Background History of Facebook and the Expected Future - Essay Example

BACKGROUND HISTORY OF FACEBOOK AND THE EXPECTED FUTURE College: Background History of Facebook and the Expected Future Facebook is one of the modern organizations that offer social networking services to millions of clients across the world. When Mark Zuckerberg, aided by Andrew McCollum and Eduardo Saverin launched Facebook in February 2004, it was a mere idea that was purposely meant to enhance social relationship within the Harvard University. Within a day, the organization had registered over 200 students in the Harvard University and within a few months more universities such as the Stanford and Yale were willing to join in this network. The road to the international market was rough due the existence of financial barriers. Although Zuckerberg in Oct 2004 intended to launch the organization’s international strategy, he did not have the resources and human personnel essential to push the business to the other part of the world. In August 2005, the organization managed to expand to other institutions and anyone with an institutional e-mail address was free to register in this network (Croft, 2007). In September 2006, the organization managed to go global and any member from wherever part of the world was able to open an account with their personal e-mail address and access this social site. Facebook is a company that has continued to grow financially since its launch in 2004. At its launch, the company was valued at $500, 000 and has continued to grow in net worth. According to its 2013 financial report, the company has total equity of $15.47 billion and was ranked among one the most competitive organizations in the social network. In this year, the company registered revenue of $ 7.872 billion dollars and net income of$ 1.500 billion. The number of register users of this social network is estimated to be about 1.2 billion and the organization employs over 5,800 employees within its network (Raice, 2011). Although the social media network has continuously expanded hence increasing competition, Facebook has remained on the competitive end by attracting more clients to the network. Although Facebook was started as a social network for the college students, the social site has grown to attract clients across different market stakeholders. For instance, the organization has provided business organization with an advertising medium which they have found crucial in their marketing strategy. For this reason, the organization has managed to pull the business people into the site leading to a rapid growth of its customers. The business organizations have found Facebook as superior advertising avenue as compared to other advertising sites (Viswanath, Mislove, Cha, and Gummadi, 2009). Due to high number of customers and the efficiency of the site, organizations have noted Facebook as the easiest way to reach their target customers. Resultantly, Facebook has continued to grow though the organization anticipates a lot of challenges in future as the social market promises to be saturated in the near future (Ellison, 2013). However, the organization has remained innovative and focused to remain relevant in the market and satisfy the demands of its customers better. Facebook has applied an effective competitive strategy to overcome the forces of competition that have set in the market due to innovation in the social media market. New market entrants such as WhatsApp and old market entrants such as MySpace have considerably put Facebook on pressure in the completion for customers. Old social services providers such as MySpace have dominated the market and enjoy a good name in the industry. New market entrants are providing the people with alternatives and hence putting Facebook at a bad position in the market. These external market forces have forced Facebook to apply a positive competitive strategy to drive their business profitably at a time of severe competition. One of the competitive strategies that Facebook has used is the customer-based business focus. The organization has remained innovative to observe the customer needs and innovatively design a social network that satisfies the customer demands. The organization has developed over 52000 applications while their competitors such as MySpace only have 7500 apps available (Ellison, 2013). As such Facebook users have a better sense of a flexible social interaction. This has ensured that more customers join Facebook and to maintain loyalty for those already who have an account. Strong leadership is another value that Facebook has tapped to drive its operations in the international market. The organization fetches its leaders from the top Silicon Valley companies to inject an innovative blood in the organizational leadership. The value of leadership within the organization has been manifested in a number of perspectives. First, the organization has applied the knowledge and experiences of its leaders to lay down strategies on how obtain more customers within their network. The organization has phased out competition by increasing their customers to higher numbers through any means. For instance, they let the Facebook application to suggest possible friends for their customers to ensure that more people join in the network and its population continues to expand (Claussen, Kretschmer & Mayrhofer, 2013). Secondly, the organization has worked on cost reduction strategies to ensure they generate more revenues. The organization has achieved this by ensuring effective team leadership to ensure optimum employee performance in their offices. Optimal employee performance ensures optimal profit generation and minimizes the expenditure. Currently, Facebook is headed by its initial founder, Mark Zuckerberg as its Chief Executive Officer. Another key person in Facebook is the product marketing officer Chamath Palihapitiya who takes care of the advertisement of the social network. Palihapitiya is an experience marketer who has previously worked with major organizations such as AIM, Spinner.com and Winamp.com. The Finance vice president in Facebook is Gideon Yu, who was a former chief finance officer in You Tube. Gideon has a large experience in financial management and working for Facebook has modeled the organizations effective financial strategy (Claussen, Kretschmer & Mayrhofer, 2013). The good performance of Facebook can be associated with the ability of the organization to put a strong executive body made up of experienced people in the society. A SWOT analysis of the organization reveals a number of strengths in this organization. First, the organization has remained strong in identifying the various needs of the customers and satisfying them. The organization obtains feedback from its users and makes changes to suit the customer demands. The organization has continuously developed new features for its customers to ensure that they are satisfied. The second strength of this organization emanates from its strong leadership that has helped the organization to construct a strong executive body that is focused to the future of the organization (Clark, Loksha and ornelas, n.d.). An innovative leadership team has allowed the organization to remain dynamic. The weaknesses of this organization emanates from its dependence on one source of income. The only source of income in this organization is advertisement, and this exposes the organization to a great risk of loss if there is fluctuation in the advertisement business at any time of the year. To make it worse, the organization has faced a number of business threats that have put it in bad position in the market (Haigh, Brubaker & Whiteside, 2013). One of the major threats is the emergence of many social sites making Facebook an alternative social site for many young people in the society. A number of social networks such as MySpace have become potential marketing sites for business owners, hence increasing competition in this industry (Clark, Loksha and ornelas, n.d.). Consequently, the organization has a reason to eliminate its threats and diversify its products to reduce its chance of failure in the market. However, there are still opportunities that Facebook can take advantage of to survive in the social media industry. In the recent past, there has been an increase in the number of mobile users and the evolution of the smartphone technology. As more people gain access to the internet, Facebook has the opportunity to provide smartphone advertisement applications as one way of increasing their source of income (Clark, Loksha and ornelas, n.d.). Taking advantage of this business opportunity is the best way that the organization can have a bright future in the highly competitive market. Bibliography Clark, W., Loksha, I. and ornelas, K. n.d. Facebook and the Emerging Social Networking Industry. Claussen, J., Kretschmer, T., & Mayrhofer, P. (2013). The effects of rewarding user engagement: The case of facebook apps. Information Systems Research, 24(1), 186-V. Retrieved from http: Croft, C., 2007. A Brief History of Facebook. Available from; < http://charlenegagnon.files.wordpress.com/2008/02/a-brief-history-of-the- facebook.pdf > Ellison, B., 2013. Social Network Sites: Definition, History and Scholarship. Available from: < http://www.danah.org/papers/JCMCIntro.pdf> Haigh, M. M., Brubaker, P., & Whiteside, E. (2013). Facebook: Examining the information presented and its impact on stakeholders. Corporate Communications, 18(1), 52-69. doi:http:// Raice, S., 2011. Facebook Targets Huge IPO: Offering Next Year Could Raise $10 Billion, Valuing Company at $100 Billion. Wall Street Journal. Viswanath, B., Mislove, A., Cha, M., and Gummadi, K., 2009. On the Evolution of User Interraction in Facebook. Available from: < http://www.mpi-sws.org/~gummadi/ papers/wosn23-viswanath.pdf> Read More