Facebook's environmental and demographic trends in social media development

¶ … Environmental Analysis

Technical trends

At the current time there are many different trends in the field of social networking technology. One of the most popular trends is associated with technologies that allow users access to various social networking websites instantaneously through portable devices. This means that when someone is looking at a Face book page, send twitter messages, get music and watch YouTube. This technology is currently available via cell phones, the iPad and other portable devices. Now more than ever people have greater access to one another through social networking sites and the technology that has been created to support their use.

One of the major trends is the use of different apps or applications to carry out specific task. These apps can be downloaded for a fee and many apps are also free. These apps allow people to do everything from receiving important new update to turning on their lights before they get home. Overall these apps are designed to make peoples live simpler and they are being used as high rates.

Another major trend is voice over internet protocol (VOIP). Although this technology has been in existence for quite some time, the popularity of the service has increased because the technology allows people to make phone calls using their internet connections. This has transformed the way people perceive telephone service. Instead of paying a monthly bill this technology allows people to pay a specific amount per year that is much less than telephone service. In the years to come it is quite possible that this type of telephone service will have a negative effect on conventional telephone companies.

Personal media is also a popular trend within the realm of technology. The concept of personal media allows users to upload pictures, video and audio. All of these capabilities enhance the manner in which technology can be utilized and how people interact with one another via technology.

Demographic Trends

The population is growing in diversity and changes in this area of the population will likely continue well into the future. In fact experts have predicted that by the year 2050 White people will become the minority. The following graph depicts the demographic trends related to race in America.

According to the Pew Research Center there are many other demographic trends taking place. For instance the center explains that there has been an increase in the return of multigenerational households. The center also explains that

"The multi-generational American family household is staging a comeback -- driven in part by the job losses and home foreclosures of recent years, but more so by demographic changes that have been gathering steam for decades. As of 2008, a record 49 million Americans, or 16.1% of the total U.S. population, lived in such a household, up from 28 million, or 12.l% in 1980. Such households had been more common a century ago, but began to fall out of favor after World War II. Now they are coming back (the Pew Research Center)."

The research center also explains that the Millennials, people in their teens and twenties are a dynamic part of the current American demographic. These individuals are becoming adults and as such they are on the verge of entering the workforce and becoming productive members of society with incomes. The article describes people in this age group as "confident, self-expressive, liberal, upbeat and receptive to new ideas and ways of living. The article also explains that millennials are "more ethnically and racially diverse than older adults. The Great Recession has set back their entry into the labor force, but they are more upbeat than their elders about their own economic futures and the overall state of the nation. And they are the first "always connected" generation, steeped in digital technology and social media (Millennials: Confident. Connected. Open to Change, 2010)."

Much of the baby boom generation has reached retirement age but is still active. Many have been forced to get part time jobs because of the condition of the economy and increases in certain costs associated with living expenses. Many in this generation are now grandparents and many also have a great deal of disposable income.

Economic Trends

At the current time the economy in many different places in the world are in recession and some are recovering from recession. Unemployment is a major issue in the United States . According to the U.S. Bureau of Labor Statistics the unemployment rate is currently 9.3% (How the Government Measures Unemployment). Over the past two years the unemployment rate has reached record high as a result of the recession.

Various states throughout the country are being faced with budget deficits as a result of the collapse of the housing market, high unemployment and the overall state of the economy. Many states have been forced to cut many state sponsored programs. At the current time inflation rates are relatively low at 2.0%. The following graph depicts the changes in inflation rates over the past decade.

The current state of the economy has drastically increased the number of people enrolling in undergraduate and graduate programs. At times of recession people often feel that obtaining more education will be beneficial and increase the likelihood that they can find employment once the economy begins to recover.

Although there are economic problems on a global scale, these issues seem to have little to no effect on the use of social networking sites. In fact people seem to use these sites more as they are able to keep in touch with family members and friends that live in other areas of the country or of the world. These sites provide people with a free way of communicating with loved ones. Additionally these sites generate so much traffic that the companies make a great deal of money from advertisements.

Political and Legal Trends

In recent years there has been a great deal of concern about laws related to internet users. This concern has heightened in recent months as a number of young people have committed suicide as a result of cyber bullying. Cyber bullying can occur through instant messaging programs and social networking sites. People can send intimidating messages to one another electronically. In some jurisdictions laws have been established to address this issue. However in other jurisdictions the issue of cyber bullying has not been addressed through current laws. Much of the difficulty in establishing such laws is associated with the fact that technology grew at a much faster rate than did legal parameter to govern new technologies. As a result there has been a concerted effort to ensure that laws protect internet users.

There have also been many legal issues related to peer exchanges of music and movies which violates copyright laws. Over the past few years individual users have been sued for downloading music and movies from the internet through peer-to-peer services. Most recently a peer-to-peer service known as Limewire was given a $1 billion fine for providing the technology that allows for the peer-to-peer downloading of music that has not been paid for. The recording industry was able to get the judgment because the company violated copyright laws. Copyright violation and the manner in which the internet has affected the recording industry can be seen in the rapid and substantial decrease in the amount of music that is sold. Instead of purchasing CDs or even downloads, people have used peer-to-peer sites to download music and as such there has been a decrease in record sales which has affected to recording industry in negative ways.

In both of the discussed instances, legislators have been forced to developed laws based on the increased use of technology and the types of technology that are available. Although there are some federal laws that govern internet use, there are also many laws that are different or are not present at all based on the jurisdiction. In any case social networking sites are impacted by these laws. As such the individuals that own these sites have a responsibility to ensure that users know what the laws are and the consequences associated with the violation of such laws.

Sociocultural Trends

People seem to have an overwhelming desire to be connected to one another via technology. People of all ages have cell phones and other devices that allow them to stay connected. This technological mindset is a sociocultural trend that has forever changed the manner in which people interact that the types of relationships that people have.

Another sociocultural trend is the "going green" phenomenon. This phenomenon is associated with being environmental friendly and making lifestyle choices that reduce damage to the environment. This includes everything from recycling cans to composting. Many companies have also developed products such as cleaning supplies that are more environmentally friendly. The awareness of the harm that has been done to the environment has forever changed the manner in which people function in society.

The obesity rate in American and the subsequent diseases and illnesses that can develop as a result of obesity. In addition, vanity is a widespread issue throughout the country and the media perpetuates certain notions about what is beautiful and acceptable and the image is usually of someone who is not overweight. For this reason the diet and fitness industry makes billions of dollars each year with nutrition and exercise programs designed to help people lose weight.

Global Trends

From a global perspective the world is becoming much smaller. Globalization has become possible because of the advent of the internet and the ability of the internet to connect people regardless of borders. The internet has also changed the manner in which companies throughout the world function by creating applications that allow for 24-hour financial transactions. This has forever changed the manner in which business is conducted.

Another global trend, particularly is microloans, particularly in third world countries. Microloans are given to individuals to start or expand a business. These loans are usually given to sole proprietors and can make all the difference between living in poverty and being able to provide an education for their children. These types of loans have grown in popularity because they assist people who cannot get loans in conventional ways. In addition they are successful because they have high rates of payback which permits others to also take out loans.

Industry Analysis

The concept of social networking sites first came to the attention of the public with the development of sixdegrees.com in 1997. This particular sites allowed users to connect to friends, family and associates based on various degrees of separation. It provided users with a place to send messages to one another. Ultimately this site was sold to Youth Stream Media Networks for $125 million. However the demise of dot com companies that came in 2000 led to the end of youth stream media.

Since this time both professional and recreational networks have become popular and been able to maintain a base of consumers who have remained with the companies despite an influx of new companies. In the early 2000 sites such as Friendster and Myspace emerged as social networking sites, particularly for young people. Since this time Facebook and now Twitter have grown substantially in popularity.

The social networking industry, continued growth is expected for the foreseeable future. According to Swartz, 2008 "Facebook, MySpace and other social-networking sites have been the rage of the tech industry for more than a year. Following investments by Microsoft and News Corp., the companies are valued in the billions of dollars and are considered blueprints for how to build a website. It is a parlor game that has Silicon Valley buzzing. With online ad spending booming into a nearly $50 billion market this year, there is plenty of money to be had. Big-name advertisers are drooling over millions of young, affluent consumers who are spending more time on their online profiles than in front of TV and movie screens. They are particularly smitten with the prospect of tailoring ads to people's specific interests (Swartz, 2008."

In addition amongst people in their teens and twenties, social networking is particularly popular. The Pew Center reports three quarters or 75% of people in this demographic have a profile on a social networking site such as Facebook. With these things understood the use of social networks are sure to continue well into the future and companies that operate in the industry will have the ability to realize a great deal of profits well into the future. In order to fully exploit the popularity of social networking companies have to have a keen understanding of the forces that propel the industry. The next section of this discussion will focus on Porters Five Forces.

Porters Five Forces

Buyer Power

In some ways the social network industry is different from other types of industries as it pertains to buyer's power. This difference exists because users don't have to purchase anything because the services provided in this industry are free. However users still have power because they have the ability to choose which websites that they will open account with. As such social networking sites must ensure that they offer the services and products that customers want. In addition companies within the social networking industry should attempt to develop products that are forward thinking and provide them with the opportunity to grow and expand.

In the case of Facebook buyers or users have a great deal of power because they can choose not the use the site or choose an alternative site. Facebook is not the only site that allows users to communicate with one another and share media. With these things understood buyers have a significant amount of power.

Supplier Power

In the context of social networking sites supplier power is also different than in other types of industries. This difference exists because unlike traditional companies that sell products, Facebook offers a service. Granted the company utilizes servers and must have a certain amount of bandwidth to ensure that the site functions in the manner that it is intended to function but these issues are not as significant because the companies that allow the use of their servers and bandwidth do not have much power as there is competition that exist amongst the suppliers.

To some extent there is a great deal of vertical integration as it pertains to the development of programs and application for use on Facebook. Facebook does not have to outsource programmers and there is no shortage of people who have the ability to program the applications used on Facebook. With these things understood the suppliers have very little power.

Rivalry

Amongst the various social networking sites the presence of rivalry exists. Many of the social networking sites have identical feature such as allowing users to post pictures and videos. In addition there are sites that appear to be alike but have different application. For instance twitter is a social networking site that has features that are similar to those of Facebook as it pertains to the ability to have subscribers, friends and the ability to post pictures and video. In addition there are newer sites such as blogtv that allow people to interact with one another via video in real time. Some users will be more attracted to twitter because of the instantaneous nature of the site.

"Twitter is also looking to expand its presence across the Web with its @anywhere service, which will allow people to log in to Twitter from other Web sites," the New York Times article continues. "The moves by Facebook and its rivals set up a battle for control over social interactions across the Internet....So far, Google's answer to these battle cries has been the creation of Google Buzz, a partnership with fading social media star MySpace, not to mention a pre-emptive rollout of its own real-time search platform. But that's been getting decidedly mixed results. In fact, the whole idea of "search advertising" is questionable, according to some online marketing experts...Search advertising clearly made Google the powerhouse it is today, with $23.7 billion in annual revenues last year," but a big question is how well it will work for real-time search, which is Twitter's bread and butter (Internet Social Media Rivalries Heating Up, 2010")."

Obviously there is a great deal of rivalry in the arena of social networking as companies jockey to gain a share of the market. The impact of these newer sites such as Google buzz remains to be seen. However it is evident that the social networking industry can be viewed as a promising business endeavour and as such many companies that have specialized in other types of business such as Google are beginning to expand into the social networking arena.

Barriers to Entry

At the current time the barriers to entry are dependent upon the skill sets of those attempting to enter into the industry. Many of the most successful social networking sites were started with very little capital. Once these sites were able to generate traffic they were able to attract advertising dollars and realize a profit. Although there are many social networking sites that currently exists the barriers to entry are so low and the changes in technology occur so rapidly that new sites are constantly being developed.

Threat of Substitutes

The threat of substitutes is always a concern for this industry, because people are constantly developing ideas and technology changes so rapidly. The development of new ideas has led to the phenomenon that is twitter. The presence of substitutes is also a major issue for any company in this industry because most sites are absolutely free to users. Users do not have to subscribe to use the content and in some cases such as twitter, users can even be paid for tweeting. With this understood the threat of substitutes is substantial. However, some users will opt to stay with social networking sites that they are the most familiar with and that their friends are also connected to. In this respect some social networking sites have loyal customers that will not leave the site.

Alternative Evaluation

All of the aforementioned alternatives are consistent with the types of things that Facebook could achieve and in line with the company's core competencies. As it pertains to the first alternative of striving to increase the number of users over the age of 26, this particular alternative, Facebook has been successful in the past at introducing a new demographic to the site. With this understood, Facebook has the ability and the popularity necessary to ensure that additional demographic groups such as baby-boomers also become a part of the social networking site. This is a feasible alternative that could be of great benefit to the company if it is properly implemented. Facebook has to find a way to expand the number of people who use the website as it pertains to different age groups. The baby boom generation is one of the most active and involved generation and they have the potential to be a source of new Facebook users.

In order for this alternative to work the company must advertise the site in places that are frequented by people in the baby boom generation. This might mean that the company has to take out ads in places such as AARP magazine or in other places that are frequented by people in this age group. There are people in this age group that might have a desire to interact on social networks but not feel as of they are welcomed on such sites. In addition they mig have some difficulty maneuvering such sites. With this understood,

The alternative of increasing the Ease of Use is also an issue that Facebook has the ability to address. If the company is going to have certain security and privacy measures it makes sense to ensure that people can use them. Making the interfaces easier to use is important because people become frustrated when they do not have the ability to add certain protections. Making the interface more user friendly is not a difficult endeavor and it could be handled rather quickly and enhance the experience that users have with Facebook. Facebook could easily assemble a focus group who could serve the purpose of showing the company the types of improvements that they need to make to improve the usability of the interfaces that they offer. There are not many obstacles that would prevent Facebook from increasing ease of use. In addition there is a great deal that could be realized if Facebook committed to such action. Simplifying the interface for users also seems to be essential to honoring customer needs. The current setup of the security settings has led to some bad reviews of Facebook's ability to secure user information. One member wrote,

Facebook privacy settings have not been simplified. Beyond the set-up page, Facebook's privacy controls are now more complex and more powerful. The new set-up page seems more designed to pry this privacy from you than give you access to the new, and excellent, controls that Facebook has put in place. What gets me about the page is that it doesn't seem to be designed for the users of the service (Needleman, 2009)."

This type of feedback is negative and may discourage people from even joining facebook. With this understood developing a strategy to simplify this interface for users could prove beneficial for the success of the company in the future.

Additionally the company can and should add additional privacy features. Such features enhance the experiences of users while also keeping their information private and protected. Privacy is of the utmost important in the internet particularly for people who want to post pictures of their children and private events that are only to be viewed by family members or friends.

The alternative of providing foreign news source is also a doable alternative. People around the world routinely post news on Facebook. In addition many major news outlets offer updates via Facebook. It seems that Facebook could benefit greatly from the development of a more organized system of delivering news throughout the world. Facebook already has all of the tools necessary to make such an alternative possible. This alternative is problematic because many countries where such an application would be the most beneficial have routinely blocked or ban the use of Facebook when political instability has occurred. It might be difficult for Facebook to overcome these odds.

Collaboration is an important part of any type of business. Facebook could benefit greatly from the development of a collaborative effort with Google. Both companies have a dominant and definite presence on the internet and they have the ability to create a social network that is second to none. There are also obstacles associated with this alternative; namely, the idea of the companies working together. At the current time, these companies are rivals and they may not have the ability to work together even if doing so would be beneficial to both companies well into the future.

Alternative Choice

The best alternative seems to be the second of the alternatives which is Ease of use and increased privacy settings. This alternative was chosen because it is needed and it is feasible. These changes are needed because user friendly interfaces keep current users and attract new users. Facebook is already one of the most used social networking sites on the internet but there is room for growth. In addition the company does not want to discourage new users from joining the site because of issues associated with ease of use. In addition this a problem that could be solved quite quickly if the company would take the proper initiative.

This alternative also calls for the expansion of security and privacy measures. These additional measures would close some gaps that currently exist on Facebook as it pertains to security and privacy issues. This change will ensure that the company is more stable and people feel more comfortable sharing their information. This means that people will be more likely to remain Facebook users and new users are likely to come as a result of such changes. As such these changes will benefit the company well into the future.

In addition, adopting this alternative would assist in the development of a Facebook that is more transparent and that has the best interest of users in mind. Facebook has an opportunity to make its website user friendly while also providing users with the protections they need to operate on the internet. In order to remain competitive Facebook has to embrace these changes because if they don't new or existing social networking sites will and Facebook users might abandon the company and choose some other social networking alternative. With these things understood Facebook should choose this alternative.