Facebook, Inc.

SWOT & Strategy Analysis

Term Paper

BUS 51
Wilson R. Ortiz
5/10/2015

Type

Public

Traded as

NASDAQ: FB

Founded

February 4, 2004

Headquarters
Current CEO

U.S.
Mark Zuckerberg

Industry

Internet

Revenue

US$12.466 billion (2014)

Operating income

US$4.982 billion (2014)

Net income

US$2.94 billion (2014)

Total assets

US$40.184 billion (2014)

Total equity

US$36.096 billion (2014)

Employees

10,082 (March 2015)

Subsidiaries

Instagram, WhatsApp, Oculus VR, PrivateCore

Website

www.facebook.com

Type of site

Social networking service

Users

1.44 billion monthly active users (March 31, 2015)

Available in
Multilingual (70)
"Facebook - Wikipedia, the free encyclopedia." Insert Name of Site in Italics. N.p., n.d. Web. 10
May. 2015
The purpose of this report is to gather information on Facebook, Inc. (FB) a publicly
traded company in the Nasdaq Index. By examining the companys Strengths, Weaknesses,
Opportunities and Threats (SWOT) this report aims to develop better understanding. This group
is considered the biggest in the social networking environment. This report aims to paint a better
picture of the company.

Overview
Facebook, Inc. operates as a social networking company worldwide. It provides a set of
development tools and application programming interfaces that enable developers to integrate
with Facebook to create mobile and Web applications. The companys products include
Facebook mobile app and Website that allow people to connect, share, discover, and
communicate with each other on mobile devices and personal computers; Messenger, a mobileto-mobile messaging application available on Android, iOS, and Windows Phone devices;
Instagram, a mobile application that enable people to take photos or videos, customize them with
filter effects, and share them with friends and followers in a photo feed or send them directly to
friends; and WhatsApp Messenger, a cross-platform mobile messaging application that allows
people to exchange messages on iOS, Android, BlackBerry, Windows phone, and Nokia devices.
As of December 31, 2014, it had 1.19 billion monthly active users and 890 million daily active
users. Facebook, Inc. was founded in 2004 and is headquartered in Menlo Park, California.
(Business Week)

Strategic Alternatives
Facebooks Corporate level strategy is to grow and serve existing communities and
businesses to help them reach their potentials. With an overall mission of connecting the world.
Theyve worked to improve the quality of ads along with further developing technologies that
will target users with more timely and relevant content. Further investments made in the next

generation of services, Instagram, Messenger, WhatsApp and helping them to connect billions of
people. This intern will create a large platform to grow advertisers and monetize these services.
Facebooks may be categorized as a prospector and analyzer under the Miles and Snow
Typology. Continually analyzing the market and seeking new forms of investments to further the
development and goals are at the corner stop of this company. Early in its beginnings it began to
analyze the market and the way its users were using its services. During this analysis, it
encountered face.com, which developed an internet facial recognition software. Facebook then
purchased the company and incorporated the technology into its systems. Early Theyve invested
in new emerging technologies such as AI Research whose long-term goal is building intelligent
machines and Oculus a Virtual Reality system designed to immerse its users in a virtual world.
Of which Facebook believes it is the future of the industry while it continues to seek out new
opportunities and risks to grow its market and ambitious goals.
The company has adopted a related corporate strategy by acquiring other companies that
bring people together. Facebook has expanded across multiple applications. Currently, theyve
seen huge user grown from WhatsApp, Instagram, and their Messenger app. The key item that
links all of these applications together is communication. Users can send messages, pictures,
voice and video massages all over the world at no cost to the user. This related diversification has
created a surge of new users and an expansion of the services Facebook provides. Keeping users
in its ecosystem while offering new services for users to experience.

Strengths

Top leading networking sites. In order for a social networking site to grow it must have
users. The amount of users that Facebook generates places it as a leader in its industry.
Facebook has been able to connect people not only locally but globally as well.

It's diversification of its services and applications. In order to remain competitive and
relevant Facebook has invested in multiple companies. Much of this diversification
comes from research and other related networking services. Giving Facebook the ability
maintains its standing as the largest market share of social networking sites while
maintaining its relevance in the current market.

Web and app integration. To further extend its reach Facebook has given websites and
mobile apps the ability to use their Facebook credentials to login. This creates an
ecosystem that you only need a Facebook account to use multiple services. This
integration and use of apps results in an advantage over other social networking.

Great user experience. Facebook has a clean and clear user interface. Giving it mass
appeal for young and old to use the site. This ease of use gives it a competitive edge to
expand to 70 languages. This accessibility translate to its apps that create an ecosystem
across the different platforms.

The tremendous data collection capabilities. The extensive amount of users that use the
service gives the company an massive amount of data. With this much data, Facebook

can accurately target its audience and deliver ads and products in a more personalized
form. Always being able to provide the right product based on the information gathered.

Weakness

Lack of diversification of revenue. Most of Facebooks revenues come from advertising.

Causing it to ties its revenues closely with user grown of its users. By creating a
vulnerability and a dependence on keeping and expanding its user base. Facebook must
find other forms of revenue that do not tie to its user and should extend its integration and
research services to their companies.

Users have a lack of customization. Users are getting any new abilities to customize and
change their pages. While the company has released many more features and capabilities,
these are more reactive measures. As users are finding other sites that offer more
customizability. Other services allow more personalization of their account than
Facebook does which could cause users to leave.

Lack of features. Although Facebook has incorporated many new features, it still lacks
many that users have been wanting. It's slow to incorporate some of the features from its
acquisitions such as Instagram images and its addition to videos on its site.

A Constantly changing Privacy Policy. Facebook collects an extensive amount of user

information and then stores it. In recent times, its been found to have sold some of this
data to advertisers and other companies. Causing users to questions the company and

causes Facebook to change its policies continually. The change in plans gives a bad
image to the group causing many users to leave the site.

Securing user information. In a growing world of hacker attacks coupled with the amount
of data Facebook stores, it creates a target for attacks. In any event, hackers can steal
passwords and other personal information from the users.

Opportunity

Massive and diverse users base. Currently, Facebook has millions of users that use their
services via the web and mobile apps. Placing the company in a unique position to target
all of its users. Potentially seeing enormous revenue from its advertisement campaigns.

Firms can easily surveys and poll consumers for data. Companies see this position a great
way to connect with customers. Getting direct feedback and audience to gather data
giving companies a competitive edge. This direct data retrieval can be used to save a firm
money as they no longer need a closed group to collect data.

Investing and acquisition power. Facebook has benefited tremendously from its users data
and is in a position to invest into the next generation services. These new ventures can
help its services expand functionality and diversity.

It's Expansion into the international market. These new markets represent more users that
Facebook can benefit. The new users will create revenue grew and additional data to
target better different markets.

Research and Projects. Its investment Artificial Intelligence and Virtual Reality can give
it a competitive edge. If the technology that it produces see a wide array of users and
adoption Facebook can expand its revenue and market share. Opening new avenues to
monetize its growing services.

Threats

Competitors appear at a faster pace. The success of social network has helped to fuel the
market grown. More of these sites with more features and customizability threaten
Facebooks dominance while slowly taking market share.

Users blocking ads. Users can install ad-blockers that will block any if not all the ads on a
site. If this happens, Facebook would be deprived of its primary source of revenue.

Spamming and identity thefts. Even today, identity thefts are common on Facebook. The
more identities are stolen; the more criticism Facebook will receive strongly damaging its
brand for inability to protect users private information.

Privacy Policies leave them open to lawsuits. The more users are using its services, the
bigger the risk of data hacks and Facebooks ability to sell the data. Its constant policy
change causes fear that they are indeed using that data inappropriately.

Governments requesting user data. Due to the detailed data that Facebook generates from
its users, governements can demand this data. It can be used for legal action or to target
an individuals ideals.

Conclusion
Given the information described in this report Facebook is in a good position to capitalize
on it strengths and opportunities. Much like many companies it does face some of its share of
weaknesses and threats. If Facebook continues to relate its products while diversifying it can see
incredible growth. Once it taps into its research and can deliver its advertisements to its many
users, the company will see a substantial growth in revenues.