Introduction

We used facebook most of the time but what did Facebook actually

look like when it was launched in 2004, and how has it developed in the

period from 2010 to 2018? Have there always been automatic status

updates, and has there always been an option to “Like” things? And

when were the Facebook logos that can now be seen everywhere in the

digital world first introduced? The changes made during the short history

of Facebook have been both big and rapid — as a matter of fact,

Facebook was so boring when it was founded that it would probably not

have been successful in that form today.

It is difficult to account briefly for all areas of the history of

Facebook. Thus, what follows pretends to be neither the history of

Facebook, nor a history of Facebook. Rather is it an outline of a history

of one single element of Facebook, namely the textual and interactive

media environment that users can see and interact with on the Web site

and on mobile media. Or to be slightly more precise: the elements

available for users of Facebook with regard to semiotics and interaction,

as well as the functions and uses these elements have facilitated for

various types of users [3]. This leaves out many other topics which would

also have been very relevant: Facebook as a company, the way users

actually use Facebook, privacy settings, censorship of content, Web

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design and aesthetics, Facebook as part of a broader cultural history, to

mention just a few. It should also be stressed that the aim is limited only

to the accounting of what has happened in Facebooks development as

media text, and not why it has happened, for instance as a consequence

of the interplay with economic factors, privacy issues, user feedback, etc.

In the following section, the history of Facebook as a media text is

divided into three phases: 2004–2006, 2006–2008 and 2008–2013. This

division into phases correlates to changes on the Web site and to the

functionalities available to users. If another point of focus had been

selected for discussion, the phases would most likely have been different.

The chronology of Facebook is analysed and interpreted through five

recurring themes: profile and network, sharing, commercial activity,

outside the Web, and software development. At the end of the paper,

there is a representation of the development in the number of Facebook

users and a timeline showing the main phenomena and events on the

Web and on Facebook.

 2004–2006: Who are you?

On 4 February 2004 the Web service thefacebook.com opened for

students at Harvard University in Cambridge, Massachusetts.

Thefacebook made it possible for Harvard students to create a profile

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page with personal information and to maintain contact with each other.

The only requirements were that you had to have an e-mail address

ending in harvard.edu — and you had to be more than 18 years old.

Thefacebook refers to itself as “an online directory that connects people

through social networks at colleges and universities” [10]. Organisations

and businesses were not allowed to create a profile [11]. The service was

created by 19-year-old Mark Zuckerberg, himself a Harvard University

student, who ran it from a computer in his college room. He was joined

by four fellow students, and the way the founders present themselves

clearly shows that this Web service was created by and for young

students:

 Mark Zuckerberg: Founder, Master and Commander, Enemy of the

State

 Eduardo Saverin: Business Stuff, Corporate Stuff, Brazilian Affairs

 Dustin Moskovitz: No Longer Expendable Programmer, Paid

Assassin

 Andrew McCollum: Graphic Art, General Rockstar

 Chris Hughes: The Secret Weapon [12].

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 Shortly after the site is launched, Thefacebook started to add other

American universities to the network, first of all Stanford, Columbia and

Yale (February-March), and later New York University, MIT, Cornell

University and others (March). Students from other universities were

invited to suggest further additions to the network on Thefacebook’s open

contact page [13]. In May of the following year, Thefacebook was

available to 800 American universities. From September 2005 it was also

available to upper-secondary school students, and in October of the

same year Facebook (the name was changed in September 2005) started

opening up to educational institutions outside the U.S. So it was no

surprise that Facebook grew rapidly: in April 2004, two months after the

launch, there were 70,000 users, but already in December this figure

increased to one million, and in December 2005 there were more than six

million users.

Thefacebook was apparently addictive from the very beginning: “I have a

new addiction. It is powerful. It is disturbing. It is thefacebook.com”, the

editorial page of 34th Street Magazine, The Daily Pennsylvanian reported

on 25 March 2004 [14].

 Profiles and networks of friends

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 The two main elements of Thefacebook were the profile and the

network. The personal profile was linked to an individual person, and it

was visible to all users of Thefacebook if permitted by privacy

settings [15]. It may include information such as contact information,

whether you are in a relationship, your political views, your favourite

music, books and films, information about where you study, and a

photo. In addition, the profile page showed whether you were logged in

and whether this had been done from one of the places that appear in

Facebook’s database of colleges [16]. The profile must not have been

created for an animal, a place, dead objects, fictitious persons, or

existing persons other than yourself [17].

 Sharing and creating contact

Because the users of Thefacebook were socially networking with

each other, the user’s profile information was available to his or her

network, which was the most basic form of sharing on Thefacebook. But

about six months after the launch, the sharing options were extended

with the introduction of a so-called “Wall” on each profile page, where

users could post messages for their friends and write on their walls.

Users were now able to share messages with each other, and later on it

became possible to share photos (from October 2005). When sharing,

however, you had to go to your friends’ profile pages to see if they had

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made updates, for example written new messages on their wall or

uploaded new photos to their site. Updates were thus not visible to your

network unless they visited your profile page. However, it was possible to

get in touch with one of your friends by “poking” them or by sending a

message; and from October 2005 it was possible to “tag” a person in a

photo. You did this by writing which of your friends are in the photo and

linking to their profiles.

 Adverts

Adverts have been part of Facebook almost from the outset. Already in

the spring of 2004, banner ads began to appear on the user profile pages,

and this option was typically used by businesses and educational

institutions that were of potential interest to students. Adverts could be

targeted for users with specific profiles on the basis of their age, gender,

university, personal interests, political views etc. [21] Businesses were

not allowed to create a profile page [22], nor were users of Thefacebook

allowed to advertise on their profile pages or to trade with each other.

 Facebook, a closed Web site for the few

Facebook’s empty structure makes it possible for the features made

available by Facebook to interact with three types of user — Facebook as

a company, profile owners and advertisers — by controlling the users as

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well as offering them opportunities, which all in all contributed to make

the service grow.

 2006–2008: What are you doing, and when?

The transition to the second phase in the history of Facebook as

media text took place in the spring of 2006, and for two reasons. For one

thing, Facebook opened up to the world outside the world of education.

And for another, from 2006 onwards a very large number of new features

were launched which change Facebook radically.

Finally, Facebook grew so fast that communication with users was

professionalised, as reflected in the creation of the Facebook Blog

(August 2006), where many new initiatives were regularly advertised and

explained, and the Customer Support Team (October 2006). Facebook’s

increased international presence was also reflected in the opening of its

international headquarters in Dublin (October 2008).

 New profile types and network options

The profile pages linked to individuals was still the main element of

Facebook. But new elements for expression and interaction were added,

loosening the

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 In September 2007, it became possible to search among all Facebook

users, even if you were not their friend. And in December of the same

year, lists of friends were launched with the option of dividing your

friends into “Family”, “Colleagues”, or whatever you need; this was useful

because Facebook had grown so people’s networks had grown too. In

2008 (May) the feature “People you may know” was launched, suggesting

that you may know your friends’ friends and wish to become Facebook

friends with them. These three initiatives meant that each individual

network could grow fast.

 New ways of sharing

The most important breakthroughs were the option of making status

updates (April 2006) and the features News Feed and Mini Feed

(September 2006). Status updates made it possible, by means of a small

writing area (“My Status”) on your own page to tell people what you were

doing without having to change your more permanent profile information

whenever you did something new that you wanted to tell your friends

about. News Feed and Mini Feed made it easier for you to keep up with

your friends’ activities in the absence of a status update. Whereas you

previously had to visit your friends’ profile pages to secure new

information, it was now possible to allow information to flow into your

own Facebook page automatically by displaying either all network

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activity (News Feed) or only the activity of one particular user (Mini Feed).

Status updates and feeds about what was happening, what you were

doing and when became a crucial new bonding option in Facebook’s

network. In particular, feeds led to an explosive growth in the radius and

speed of messages. According to one of the developers of News Feed, it

was not really their intention to invent a platform that could be used to

support global activism, but this seemed to be what had happened: for

example, posts about the creation of new groups on topics such as

support for Darfur or breast cancer spread at the speed of lightning,

making groups grow from zero to half a million

 Gifts, marketplace and viral advertising

The “Gifts” feature was launched in February 2007, giving users

the option of buying small Facebook ”gifts“ for their friends and thus

supporting a charitable cause. Gifts consisted of small icons costing

US$1 each, with all proceeds going to cancer research, for instance. They

were stored in the recipient’s “gift box”, and if they were donated publicly

a message appeared on the recipient’s wall.

Later in 2007 (May) “Marketplace” was launched, making it

possible for Facebook users to advertise things they wanted to buy or

sell, or things they needed (a job or accommodation, for instance). So

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“Marketplace” could be categorised as somewhere between the classified

advertisements and adverts for jobs or accommodation.

 Facebook outside the Web — “Facebook Mobile”

In April 2006 Facebook Mobile made it possible to communicate with

Facebook by text messages, and later it became possible to upload

photos as well as visiting Facebook’s site from your mobile phone

(January 2007). Less than two months after the launch of the first

iPhone, Facebook’s site was accessible via iPhone (August 2007). Shortly

after Apple opens its App Store the following year, “Facebook for iPhone”

was ready (August).

 Software development for everyone

The last major new type of activity launched by Facebook in this

period was the “Facebook Platform” (May 2007), which made it possible

for software developers — large companies as well as amateurs — to

produce programs that could be integrated with the Facebook universe:

either programs on Facebook’s site, or programs which send information

from Facebook to other sites or the user’s computer desktop. At the

launch in May 2007, a number of examples of such programs were

mentioned, including a program for book reviews (“Book Reviews”),

produced by Facebook and Amazon to give Facebook users the chance to

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write and display book reviews on their profile page, where there was a

“Buy from Amazon” button for each review. Each Facebook user decided

which programs they wanted to use by adding them to their profile page.

 Facebook, a powerful media machine for the flow of

information

One important prerequisite making it possible to handle the rapid

expansion in all variables was that Facebook was still basically an empty

structure. It was true that Facebook added a wealth of new structural

elements; but it was still profile owners (now including companies,

software developers and owners of other digital services) who supplied

content and specific relations to the structure. The way in which the

structural elements were mixed seemed to be balanced constantly,

enabling more and more users to co-exist and want to be part of

Facebook, despite differences in their interests.

 2008–2013: Where are you?

By contrast with the rapid expansion of new functionalities during the

second phase, there were far fewer new initiatives during the third phase.

Even so, Facebook continued to expand at even greater speed than

before: from 150 million users in January 2009 to more than 500 million

in July 2010. The one billion mark was passed on 14 September 2012.

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Facebook was now used by one-seventh of the world’s population, and by

just under 50 percent of everyone with an Internet connection. From

2009 onwards Facebook was also available in over 70 different

languages, including Latin, and had a presence on all continents, even

Antarctica. The structure of Facebook as a company also changed when

it entered the stock market (NASDAQ) on 18 May 2012. The Facebook

phenomenon really penetrated many aspects of culture: for instance, the

verb “to unfriend” was chosen as the “word of the year” in the New

Oxford American Dictionary (November 2009), and Mark Zuckerberg was

elected “Person of the Year” by Time in December 2010. The reason given

for choosing Zuckerberg was that “We have entered the Facebook age,

and Mark Zuckerberg is the man who brought us here”. And finally, the

creation of Facebook was portrayed in the film The Social Network, which

opened in October 2010 (directed by David Fincher).

 Profiles and networks of friends

In the third phase there were countless changes in layout,

expansions, alterations and changes in the profile pages as well as the

many expression/interaction elements and page types that were present

in previous phases. New elements were added as well.

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 First of all, various forms of live streaming were added to video as a

mode of expression. Secondly, Facebook’s users had the opportunity to

review their Facebook past in an entirely new way. “Thirdly, a new type of

page was launched in April 2010 known as “Community Pages”, which

were pages based on a topic, interest or activity (“Cooking”, for instance).

 “Likes” and Facebook Connect

“Facebook Connect” made it possible to extend the range of sites

from which you could access Facebook. For example, in April 2009 it

became possible to see and write in Facebook via another site or directly

via a program on the computer desktop without using a browser, either

with Facebook alone in the window or in applications which combine a

number of information flows, e.g., from Twitter. From August onwards

you could share photos from Nintendo game consoles by using “Facebook

Connect”. From November onwards you could play Xbox games with your

Facebook friends as well as using Xbox and the television screen to

access Facebook. This development turned Facebook into more than just

a Web service.

 “Gifts” shut down and reopened, Facebook Credits and

Deals

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 As an offshoot of the activities in “Gifts”, Facebook created its own

“virtual currency”. Initially this was called “Gift Credits”, and later on

“Facebook Credits”. You purchased “Facebook Credits” with your credit

card (or PayPal, from February 2010), using them to buy gifts such as

goods or game elements in the Facebook universe. From September

2010, it was also possible to buy vouchers or credit cards issued for fixed

amounts to use in the Facebook universe.

 Mobile growth and “Places”

The most important breakthrough in relation to mobile media,

however, was not only that Facebook was becoming increasingly mobile

but that the geo-localisation option of mobile units was connected to

features that are already part of Facebook. From September 2009 you

could see which of your friends were nearby, and “Facebook Places” was

launched in August 2010, connecting Facebook users to their location.

“Checking in” made it possible to share information about where you

were and who you were with — as well as finding out which of your

friends were nearby. You could also go back in time to see if you or any

of your friends had been in the same location previously. “Places” was

basically like the location function from 2004, but much more flexible

because the location was determined by your mobile phone and not the

physical location of the computer.

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  Software development

Since Facebook gave software developers the opportunity to create

programs that could be integrated with the Facebook universe in May

2007, thousands of small programs had been developed (for instance,

there were 52,000 programs on “Facebook Platform” in May 2009). In the

wake of this great popularity, a very natural need for a clear directory of

programs arose. This resulted in the launch of an “Application Directory”

in May 2009, where you could find a list of all the programs developed

for Facebook’s site and other sites and programs outside the Web, as well

as mobile media.

 The development of Facebook 2004–2013

Facebook’s history from 2004 until the beginning of 2013 was

characterised by both continuity and change.

Generally speaking, two types of continuity were evident during the

entire period. First of all, Facebook as a company provided a digital space

that structures the possible interaction of its users — but was in other

respects an empty space whose content was provided by others in the

form of text, pictures, sound, software and social relations in the form of

networks. Secondly, Facebook was always accumulating and expanding,

with more of everything constantly being added within the areas of

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Facebook’s universe, and new areas appearing while hardly anything

ever disappeared.

 Facebook in a Web-historical perspective

As each of the three phases has shown, Facebook — based on its

empty structure — was able to absorb and combine existing software or

usage types of the Web. This could indicate that the more adaptable and

flexible a structure is, the greater the possibility of survival.

 From the Internet to the Web

The interesting thing is that this particular mechanism occurred at

a crucial time in the short history of the Internet: at the point in time

when the specific software system today seen as “the Internet” — the

World Wide Web (WWW) — was invented [28]. In August 1991, a British

software developer employed at CERN in Switzerland, Tim Berners-Lee,

published the results of several years of programming in the newsgroup

alt.hypertext with the title “WorldWideWeb — Executive Summary”, after

which the source code was accessible to anyone interested in using it or

developing it. The WWW was different because it combined two

phenomena that had been separate in the past: hypertext programs that

made it possible to jump from one part of a text to anywhere in the same

text, which had been used in computers since the 1980s; and the option

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of downloading files from other computers via a computer network.

Berners-Lee’s combination of these two phenomena meant that the

WWW could be used to jump from one location in a text on one computer

to any location in a text on any computer connected to the computer

network. The fundamental functionality which made jumping from one

computer text to another possible was called the hyperlink. The notion of

a hyperlink seems obvious today. At the beginning of the 1990s it was

revolutionary, especially when compared to the Internet before the WWW.

 The Web and Facebook — similar patterns?

All in all, the strength of the WWW is that it offered a very flexible

framework which made it possible to combine the communicative and

social functions which were previously assigned to each specific type of

software or network in the same “box”, enabling them to seamlessly

communicate with each other via hyperlinks. This possibility was a big

advantage from the user’s point of view, so the trend increased

exponentially: the more activity the WWW permitted, and the more

functions working together, more users joined, increasing activity.

A similar pattern seemed to be an important driving force in the

development of Facebook as a media text. Just as the WWW attracted

and absorbed previously separate software types in other formats,

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Facebook absorbed or integrated software types that were already

available on the Web as separate services. The effect of the Web on

previous types of software outside the Web was matched by the effect of

Facebook on contemporary software types on the Web. In this sense,

Facebook is almost as diverse as the Web — in terms of software types,

usability and users — so it functions like a mini-version of the Web

where you can stay in the same program, like a Web2 instead of a Web

2.0.

When comparing Facebook to the Internet’s history, one fact

becomes clear: the better a software system is at striking a balance

between being open and flexible on the one hand and prescriptive and

structural on the other, the greater the chance is of outperforming or

absorbing, gathering and integrating other software systems and thus

growing and becoming the de facto standard. It should be noted,

however, that there are differences between the development of the WWW

and Facebook. First of all, Facebook was created in the Web, meaning

that it could be integrated seamlessly with sites outside Facebook,

whereas the WWW had to absorb software types from which it differed.

Secondly, the Web services absorbed or integrated in Facebook do not

necessarily disappear, as was the case with the WWW and the previous

software systems. In fact, in many cases Facebook actually attracts

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users. And lastly, a big difference was that Berners-Lee and CERN chose

not to commercialise the Web but instead released the source code to the

Internet community.

 Social media and the necessity of history

Facebook is often referred to as a social medium or social

networking site [30], often with the implication that it was a new

phenomenon. But the need for sociality and networking did not arise

with the Internet, the Web or Facebook. If anything, that need is an

integral part of human life. But through history this need has been

reflected in a variety of media technologies, from spoken and written

language, to print, film, radio and television to the Internet and other

digital media, each creating their own communicative space with

different limitations and opportunities.

So as well as providing knowledge of past events, history is also an

important voice in any attempt to explain the world today — and perhaps

the future as well. The ability to identify recurrent patterns and

development mechanisms in history may prove to be of great importance

when decisions have to be made today: what we should be doing (or not

doing) as a society or organisation, or in connection with the

technological development and innovation of companies. The events of

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the past rarely repeat themselves, but the mechanisms behind them

might do so. So studying the past is an important aspect of studying the

present.

In this case study, which we aim to provide recommendations for

the possible issues and problems in Facebook Inc., we have structured

the review of Facebook objectives and strategy using some of the

customer-related aspects and the ability of Facebook in terms of

advertising add more to it, it’s vision and mission statement, the ethical

culture of Facebook making a better community and the competitive

advantage and the factors affecting it.

Statement of the Problem

Facebook currently stands as the world’s largest social networking

website, which certainly makes it an attractive network for individuals to

join. By doing so, we can easily get connected, share, like and comment

to our family and friends. With that foundation, the next focus will be

developing the social infrastructure for community — for supporting its

users, for keeping them safe, for informing them, for civic engagement,

and for the inclusion of all. However, one simply cannot disregard the

feeling of uneasiness. Some of the fake news, unnecessary mema’s, cyber

bullying started to bombard the community of users of the facebook.

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Despite the rapid growth of facebook from 2004 to 2018 how should they

take responsible actions to build a global community that would works

for all of us?

Questions:

1. What actions can facebook imposed to build a harmonious

relationship among its users?

2. How can facebook be used as a tool in providing accurate and reliable

information where every user will become well-oriented and

knowledgeable?

3. How can facebook be fully utilized by its users while maintaining their

collective values and common humanity from local to global levels?

Objectives of the Problem

To make a positive impact in the facebook community among its

users by building a harmonious relationship, providing accurate and

reliable information and still maintaining their collective values and

common humanity.

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Facebook Vision, Mission, Objectives and Strategies

Founded in 2004, Facebook is going to be 13 this year on February

4TH. The website has grown to become the world’s largest social media

platform. In the short span of its existence, the brand has grown a very

large follower base. Its number of followers had crossed a billion in 2012

only which might double in the coming days. In 2016, the follower base

had grown to 1.79 billion. In these years, its revenue has also continued

to improve with its customer base. In mobile ads Facebook has also

emerged as a strong competitor for Google. The two internet giants

continue to garner the lion’s share in online advertising.

Facebook’s job is to connect people together and it is pursuing its

mission very well. With excellent performance throughout the year,

Facebook was all set to achieve its target of $27 billion for revenue in

2016. Its third quarter revenue showed a 50% rise over the revenue for

the same period in 2015. The brand is actively growing and has acquired

a number of other social media brands and other businesses. Here

follows an analysis of Facebook’s mission and vision statement:

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 The mission and vision statements are an important part of

organizational strategy. One is the reason behind the brand’s existence

or its objective and the other sets the course for the future. Several

companies have elaborate mission and vision statements that detail

there strategy for the future as well as how they are achieving their goals

and serving the world. In case of several brands the mission and vision

statements are separate and in case of several they are unified. When

you visit Facebook’s about page, you will find its mission and vision

noted there. The statements are unified. Facebook states its mission and

vision as:

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 Founded in 2004, Facebook’s mission is (old mission – to give

people the power to share and make the world more open and connected.

People use Facebook to stay connected with friends and family, to

discover what’s going on in the world, and to share and express what

matters to them).

Facebook’s Current Vision and Mission Statement

Mission Statement

Facebook’s corporate mission is “to give people the power to build

community and bring the world closer together.” This new mission

statement was implemented in the midst of data privacy and security

issues involving Cambridge Analytica and other parties. In early 2017,

the company’s corporate mission was “to give people the power to

share and make the world more open and connected.” In this regard,

the new corporate mission shows that the company now focuses on

making its social networking web site an important part of community

development. The following are the major components of Facebook’s

mission statement:

1. Empowering people

2. Enabling community building

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 3. Connecting the world

The “empowering people” component of Facebook’s mission statement

signifies the company’s goal of making its online social networking

service a means to make users more capable online. In addition, the

corporate mission shows that this capability is in the form of community

building. For example, people can use the social network to facilitate

communication and information sharing among members of

communities. These communities include neighborhoods, foundations,

shared-interest communities, and a wide variety of virtual communities.

In connection with the corporate vision, the mission statement further

indicates that Facebook Inc. has the goal of connecting the world.

Connections are created when users communicate through the social

media website and its corresponding mobile apps. In relation, the

company enables businesses to connect with their customers.

Vision Statement

Facebook’s corporate vision statement, based on the company’s social

media service offerings, is “People use Facebook to stay connected

with friends and family, to discover what’s going on in the world,

and to share and express what matters to them.” This corporate

vision shows that the business is not just a basic online social

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networking site. Instead, the company also facilitates knowledge

acquisition and valuable communication among individual users.

Facebook’s vision statement has the following main components:

1. Global market scope

2. Tool for communication

3. Tool for discovery

4. Tool for self-expression

The “global market scope” component of Facebook’s corporate vision

is based on the company’s specification of “people” as users, indicating

everyone around the world. The corporate vision also shows that the

company sees itself as a facilitator of communication among friends and

family. Moreover, Facebook Inc. aims to be a global discovery tool

through information access. In addition, the company aims to make its

online social network a global tool for self-expression. These components

of Facebook’s vision statement require the company to grow

internationally to maintain its leadership position in the multinational

social media market.

Objectives

1. Bring Internet Access to the Other Two-Thirds of the World

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 2. Make Facebook THE Killer Mobile App

3. Acquire Mobile Platforms (and Emerging Ones) that Increase Short

Term / Long Term Competitive Advantages

4. Give New Innovations Time to Develop (even if patience contradicts

The Hacker Way)

5. Prove Digital Marketing Results in Positive ROI

Strategies

Facebook Inc. has a generic strategy and intensive growth strategies

that maintain business competitive advantage based on efficiency and

accessibility of online social media services. Michael Porter’s model for

generic competitive strategies indicates the company’s approach and

strategic direction for business growth.

In this business analysis case, it is determined that Facebook’s

generic strategy ensures growth and competitive advantage through the

social network’s features and ease of access to capture a bigger share of

the market, addressing competition against companies like Google,

Twitter, and Snapchat, which have significant presence in the online

advertising market. In relation, based on the Ansoff Matrix, Facebook’s

intensive strategies emphasize the use of market penetration as the

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primary thrust to grow the business. The company’s generic strategy and

intensive growth strategies align with business strengths based on SWOT

Analysis of Facebook Inc. and enable the company to keep its market

position as one of the world’s leading online social networking firms.

Facebook’s generic competitive strategy (Porter’s model) supports

the business through operational efficiency and customers’ ease of

access. Related intensive strategies grow Facebook’s market position and

revenues by making the social networking website accessible in more

regions worldwide. The effects of these intensive strategies and generic

strategy impact the competitive landscape (see Porter’s Five Forces

Analysis of Facebook Inc.) and the external factors that influence the

company’s business performance relative to the multinational industry.

Facebook SWOT Analysis

Facebook Inc.’s strengths and weaknesses, as well as the

opportunities and threats in the global social media and online

advertising markets can be identified through a SWOT analysis of the

business. A SWOT analysis identifies the internal strategic factors

(strengths and weaknesses) and external strategic factors (opportunities

and threats) significant to the business. In this case of Facebook Inc.,

such factors pertain to the dynamics of the online social networking

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environment and online advertising market. While Facebook remains one

of the leading players in the market, this SWOT analysis highlights

issues that the company must address to continue in its global market

position. Also, the company must adjust its strategies and internal

factors along with changes in the external factors that affect the

business. In this way, Facebook can ensure that its weaknesses are

contained and its strengths are sufficient to compete in the international

market.

This SWOT analysis of Facebook Inc. indicates strengths that

support the organization’s leadership in the online social media

business. However, the company must continue innovating to ensure

such market position, considering the threats facing its social networking

and online advertising services. The business competes against firms

like Google LLC, Snap Inc. (Snapchat), and Twitter Inc. These

competitors influence the threats and opportunities that impact

Facebook’s strengths and weaknesses.

 Facebook’s Strengths (Internal Strategic Factors)

Facebook Inc.’s strengths support its market position as one of the

biggest players in the social media market and the Internet advertising

market. Such strengths are internal factors that build business

29 | P a g e
competitiveness. This element of the SWOT analysis enumerates the

company’s strengths and how they relate to business performance. The

following are Facebook’s main strengths:

1. Strong brand image

2. Large consumer base with externalities

3. High revenues

4. Innovative workforce

Facebook Inc.’s social network’s popularity comes with a strong brand

image, which is considered as strength in the context of this SWOT

analysis. The company develops its business as a reliable social media

service provider. In relation, the company’s large consumer base is a

strength that brings a number of beneficial externalities. For example,

the large number of users or members makes Facebook’s social

networking website and mobile apps more attractive to potential new

members, more attractive to advertisers, and more difficult for new social

media companies to compete with. Moreover, high revenues are a

beneficial internal strategic factor that supports the company’s financial

capacity for research and development (R&D) investments for new

products and new business ventures. Also, Facebook’s organizational

culture contributes to innovativeness in the workforce. This internal

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factor enables product development, which is a growth strategy. Thus,

this element of the SWOT analysis shows that Facebook Inc. has the

strengths to maintain its competitive advantage and attractiveness in the

online advertising market.

 Facebook’s Weaknesses (Internal Strategic Factors)

The company suffers from a number of weaknesses based on the nature

of its business. Social media and online advertising technologies create

weaknesses that enable competition, which exerts a moderate force on

firms in the industry (See Porter’s Five Forces Analysis of Facebook Inc.).

In this element of the SWOT analysis, weaknesses are internal factors

that prevent or reduce the company’s success. The following weaknesses

affect Facebook Inc.’s long-term success:

1. Imitable products and services

2. Negative impacts of online advertising on user experience

3. Low diversification of business

Facebook’s social networking website, mobile apps, and related services

are imitable in terms of basic features. This SWOT analysis considers

such internal strategic factor a weakness because it makes the company

vulnerable to competition. For example, other companies can develop

31 | P a g e
their social networking services to directly compete against Facebook Inc.

Also, the company’s online advertising mechanism is a weakness

because users could perceive advertisements as a nuisance in their

social media experience. In addition, the corporation suffers from a low

level of diversification, which maximizes market risk exposure. With low

diversification, the vast majority of the company’s earnings are generated

through its social networking website and related mobile apps. Based on

this element of the SWOT analysis, Facebook Inc. must address its

weaknesses to reduce market risk exposure, and to increase potential

business growth.

 Opportunities for Facebook Inc. (External Strategic Factors)

A number of opportunities are available for the company to grow its

social media business internationally. This element of the SWOT analysis

enumerates the external factors that the company can exploit to improve

its business situation. The following opportunities are most relevant in

Facebook Inc.’s case:

1. Business diversification

2. Product innovation

3. Market penetration and development

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Facebook Inc. has the opportunity to diversify outside its core social

media and online advertising business. The company has taken steps to

exploit this external factor. For example, the company acquired Oculus

VR, which is a virtual reality technology business that can complement

social networking services. However, this SWOT analysis points to the

need for further diversification to reduce Facebook’s business risk

exposure. Another opportunity is for the organization to innovate

products that are complementary to its social networking website and

mobile apps. Furthermore, market penetration and development can

increase membership and revenues, in line with Facebook Inc.’s generic

competitive strategy and intensive growth strategies. This element of the

SWOT analysis indicates the need for the company to reform some of its

strategies and management direction to ensure continuous growth.

 Threats Facing Facebook Inc. (External Strategic Factors)

The company experiences risks linked to threats in the social

media and online advertising industry environment. External factors that

impede business growth are outlined in this element of the SWOT

analysis. Facebook must address the following threats against its

multinational business:

1. Imitation

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 2. Cybercrime

3. Market saturation

Imitation is one of the major threats to the business, considering

that other firms could develop social networking websites and mobile

apps similar to those of Facebook. In this SWOT analysis, imitation is a

threat because it has the potential to reduce the company’s market

share. Also, with increasing membership, the company is now an

attractive cybercrime target. This external strategic factor can negatively

impact user experience and, consequently, business performance.

Moreover, the market is increasingly saturated, as pointed out in

the PESTEL/PESTLE analysis of Facebook Inc. Market saturation could

lead to business growth plateau or stagnation. Based on this element of

the SWOT analysis of Facebook Inc., it is crucial that the company

develop new products and related technologies, and enter new

businesses.

Competitive Profile Analysis/ Matrix

Established in the year 2014 by Mark Zuckerberg, Facebook has

since grown to become a popular social networking service and boast of

more than1.86 billion monthly users by the last year 2016. By 2015,

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the company becomes the world fastest corporation in the

standard and poor’s index to reach a market cap of $250 billion

(Sun, 2015). A competitive profile matrix(CPM) describes a tool used

to compare a business and its competitors, and show their relative

strengths and weaknesses (Bhasin, 2016). The firm has a mission to

give people the power to share and make the world more open and

connected. In the case of competitive strengths, the company

boost of around three most right capabilities that include; the

integration with website and applications, it has over one billion

active monthly users, excellent user experiences, and wider

understanding of the user’s needs and behaviors (Sun, 2015).

Facebook weakness includes a weaker click-through-rate (CTR) of

advertisement of about 0.05% and close to 4% respectively, lack

of website customization, weaker protection of its user’s

information, and poor attitude towards the user’s privacy. Other

weaknesses include its ability to have an advertisement on Facebook

only, and that the social network has limited features.

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 From the table, we can conclude that Facebook Company is

more stable regarding its competitive strengths over that of LinkedIn

and Google.

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External Factor Evaluation (EFE) Matrix

EFE Matrix is an analytical technique related to the SWOT

analysis. EFE is an acronym of the External Factor Evaluation. EFE

Matrix evaluates the external position of the organization or its strategic

intents.

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 IFE matrix means Internal Factor Evaluation Matrix; is a popular

strategic management tool for auditing or evaluating major internal

strengths and internal weaknesses in functional areas of an organization

or a business. IFE matrix also provides a basis for identifying or

evaluating relationships among those areas

38 | P a g e
Facebook SWOT matrix

Strengths Weaknesses

1. Integration with websites and 1. Weak CTR of advertisements

applications
2. Social network lacks of some

2. More than a billion active features

monthly users
3. One source of revenues –

3. Excellent users experience advertisements on Facebook

4. Understanding of user’s needs 4. Attitude towards users’ privacy

and behavior
5. Lack of website customization

6. Weak protection of users’

information

Opportunities Threats

1. Increasing number of people 1. Increasing number of mobile

using Facebook through mobile internet users

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 devices 2. Users using ad-block extensions

2. Expansion to China 3. Slow growth rate of online

advertising
3. Diversify sources of revenue

4. Identity thefts
4. Open Facebook marketplace

5. Weak business model

Strengths

1. Integration with websites and applications. To enrich user

experience and engage more users to use Facebook, the social

network has launched many features that would allow closer

integration with other websites and producers of applications that

run via Facebook. Easy integration and use of applications results

in competitive advantage over other social networking websites

that struggle to provide the same level of service.

2. More than a billion active monthly users. For a social network

to grow, it must have users. The more users the Facebook has, the

more socially connecting it is. With one billion active monthly

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 users, Facebook is able to connect people not only locally but

globally as well.

3. Excellent user experience. Facebook has an easy to use

interface, is integrated with many website, can connect people

through PC or mobile devices, is translated into more than 70

languages and has many more additional features that lack other

social networks.

4. Understanding of user’s needs and behavior. Except Google, no

other business has so many data collected on what users like,

dislike, needs and how the users behave online. With so much

data, Facebook knows what exactly to offer to its users (what

additional features, what advertisements) and how to further

improve their experience with Facebook.

Weaknesses

1. Weak CTR of advertisements. Facebook has a lower click-

through-rate (CTR) than an average website, which is only 0.05%

and about 4% respectively. In order to earn more income from the

advertisements Facebook has to change the way it displays the ads

(advertisements on wall posts have more than 6% CTR) but

without interfering users’ experience.

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2. Social network lacks of some features. Although Facebook has a

wide range of features that other social networks don’t, the website

still lacks: video chats, group chats, dislike buttons, ability to

unsubscribe from alerts and many others.

3. One source of revenues – advertisements on Facebook. More

than 80% of Facebook’s revenues come from advertising on its

social network. The growth of the revenues directly depends on the

growth of users. This leaves the business very vulnerable and

dependent on continuous growth of users, which will eventually be

only marginal as the social network has already attracted so many

users.

4. Attitude towards users’ privacy. Facebook collects private users’

information and then stores it, uses it for its own purposes or sells

it. Such treatment of users’ private information draws negative

attention that decreases popularity of Facebook.

5. Lack of website customization. Many Facebook’s users spend a

lot of time on social network and want the website to reflect their

personalities but are unable to customize the website to their

needs and are forced to use uniform template for all users. In

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 comparison, Google+ allows for much more personalization of the

social network account than Facebook does.

6. Weak protection of users’ information. Facebook, having so

many users that upload personal information to the social

network, is a target for attacks that steal passwords and other

personal information from the users. Such attacks occur every day

and thousands of passwords are stolen. Though, Facebook is not

doing enough to protect users’ from identity attacks.

Opportunities

1. Increasing number of people using Facebook through mobile

devices. Currently Facebook has more than 600 million users who

use Facebook through mobile devices. Despite that this group

makes 60% of all Facebook users, the mobile advertising only

accounts for only 14% income for the company. Facebook has an

opportunity to create a platform that could be used to display ads

for mobile users and increase firm’s income.

2. Expansion to China. Easing government regulations and newly

elected government may open a way for Facebook to enter China’s

social networking market. Until then, Facebook should prepare

itself for such an entry.

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 3. Diversify sources of revenue. Facebook heavily relies on

advertising on its social network as a source of income, but with

being the number 2 website in the world and more than 1 billion

active monthly users, Facebook could exploit other opportunities to

attract the money.

4. Open Facebook marketplace. With so many users and extensive

coverage of the world, Facebook is well positioned to open

Facebook marketplace. If successful, it would bring more revenues

than the advertising, thus boosting company’s growth and future

prospects.

Threats

1. Increasing number of mobile internet users. Currently Facebook

has more than 600 million users who use Facebook through

mobile devices. Despite that this group makes 60% of all Facebook

users, the mobile advertising only accounts for only 14% income

for the business. If the company will be unable to monetize mobile

users, it will face decreasing advertising income as more PC users

will turn to mobile users.

2. Users using ad-block extensions. Educated internet users often

install extensions that block advertisements from the websites. The

44 | P a g e
 growing number of such users is threatening Facebook’s model as

they can’t see advertisements and click on them.

3. Slow growth rate of online advertising. Although online

advertising still grows in double digits (14% in 2012, down from

23% in 2011) that growth is slowing down, thereby threatening

growth of Facebook’s advertising income.

4. 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.

5. Weak business model. Facebook’s aim is to attract social network

users, display the ads for them and charge the businesses for the

ads displayed. Although Facebook’s business model looks sound

for the moment, the company may face severe difficulties if some

conditions change that are not in firm’s control. For example,

slowing growth of online advertising, new social network, shift from

advertising on Facebook to other websites, growing number of

mobile users (Facebook is yet unable to monetize them) or failure

to diversify source of income.

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Pestle Analysis

Facebook Inc. evolves to address the issues identified in this

PESTEL/PESTLE analysis of the social media business. The

PESTEL/PESTLE Analysis model presents an external analysis of the

most important factors in the company’s remote or macro-environment.

As one of the top players in the international social media market, the

corporation has the capabilities to maintain such market position

through popularity, brand development, and research and development

investment. However, this PESTEL/PESTLE analysis of Facebook

indicates the need for adjustments in strategies to ensure that its social

networking website, mobile apps, and display advertising services remain

attractive in the face of significant competition from other firms, such as

Twitter Inc., Snap Inc. (Snapchat), and Google’s YouTube. Considering

the industry landscape and level of competition determined in

the Porter’s Five Forces analysis of Facebook Inc., it is essential to

implement strategies that strengthen the company’s competitive

advantages to support continued growth worldwide.

A PESTEL/PESTLE analysis of Facebook Inc. identifies the external

factors that significantly influence the condition of the firm’s remote or

macro-environment. These external factors require the company to

address issues in the industry, particularly political and technological

46 | P a g e
factors. Strategic alignment with the conditions of the industry

environment helps in satisfying Facebook’s corporate vision and mission

statements, especially in providing effective tools for communication in

the global social networking market.

 Political Factor

Facebook’s business is linked to the political landscape. In this

element of the PESTEL/PESTLE Analysis, the effects of governments

as external factors in the company’s remote or macro-environment are

determined. Political movements have the power to shape the progress

of businesses and entire industries. The following are the major

political factors influencing Facebook Inc.:

1. Political stability in developed countries (opportunity)

2. Popular governmental support for globalization (opportunity)

3. Political barriers in the Chinese market (threat)

4. Political action on online data (threat)

The political stability of developed countries presents opportunities

for Facebook Inc. to continue diversifying its business in these

markets. Also, the company has the opportunity to expand its social

media and display advertising services worldwide, based on

governmental support for globalization. However, Facebook could

47 | P a g e
suffer from political barriers in China. The company’s potential global

growth is limited because of Chinese censorship. In addition,

regarding data privacy and security issues involving organizations like

Cambridge Analytica, governments are increasingly working to limit

online data collection, sharing, and processing. This external factor

can slow down the company’s growth. Based on this element of the

PESTEL/PESTLE analysis of Facebook Inc., the company must

enhance data privacy and security, and continue negotiating with the

Chinese government to open up the display advertising market in the

country.

 Economic Factor

Economic conditions shape Facebook Inc.’s business growth. This

element of the PESTEL/PESTLE Analysis considers the impact of

economic trends and conditions on the firm’s remote or macro-

environment. The economic external factors that affect the company

are as follows:

1. Increasing stability of developing countries (opportunity)

2. Rapid economic growth of developing countries (opportunity)

3. Increasing disposable incomes (opportunity)

48 | P a g e
 Facebook Inc. has the opportunity to increase its market

penetration efforts in developing countries with increasing economic

stability. In relation, the rapid economic growth of these countries

leads to an improvement of infrastructure, including

telecommunications infrastructure. In this PESTEL/PESTLE analysis,

such an external factor supports an expansion of access to

Facebook’s social network. Moreover, the increasing disposable

incomes in developing countries improve users’ capacity to purchase

devices to access the company’s services, thereby also contributing to

business expansion. Such conditions support Facebook’s generic

competitive strategy and intensive growth strategies. This element of

the PESTEL/PESTLE Analysis indicates that Facebook Inc. has major

opportunities to expand its multinational operations, especially

through market penetration.

 Social Factor

Facebook’s popularity and global reach is under the influence of

social conditions. The impact of sociocultural trends and changes on

the company’s remote or macro-environment is determined in this

element of the PESTEL/PESTLE Analysis. The following sociocultural

external factors are most notable in the case of Facebook Inc.:

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1. Increasing preference for high quality services (opportunity)

2. Increasing online buying (opportunity)

3. Increasing support for corporate social responsibility (opportunity)

With increasing financial capacity and improving living conditions,

people are increasingly emphasizing high quality in the services that

they use. In the context of this PESTEL/PESTLE analysis, such a

social condition presents an opportunity for Facebook Inc. to improve

its service quality standards to satisfy and retain clients who pay for

the company’s display advertising services. In addition, increasing

online buying worldwide creates opportunities for Facebook to develop

additional services to profit from retail sales generated through its

social networking website and related mobile apps. For example, the

company can offer better marketplaces to address this trend. The

company also has the opportunity to enhance its corporate social

responsibility programs as a way of satisfying the corresponding

expectations of users. Based on the external factors in this element of

the PESTEL/PESTLE analysis of Facebook Inc., there are major

opportunities to improve the company’s services to optimize

competitive advantage.

 Technological Factor

50 | P a g e
 Technologies impact Facebook Inc., considering that it is a

business founded on online technologies. This element of the

PESTEL/PESTLE Analysis identifies the main technological influences

on the firm’s remote or macro-environment. The following

technological external factors affect Facebook Inc.:

1. Increasing use of mobile devices (opportunity)

2. Increasing number of online social media companies (threat)

3. Diversification of online retail firms (threat)

Facebook has the opportunity to improve user experience involving

its mobile apps. This opportunity is based on the trend of increasing

mobile device usage worldwide. However, this PESTEL/PESTLE

analysis points to the threat of increasing competition, as more online

social networks attempt to attract users away from the company’s

social media services. This technological trend also leads to market

saturation, which is a threat noted in the SWOT analysis of Facebook

Inc. Furthermore, the diversification of online retail firms threatens to

compete with the company. For example, giants like Amazon.com is in

a position to offer online advertising services through its network of

affiliate websites. This element of the PESTEL/PESTLE Analysis

51 | P a g e
shows that Facebook Inc. must continue improving its social media

and display advertising services to retain customers.

 Environmental Factor

Facebook’s social media business is partly linked to the natural

environment. The effects of ecological issues and trends on the

company’s remote or macro-environment are determined in this

element of the PESTEL/PESTLE Analysis. The following ecological

external factors influence the company:

1. Increasing emphasis on business sustainability (opportunity)

2. Increase complexity of waste disposal standards (opportunity)

3. Climate change (threat & opportunity)

Facebook Inc. has the opportunity to enhance its social media

business sustainability to satisfy concerns regarding the natural

environment. Also, the company can implement better waste disposal

policies and standards for its corporate operations. Such effort can

address the increasing complexity of waste disposal standards,

especially in Western countries. Facebook faces the threat of climate

change, which could prompt the business to transfer its servers and

other equipment to another location in the future.

52 | P a g e
Improving Facebook Inc.’s corporate social responsibility standing can

help address the external factors shown in this element of the

PESTEL/PESTLE analysis.

 Legal Factors

Laws impose requirements and limits on Facebook’s business. This

element of the PESTEL/PESTLE Analysis covers the effects of legal

systems and regulations on firms’ remote or macro-environment. The

legal external factors notable in Facebook’s case are as follows:

1. Improving patent laws worldwide (opportunity)

2. Increasing regulatory support for free Wi-Fi (opportunity)

3. Internet regulation in China (threat & opportunity)

4. Increasing regulation on online data (threat)

Facebook Inc. has the opportunity to innovate and introduce new

products, with the expectation of legal protection based on improving

patent laws around the world. In addition, this PESTEL/PESTLE

analysis points to the increasing coverage of free Wi-Fi as a beneficial

trend. For example, based on this external factor, the company can

expand its social media reach in more areas worldwide. However,

Facebook suffers from its ban in China. Nonetheless, the firm has the

53 | P a g e
 opportunity to adjust its services and negotiate with the Chinese

government to gain access to the country’s online social networking

market. Online data collection, sharing and processing regulation

markedly increased in the aftermath of the Cambridge Analytica

scandal and related issues in 2018. This external factor threatens the

company and the online display advertising industry. Overall, this

element of the PESTEL/PESTLE Analysis shows that legal external

factors mainly provide opportunities that Facebook Inc. could take to

expand its operations and market reach.

Financial Analysis

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 Facebook Inc., Consolidated Income Statement
USD $ in millions

12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013

Revenue 40,653 27,638 17,928 12,466 7,872

Cost of revenue -5,454 -3,789 -2,867 -2,153 -1,875

Gross profit 35,199 23,849 15,061 10,313 5,997
Research and
development -7,754 -5,919 -4,816 -2,666 -1,415
Marketing and sales -4,725 -3,772 -2,725 -1,680 -997
Income from
operations 20,203 12,427 6,225 4,994 2,804
Interest income 398 176 52 27 19
Interest expense -6 -10 -23 -23 -56
Foreign currency
exchange losses, net -6 -76 -66 -87 -14
Other 5 1 6 -1 1
Interest and other
income (expense), net 391 91 -31 -84 -50
Income before
provision for income 20,594 12,518 6,194 4,910 2,754
Provision for income
taxes -4,660 -2,301 -2,506 -1,970 -1,254

Net income 15,934 10,217 3,688 2,940 1,500

55 | P a g e
Facebook Inc., Consolidated Statement of Comprehensive Income
USD $ in millions

12 months
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
ended
Net income 15,934 10,217 3,688 2,940 1,500

Change in
foreign currency
translation
adjustment, net
of tax 566 -152 -202 -239 11

Change in
unrealized gain
(loss) on
available-for-sale
investments and
other, net of tax -90 -96 -25 -3 1

Other
comprehensive
income (loss) 476 -248 -227 -242 12
Comprehensiv
e income 16,410 9,969 3,461 2,698 1,512

56 | P a g e
References

http://www.firstmonday.dk/ojs/index.php/fm/article/view/5423/4466

https://www.cheshnotes.com/2017/01/facebook-mission-and-vision-

statement-analysis/

http://panmore.com/facebook-inc-vision-statement-mission-statement

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

https://www.strategicmanagementinsight.com/swot-analyses/facebook-

swot-analysis.html

https://www.stock-analysis-on.net/NASDAQ/Company/Facebook-Inc

http://panmore.com/facebook-inc-pestel-pestle-analysis-

recommendations

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