Industry BackgroundSocial Networking Industry building onlinecommunities of people having shared interests.Social networks have common themes ofinformation sharing, person-to-person interactionand creation of shared & collaborative content•The industry have been successful in getting a large number of people at one place, but not very successful in Monetization.•Two-thirds of the world’s Internet population visit a social network or blogging site and the sector accounts for almost 10% of all internet time.
Facebook.com• Facebook belongs to the online social networking industry. • Facebook.com is a free socialnetworking website operated by Facebook Inc. • Founded in 2004 by Mark Zucherberg as a network for Ivy League schools
InternalMission: To connect people on an innovate platform that fosters increasing interaction. Vision: To provide users with value beyond interaction. Facebook Some of Facebook’s key personnelFacebook known Name Designation Priorsas silicon valley Mark Zucherberg CEO Founder of Facebook.comcompanies Chamath AIM, ICQ, Spinner.com, Palihapitiya VP Product Marketing Winamp.com Gideon Yu VP Finance CFO of YouTube! Sheryl Sandberg COO VP of Sales at Google Apple, Director at several Dave Morin Sr. Platform Manager Startups
InternalLong Term ObjectivesTo become part of daily life by becoming a complete communications tool Bring people andbusinesses on the same page to deliver servicesCreate an enjoyable anduseful online experience
STRATEGIC ANALYSIS1) Interface2) PEST Analysis3) Porter’s Five Forces4) Critical Success Factors for the industry5) Competitors analysis6) Strategic Map7) SWOT Analysis
Interface External Facebook has had a new design every year since 2005.Continuous improvement and innovation withsite design has helped Facebook
PEST Analysis External External Environment Analysis POLITICAL ECONOMIC- Pressure to crack down on child - Greater affluence, leading to more number of users onlinepredators- Increased emphasis on privacy PEST SOCIAL TECHNOLOGY- “Everyone’s on it” & there is a - Increases in broadband speed andpressure to Belonga penetration - Decrease in bandwidth and data center costs
Porter’s Five Forces External Threat of New Entrants (Medium) Supplier Industry Buyer PowerPower (Low) Rivalry (High) (High) Threat of Substitutes OVERALL - (Medium) MEDIUM
Critical Success Factors for facebook ExternalQuestion: How do we measure success in Social media likeSocial networking sites? •Design Key Business Imperatives •Target Market •Activity Focus. Answer: •User 1) Increase Engagement advertising • Transaction revenue 2) Increase user • Privacy engagement • Entry Barriers • Trust • Localization
Competitive Landscape : Worldwide External Key Takeaways •The major cmpititors of Facebook are MySpace, Orkut, twitter & •Friendster. • These global players face issues in countries like China, Japan and Germany• Facebook now leads in the US market (in addition to worldwide)• MySpace still leads in terms of ad-revenue
Strategic Map ExternalMapping userengagement to revenues • It is interesting to note that facebook with much greater MySpace user engagement, but $750 mil. in sales •FB cannot make as revenue much as MySpace Facebook $300 mil.
SWOT ANALYSIS Strengths Opportunities1.Huge active user base. 1.Advertising is moving towards2.Popular Platform for application Targeted ads development 2.Improve Email and Chat3.Present in all geographies4.Translated in over 40 languages5.Email and Chat are integratedWeaknesses Threats1.Chat at monetizing 1.People may grow tired of the highly structured FB and2. delivering a high number move to MySpace of ad’s per user 2.People have privacy concern with Facebook3.Inability to manage 3.Risk of losing young, hip application image
Financial Performance Face book has seen its revenue grow substantially from 2007 to 2011, increasing from $153 million to $3.7 billion. Facebook has been profitable since 2009 and has seen its net income rise to $1 billion. Facebook generates 85% of its revenue from advertising accounts with an additional 12% coming from Zynga related transactions of virtual goods and payment processing.8/7/2012 20
Market share analysis 35 30 25 20 15 10 5 0 tw e ar ys ok nd r t ku ie e c st fr i tt pa bo or ce m fa8/7/2012 21
ConclusionFacebook’s IPO will most likely be the biggestfinancial event of 2012, assuming that the Eurozone doesn’t collapse, especially for those whowere lucky enough to acquire early shares inthe company.Zuckerberg, who owns 28.2% of the shares, isexpected to walk away with a cool $28 billion,making him the 9th richest person in the world.