Facebook Business Case
Business organizations are established to address a gap in the market that in turn generates revenue for the company. One such organization is Facebook Inc. that defined a market problem in connecting people in the world and established an equilibrium theory that governs its operations. Thus, the business has a defined organizational structure led by executive leadership that helps in managing and coordinating activities in the company. Also, the firm has a mission and core values that form the basis of the organization. Also, the company’s strength and weaknesses help define the industry. Thus, the analysis focuses on the elements of concern at Facebook Inc. that represents the company.
Equilibrium theory seeks to prove that the interactions between supply and demand will result in a state of balance. Facebook Inc. is in business to empower people, build a community that brings the world closer together by use of technology for online communications (Haan 22). The company achieves this objective by providing various social networking platforms such as Facebook, Messenger, Instagram, WhatsApp, and Oculus that help people to stay connected. The multiple platforms offer different means of engaging the people. Facebook provides News Feed, which displays stories and advertisements customized to suit an individual’s needs and preferences. Instagram allows sharing of photos, or videos with additional tools that enable the user to tailor them and share them with friends. Messenger enables communication among people and businesses over a wide range of devices. WhatsApp is a messaging application available for a wide range of devices that allows users to communicate via text messages, send pictures, and videos across the world. Oculus is a virtual reality technology that will enable people to interact in a simulated environment, share information, and play games. Facebook maintains a unique culture which serves to rewards impact (Facebook.com) Thus, its mode of operation is identifiable with Barnard’s organizational equilibrium theory which holds that an organization will only survive if it makes incentive payments that are equivalent to their contributions (Monden, 22). Facebook relies on the people as the primary resources that include the developers and users. Therefore, people are the primary source of motivation in the business.
Facebook, Inc. is a firm that provides social networking solutions with its headquarters in Hacker Way, California. Mark Zuckerberg founded Facebook Inc. in 2004 as a social interactive platform for learners at Harvard. The co-founders include Zuckerberg roommates at the college Chris Hughes and Dustin Moskovitz among others (Haan, 17). The social networking services then expanded to other colleges and later in 2006 became global with the majority of its customers being youths owing to its initial target group. Facebook services can be accessed from personal computers, tablets, smartphones, and other devices with internet connectivity.
Statistics show that the online social network has over two billion users with about 1.5 billion of them as active daily users. The platform attracts over 500 million mobile users and over 100 million connectivity among the users (Facebook.com). Also, photo uploads are over the two billion marks and continue to rise with the increasing number of active users. The highest number of users recorded are from the Asia-Pacific region with more than 900 million active users followed by Europe at 350 million, the United States at 200 million and the rest of the areas at 700 million. Thus, Facebook is one of the most trusted service providers of an online social interactive platform used by individuals and businesses in the world.
The core products and services at Facebook Inc. aim at enhancing connectivity and making the world a global village. It empowers individuals to become closer to each other through online communication that enables them to share ideas, photos, and videos with friends and family. Moreover, the individuals can share with the public depending on their privacy preference. Some of the products owned by the business are Facebook and messenger including the mobile application. Other products owned through acquisitions are Oculus, Instagram, and Whatsapp that includes their applications. Additional products are Audience Network, Facebook Mentions, software, and technological tools offered by the company alongside Spark AR Studio and other applications (Facebook.com). The services offered include communications and advertisement platforms that allow businesses to connect with the customers online depending on their age, preferences and gender. Advertisements appear in different places such as in Facebook news feeds, and Instagram’s photo feeds.
Corporates have different organizational structures based on the nature of the business and its goals. Facebook Inc. is a multinational company that serves a dynamic online socials media and networking market. Thus, the company employs a hybrid system, which integrates elements of divisional and hierarchical organizational structures. The corporate structure allows for expansion and diversification of the business for a competitive advantage against forces from new entrants online interactive media and advertisement industry. Besides, Facebook Inc. has approximately 37, 700 employees worldwide that require a proper organizational structure to manage the product-based divisions (Facebook Newsroom). Thus, an appropriate structure of the company enables global teams that focus on specific products and services to improve on the existing ones while addressing the competitor’s aggressiveness.
At the top of Facebook Inc. organizational structure is the chief executive officer. Other senior leaders follow in the hierarchy then the board of directors. Then, the company’s structure is broken down into significant departments that are further subdivided into divisions that cover specific roles. The major departments include Operations, Finance Center, Information Security, Marketing Center, Business Development, Legal and Engineering. Finance Center is divided into treasury, audit, tax, and risks while Information Security subdivisions include consumer service, privacy and security. Marketing center covers advertisements, international marketing, communications advertisements and public relations. Other divisions in the department include consumer analysis unit and product promotions (Facebook.com). Business development department is subdivided into corporation strategies unit, business management, organizational behaviour and business partnerships. The Legal division covers public policy while the Engineering department is responsible for software development, research, information, and technology. Operations department subdivisions include human resource, remote applications, and sales. In the mid-level management, the company has no clearly defined roles and encourages autonomy among the employees with less supervision. However, the business is free from hierarchy distinctions to promote a free flow of information (Facebook Newsroom). The global presence of the company with sixteen subsidiaries attracted adoption of a decentralized decision-making criterion.
Senior leadership at Facebook consists for the chief executive officer and the board of directors. Mark Zuckerberg is the founder and chief executive officer (CEO) at the corporation and lead designer of the underlying technology and infrastructure for the business (Facebook Newsroom). Zuckerberg role at Facebook is setting the general perspective of the firm, product and service delivery plans. The chief operations officer (COO) at Facebook Inc. is Sheryl Sandberg tasked with the duty to manage the commercial operations at the firm. Chief financial officer David Wehner who is in charge of information technology, the company’s finance and facilities teams (Facebook Newsroom). The Chief technology officer is Mike Schroepfer whose role is leading the advancement of technology strategies that includes artificial intelligence technology and incorporation of cybernetic reality. Also, Schroepfer leads the teams that make connectivity and communications on the social platform across the world possible. The board of directors is composed of Zuckerberg, the CEO, Susan Desmond-Hellmann, Sandberg, and the COO (Facebook Newsroom). The role of the member of the board is ensuring the firm fulfils its objectives and company goals while protecting the interests of the shareholders. Through transformational leadership, Facebook Inc. has availed innovative solutions to social networking challenges and has devised methods of monetizing services such as news feeds that helps it fulfil its business goals.
Moreover, the company’s motivation towards building a connection among people, helping businesses expand their market base through online interactions and the CEO’s personal aggression is the reason Facebook Inc.’s prosperity. The company is anchored upon its mission and vision that helps in maintaining its aggression in the market of social networking. Facebook Inc.’s mission proclamation is “to give people the power to build community and bring the world closer together” (Facebook Newsroom). The mission’s components can be simplified into three major elements that are to enable people, community building, and to linking the world. Empowerment comes from giving people the power to communicate online by providing social and networking tools. The communications among people lead to community building through the sharing of ideas, opinions and useful information at the convenience of the users. Thus, real-time communications and sharing lead to a global community that is closer together. The company has no clearly defined vision. However, the company’s profile and service offerings provide sufficient information that can help in conceptualizing the company visualization of the future. In this regard, the company’s vision is summarized as “to become that social networking site that keeps friends and family connected to discover what is going on in the world and to share and express what matters to them” (Hann 28). The elements of the firm’s vision include having a global market scope that refers to the need to connect all users in the world. Also, it highlights the social platform as an instrument for communication, discovery and creativity because it is the enabling link between the users. Sharing of personal ideas at will with the world provides a learning opportunity for other account owners that leads to innovation and accumulation of knowledge.
Facebook Inc. as all other organizations has the strengths that help it maintain its position in the international market as the largest social online networking service provider. The first strength is the strong brand image maintained by the company since its launching to the present day (Young). Facebook is a trusted social networking service provider that caters for the needs of both individuals and businesses that leads to other benefits. The second factor is the steady rise in advertising revenue that serves as a source of capital for investment in long-term growth projects. Statistics show that the company witnessed a 64.5% revenue growth between the financial years 2013 and 2014 when its income rose from $6.986 billion to $11.492 billion (Facebook Inc.). The constant rise in revenue is a significant strength to Facebook because of it. Also, the company’s initial public offering was made in 2012 valued at $104 billion that is the highest recording for newly listed businesses. The third strength is the presence of an innovative culture in the company that encourages and values new ideas that would improve service delivery (Young). The social media and social networking market is fast-paced and requires constant delivery of new products and improved products in the market that gives the organization a sustainable competitive advantage.
On the other hand, the company has weaknesses that have a magnitude of consequences. The nature of the business draws a significant concern, that is, privacy issues. Facebook has little limitations on how much information it can obtain from the user accounts without consent (Young). Several lawsuits have been filed concerning users’ privacy violation. For instance, a district court in Oakland ruled in 2015 that Facebook should be subjected to trial on charges related to unauthorized scanning of user messages (Facebook Inc.). Another issue is a data breach that raises cyber security concerns. Unavailability of proper user data protection strategies leads to cybercriminals targeting user accounts and stealing valuable data. Also, data mining has led to companies using artificial intelligence in gathering consumer information used in decision making processes. The matter of concern is that the user is unaware of such activities. An example is the alleged stealing of personal data from Facebook accounts by a Russian company that used the information in influencing elections in the United States. Such concerns tarnish the brand’s image that leads to some users leaving the platform and a drop in stocks. Use of a shadow strategy task force can help prevent exploitation of their weaknesses.
Thus, Facebook has an equilibrium theory focused on rewarding impacts. The company’s success is based on the organizational structure, innovative culture, global market presence, mission and vision of the business. Availability of human and other resources has enabled the firm to expand and diversify their scope of business from only connecting people to earning money from it. Although the firm makes high revenues from its competitive products and services, it faces various challenges that include cyber security and user privacy.
Works Cited
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Facebook Inc.: Technology and Communications – Company Profile, SWOT & Financial Analysis. GlobalData plc, London, 2016. ProQuest, https://search.proquest.com/docview/1820187545?accountid=45049
Facebook Newsroom. “Company Info.” Facebook Newsroom, newsroom.fb.com/company-info/. Accessed 4 May 2019.
Haan, Sarah C. “Facebook’s Alternative Facts.” Virginia Law Review, vol. 105, 2019, pp. 18-36. ProQuest, https://search.proquest.com/docview/2194492848?accountid=45049.
Monden, Yasuhiro. Management of Enterprise Crises in Japan. New Jersey, World Scientific, 2014.
Young, Justin. “Facebook Inc. SWOT Analysis & Recommendations.” Panmore Institute, 14 June 2018, panmore.com/facebook-inc-swot-analysis-recommendations. Accessed 4 May 2019.