emergence of social media as a political, economic and similar forces has been a sight to behold over the last five to ten years. It started a little slowly with MySpace but has since grown at a frenetic pace in the form of Facebook, Twitter, Instagram, Yelp and other similar websites. This particular report shall focus on Facebook as they are perhaps the most obvious and powerful example of what social media has become in the modern marketplace as well as the culture of the United States and the rest of the world. Points of analysis will include segments of the general business environment, forces of competition, external threats, opinions about the strengths and weaknesses of Facebook, a summary of the strengths and weaknesses of Facebook and an analysis of their value chain. While Facebook's arc to the top has not been completely flawless, they rival other dominant companies like Apple, Microsoft and Amazon in terms of just now much of their market that they control.
Of course, the general environment of business is commonly comprise of the acronym PESTEL, which is short for the different dimensions of the general environment. That acronym stands for political, economic, social, technological, environmental and legal (NCU, 2014). When it comes to Facebook, there are several dimensions of the general environment that immediately stand out including social, technological and legal. However, the technology that underpins Facebook is not nearly as significant or "new" as the legal and social implications, so the latter two will be focus of analysis for this section.
The social dimension is something that has to be looked at because it is the entire basis of its existence and daily business. The legal frameworks surrounding social media is the other elephant in the room because there are real and pressing questions about things like privacy rights, just how one can really screw up their life through a Facebook post and the international borders that are crossed daily when it comes to social media activity of any sort. Indeed, even massive conflicts and uprisings like those in Egypt and elsewhere have been trumpeted and propagated in part through social media outlets like Facebook and Twitter (Lim, 2012).
When it comes to the five forces of competition, Facebook is an enigma. The five forces, as described in a recent journal article, are buyer power, supplier power, substitutes, new entrants and degree of rivalry ("Five Forces Analysis," 2014). Facebook is special because, as is easily seen on their login page, it is free to the public and "always will be." As such, the fact that there is no proverbial price of admission makes the use of Facebook a bit atypical. However, this is quite common in the technology sector as many smartphone applications, websites and such are all free or at very low cost to the consumer. The revenue for these applications and sites, not unlike Facebook, is garnered through ad sales and partnerships with other websites. Indeed, many comment sections of other non-Facebook websites are linked to a person's Facebook profile. Indeed, people can log into sites like ESPN.com and others using their Facebook, Google+ or similar credentials rather than having to create a distinct profile on said website. The latter option still remains but the creation of one Facebook profile allows for quick and easy access to a larger number of websites. Given the above and given that Facebook really does not have a rival that is significantly similar to their own while being remotely as powerful, the dimensions of rivalry, new entrants and substitutes are basically non-factors. Instead, supplier power and buyer power are the big players in the equation because of the integration with other sites, the advertising that occurs on the Facebook website and the desire to attract the millions of people that use Facebook every day.
To keep their lucrative advantage over the years to come, the best thing Facebook can do is keep new entrants or even currently smaller existing presences in the social media market squelched. Like Amazon, Facebook's every increasing reach further entrenches them as the dominant Facebook competitor. However, they should be careful to shun the wrong companies as social media outlets that are actually complementary to Facebook like Twitter and Instagram can actually help Facebook over the long-term. However, remaining dominant on a scale like Microsoft and others will keep Facebook in power for a long time. There is always the chance that sites like Amazon and Facebook will face antitrust and competition scrutiny at some future point. However, Microsoft weathered that storm just fine and Facebook can avoid the same legal morass so long as they do not engage in the crossing certain competition lines. Rather than suppress and acquire all competitors, Facebook can simply make their site the best and easiest choice due to their power, reach and capabilities. After all, Amazon dominates the online retail market but the big box retailers (e.g. Wal-Mart) and other online retailers (e.g. Wayfair, Overstock.com, etc.) are in the marketplace as well. The difference with Amazon is that they are doing online business on a scale and at a level that even Wal-Mart could never dream of at this time. So long as Facebook positions itself as the one and only choice for effective social media integration, people will keep choosing Facebook over the competitors.
There are some massive external threats that present themselves as being an issue for Facebook and most of them are legal and privacy-related in nature. Even further, some have posited that someone's social media presence and activities should not be used against them even if they fail to protect themselves through the readily available privacy features that Facebook has. The people that have been wielding social as a means to find or screen people include potential employers and law enforcement agencies (Bayer, 2012; Lieberman, Koetzle & Sakiyama, 2013). While the author feels that the law enforcement/employer examples are silly due to the actions or inactions of the "victims" of the users' publicly available activity and information being used against them, the earlier part of this paragraph is absolutely a concern. After all, a user wanting to keep their activity private can be stymied by changes that are made with little to no consultation or permission from users. However, Facebook simply cannot please all of its hundreds of millions of users and they often have to pick the lesser of two evils. Combine with this hoaxes that assert that Facebook is some evil entity that is selling them out to the highest bidder and/or otherwise trampling their rights, and Facebook has a perpetual and ongoing public relations nightmare of sorts. Even Facebook CEO Mark Zuckerberg has been the victim of this as there was a rumor not that long ago that said he died in a car crash and that was not remotely true or accurate (IBT, 2014).
To synthesize the threats simply, Facebook faces blowback from customers who seem to believe that Facebook has a duty to police the profiles of millions of their members, are bound to be able to protect the privacy of publicly viewable posts and that they shouldn't be selling advertising. However, the first of those two are simply ridiculous as users have a burden to protect themselves and the latter is also laughable as Facebook does not charge its users an entry/use fee unless one counts the optional games and such. As such, they have to make their money somehow and advertising is the usual vehicle to do that.
Moving on, there is now going to be a discussion of the strengths and weaknesses of Facebook. As already noted in part in this report, Facebook's main strength is that they are by far the giant of the standard social media websites. That mantle used to be held by Myspace but Facebook has since taken over and Myspace was never even close to what Facebook is right now, let alone what they will be. While Twitter, Instagram and others are out there, they present and formulate their product in a different way. As such, they are not direct competitors of Facebook and they do indeed integrate quite well in some ways. Another strength that Facebook possesses, also as noted before, is their strong amount of networking and partnerships through other sites. The author of this report previously pointed to the comment board integration as an example but that is actually one of many. On many sites, the site administrators have added link buttons so that people can share and discuss items like news stories, items that can be bought and so forth. For example, if someone sees a news story that they want to share with a fellow Facebook friend, they can just click the link to share and it happens automatically. They can even comment on the story as they share it rather than having to separately going to Facebook and adding the comment there. However, even if no such social media…