Beruflich Dokumente
Kultur Dokumente
Facebook Public General: photos, A billion users. Broad segments: Open Wide
videos, blogs, open to people 13 and older.
apps
Google Plus Subsidiary General Nearly 100 million users. Broad Closed Moderate
segments: open to people 13 and
older.
Twitter Public General. Micro- Over 200 million users. Broad Open Narrow -
blogging, RSS, segments. Moderate
updates
LinkedIn Subsidiary Business and Over 200 million. Focused: Closed Moderate
professional working and employment
networking seeking professionals.
Strategic Group Map
Point of View and Time Frame
The group has taken the point of view of Mark
Zuckerberg, founder and CEO of Facebook.
The group assumes that the timeline of the
case takes place in 2013.
VISION FRAMEWORK
FACEBOOK, INC. (2013)
Core Ideology
Core Values
● Autonomy and Responsibility
● Focus on Impact (innovation)
● Facebook is Run by Hackers (detail
oriented innovation and creation)
● Growth and Coaching (no fear of failure)
Core purpose
“Give people the power to share and make
the world more open and connected”
VISION FRAMEWORK
FACEBOOK, INC. (2013)
Envisioned Future
10-to-30-year BHAG
● Expand our global community.
● Develop great social products to increase
engagement.
● Increase the utility of our services and provide the
most compelling user experience.
● Improve our ad products.
● Excel at mobile product development and make our
mobile products fast, reliable and easily available.
● Enable developers to build, grow and monetize their
mobile and web applications.
● Build a scalable infrastructure to provide the most
compelling, robust, and reliable product experience.
VISION FRAMEWORK
FACEBOOK, INC. (2013)
Envisioned Future
Vivid description
Billions of people using Facebook's websites
and mobile applications every day to stay
connected with their friends and family, to
discover and learn what is going on in the
world around them, and to share and express
what matters to them to the people they care
about.
Facebook Core Products
Facebook Business Model
Value Propositions
For Users: “a social utility that helps people
communicate more efficiently with their friends,
family and coworkers.”
The growth of China as Social media companies from Increase threat of Threat
an economic China may enter competition. entry
powerhouse China may open its market to
international companies including Decrease bargaining Opportunity
social networking sites - more power of buyers and
buyers and suppliers suppliers
Rapid economic Enlarged market size and increase Decrease bargaining Opportunity
growth of developing dependency on the internet power of buyers
countries
Opportunities
Popular governmental support for globalization and political stability in 0.05 4 0.20
developed and developing countries
The growth of China as an economic powerhouse 0.05 3 0.15
Increasing disposable incomes and significant level of willingness to pay for 0.05 3 0.15
what have customarily been free services
Increase transaction and usage of the online platform 0.15 4 0.60
Mobile platforms have quickly become one of the fastest growing segments of 0.15 4 0.60
advertising.
Improving patent laws worldwide 0.10 4 0.40
Increasing regulatory support for free Wi-Fi 0.10 3 0.30
Increasing emphasis on business sustainability 0.05 3 0.15
Threats
Increase in data privacy concerns and laws 0.15 1 0.15
Increasing cost of the internet 0.10 2 0.20
Strict internet regulation in China and other countries 0.05 2 0.10
The Facebook user The company receives the content Increase value Strength
uploads the content without additional cost. The and services
such as photos, texts company obtains free information
and videos. from users. The company receives
open feedback from users for any
improvement and change
Procurement
Effects of Firm’s
Value Chain Analysis Impact on Value Chain Elements Conclusion
Business Model
User-friendly platforms for Increases web traffic and Improve customer Strength
both users & advertisers attracts user loyalty relations and improve
quality of service
Social ads and viral Ability to provide the Improve perception of Strength
marketing platform for marketers to value
reach their existing and
prospective customers
Easily imitable products and Competitors are developing Decrease company’s Weakness
services similar products and services value
Operations
Impact on Value Chain Effects of Firm’s
Value Chain Analysis Conclusion
Elements Business Model
Operates more than 30 sales Effectively builds and maintains Improve Strength
office around the world. Global long-term partnerships with perception of
sales force attracts and retains advertisers, users and value and quality
marketers and provides support developers. of service
at all stages of the advertising
campaign cycle.
Employs highly skilled Talent and experience of Improves value and Strength
engineers and computer each employee is the quality of products
scientists whose foundation for enhancing and services
expertise span a broad Facebook’s products and
range of technical areas. services
Buys companies to get The company uses the Improves value and Strength
excellent people talent and knowledge of quality of products
acquired employees to and services
improve capabilities and
develop new businesses
● Current Ratio For the past two (2) years, Increase Value Strength
Facebook’s current ratio is
consistently above the normal
current ratio of 1. Facebook
even doubled its current ratio
from 5 in 2011 to 11 in 2012.
Furthermore, Facebook has the
highest current ratio as
compared to its competitors
(Google and LinkedIn).
● Total Asset The total asset and fixed asset turnover Facebook is not Weakness
Turnover Ratio ratio of Facebook went down from 0.59 efficiently utilizing
● Fixed Asset and 2.25 in 2011, respectively, to 0.34 and its fixed and non-
2.13 in 2012, respectively. The significant fixed assets to
Turnover Ratio
increase in assets and fixed assets of generate profit as
Facebook is due to the increasing compared to its
purchases of PPE which contributed to the peers.
lower turnover.
● Gross Profit The gross profit margin of Facebook is Decrease Shareholder Weakness
Margin consistently around 70% to 75% in 2010 to Value and
2012. This margin is the highest among all of its Profitability.
● Operating Profit
Margin competitors with Google, LinkedIn and Twitter
● Net Profit Margin only has 59%, 87% and 59%, respectively.
However, Facebook experienced decreasing
● Return on Equity
operating and net profit margin with only 10.6%
and 0.6% in 2012 as compared to 52% and 19%
in 2010. This margin is because of the
increasing cost and expenses, especially
Research and Development costs of the
Company. Despite the high gross profit margin,
Facebook has one of the lowest operating and
net profit margin as compared with its
competitors, Google and LinkedIn.
In terms of return to shareholder equity,
Facebook experienced downfall in the last 3
years and has the lowest return as compared to
its competitors.
Cash Flow
Impact on Value Chain Effects of Firm’s
Financial Ratio Analysis Conclusion
Elements Business Model
Strengths
Ability to provide the platform for marketers to reach their existing and 0.15 4 0.60
prospective customers
Highly skilled and experienced talents from acquired businesses. 0.10 3 0.30
Strategic Facebook office location with more than 30 offices around 0.05 3 0.15
the world.
Strong liquidity ratio, debt ratio and positive operating cash flow. 0.10 3 0.30
Weaknesses
Relies heavily on advertising to generate positive cash flow and 0.10 1 0.10
revenue.
Weakness-Opportunity
O3,4&5-W2: As the number of Facebook users
continue to grow across different channels, the
company must develop other products and
services that can generate additional revenue
streams apart from advertisements and royalties
from third party developers.
Strength-Threat
TOWS Matrix
S6-T1: Facebook allocates a significant portion
of its funds into research and development to
address the issues and concerns of its users.
Weakness-Threat
W1-T1: The company must continue to
negotiate and lobby policies with countries
where it has minimal or no presence to open up
their markets to broaden the company’s reach.
Competitive Strategy Framework
DIMENSION PARTICULARS CONCLUSION
Specialization The company caters widely in terms of product line and customer segment. Maintain
Facebook offers various products and targets different users and
advertisers.
Brand The company has been the icon of social networking for years. Its brand as Maintain
Identification well as the company has been recognized globally.
Product The company gives high importance to product quality. It prides itself with Maintain
Quality competent and skilled programmers who produce innovative and technical
developments at a fast pace.
Technological The company is proactive side in the aspect of technological leadership. Maintain
Leadership Through strategic partnerships and acquisitions, Facebook aims to provide
user-friendly platforms that caters to customers’ needs.
Cost Position The company's cost position relies heavily on advertising revenues. The Improve
Facebook users platform is however, free of charge.
Vertical Facebook has employed horizontal scaling on the other hand. This is Maintain
Integration through adding more machines, moving fast, and finding the right people.
Service The company provides customers support to business services through its Maintain
Facebook Business Tools used by website owners, publishers, app
developers, business partners (such as advertisers) and customers.
Financial Facebook is not heavily reliant on debt as indicated by its financial ratios. Maintain
Leverage
SPACE Matrix
Alternative Courses of Action
Ability to provide the platform for marketers to reach their existing 0.15 4 0.60 4 0.60 3 0.45
and prospective customers
Highly skilled and experienced talents from acquired businesses. 0.10 3 0.30 3 0.30 3 0.30
Strategic Facebook office location with more than 30 offices around 0.05 4 0.20 3 0.15 4 0.20
the world.
Easy and user-friendly platform. 0.10 4 0.40 4 0.40 3 0.30
Large Scale Systems and Scalable Infrastructure. 0.15 4 0.60 4 0.60 3 0.45
Significant funding allocated to research and development. 0.10 4 0.40 4 0.40 3 0.30
Strong liquidity ratio, debt ratio and positive operating cash flow. 0.10 4 0.40 4 0.40 4 0.40
Internal Weakness
Strategic Planning Matrix
Competitors are developing similar products and services 0.05 4 0.20 4 0.20 2 0.10
Relies heavily on advertising to generate positive cash flow and 0.10 4 0.40 3 0.30 2 0.20
revenue.
Weak asset efficiency and profitability ratios. 0.10 4 0.40 4 0.40 3 0.30
TOTAL 1.00
EXTERNAL
Opportunities
Popular governmental support for globalization and political stability 0.05 3 0.15 3 0.15 3 0.15
in developed and developing countries
The growth of China as an economic powerhouse 0.05 3 0.15 3 0.15 3 0.15
Increasing disposable incomes and significant level of willingness to 0.05 4 0.20 3 0.15 3 0.15
pay for what have customarily been free services
Increase transaction and usage of the online platform 0.15 4 0.60 4 0.60 4 0.60
Mobile platforms have quickly become one of the fastest growing 0.15 4 0.60 3 0.45 4 0.60
segments of advertising.
Improving patent laws worldwide 0.10 3 0.30 3 0.30 4 0.40
Increasing regulatory support for free Wi-Fi 0.10 3 0.30 3 0.30 3 0.30
Increasing emphasis on business sustainability 0.05 3 0.15 3 0.15 3 0.15
Threats
Increase in data privacy concerns and laws 0.15 3 0.45 3 0.45 3 0.45
Increasing cost of the internet 0.10 2 0.20 3 0.30 3 0.30
Strict internet regulation in China and other countries 0.05 3 0.15 3 0.15 3 0.15
Total 1.00
Complementary Strategy:
Product Diversification Strategy
Recommendation and Conclusion
Functional Strategies:
● Logistics: Increase transparency on how the company manages user
content. Protecting user privacy should also be of utmost
importance in the product development process of Facebook.
● Marketing and Sales: As majority of the marketers use the self-
service ad platform to establish their advertising campaigns, the
global sales force of Facebook should be able to provide assistance
to the marketers and users in the whole process to attain high
customer satisfaction and induce loyalty.
● Operations: Open more local offices in strategic locations to provide
continuous and uninterrupted service to its users. The company can
also invest on self-service tools to provide direct customer support.
● Finance: Charge fee to Facebook users to the new product and
service offering. Improve the utilization of fixed and non-fixed assets
to generate more profit for the company.
Recommendation and Conclusion
Functional Strategies:
● Human Resource Management: Gather a pool of top notch
students graduated from prestige schools by training to diversify
Facebook’s product and services. Cultivate the current culture of
being Bold, Moving Fast, and Taking Risks
● Firms Infrastructure: The Company should continue the efficient
maintenance and scaling of its technical infrastructure in order to
avoid disruptions in their services.
● Research and Development: Focus and invest on R&D to innovate
products that will increase customers and suppliers satisfaction
and loyalty. This will also benefit by increasing usage to the
existing users and penetration of the market that is not currently
captured by the existing products.
Financial Projections and Forecast
Assumptions used:
•Year-on-year sales growth on Advertising segment is 40% based on the average sales increase.
•Year-on-year sales growth on Royalty segment is 50% based on the average sales increase.
•Sales for the new product line is projected to be 3/4 of the sales for the Advertising segment and is expected to increase by 40%
for year 2 to 5 based on the projected increase in advertising segment.
•Cost of sales and Gross profit margin of 25% and 75%, respectively, is based on the average Cost and GP margin from 2010 to
2012.
•Marketing & Sales and General & Administrative expenses is 12% and 10% of gross sales, respectively, is based on the average
marketing and administrative expense ratio from 2010 to 2012.
•Research and Development Expense is projected to be at $1,400 for the next 5 years.
THANK YOU
LIQUIDITY RATIO
CAPITAL STRUCTURE RATIO