Executive Summary
Introduction
Facebook Inc., which has now changed its name to Meta ,Platforms is a social media and social networking platform founded by Mark Zuckerberg and colleagues in 2004. the company has now reached global dimensions with more than 2 billion users in 2022. the company relies on the multiple platforms business model, which entails that its service is connected and it generates revenue from the interaction of users. The most recognized means of monetization by the company is advertisements. However, it also has subscriptions premium services. The total revenue for 2022 was $116 billion from the meta platform, a figure indicating a steady increase since 2019. 98% of this revenue came from advertising.
Competitive strategy
the company mainly focuses on user experience, which has been further boosted by the metaverse. The Facebook metaverse is a virtual world being developed by Meta Platforms that would enable users to communicate with friends, family, and other people in a 3D setting without being constrained by physical distance. Users of the platform will be able to feel as though they are being teleported from one location to another, for example, from one store to any clothes area or market, to buy virtual goods. Although there is a lot of ambiguity around its potential, the metaverse shows promise for the development of Meta Platforms.
Value chain
The value chain analysis of the firm indicates that it capitalizes mostly on its vast amount of data and great number of customers as the key assets. Content creation, advertising, and marketing all create revenue for the firm. Its logistics comprises its 18 data centers which occupy a combined 40 million square feet area. The company ensures the security of the center and that it is environmentally sustainable.
VRIO analysis
The paper does a VRIO analysis of the data center facilities, which are the main asset of the firm. They are a source of great value to Meta since the firm relies on data analytics from the same centers to tailor ads and recommendations for its customers. Further, the partnerships with established firms rely on this sam data to tailor their advertising to the customers. The data centers are rare and form a unique selling point for the firm. The company’s programs and services, such as Facebook, Instagram, Messenger, and WhatsApp, are powered by a global portfolio of data centers, facilitating communication and sharing between billions of people worldwide. The facility is inimitable since it would be hard for an emergent player to replicate the such amount of data. The meta platform use of met averse is also a unique selling point (USP).
Recommendations
Recommendations are made to make Facebook maintain its position in the market. These include strategic partnerships and mergers and acquisitions of related brands. Partnerships will both boost revenue and the reputation, specifically in this period of accusations against Facebook for its data breaches. Another recommendation is to focus on user experience and data security.
Introduction
Facebook has been in existence for two decades since its establishment by Mark Zuckerberg and his Harvard University Colleagues in 2004. according to the company’s annual reports, the platform (original Facebook) had a total of 2 billion users by the end of 2022, which is an increase of 4% from the previous year’s figure (Meta-Financials, 2023). Meta platforms Inc., the current co-owner of the platform, and the official commercial brand of Facebook, reported that for the fiscal year ended September 2022, the company gained a net income of $4.4 billion on $27.7 billion for the 3rd quarter of 2022. The company employs over 60,000 people globally and has a market capitalization of over $1 trillion as of April 2021 (Meta-Financials, 2023).
Following its recent re-branding into Meta Platforms, the company shifted to the metaverse concept, which relies on AI-powered solutions for businesses for advertising and online interactions. This has led to a sudden decline in its revenues due to uncertainty among the users over the sustainability of the concept. The company’s met-averse unit reported a 60% stock decline in 2021, soon after the CEO’s declaration of the company’s change of business tact (Kraus et al., 2021). This paper develops a strategic analysis of the business, highlighting its core capabilities, the weak areas, and presents recommendations for the future sustainability of the business. The VRIO framework is applied.
Company Prospects for Facebook Inc.
Facebook’s competitive strategy
Facebook, currently Meta Inc., is a global social media behemoth that mainly capitalizes on its ownership of multiple social media platforms to gain a competitive edge. These are Instagram, Whatsapp, Messenger, and the original Facebook (van der Vlist et al., 2022). It has billions of users from all over the world and mainly relies on advertising as its main source of revenue. Further, the company is able to leverage its consumer base and offers targeted advertising for businesses according to the user’s needs. Currently, the company has over 50 million registered users, with more than 80% of global businesses using the platform in one way or another in their marketing strategies. There are notable key areas of the company’s competitive advantage that are highlighted in this section.
To begin with, the company uses a multi-sided platform business model. Such a model entails a business whereby the key player does not offer a service but rather connects two or more participant groups and benefits from their interaction. One main benefit that Facebook gains from employing the model is known as network effect (Benzel & Collins, 2022). Facebook becomes more beneficial for everyone as more people utilize it. By continuously enhancing the user experience and adding fresh features to keep people interested, Facebook makes use of this network effect. Facebook fosters the network effect by encouraging users to ask their friends and family to join and by keeping users on the site and offering value. The most current example of such an offering is shorts, a feature that allows users to create and publish short videos on the platform. This was introduced to make the company competitive against Ticktock and Instagram reels (Imran, 2022).
Secondly, owing to a large number of users, the company also garners a substantial income from its data and analytic services. The vast data pool allows the company to tailor advertisements for its users, making it highly subscribed to by companies that need the service. It also allows the company to create tailored experiences for its users through algorithm-based suggestions. On the same note, the business is well known for its diversification; one main demonstrator of this aspect is its acquisition of Instagram and WhatsApp. Through these acquisitions, the Meta Inc. brand entered into new service offerings such as messaging and photo sharing. The company also stays open to new ideas and trends, such as the Avatar character. Other strong points in the company’s competitive strategy include partnerships with PayPal and Shopify and innovation – demonstrated by the acquisition of Occulus (an AR and VR heavy company) (Sinha, 2022).
Facebook’s value chain analysis
Content creation, advertising, and marketing all make part of the company value chain. Activities like content generation, data analysis, and advertising are all included in the company’s value chain analysis. User-generated material, such as posts, images, and videos, as well as content produced by companies and marketers, are all part of Facebook’s content development activities. In order to provide consumers with tailored adverts, the company’s data analysis operations entail gathering and analyzing user data4. Selling ad space to companies and advertisers, as well as providing users with tailored adverts, are two aspects of Facebook’s advertising activities (Imran, 2022).
One main area in facebooks inbound logistics is the management of its data center. Owing to the global importance of user data and its vast number of subscribers, the company has a rich data lake that it hosts in 18 global data center campuses which occupy a total of 40 million square feet and cost the company in excess of 20 million uses. It is also important to note that the data centers are designed to be energy efficient as well as environmentally friendly in addition to being secure and efficient. They use renewable energy sources with projections of going 100% pollution free by 2030. Additionally, the business has created cutting-edge cooling systems that utilize outside air to cool its servers, eliminating the need for energy-intencontent sive air conditioning (Roy et al., 2015).
The platform delivers to its users across the internet, which further fosters its global presence. The users may use a range of devices to access the platform ad its member apps. These include mobile applications (both Android and apple inc.). further, Customer assistance, user education, and the creation of a safe and secure platform are all examples of Facebook’s service initiatives. To safeguard the data and privacy of its users, Facebook makes significant investments in safety and security. In order to assist consumers learn how to utilize its platform successfully and securely, the firm also offers user education.
Outbound logistics for the company may include delivering content to users across the globe via the Internet. The company also focuses on value addition to their product with the constant addition of innovative products to their collections, including Facebook marketplace and Facebook Live. Customer assistance, user education, and the creation of a safe and secure platform are examples of additional service activities. To safeguard the data and privacy of its users, Facebook makes significant investments in safety and security. In order to assist consumers learn how to utilize its platform successfully and securely, the firm also offers user education.
VRIO Analysis: Facebook data centers
Organizations use VRIO analysis as a technique to assess their resources and skills and determine which ones can provide them a competitive edge. The acronym VRIO stands for importance, Rarity, Imitability, and Organization, and each of these elements is evaluated to ascertain a capability’s strategic importance (Knot et al., 2015). The data centers are a critical possession in the company’s supply chain. this can be analyzed under the framework.
Valuable: The ability for Facebook to store and handle enormous quantities of user data, which is essential to its advertising business, makes its data centers lucrative. Facebook has set a target to run all of its operations using renewable energy by the end of 2020. The company’s data centers are built to be environmentally friendly and energy-efficient.
Rare: Facebook’s data centers are profitable because of its capacity to store and manage massive amounts of user data, which is crucial to its advertising business. By the end of 2020, the corporation aimed to use renewable energy for 100% of its activities. As a result, data centers are designed to be both energy and ecologically-friendly (Roy et al., 2015).
Inimitable: Facebook Inc. is a highly innovative brand that has contributed to its domination of the social media and advertising sector. As a global company, Facebook employs a team of diverse professionals and techniques to understand its customer needs and adapt to them. It also has a well-established feedback and community participation network, which allows it to communicate with the customer and understand their needs. The application of diversity in innovation makes the brand inimitable.
The company presents itself with the unique selling point of being the largest social media network. With the acquisition of other social media platforms and the ,metaverse it is hard for a social media company to come into play and compete at par with the brand. One other USP is that the company connects family and friends in real-time. Currently, it is almost a necessity to have a Facebook, Instagram, or WhatsApp account in order to connect with family, and friends or conduct business. The company can therefore be equated to a social media monopoly.
Organization: The manner that Facebook has set up its data centers enables it to make the most of its resources. By the end of 2020, the firm wants to run entirely on renewable energy. To that aim, it has created cutting-edge cooling systems that use outside air to chill computers instead of energy-intensive air conditioning.
Recommendations for growth
One way the company can continue growing and maintain its global presence would be strategic partnerships with strong brands which boost their service offering to the customers. An example of such partnerships witnessed in the past include PayPal (Sinha et al., 2022). This was just the first step; the meta platform is currently aiming through its Financial services team to partner with more payment networks, banks, and other financial institutions as a long-term growth strategy of leveraging the platform as a business arena. On the same line, the marketplace functionality of the Facebook app has great prospects and promise for the propulsion of growth of the company. A myriad of items can be found listed there and, if properly leveraged, can make Facebook competitive against e-commerce brands like Amazon.
Secondly, in strategic partnerships, the company could focus on partners who further edify its services. According to Hern (2016), the company is eyeing a major partnership with Google, Amazon, IBM, and Microsoft for AI. Such a partnership would greatly boost the company’s data analysis of customer trends, thus boosting its business delivery. Another area that would greatly benefit from AI use is Cybersecurity which would boost its data security protocols. Specifically, this measure comes in handy at a period when Facebook is still under criticism for the 2021 personal data breach. The company made public the biodata of 577 million users without their consent or knowledge (Sun, 2023). Partnership to this effect will thus lead to the company regaining the trust of the public.
Monetization is a step that the company needs to focus on for growth. Currently, the company depends on advertising to make revenue from the platforms. However, there is much more promise for revenue generation from the same. However, it has recently introduced innovative products such as shorts, where users create short videos. If the company leverages on the same, it may end up further growing its network. What needs to be done is incentivizing the creators, which will lead to more users joining. Further, the metaverse platform will serve both as an AI platform with immersive interactions for the users and as a business model for the novel Meta Platform. Despite the concept showing less promise in its inception stage, the concept will lead to the uniqueness of Facebook inc and the generation of new monetization vis-a-vis communication schemes (Piranda, Sinaga & Putri, 2022).
Conclusion
The paper presents a strategic evaluation of Facebook Inc., a social media company currently with a global presence and ownership of Whatsapp, Messenger, and Instagram. The company was formed by Mark Zuckerberg in 2004, and he is still the current CEO even after the evolution of the same into Meta Platforms. It has a strong competitive strategy which is fostered through partnerships and mergers to form the largest global social media brand. Innovation also makes the brand competitive. The value chain indicates the company is dependent on its vast volume of data and users as the driver of its profitability. It operates on the multiple platform business model. the paper then does a VRIO of Facebook data centers before proposing recommendations for its further growth.
References
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