Strategic management case study on Facebook

Social networking sites have grown in popularity in recent years. Amongst the most popular of these sites is Facebook. Facebook was created in 2004 as an online 21st century version of the conventional facebooks that have been an aspect of college campuses for many years. Initially the creation was confined to the campus of Harvard University. Eventually it became an online sensation open to people of many different age groups. Today, Facebook leads the online social networking industry, but it is also a target for competitors and a point of controversy as it pertains to internet privacy. Competition in this industry is quite fierce because the barriers to entry are low and new technologies are constantly being developed. Bassically anybody with a good idea and the know-how to implement the idea can have a successful social networking site.

Facebook is also affected by various trends associated with trends in technology, demographics and economics. Trend in technology are inclusive of Mobile e-commerce, Voice over Internet Protocol (VOIP) and personal media. Demographic trends include an increase in diversity and the prevalent use of technology amongst young people in their teens and twenties. In addition the economic conditions that are currently present throughout the world have actually proved beneficial to networking sites because they provide a free way for people to stay connected to one another. The research evaluates Facebook using Porters Five Forces and a SWOT Analysis. The five forces evaluation reports a great deal of rivalry in the industry, a substantial amount of buyer power and a low entry barrier. The SWOT analysis points out tha the major strength of face book is its popularity. The company has a strong following and people are extremely loyal to the site and what it has to offer. The major weakness of the company is the security and privacy issues that are prevalent on the site. The most prominent opportunity for Facebook lies in global expansion in the area of social networking. Finally a major threat to Facebook is the government regulations that might inhibit the company from expanding in the manner that is wishes.

In order to be successful in the future Facebook has to develop a strategy that fully exploits the company's strengths and opportunities, while also minimizing the weaknesses and threats of the organization. To this end four strategic alternatives were developed for Facebook. Strive to increase the number of users over the age of 26, Ease of use and increased privacy settings, Foreign news source and collaboration. Each of these alternatives are feasible and need to be implemented in some form if Facebook is to be successful in the future. After careful evaluation it is apparent that increasing the ease of use and improving security and privacy settings is the most advantageous strategy that can be implemented by Facebook. At the current time Facebook is receiving a great deal of criticism as it pertains to the difficulty associated with utilizing the security of privacy settings on the site. Critics also assert that the current security and privacy settings are inadequate and need to include additional features.