TOWS Analysis for Facebook

 

TOWS Analysis for Facebook

Background

Key Facts
Name	Facebook, Inc.
Founded	4th of February 2004
LOGO
Ticker Symbol	FB
About Facebok	Facebook constantly iterating, solving problems and working together to connect people throughout the world. People use Facebook’s technologies and Facebook apps to connect with family and friends, find different communities, to discover what’s going in the world and share and express what matters to them and improve businesses.
Product and Services	Social media platform Newsfeed Marketplace - Promote and grow businesses Messenger Stories Instagram WhatsApp Messenger Watch Oculus – Virtual Reality Device Workplace – Business Tool Lasso Portal – Video Calling Device Calibra – Electronic Payment System – Facebook Dating
Geographical area served	Worldwide Facebook daily active users (2.7 billion on average for second quarter 2020)
Headquarters	1 Hacker Way, Menlo Park, CA, US
Current CEO	Mark Zuckerberg
Founder	Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz and Chris Hughes
Revenue	Facebook revenue for the quarter ending 30th June 2020 was USD 18.687 billion  Annual revenue 12 months ending 30th June 2020 was USD 75.158 billion Annual revenue for 2019 was USD 70.697 billion
Profit	Facebook gross profit for the quarter ending 30th June 2020 was USD 14.858 billion   Annual profit for the 12 months ending 30th June 2020 was USD 61.223 billion   Annual profit for 2019 was USD 57.927 billion
Employees	52,534 as of June 30th of 2020
Main Competitors	Social Media and Messaging: Twitter, Pinterest, Linkedln, Vkontakte, Snapchat, Tumbler, Reddit, Instagram Advertisement: Google, Amazon   Vidoes : You Tube, Tik Tok   Peer to Peer Marketplace: Letgo,  OfferUp, eBay, Alibaba   Electronic Payment: Paypal   Business Tools: Zoom, Google Meets, Microsoft Teams, Slacks Online Dating: Tinder, Bumble

 

General Information

Facebook Inc. is an American social media cooperation. In 2004 February Facebook was begun as an inter university based network at a Harvard University. Facebook was founded by Mark Zuckerberg along with his friends of Harvard University. Facebook is user friendly and opened for everyone in the world. It was started as a keep in touch or reconnect with long lost friends, build community and it became the media of promote economic opportunities.

Their top priority is given for build useful and engaging products that enable people to connect, and share with community through electronic device (laptops, smart mobile devices and etc.).  People can share their posts, opinions, ideas, upload photos and videos and promote their businesses through Facebook ads. 

 

TOWS Analysis

Facebook Strengths 

Internal Strengths

 

1.Strong Brand Name

Facebook is a strongest brand name in the social media industry in the world and it helps for both stability and long term sustainability. Facebook was ranked no 5 most valuable brand by Forbes magazine in 2019.

Facebook Daily active users for the year 2019 were 1.66 billion.

**April 2020 – The World’s most used social platforms

Based on monthly active users, active user accounts, advertising audiences, or unique monthly visitors (In millions)

Source: Digital 2020: April Global Statshots

Social Media Landscape	Monthly Active Users (Millions)
Facebook	2498
YouTube	2000
WhatsApp	2000
Messenger	1300
WeChat	1165
Instagram	1000
Tik Tok	800
QQ	731
Qzone	517
Sina Weibo	516
Reddit	430
Kuaishou	400
Snapchat	398
Twitter	386
Pinterest	366

 

2. Diversified Portfolio

Diversified Portfolio helps to company to protect their core financial assets in case of revenues reduce in particular section. Facebook spread its investment in different areas.

Example:

·        WhatsApp
·        Instagram
·        Messenger
·        Oculus
·        Workplace (Business Tool)
·        Portal (Video Calling Device)
·        Calibra (Electronic Payment System)

Therefore, the Facebook’s diversification is a major strength.

 

3.    Strong Advertising business

Facebook advertisements highly targeted for certain businesses based on the demographics of the users.

Facebook has announced advertisers reach more than 2 billion people in Facebook. (2020 April)

Profile of Facebook’s advertising audience – Share of Facebook’s advertising audience by age group and gender (2020 April)

Source: Digital 2020: April Global Statshots

Age Group	Male (Percentage)	Female (Percentage)
13-17	3.1	2.5
18-24	14	10
25-34	19	13
35-44	9.4	7.4
45-54	5.4	4.9
55-64	3.0	3.2
65+	2.1	2.4

 

Facebook Monthly Ad clicks by age and gender

Median number of times that the typical Facebook users of each gender and in each age group clicks on an ad on Facebook (2020 April)

Source: Digital 2020: April Global Statshots, Facebook Self –Service advertising tools (April 2020)

Age Group	Male	Female
18-24	9	12
25-34	10	16
35-44	14	22
45-54	14	23
55-64	13	22
65+	10	17

 

In 2019, Facebook earn USD 69.66 billion from advertising (98.5% of its annual revenue).

 

4.     High Revenues

High revenues are a beneficial strategy factor that supports to increase company financial capacity for investments, product diversification and research and developments.

 

Year	Revenue (In USD Billion)
2019	70.697	26.61% increase from 2018
2018	55.838	37.35% increase from 2017
2017	40.653	47.39% increase from 2016

 

Facebook research and development cost for the quarter ending June 30^th 2020 were USD 4.462 billion. It was a 34.6% increase year over year.

 

5.     World’s Best Employer

Facebook has Innovative workforce. Their excellent Human Resource practices and policies regarded as one of the best not only in the social media but also globally across all other industries throughout the world.

Forbes rated Facebook as follows:

·        #147 Best Employers for Diversity 2020
·        #144 World’s best Employers 2019
·        #71 America’s Best Employer 2019
·        #137 Best Employer for Women 2020

According to SimilarWeb (April 2020) Facebook.com was ranked in 3^rd place of World’s most visited websites.

Facebook was rated as the “best place to work” three times in the last 10 years.

 

6.    Promoting Safety and Expression

Facebook find and remove violating content

Example:

·        hate speech
·        harassment
·        threats

 

Facebook have more than 35,000 people for working on security and safety at Facebook.

Facebook team block fake accounts.

Facebook give users to control over what they see and allowing to block, unfollow or hide posts and videos.

Facebook users can report content to Facebook team or appeal certain decisions that Facebook made a mistake.

Facebook build tools to control Facebook users’ privacy and it helps to users understand how information is used.

Facebook committed to honoring users’ privacy choices and protecting user information.

 

Facebook Weaknesses

Internal Weakn

1. Overdependence on advertising and negative impacts of online advertising on user experiences

• Facebook relies highly on advertising for its revenue. More than 95% of its revenue comes from advertising.
• The company’s online advertisement procedures may fail because user may feel advertisement as a nuisance in their social media experience. 

2. User privacy is hard to maintain

Users privacy have been difficult to maintain because information is used for advertisement targeting.

Facebook experiencing a decline its popularity in some regions in the world because its negligence in the protection of user’s privacy.

According to Edison Research data Facebook has lost ~15 million users since the yetar 2017.

In 2018, a bug on the social network exposed over 6 million user’s photos to outside developers. (Example Facebook-Cambridge Analytica data breach incident in 2018 – Facebook users’ personal information was harvested without consent by Cambridge Analytica, mainly to be used for political advertising.)

Top reasons for why people are not using Facebook

Source: Survey conducted in 2019 with a sample size of 1123 Americans (The Verge)

 

Reasons for why people are not using Facebook	# of Users
Privacy/Trust of personal information	46%
Not interested	36%
Don’t like Facebook Business Model	27%
Prefer other social media	26%
Friends or family don’t use Facebook	10%
Advertising	9%
Bad user interface	9%
other	2%

 

3.     Data Management Issues

In 2018, Facebook Inc. faced for data management issues and they missed revenue goals as users slunk away from the platform.

Therefore, Facebook has faced a number of scandals in the year 2018 over data privacy and security.

 

4.     Friction in management

Consecutive scandals lead to disintegration the harmony that existed between top level management.

 

Opportunities (External Factor)

• Diversification

Facebook Inc. uses business diversification as a supporting intensive strategy for growth. It helps to establish new subsidiaries or business and increase revenues and market reach.

Example: Facebook Inc. acquired the firm Oculus VR to offer virtual reality technology that complements social networks.

Facebook expands its existing services such as marketplace, online dating, e-wallet etc to compete with competitors such as Amazon, Netflix, YouTube, Tinder etc. Therefore, Facebook has the opportunity to extent its portfolio beyond the social media industry.

 

• Product Innovation 

Innovate products that are complementary to social network mobile apps and websites. Objective of intensive growth strategy is to enter a new market.

Example: Facebook coordinate with government to allow their citizens to access the online social network. It helps to emphasize growth through global market reach.

•  Market Penetration and Development

Objective of intensive growth strategy is to maximize present market share.

Company increases its shares in current markets by establishing alliances with telecommunication companies to increase active users who access the company’s social media service via the Facebook mobile apps.

• Other social medias (LinkedIn, Twitter etc.) has number of registered users but their active users are lack compared to Facebook.
•  Social media platforms used by marketers to promote their product or service. In 2019, 89% marketers use Facebook for marketing efforts.
•   Number of internet users are expected to growth in future.
• Target different audience

Facebook mainly focused on young generation. By introducing new features Facebook can attract other segments in the society.

There are some options available for select target audience for advertising. 

Options available in the “Audience” section of ad set.

·        Locations (Based on country, region, postcode, district, Europe, NAFTA etc)
·        Age – Target ads to users within specific age range
·        Gender – Target ads for male, female or all genders
·        Language
·        Custom Audience
·        Detailed Target – Include or exclude people based on interests, demographics etc.

•  Popular government supports for globalization.

Facebook Inc. has the opportunity to expand social media advertising services worldwide, based on governmental support.

 

 

Threats – External Factors

1.     Imitation

Other firms develop social networking websites and mobile apps similar to Facebook. Imitation reduce the company’s potential market share.

Example:

The most visited web site in the world is google.com

 

2.     Cyber-crimes

When increasing the number of active users, the company is attractive for cyber-crime target. Cyber-attacks harm to company’s reputation and reduced existing users.

 

3.     Many organizations in the world banned Facebook due to lost their productivity

4.     Some countries banned Facebook (China, North Korea, Syria, Iran, Russia)

Example: Political barriers in the Chinese market.

 

5.     Increased Rules and Regulations

6.     New Digital Tax

In UK and EU introduces new digital tax that Facebook will need to pay higher tax. Therefore, portion of Facebook’s profits directed to paying digital tax.

 

	Internal Strategies (S) 1.     Strong Brand Name 2.     Diversified Portfolio 3.     Strong Advertising business 4.     High Revenues 5.     World’s Best Employer 6.     Promoting Safety and Expression	Internal weaknesses (W) 1.     Overdependence on advertising and negative impacts of online advertising on user experiences   2.     User privacy is hard to maintain   3.     Data Management Issues   4.       Friction in management
External Opportunities (O) 1.     Diversification 2.     Product Innovation  3.     Market Penetration and Development 4.     Other social medias (LinkedIn, Twitter etc.) has number of registered users but their active users are lack compared to Facebook. 5.     Social media platforms used by marketers to promote their product or service. In 2019, 89% marketers use Facebook for marketing efforts. 6.     Number of internet users are expected to growth in future. 7.     Target different audience 8.     Popular government supports for globalization.	S-O Strategies S1-O3-O4 Further development of professional social media network. Use its brand for sell new product or service.   S2-O1-O2-O5-O7 International coverage to exploit many market segments (wide target audience, reliable product and service range as well as target potential customers and more target markets)   S3-S4-O3-O5-O6-O8 Develop a more user friendly features that ill boosts user preference, particularly the business oriented people and engage with customers through tools on Facebook   S5-O5 Increased no of trainings to achieve effective and efficient workforce.   S4-O2-O3 Invest profits in new markets   S6-O3-O8 Increased security to get government support to expand social media advertising	W -O Strategies W1-O2-O3-O5-O7-O8 Invest for product innovation and advertising (not over depend on advertising) in social media users and existing business in the emerging market place.   W2- W3-O8 Invest money for resolve its privacy and legal concerns of Facebook users.   W4-O8 Create a clearer organizational structure that can be trusted by Facebook community
External weaknesses (T) 1.     Imitation 2.     Cyber-crimes 3.     Many organizations in the world banned Facebook due to lost their productivity 4.     Some countries banned Facebook (China, North Korea, Syria, Iran, Russia) 5.     Increased Rules and Regulations 6.     New Digital Tax	S-T strategies   S1-S4-T1 Develop further professional network site with different user friendly features that are not common for other social media network   S2-S3-T3-T4 Invest for data analysis to understand its consumers, privacy developments and future trends.   S6-T2-T3-T4-T5-T6 Invest to development of users’ security and implement rules and regulations to avoided cyber-attacks.	W -T Strategies   W2- W3-O2 Increase security level and privacy concerns of Facebook users.   W1-O3-O4 Develop further professional site

 

Potential Strategies that can be persuade to ensure market growth and share

Further development of professional social media network and diversification of products and services.

Facebook uses diversification their services to support intensive strategy for growth and market share. Further development of professional network helps for both stability and long term sustainability. Main purpose of intensive growth is establishing a new subsidiaries or business. Facebook Inc. acquire the firm Oculus to offer reality technology that compliments social networking services. Though the intensive growth strategy Facebook Inc. could be able to increase revenues and market reach. The cost leadership generic competitive strategy reduced cost that supports to implementation of intensive strategy.

 

Invest profits in new products and markets

Invest for product and market development is support for intensive growth used in Facebook Inc. social media. It involves offering new products. For example, as a strategic decision Facebook Inc. developed mobile apps to complement the social networking websites. The company engaged in develop new products offerings. Though the intensive growth strategy Facebook Inc. could be able to increase revenues and market reach. The cost leadership generic competitive strategy reduced cost that supports to implementation of intensive strategy. The intensive strategy influences Facebook marketing mix (Product, Place, Promotion, Price)