Facebook as a Social Media Company

Category: Media
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Facebook, a social media company, was created in 2004 by Mark Zuckerberg. The company began out while he is at Harvard and famously had controversial. However, despite the controversy, questions about ethics and lawsuits, Facebook was an instant success and reached one million users in 10 months (Toth). The company operated as privately held until it went public in 2012. At the time of its public offering it was a consumer success and its stock offering was anticipated by investors. The initial stock price as $38.00 per share with some investors racing to be the first ones to buy and others who were concerned that the company’s valuation was too high and incorrect and might not be able to sustain itself (Toth).

The company now includes 66 holding companies with the majority of its company holdings are social media, apps and digital technology companies that operate in conjunction with or support the social media platform (Toth). Acquisition seemed to be an important part of the company’s strategy from the beginning. As early as 2005, Facebook began to acquire additional companies the first of which was a company called About Face (for $200K) which was a small media company that owned the website address facebook.com. (Toth). Facebook’s large and probably most notable acquisitions include Instagram in 2012 for $1 billion (at the time a competitor) and What’s App Messenger in 2014 for $19 billion (Page).

According to Facebook’s 2018 Investor Relations (online site) the company describes its business mission is to deliver a way for people to connect and build communities (Facebook 2018 Investor Relations). The same report cites that Facebook currently employs 33,606 people and has 14 offices in U.S. cities, including its Headquarters in Menlo Park, California, along with 32 International offices in a wide range of countries across the world (Facebook 2018 Investor Relations).

The 2018 Facebook Investor Relations also provides information about its Corporate Culture. This provides interesting insight into the mission, goals and strategy. The findings show that the Corporate Culture is about being creative and innovation and also encourages and gives the power to all employees to take risks and make choices that move good ideas forward (Facebook 2018 Investor Relations). The Corporate culture is described as built around small teams in all areas so that employees can act quickly and be flexible, because in there is an emphasis put on the need to be quick to solve problems and present solutions. The company’s internal motto is “this journey is 1% finished” (Facebook 2018 Investor Relations). An interpretation of this might essentially mean that they have a long way to still go to finish their mission of connecting and bringing the world closer together, so they should all employees should keep working toward the goal.

Taking a look at the Facebook 2018 Investor Relations, Facebook’s Executive Team is led by Mark Zuckerberg who remains President and CEO and is responsible for the broad direction of the company’s mission, along with setting goals and strategy for product development. The COO of the company, according to the Facebook 2018 Investor Relations< Sherly Sandberg is responsible to direct the business operations and all strategies and recommendations related to operations. In addition, to her role at Facebook, Sherly Sandberg is also a well-known U.S. female business leader who has at times been a notable face for women in technology and women in executive management with one of her most notable accomplishments, her book “Lean-in” which describes her own career philosophy (Bort). A look at the rest of the Executive team and it is easy to see that Sandberg appears to represent the only diversity that can be found at the top levels of the company’s management. According to the Facebook 2018 Investor Relations, the remainder of the Executive team includes the CFO, David Wehnr whose role is the leadership of strategy, decisions, recommendations and the department related to finances, facilities/real estate and information. Mike Schroepfer is Chief Technology Officer and his role and responsibilities include creating and directing critical technology strategies for the company worldwide; Chris Cox is the Chief Product Officer whose role is to lead Facebook, Instagram, What’s App and Facebook Messenger (Facebook 2018 Investor Relations). In addition to the Executive team, Facebook’s 2018 Investor Relations details a Board of Directors which includes Zuckerberg and Samberg along with CEO’s Chairman and Presidents from other technology and financial companies, as well as academics.

Leading into the financial statements presented in this report is a statement from Mark Zuckerberg that talks about the speed of the company’s growth. In his statement he talks about the power of 2 billion people around the world who use one of Facebook’s products every day (Facebook 2018 Investor Relations). In this statement to investors, he also discussed the company’s strengths and advantage over its competition in being the company that builds the best solution (Facebook 2018 Investor Relations). The Facebook 2018 Investor Relations details financial data for Third Quarter 2018. Examining the financial tables shows the following: overall revenue at 13,539,000 which is 33% greater than the same time in 2017 and the greatest and almost all revenue is from advertising. In a statement that explains the financial table, mobile advertising is said to be the major source of advertising revenue. Additional findings from the financial tables shows that income for this time period is $5,137,000. The Facebook 2017 Annual Report Form 10-K SEC Filing [included in this Investor Relations site] cites the company’s total revenue for 2017 at 40,653,000 with net income at 15,934,000 and consistent with the Third Quarter data, the majority of revenue coming from advertising (39,942,000).

It is interesting that a lot of time is spent talking to investors in the Facebook 2018 Investor Relations report about company news and press. These sections of the report include product news and business development information, but most interesting is that the amount of attention Facebook gives to articles and statements about topics that are in the public attention. Facebook makes an effort to address, solve and provide information about the big issues they face and those that are most controversial. Specific examples include a regular section called “Hard Questions” and some of the topics include how Facebook can play a role in terrorist concerns, how Facebook can play a positive role in elections and news as well as addressing privacy fears and data breaches (Facebook 2018 Investor Relations). The information sometimes includes articles written by outsiders to the company, too. One conclusion that can be drawn, through this section, is that Facebook is trying to take on these issues in a proactive way, seems to be serious, is taking steps to make these issues better and wants to be clear and upfront with its investors.

A SWOT report is conducted by an outside independent company and creates a report with the goal of analyzing a company’s business model and all of its components to identify the assets, weaknesses, prospects or opportunities and market pressures that will affect a company’s business. A SWOT analysis for Facebook conducted and published by MarketLine (August 21, 2018) details Facebook’s primary opportunities into three categories: maximizing their acquisitions, best using an expansion strategy and making best use of partnerships.

Findings from MarketLine Company Profile: Facebook August 2018 SWOT analysis shows that with a strong strategy to use acquisitions to improve their main brands (i.e. Facebook, Instagram, Facebook Messenger and What’s App), the company could see better innovation, provide better products to consumers and maximize profits through advertising [their main source of revenue] (6). The SWOT analysis [conducted by MarketLine 2018] also sees the expansion that the company has been doing as a potential opportunity for them to meet consumer needs which will result in better services and positive customer feedback (6) Last findings from the MarketLine Company Profile: Facebook SWOT analysis[August 2018] report analysis presents the point-of-view that there should be benefits from partnerships that the company has, such as data centers and technology platforms. According to this SWOT [MarketLine Company Profile: Facebook] report all of these represent ways for the company to provide better, enhanced and smarter services to consumers which can will make it more valuable (6).

In addition, a look at the MarketLine Company Profile: Facebook SWOT analysis [August 2018] shows several strengths that can may present opportunities for Facebook as it grows its business. First, the analysis cites the trend the company has gone through where they have been able to increase their overall profits which is positive for the following two main reasons. One reason is that greater profits means better stock prices, better return for investors which means that the market and investors will have greater confidence in the company (MarketLine Company Profile: Facebook, 4) A second reason is that this could also result in better press and better reputation, so that in the end this could mean that other companies might be open to partnerships and advertisers will be encouraged to work with Facebook (MarketLine Company Profile: Facebook, 4)

Findings from the MarketLine Company Profile: Facebook SWOT (August 2018) analysis shows a second strength of Facebook’s which is data information they have captured on their customers (4). The MarketLine Facebook SWOT analysis points out that this is a huge benefit and value to advertisers. The better Facebook’s database is the more it is ahead of other competitors who are also looking to attract advertising revenue. An inference from these findings is that Facebook’s ability to provide information about consumers that helps advertisers better direct their advertising is an important strength for the company. A third strength for the company, according to the MarketLine Company Profile: Facebook SWOT (August 2018) analysis is the fact that the company has a fair amount of available cash or liquidity so that it will be able to meet its debts, free up money for product improvements, possible expansion and partnerships if these opportunities come up (5).

The MarketLine Company Profile: Facebook August 2018 SWOT analysis discusses only one major weakness which they identified as Facebook’s revenue stream as its single source which is advertising (5). The MarketLine report points out that if Facebook cannot deliver to what advertisers want or other changes happen in the advertising marketplace not necessarily in their control, they are leaving themselves open to significant risk (5).

The MarketLine Company Profile: Facebook August 2018 SWOT analysis discusses several key threats to Facebook. Analyzing the SWOT report shows that the first threat is competition (7). The SWOT analysis points out that changing technology which can happen fast means that other companies can potentially offer products like Facebook and most importantly competition might have the ability to attract customers by creating something that offers better service and is even seen as something new, which, the SWOT analysis points out is very tempting to the typical Facebook customer (MarketLine Company Profile: Facebook, 7).

According to the MarketLine Company Profile: Facebook, August 2018 SWOT analysis the second threat to Facebook’s business is concerns the public has about privacy and potential for stolen data (7). From the findings, you can infer that exposure to having their information stolen, sold or made public in some way other than they intended is a huge concern for the Facebook customer. This MarketLine Company Profile: Facebook, August 2018 SWOT analysis points out that if Facebook cannot make changes to alleviate the customer concerns and if they cannot guarantee the safety of customer’s information, the result will be a loss of confidence and damage to the company’s reputation could be devastating (7). A conclusion from this is that Facebook would not only lose customers, but competitors could come in and do it better and attract these customers.

This MarketLine Company Profile: Facebook August 2018 SWOT analysis identifies a third threat which is government regulation which the report defines as primarily related to privacy and data collection and storage concerns (8). The report points out that regulation can be both U.S. and international and changes to laws can affect many areas of the company’s and most importantly could weaken its key strength which is data and could potentially have a negative effect on the overall business operations and profits (MarketLine Company Profile: Facebook, 8)

The 2017 Annual Report; Form 10-K SEC Filing [included in Facebook’s 2018 Investor Relations site] details the company’s own reporting on its business strengths, weaknesses and potential threats. An analysis of Facebook’s perspective shows that they also acknowledge competition as a key threat. In its 2017 Annual Report, Facebook points out that the media segment they are in, social media, changes quickly and other companies can easily provide services that provide a social media connection (10). Facebook says that the way to prevent this threat is for them to be innovative and relevant with their product so that they can keep their customers and attract new ones, too. Facebook details its plan to do this by building mobile and apps that can work with Facebook and make the social media experience exciting for customers (2017 Annual Report; Form 10-K SEC Filing, 11). In this same 2017 Annual Report, Facebook appears agrees with the other key findings from the MarketLine 2018 SWOT by acknowledging that government regulation can affect their business around the world (6). Their perspective is that they need to keep ahead of privacy concerns and data breaches and provide the public and the government with confidence about their commitment to this real concern (2017 Annual Report, 13). Also, Facebook acknowledges that their the reliance their business has on advertising is a major risk factor, as reported in the (2017 Annual Report, 9). One inference from their information is that the solution is to keep ahead of the competition and keep customers involved with their products and this will then ensure that advertising dollars are allocated to them. Facebook talks about creating mobile and apps to work with Facebook and to make sure they maintain high quality in order to keep customers [and then advertisers] (2017 Annual Report, 11). After analyzing the company’s own assessment of their business, a conclusion that could be made is that their greatest opportunity in creating mobile and app products for Facebook to keep customers interested and using their product and to be innovative and smart about privacy and data collection.

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Facebook as a social media company. (2019, Jul 01). Retrieved from https://papersowl.com/examples/facebook-as-a-social-media-company/

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