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INDEX

1. INTRODUCTION ……………………………………………………………….…….……..3
2. HISTORY………………………………………………………………………..……………3
3. FACEBOOK’S TIMELINE OF EVENTS…………………………………….……………...4
4. SWOT ANALYSIS……………………………………………………………....…………...6

4.1. STRENGTHS……………………………………………………………….……………6

4.1.1. LEADING SOCIAL MEDIA NETWORK………………………....…………6

4.1.2. HIGH NUMBER OF USERS…………………………………….……………7

4.1.3. LEADING ONLINE ADVERTISING BUSINESS………………….………..7

4.1.4. OWNERSHIP OF MULTIPLE PLATFORMS……………...…….………….7

4.1.5. HUMAN RESOURCE MANAGEMENT…………………………………….7

4.1.6. RESEARCH AND DEVELOPMENT…………………………….…….…….7

4.1.7. HIGH INVESTMENT IN MARKETING & SALES………...….……….…...8

4.2. WEAKNESSES……………………………………………………………….……….....8

4.2.1. USER PRIVACY AND CONTENT RELATED CONCERNS…….….……...8

4.2.2. TAINTED IMAGE ………………………………….……………….………..8

4.2.3. MANAGEMENT ISSUES……………………….………………….………...9

4.3. OPPORTUNITIES…………………………………………………………….…...…….9

4.3.1. DIVERSIFICATION..........................................................................................9

4.3.2. NEW ACQUISTIONS………… ……………………………….…………….9

4.3.3. TARGETING NEW USER SEGMENTS…………………………………….9

4.4. THREATS……………………………………………………………………………….10

4.4.1. COMPETITIVE THREAT...…………………………………………………10

4.4.2. REGULATORY THREAT…………….……………………………………..10

4.4.3. OPERATIONAL COSTS………………………….…………………………10

5. CONCLUSIONS……………………………………………………….…………………………..10

6. REFERENCES………………………………………………………….………………………….11

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INTRODUCTION
Facebook was founded under the leadership of Mark Zuckerberg at Harvard University in early
2004, with the initial intention to create a student directory containing student profiles and pictures.
Moreover, the website became available for public use in 2006 and by this stage in its development,
anyone over the age of 13 could create a profile if they possessed an e-mail address. Facebook is
characterized as a social media website which “combines features of e-mail, instant messaging,
photo-sharing, and blogging programs, as well as a way to monitor one’s friends’ online activities”.
Thus, Facebook functions as one-stop platform that combines various social activities for its users.
According to Fuchs, the defining features of Web 2.0 social networking websites, like Facebook
and Myspace, are that they allow users to craft their own profiles, link such profiles together in
visible social networks, and allow users to communicate with one another. Thus, on social
networking websites, users utilize self-created profiles that act as avatars, to interact with one
another through interconnected social networks. In addition, such profiles often contain personal
information such as full names, contact numbers, e-mail addresses, physical addresses,
occupations, friendship networks, photos, records of activities, personal preferences, and
demographic information.

Growth of the social media giant was based on the high level popularity it acquired soon after
release. The brand has enjoyed sharp growth and good financial performance in recent years. User
privacy related concerns however, have continued to remain a problem for the social media giant.
Apart from that, pressure from governments and legal agencies will also affect its business. While,
the audience of the social media brand has continued to grow, its addictive qualities have become
a topic of heated discussion among scholars. Apart from Facebook, the social media brand also
owns Instagram, WhatsApp, Messenger and Oculus. Nearly all of the social networking giant’s
revenue comes from online advertising. In this area, it has emerged as a mighty rival for Google’s
online advertising empire. Current issues, however, have become a threat to the brand’s reputation.
Despite emerging concerns, its popularity among users remains high because of the easy to use
interface and other several features which have been admired as effective and criticized for being
addictive. Facebook is among the leading businesses in the internet world. In the recent period,
number of users of Facebook was past 2 Billion.

HISTORY

Founded on February 4, 2004 by Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz and Chris
Hughes in a Harvard dorm room, Facebook has rapidly became one of the biggest social
networking sites in the world. Within the year, the social networking site accrued over 1 million
users - which has since grown exponentially to hit over 2 billion in 2018.

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In 2003, as a sophomore, Zuckerberg created a site that compared the pictures of different Harvard
students' faces and allowed users to rate the attractiveness of those pictures - attracting 450
people to vote 22,000 times. However, because Zuckerberg violated the school's policy by hacking
into the school's system to acquire photos for the site, it was shut down quickly by the university
- within two days. Still, Zuckerberg avoided expulsion. However, Facemash's success sparked the
idea for Facebook - a social networking site where students at Harvard could use their ".edu" email
addresses and photos to connect with other students at the school.

Along with Moskovitz, Saverin and Hughes, Zuckerberg created the address thefacebook.com in
February of 2004, and it began to spread like wildfire at Harvard - and then Stanford, Yale and
Columbia by March of that year.

FACEBOOK’S TIMELINE OF EVENTS

 February, 2004 - Facebook (then called "thefacebook") was founded by Zuckerberg,


Moskovitz, Saverin and Hughes.

 March, 2004 - Facebook spreads to three other college campuses - Yale, Columbia and
Stanford.

 June, 2004 - Facebook moves its headquarters to Palo Alto, California.

 September, 2004 - The site launches the now infamous "wall" - which allows users to post
things and receive messages on their own page.

 December, 2004 - Facebook hits 1 million users.

 May, 2005 - Facebook expands to over 800 college campuses.

 September, 2005 - The site expands to high school networks. It also drops the "the" to become
just "Facebook."

 October, 2005 - Facebook adds photos and goes international.

 December, 2005 - Facebook has over 6 million users.

 April, 2006 - Facebook goes mobile.

 September, 2006 - Anyone can now join Facebook.

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 December, 2006 - Membership increases to 12 million.

 June, 2007 - Video launches.

 December, 2007 - Membership increases to 58 million.

 July, 2008 - Launch of Facebook for iPhone.

 February, 2009 - The "like" button is introduced.

 July, 2010 - Over 500 million users are active on Facebook.

 August, 2010 - Engineering center is opened in Seattle.

 October, 2010 - Groups are launched.

 April, 2011 - Data center opens in Prineville, Oregon.

 July, 2011 - Video calling is launched.

 April, 2012 - Acquisition of Instagram is announced.

 May, 2012 - Facebook releases their IPO - which raised $16 billion and gave the company a
$102.4 billion market value.

 October, 2012 - Membership hits the 1 billion mark.

 February, 2013 - Acquisition of Atlas is announced.

 June, 2013 - Facebook's acquisition Instagram launches video.

 February, 2014 - Acquisition of WhatsApp is announced.

 March, 2014 - Acquisition of Oculus is announced.

 November, 2014 - Groups App is announced.

 April, 2015 - Over 40 million small business pages are on Facebook.

 June, 2015 - Facebook's AI Research opens in Paris.

 February, 2016 - Facebook's Reactions launches.

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 July, 2016 - Over 1 billion users of Messenger a month.

 October, 2016 - Marketplace launches - allowing users to buy and sell products.

 April, 2017 - F8 developer's conference is held in San Jose by Facebook.

 March, 2018 - Facebook is sued by shareholders following stock plummet.

 April, 2018 - Zuckerberg testifies before Congress regarding concerns over data and privacy
breaches.

 September, 2018 - Facebook COO Sheryl Sandberg testifies before Congress alongside

Twitter executives.

 January, 2019 - Irish Data Protection Commission raises concern over Facebook's merger with

WhatsApp and Instagram

 February, 2019 - Intimate personal information shared to Facebook by third-party apps

 March, 2019 - Facebook's lobbying against data privacy laws revealed

 April, 2019 - Hundreds of millions of Facebook records exposed on Amazon cloud servers

SWOT ANALYSIS

STRENGTHS:

LEADING SOCIAL MEDIA NETWORK


Despite recent concerns and controversies Facebook is the leading social network of the world.
The popularity of the social media site was high right since its foundation. With time, it kept
growing even popular. Individual users, businesses and other groups started using it for striking
connections and for marketing. With time, it has added several more features that have made the
platform all the more engaging and attractive for users.

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HIGH NUMBER OF USERS
The number of Monthly Active users at Facebook has grown very fast doing the recent years. It is
past 2.2 Billion now. The popularity and audience size of the social media brand has grown very
fast. It’s famous globally as the leading social media platform. The number of users in Asian and
Western markets has grown very high.

LEADING ONLINE ADVERTISING BUSINESS

It is one of the leading online advertising businesses. Facebook is behind Google in this area.
However, the brand has grown its presence in the area of mobile advertising. Facebook’s
advertising revenue was close to 40 Billion US dollars in 2017. Since Facebook has such a vast
audience, it makes sense that it’s the prime location to buy ads compared to less popular platforms
like Twitter. Facebook ads are so popular, consulting and marketing firms specialize in the creation
and deployment of these ads. Facebook further encourages ad usage through courses on how to
create your own Facebook ad campaign.

OWNERSHIP OF MULTIPLE PLATFORMS

Apart from Facebook, Facebook Inc, also owns WhatsApp, Instagram, Oculus and Messenger.
Facebook is a platform for building connections, sharing and forming groups. Instagram on the
other hand is a platform for sharing visual media like images, videos and for forming groups and
communities as well as connecting with others and messaging. WhatsApp is a mobile application
for instant messaging and for video messaging. Now, to capitalize on this vast user outreach,
Facebook is considering bridging messaging platforms (combining Instagram direct messages,
Messenger, and WhatsApp) into one single messaging app. Oculus is a virtual reality technology
and content platform that allows users to learn and train as well as connect.

HUMAN RESOURCE MANAGEMENT


Facebook is also known widely for its excellent human resource management. Apart from paying
its staff well, the brand has also adopted excellent HR management policies that have been hailed
industry wide as among the best. Apart from training and education, it provides its employees with
opportunities for growth.

RESEARCH AND DEVELOPMENT


Every technology brand depends heavily on research and development for growth. Facebook also
keeps its platform updated to remain technologically ahead of its social media competitors. In the
recent years, it has raised its expenditure on research and development aggressively. In 2015, its
expenditure in research and development was 4.8 Billion dollars which increased to 5.9 Billion
dollars in 2016 and then 7.8 Billion dollars in 2017. That’s a large sum and Facebook is among

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the leading spenders on R&D. Research and development has played a major role in fueling the
growth of the social media brand during the recent years. Overtime, as the social media network
and its audience grew, it brought several new features to make social networking an immersive
experience.

HIGH INVESTMENT IN MARKETING & SALES


Part of the fast growth of Facebook as a social network can be attributed to its excellent marketing.
Facebook has marketed its brand heavily leading to fast growth in the numbers of mobile users.
Its investment in marketing and sales has grown a lot in just last few years. It grew from 3.8 Billion
in 2016 to 4.7 Billion in 2017 and then 5.4 Billion dollars in the first three quarters of 2018.

WEAKNESSES:

USER PRIVACY AND CONTENT RELATED CONCERNS


User privacy has become a central issue challenging the internet industry in the recent times.
Facebook is facing a lot of criticism over its user data related policies. Complaints against
Facebook over its user data management have risen. In the recent months of 2018, it missed some
of its important targets related to revenue due to declining popularity over the user privacy row.
Europe has adopted strict rules related to user data. The result has been that user base eroded most
rapidly in Europe. In Canada and US, the position of the social media network has remained
relatively unchanged.

TAINTED IMAGE
Fake news, user privacy related concerns and other similar issues have tainted the image of the
social media network. Some experts argue that core Facebook platform has been in a state of
decline. It is now not as much popular as it was some time ago. In July 2018, data scandals resulted
in user disenchantment. The Facebook data scandal was considered to be the worst of this century
resulted in increased government oversight and higher pressure on internet based businesses.
Questioning of Facebook leader Mark Zuckerberg was an evidence of the gravity of the issue.
Brand image is very important for any business and especially leading global platforms. Analysts
expect that the charm of Facebook could thin further unless management pays able attention to its
data and user management practices. Moreover, Facebook owns several platforms like Instagram
and WhatsApp. Its aggressive user acquisition practices have bene criticized by media and
competitors. Its use by foreign entities to affect the outcome of the US elections is also a major
problem that could taint face book’s image further. Analysts see a solution only in heavier control.
The ‘Cambridge Analytica’ data scandal has tainted Facebook’s image and its effects are going to
remain for long. According to several researchers and analysts, it is the worst to have happened to
Facebook and to regain the image and value it held would be very difficult if not impossible. The

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leader’s duty would be to ensure that management follows the highest level of ethics and to ensure
such incidents do not happen again at Facebook.

MANAGEMENT ISSUES
The data scandal at Facebook has been linked with management problem. Apart from the founder
other top executives have also been held accountable in this area. Management problems are seen
as the biggest problems in the business world. They can lead to more and more problems.
Convincing users has become difficult for the leader. However, he is convinced, he might be able
to bring things back under control in future.

OPPORTUNITIES:

DIVERSIFICATION

Facebook owns several platforms including WhatsApp, Instagram and Messenger. To find further
growth diversifying into new technology areas can be an attractive option. Facebook has
diversified its user base by collecting Instagram and WhatsApp under its umbrella. It seems teens
and young adults are more likely to frequent Instagram regularly than Facebook. And everyone
from families to corporations use WhatsApp. This means Facebook has an opportunity to reach
various audiences in different forms. Once Facebook has overcome the recent data and
management related problems, it could consider diversifying into other related areas.

NEW ACQUISITIONS

Facebook has managed a series of acquisitions including that of WhatsApp and Instagram. It has
had attractive financial growth in the recent years. It can also consider making new acquisitions.
Acquiring technology startups can help it build a string portfolio of businesses. It has the funds to
transform a product from nothing into something, as it did with Instagram. Initially, Instagram had
no revenue when Facebook bought it in 2012. And now, seven years later, the platform is worth
ten times what Facebook paid for. Facebook can achieve a similar feat with another product, so
long as the product offers something different.

TARGETING NEW USER SEGMENTS


Facebook has mainly remained the social network of the modern users. However, it can target new
user segments. It can target older users too as well as bring additional features for businesses and
institutions. While it offers attractive features for marketing, not all kinds of institutions find it
much suitable for marketing. It could become a marketing platform of choice given it innovates to
suit the needs of all kinds of users.

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THREATS:

COMPETITIVE THREAT
Competitive threat against Facebook has kept rising. Google has got some formidable strengths
and the strongest position in the internet industry. It is the toughest competitor that Facebook has
to face. Other competitors like Amazon, Microsoft and Apple too hold significant clout that can
lead to higher pressure in the social networking platform. Higher competitive threat can shrink the
user base of the social media giant. While Facebook has got a large user base, competitive pressure
has forced it to make compromises.

REGULATORY THREAT

Regulatory pressures on all the internet businesses have increased. From user privacy to data safety
and content quality related concerns there are several areas where these brands have been forced
by governments to adopt extra transparency and higher accountability. Because of data breaches
and governmental parties taking a deeper look into internet privacy, regulatory pressures on
internet businesses is at an all-time high. Because of the earlier controversies, Facebook is likely
the company under the most scrutiny. One wrong move and it’ll wind up in another viral article.

OPERATIONAL COSTS
As the size of audience has grown, the operational costs of Facebook have also increased. There
has bene a sharp rise in the cost of revenue of the social media business during the previous three
years. From 2015 to 2017, its cost of revenue has nearly doubled. Cost of revenue stood at 2867
million dollars in 2015, and increased to 3789 million dollars in 2016. From there it increased by
around 44% or 1.67 Billion dollars 5.5 Billion dollars in 2017. Apart from other things, the
increased expenses related to data centers and technical infrastructure has led to higher operational
costs for Facebook. Facebook is trying to increase its data center capacity further which will further
increase its operational expenses.

CONCLUSION
Facebook is the leading social media network of the world. However, a series of user data and
content related controversies have bothered it in the recent years. An increasing number of user
are feeling disenchanted form the social media experience. While the social media experience is
considered immersive on the one hand, on the other it is also highly addictive. Moreover, fake
news, election rigging and other similar challenges are giving rise to new controversies and
troubles. The brand has performed well financially in the recent years. The social media network
enjoyed heavy growth in recent years but sometimes growth also brings huge and unanticipated
costs. Mark Zuckerberg might not have anticipated earlier that the Cambridge data scandal would
take such form. However, his focus must remain on bringing things back under control and

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changing the image of his website into a responsible social media network. This would also require
higher accountability from the top executives as well as better user and user data management.
These scandals have rocked Facebook. However, it still has large user base and in the Western
Nations especially its audience has remained nearly unchanged. The revenue and user acquisition
targets of Facebook have fallen below expectations. However, if we compare the quarterly
earnings of the social media brand for the first three quarters of 2018 with the previous year, its
financial performance is still better than previous year.

REFEERENCES

1) https://investor.fb.com/financials/default.aspx
2) https://www.forbes.com/sites/victorlipman/2018/04/10/the-one-real-question-facebook-
needs-to-answer/#79f8ee3b535f
3) http://time.com/5349100/facebook-revenue-decline-zuckerberg/
4) https://notesmatic.com/2018/11/facebook-swot-analysis-2018/
5) https://www.thestreet.com/technology/history-of-facebook-14740346
6) https://www.researchgate.net/publication/294836170_Social_Media_Privacy_A_Faceboo
k_Case_Study

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