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FACEBOOK SWOT ANALYSIS 1

Facebook SWOT Analysis

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Facebook SWOT Analysis

Introduction

Facebook, Inc. ranks among the most successful social media companies in the world

headquartered in Menlo Park, California. The company’s founder Mark Zuckerberg initially

started the organization as Facemash in 2003 as a student at Harvard University. Still, due to a

breach of users’ privacy, the University’s administration pressured him into closing it in addition

to offering a public apology as a condition for circumventing his looming expulsion from the

institution. Later the following year, he launched TheFacebook but dropped “The” in August

2005, and the company became known as only Facebook.

Due to company commitments, Zuckerberg quit Harvard to focus on the organization’s

operations and growth. Facebook enables social connection and networking through cellphones,

personal computers, and other electronic devices. Its main product offerings and subsidiaries

include Oculus, WhatsApp, Messenger, as well as Instagram. Facebook's primary source of

income consists of the application programming interface (API), which enables programmers to

develop applications and software by Facebook members through its platform. Besides, it

generates revenue from digital and virtual products purchased by users via third-party apps and

through sponsored advertisements.

Facebook, Inc. is now a publicly-traded company with over 2.45 billion active users

monthly and a global reach except in countries such as China where it remains banned. Its

financials are impressive, and the company managed to make a revenue of $ 55.838 billion in

2018 and a net income of $22.111 billion with total equity of $84.127 billion (McManaman,

2019). Its total assets are worth $97.334 billion as of 2018. Lastly, its leadership structure
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includes Zuckerberg as the chairperson and CEO, Sheryl Sandberg, David Wehner, and Mike
Shroeperfer as the COO, CFO, and CTO, respectively. Facebook's cofounders include Eduardo
Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes. Its main competitors include
Google, Amazon, Apple, Microsoft, YouTube, and Snap, Inc.
SWOT Analysis of Facebook, Inc.
Table 1: Facebook's SWOT Analysis
  SWOT Analysis  
    Environment (External Factors)
     
I. Facebook is financially stable with a
healthy balance sheet characterized
by a huge revenue base from its
subsidiaries
II. It promotes innovativeness
amongst its workforce
III. strong brand image and loyalty
IV. it has the largest number of
subscribers of over 2.45 billion
Strength
v. B2B and B2C market segmentation
vi. Huge uptake of its services by
India, Indonesia, and Philippines
vi. It has a global presence, and its
services are unavailable to countries
Company (Internal Factors)
that have blocked its use like China.
vi. Seamless integration with other
applications
vii. Has an impressive user interface
that enables easy navigation
3
   
 
Threat  
1. Imitation of its business model and products
could reduce its market share
2. Facebook is a target for cybercrime and fake
news problem, which threatens its business
performance and user experience. Facebook is
already experiencing such effects as it was unable
to meet its revenue forecast of 2018, and the
growth of daily visitors stagnated in the same
year.
3. The Proposed political reforms in the United
Kingdom are likely to affect Facebook's operations,
as it will be paying higher taxes in the form of
digital taxation.
4. Facebook risks being fined a substantial
amount of money in damages by European
countries following the Cambridge Analytica
Scandal involving the hacking of over 50 million
profiles of Facebook users
5. Competitive threat from Google, Amazon, and
Microsoft
6. Increased operational costs due to increased
use
7. Increasing uncertainty regarding user loyalty
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I. The company’s products and

services are prone to imitation by
rivals
II. Market risk exposure due to low
diversification of social media
business
III. Online advertisements could
negatively impact user experience
IV. Adverse publicity and dented
Weakness
I. Facebook can diversify its business outside its
core area of operation. For example, the company
has acquired Oculus to complement its services
but can invest in other activity such as calling
services to minimize its risk exposure
II. Product innovation. Facebook can invest in the

reputation due to hacking of user-
profiles as it happened recently in the
infamous Cambridge Analytica Scandal
V. slowed the growth rate of daily
visitors in 2018
Vi. Inability to meet its revenue target
in 2018
Vii. Facebook mainly relies on
advertising for its revenue
viii. Increased crackdown and
restriction of third-party applications
   
Opportunities
innovation of products that are complementary to
its mobile applications and its social networking
sites
III. Market development and penetration and
wade off competition. Utilize unexploited markets
and develop existing ones to increase membership
and subsequent revenues. It can also acquire
Snapchat
IV. Improve and tailor-make its advertisements
to mobile phones because people prefer to use
mobile phones for social media
V. investment in artificial intelligence

           

An Evaluation of Facebook’s SWOT Analysis in Table 1

Despite its long-standing position as the global powerhouse in social media networking,

Facebook is experiencing several setbacks that threaten its brand image and market dominance.

One of the challenges that require immediate addressing is the issue of security and privacy

breaches that continue to soil its brand image and reputation (Young, 2018). Identity theft on

Facebook has been a significant issue for the company. It is easy to create a pseudo account with

another person's details and use it to damage the reputation of the profile's real owner and spread

hate speech and fake news, hence creating scandals and controversies. Cybercrime has also

affected the company as malicious people hack into the company’s servers and harvest

confidential information for personal and commercial use. Facebook is also infamous for
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orchestrating scandals involving users' data contrary to its data protection and usage policies.

Over the years, Facebook has been involved in mega scandals that have gravely damaged its

reputation. The most notable scandal is the Cambridge Analytica involving 87 million users, a

figure initially placed at 50 million (Shukaev, 2019). Cambridge Analytica allegedly used

Facebook data to benefit the Trump campaign to target and influence US voters. Other scandals

linked to Facebook include sparking a genocide in Myanmar targeting Rohingya Muslims,

Russian interference with the US presidential elections of 2016, and using hiring research

organization to accuse opponents of anti-Semitism and association with George Soros.

In addition to data privacy issues, Facebook and its subsidiaries mainly rely on

advertising for its revenue, a situation that could adversely affect its revenue and operations in

instances of government interventions, competition, reduced user engagement, changes in the

legal environment, unsuitable targeting efficiencies, as well as restrictive pricing policies. Also,

the company’s click-through-rate (CTR) is lower than that of major competitors and websites in

addition to small advertising budgets from its customers, a situation that could significantly

cripple its operations in case of changes in advertising trends that favor other modes of

advertising.

Therefore, the above areas require immediate attention from the management of

Facebook. In light of these scandals, people mounted fierce protests against the company's stock,

while others called for its dissolution. Such demonstrations have stalled its growth and Facebook

despite its wide popularity in the social media scene. While it remains the preferred social

networking platform, the company’s acquisition and revenue targets are below par; thus, it needs

to institute measures to regain public trust, maintain brand image, and loyalty, and further

solidify its dominant market position. Therefore, Zuckerberg and his team need to invest more
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in data protection measures and public relations to regain its brand image as a responsible and

ethical social media network. It will also entail the top management being more accountable to

the people as well as instituting policies that promote better management of customers and user

data. Facebook also needs to diversify its operations by investing in artificial intelligence and

products that complement its networking sites and mobile applications. It can also task its

research and development department to innovate AI tools that continuously monitor Facebook

activities to deter misuse, including the spreading of fake news, propaganda, and hate speech.

Conclusion

Facebook remains a social media powerhouse in the world. SWOT analysis of the

company reveals its many strengths, weaknesses, threats, and opportunities. Its significant

strengths, including financial stability, innovativeness, global presence, and many subscribers,

contribute to its steady growth. However, issues of data security and privacy and dependence on

a single source of revenue threaten its performance and growth in the long. Thus, the company

needs to diversify its operations, invest in user and data management, as well as work towards

improving its dented image.

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References

Young, J. (2018, June 14). Facebook Inc. SWOT Analysis & Recommendations. Retrieved from

http://panmore.com/facebook-inc-swot-analysis-recommendations

Shukaev, A. (2019). Facebook Inc. Strategic Analysis and Recommendation [Ebook]. Lincoln:

University of Nebraska. Retrieved from

https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1154&context=honorstheses

McManaman, R. M. (2019). Strategic Audit of Facebook through the Lens of International

Reputation. Ebook]. Lincoln: University of Nebraska. Retrieved from

https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1154&context=honorstheses