The paper "Analysis of Facebook Environment and its Strategy" is a perfect example of a business case study. Environmental analysis is the study of the firm’ s environment to identify environmental factors, which can significantly impact on the organizational operations (Nag, Hambrick, and Chen, 2007). The environmental analysis enables a firm to know what is happening inside and outside the firm and to increase the probability that the strategies of a firm developed reflects the environment of the organization (Hill and Jones, 2007). Organization environment has three distinct levels: internal environment, operating environment and the general environment (Haberberg and Rieple, 2008).
The internal environment entails employees, managers, union and board of directors (Alkhafaji, 2008). Operating environment includes competitors, markets, customers, regulatory agencies and shareholders (Morden, 2007). On the other hand, the macro-environment or general environment includes economic, social, political and legal systems in the country (Malunga, 2010). Analysis of internal and external environment of the business enables its decision-makers to formulate a strategy (Morrill, 2007). By using SWOT analysis and PESTLE analysis one can be able to carry out a thorough environmental analysis of business (Armstrong, 2009).
The SWOT analysis provides internal environment analysis while PESTLE provides an external analysis (Witcher and Chau, 2010). This report provides an environmental analysis of Facebook using PESTEL and SWOT analysis. It also provides an analysis of the Facebook strategy. Background information Facebook is the largest social network in the world with over 600 million users (Facebook, 2011). It was founded by Mark Zuckerberg in 2004, initially as an exclusive network for Harvard students (Facebook, 2011). The name of the network stems from the colloquial name for the book given to students at the beginning of the academic year by the university administration in the USA to enable students to be acquainted with one another.
Users of the network are able to create a personal profile, add other users as friends and exchange messages (Facebook, 2011). The main source of revenue of Facebook is advertising. Microsoft is the exclusive partner of Facebook for banner advertising and hence Facebook only advertises whatever is found in Microsoft advertisement inventory. However, Facebook has a lower click-through rate (CTR) for advertisement as compared to other major websites. Over half of Facebook users return daily (Facebook, 2011).
On average, people spend an average of 20 minutes on the site daily. The firm has been able to attract the best talents from Google that have spurred innovation and growth at the firm. A large percentage of Face book’ s income is from the advertisement. Facebook collects a lot of data from its visitors. The firm acquired FB. com in 2010, which recorded 8.5 million in domain sales income (Facebook, 2011). The firm obtained a patent for the news feed.
The firm also allows users to upload an unlimited number of photos unlike its competitors like Photobucket and Flickr, which have a limited number of photos that users can upload. Facebook also has an official application on various phone models. The firm is expected to launch @facebook. com email addresses. Internal Business environment analysis An internal analysis is essential for strategic decision making in any firm (Nag, Hambrick, and Chen, 2007). It helps a firm to have a greater understanding of itself by evaluating their resources and capabilities.
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