetration intensive strategy with
increasing market share. Facebook focused on mission, that is connecting people, and as Facebook has
added people from everywhere it spun to be a potent apparatus for linking to the people for building
communities/ groups and businesses.
Strategy: choices and change Bista, Susan

Market Development

Self-disclosure is the cash in Facebook's social economy. They furnish us with free data from
administrations, and amusement and they at that point exchange our regard for publicists to advertisers
to fill walls with their products one talked, liked or shared about. With the global strategy, to hold
Facebook users around the world it changed itself to their own (local) language and include every age
population in it.

Diversification

Facebook had the acquisition of many firms and expand their market reach.

Product development

Offering new products will attract new users and which will attract new advertisers, which will help the
company to optimize the profit margin. Facebook also acquired other companies to get talents in the
workplace and invested in profiles to build a tremendous user database.

Mergers and Acquisitions

Facebook had quick move to vanquish some of its rival with an acquisition of Instagram, a photo sharing
app in 2012 with $1billion and later it also brought Whatsapp in 2014 and added them in layers to
create barriers (Bungay, 2019). These deals were viewed as radical and defensive move as any other
social network oriented toward photos could really get power control compared to Facebook.

Zuckerberg was stepping into a well-traveled path. But what set him apart was his vision. Facebook
created a large community for businesses to ignore, a revolutionary for marketers, allowing advertisers
to easily shoot fish in a barrel. From your posts updates and likes, Facebook could learn your personal
preferences and customize advertisements from your feeds.

BCG Matrix
Clients have various requirements, and those necessities will be presented with independently marked
items to deliver various meetings and draw in and hold fluctuated client portions (Dawar, 2014). Each
brand whether it is Facebook, messenger, instagram or Whatsapp marks distinct category in its social
space.

Categorizing the Facebook Corporation’s business portfolio into the four boxes of BCG model
Strategy: choices and change Bista, Susan

Star Problem Child

Instagram Oculus
Cash Cow Dog
Whatsapp & Facebook Messenger

Instagram is a star because currently it is the highest & fastest growing SBU owned by Facebook. Oculus
is a question mark since it is very hi-tech and considering their product with next generation strategy.
Whatsapp and Facebook platforms are cash cows because their growth rate more or less has been
maximized at this time. Messenger is a dog since the growth of similar applications were developed to
compete with it like Snapchat and viber.

Facebook is on its way to become a conglomerate in network effect managing business. Network effect
favor Facebook because for those who want to connect socially, Facebook might be the best place, as
everyone might be hanging there.

“B. J. Fogg said, “The popularity of social media giants are imbedded in a policy that allows users to
present to the world in their own way.” Facebook's scheming has something to do with how it permits
user to direct their world. Ability to control which means having ability to choose, and Facebook offers
never-ending amount of choices as to control environment (Rice, 2009).

But these tools are also used by many to harm others, such as fake news, foreign interference and
elections and hate speech as well as data privacy. It started primarily as building tools that would
empower people to do good things. But now since it has faced number of issues like data privacy, fake
news and foreign interference for this they should take a proactive role in a broader views of
responsibility.
Strategy: choices and change Bista, Susan

Competitive Advantage

Facebook is in good position compare to its competitors. Facebook has extraordinary market attraction
and high competitive position. This makes the company in a perfect position for aggressive market
penetration strategies and diversification of its products to include more users in it by making friendly
culture so that people can spend quality time over it. Facebook in 2019, more than 90% of their
revenues were generated from advertising. One of Facebook competitive challenger are Google,
amazon and twitter which also receives most of their revenues from advertising. In our uncertain world,
fundamentals are changing, for changing the fundamentals in both short and long term. For eg: world
has shifted its position from photos to videos, resulted in rise of apps like TikTok, Youtube (Levy, 2018).
Facebook has not much competition in the services it provides but somehow other internet service
companies’ might overlap to some services like connecting with people as that of Facebook. Facebook
demographics provides an attractive mix of age groups, with a majority in lucrative 25-35 bracket,
among them most are of self-earning category (Noyes, 2019).

Core competence

Facebook uses its competitive advantage to great effect, as can be seen by their $17 per user annual
revenue – far higher than twitter’s $7.5 or YouTube’s $8.33 (Team, 2018) (Balakrishna, 2017). The ability
to make more revenue from each user than other social media companies allows Facebook to
outcompete comparable platforms, and quickly grow new acquisitions. Along these lines, while
Facebook's procurement of more youthful organizations permits it to rapidly enter new markets and
access new socioeconomics, its adaptation ability lets it outflank the opposition.

Comparative Advantage

Over its years of operation, Facebook has created an experienced team and powerful technological
infrastructure. These resources from Facebook’s competitive advantage in social media, allowing them
to easily create, extend, and grow their social media services. But still the competitive advantage for
Amazon, Alphabet, Facebook and Microsoft has created high barriers. In a very short time, it has
Strategy: choices and change Bista, Susan

become hard to imagine how market forces alone could have cultivated them. What makes Facebook's
trick exceptional is its worldwide extension, its corporate support and its profound confidence in
innovation.

Recommendations
“Spontaneous order can generate outcomes that are entirely new and unpredictable.”

Be expanded to general political interference. Since Facebook’s business is social networking, it is most
attuned to social disturbances. In 2017 the Cambridge Analytica scandal revealed that the data
entrusted to Facebook was harvested by the third parties and used to manipulate elections around the
world and shattered public trust in Facebook. So before committing to create human communities,
Facebook should commit itself to protect the privacy and security of existing communities.

As the quantity of clients develop, so the measure of their information, keeping up appropriate security
and protection is likewise a test. In a book by Yuval Noah Harari he said that “in 21st century data will
eclipse both land and machinery as the most important asset, and politics will struggle to control the
flow of data. The race to get information is now on and headed by giants like Google Facebook, Baidu by
receiving the plan of action of "attention merchants". But currently the authenticity of Facebook has
been questioned by most. As the issues regarding fake news need to be concerned.

Facebook has been repeatedly accused of tax evasion. How can one admire virtues of community while
rejecting to financially sustenance the most chief community service area? Zuckerberg’s vision of
connecting humans to one another is therefore a timely one. In order to implement this vision,
Facebook might have to change their business model. You can barely assemble a worldwide network
when you bring in cash from catching individuals' consideration and offering it to sponsors.
Notwithstanding this current, Zuckerberg's eagerness even to plan such a dream merits acclaim. I would
recommend Facebook to work on solving trust issues.

Diversify its business more, Continue mergers and acquisitions strategy, become an app for everything.
Facebook should strengthen its security for breaches.
Strategy: choices and change Bista, Susan

Bibliography
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Available at: https://www.cnbc.com/2017/05/03/facebook-average-revenue-per-user-arpu-q1-
2017.html

Bungay, S., 2019. HBR. [Online]

Available at: hbr.org/2019/04/5-myths-about-
strategy?utm_medium=social&utm_source=facebook&utm_campaign=hbr

Dawar, N., 2014. HBR. [Online]

Available at: https://hbr.org/2014/04/facebooks-unbundling-strategy-makes-perfect-sense

Hartuung, A., 2010. Forbes. [Online]

Available at: https://www.forbes.com/sites/adamhartung/2011/01/14/why-facebook-beat-
myspace/#5433c9df147e

Levy, A., 2018. Fool. [Online]

Available at: https://www.fool.com/investing/2018/05/11/youtube-is-growing-users-nearly-twice-as-
fast-as-f.aspx

Noyes, D., 2019. [Online]

Available at: https://zephoria.com/top-15-valuable-facebook-statistics/
[Accessed 03].

Rice, J., 2009. The Church of Facebook. In: The Church of Facebook. Ontario, Canada: David C Cook, p.
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Team, T., 2018. Forbes. [Online]

Available at: https://www.forbes.com/sites/greatspeculations/2018/04/02/a-look-at-twitters-
valuation/#1740ed5357d1
[Accessed 02 04 2018].

Yahoo Finance, 2019. Yahoofinance.com. [Online]

Available at: https://finance.yahoo.com/quote/FB/financials?p=FB