A case study on Facebook. The Organizational structure and design of Facebook is discussed

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FACEBOOK
ORGANISATIONAL STRUCTURE

2. INTRODUCTION
• Facebook is an American IT giant company having there operations mainly involving around social
networking.
• It has provided social networking platforms initially as Facebook and expanded their control over
WhatsApp, Instagram etc.
• Facebook become the largest social network in the world with more than a billion users in 2012
• It is estimated to have more than 2.45 billion users as in 2020
• Facebook was founded by 4 students of Harvard University named Mark Zuckerberg, Eduardo
Saverin, Dustin Moskovitz, and Chris Hughes.
• Company's headquarters are in Menlo park, California.

3. HISTORY
• The company was started early in Harvard University as Facemash in 2003 as a online portal for
students to judge the attractiveness of their fellow students. It was shutdown after few days for
violating University Policy. In its short period of existence it got around 450 users and they voted
for 22,000 times(approx.)
• This success made Zuckerberg think of a new platform for interaction and he registered a new URL
as www.thefacebook.com. Then he changed it into just www.facebook.com.
• It’s popularity increased, and beyond Harvard students of other universities were also allowed to
join and it gained around by 2004 more than 2.5L students from 34 universities signed up. By end
of 2005 it scaled beyond US. In 2008 Facebook become the most visited social media application.
• In 2006 Facebook introduced API’s so that third party developers can use Facebook and they
gained a revenue of $500 million.
• During the initial stages of development Facebook started with investment of $1000 each from
Mark Zuckerberg and Eduardo Severin and in 2012 Facebook filed to become a Public Company
and raised 16 billion initially and having a market value of 102.4 billion.
• In 2009 Facebook acquired FindFriend and in 2012 it acquired Instagram for $1 billion and in 2014
WhatsApp for $19 billion.

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GOAL OF
THE
COMPANY
The mission of Facebook was “the world more open and
connected”
MISSION INITIALLY
to give people the power to build communities,
and get closer together
NEW MISSION
• Move Fast and Break Things.
CORE VALUE

5. FACEBOOK-ORGANIZATIONAL
STRATEGY
Facebook’s Generic Strategy (Porter’s Model)
• supports the business through operational efficiency
and customers’ ease of access
• cost leadership generic competitive strategy
• Cost minimization enables the company to reduce its
prices competitively

6. Facebook’s Intensive Strategies
(Intensive Growth Strategies)
• Market Penetration
• objective of this intensive growth strategy is to maximize current
market share.
• For e.g. the company increases its share in current markets by
establishing alliances with telecommunications companies to
increase the number of users who access the company’s social
media service through the Facebook mobile app.
• This supports the company’s generic competitive strategy of cost
leadership by maximizing market reach using existing assets.
• Recent association with Reliance ,Apr 28, 2020

7. • Market Development
• secondary intensive strategy that Facebook uses for business growth
• objective in this intensive growth strategy is to enter new markets.
• For example, one of Facebook’s strategic objectives is to coordinate with governments to allow their citizens to
access the online social network
• DIVERSIFICATION
• uses diversification as a supporting intensive strategy for growth
• For example, the company acquired the firm Oculus VR to offer virtual reality technology that complements
social networking services
• Facebook Inc.’s strategic objective is to purchase or establish new subsidiaries or businesses to increase revenues
and market reach
• Product Development
• For example, as a strategic objective, Facebook Inc. developed mobile apps to complement the social
networking website
• This intensive strategy influences Facebook’s marketing mix or 4Ps
• The cost leadership generic competitive strategy optimizes profit margins when implementing this intensive
growth strategies

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FACEBOOK
• The ability to rapidly iterate and
add new features; it was named
one of Fast Company’s most
innovative companies of 2017
• It has several core competencies
that permeate the entire
company and allow them to be
consistently innovative. These
include:
• Move Fast
• Employee Autonomy
• Focus on Impact
Core competencies
Move Fast
• Build the best services over the long term by quickly releasing
and learning from smaller iterations rather than trying to get
everything right all at once.
• This agile approach can come with its fair share of difficulties
• Facebook consistently creates products and improvements to its
platform quickly
Employee Autonomy
• With that comes self-imposed high standards of responsibility and
performance
• The developers organize hackathons on their own, and that
“Many of our most successful products came out of hackathons,
including Timeline, chat, video, our mobile development
framework, and some of our most important infrastructure.
Focus on Impact
• Facebook can innovate and be successful because it operates
based on a shared goal of changing the world for the better
• This philosophy drives all company actions, whether operational
decisions, or hiring, and allows the organization to be consistently
competent and high-performing.
• The employees believe in Facebook’s mission and are inspired to
go to work every day.

9. ORGANIZATIONAL STRUCTURE
Facebook has a Matrix organizational structure.
The following main features of Facebook’s corporate structure are notable:
• Corporate Function-Based Teams
• Geographic Divisions
• Product-Based Divisions
Global Organization having 16 subsidiaries and 109 executives.
It concentrates that its employee base is of the lower age group.
It has a high turnover rate.
Structure encourages free flow of communication .
No clearly defined roles in the mid management level if compared to
Google and other internet companies.

11. Organizational Design
Basic design of facebook is organic characterized by the following:
• Little job specialization.
• Few layers of management.
• Decentralized decision-making.
• Not much direct supervision.

12. Advantages:
It provides flexibility to it’s multinational operations in the social media and online advertising market.
Another advantage of this corporate structure is significant corporate control.
Moreover, the product-based divisions support creativity and innovation in product development.

13. Disadvantages:
Difficulty in implementing directives throughout the corporate structure.
This difficulty is due to variations in regional management initiatives, based on the company’s geographical
divisions.
Still, these divisions are necessary to ensure that the business satisfies sociocultural and political variations
among countries and regions.

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• Follows Hacker culture
• Creative problem solving and
decision making
• Encourage social activities
• Continuous improvement
• Openness
• Boldness
ORGANIZATIONAL CULTURE

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ADVANTAGES
● Supports for flexibility
● Rapidly addressing problems and issues in
social media business
● Online social networking
DISADVANTAGES
● Difficulty in implementing new mandates.

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ENVIRONMENT
ANALYSIS
STRENGTH
• Largest user-base in the world, an extreme
network effect
• Effective Facebook.com and Instagram
monetization strategies and available financing
• Acquisition and growth of younger high-
potential companies
• Strong Brand Image
• Innovative and skilled employees
THREATS
• Aging demographics
• Glut of competition
WEAKNESS
• Lack of monetization of Messenger and
WhatsApp
• Negative impact of online advertising on user
experience
• Poor optics after the 2016 election and
Cambridge Analytica scandal
OPPERTUNITIES
• Higher international per-user monetization
• Future acquisitions in adjacent areas, such as
possible competitors to TikTok
• Development of new monetization plans for
messaging apps
• Market gain in younger demographics to ensure
future users
SWOT ANALYSIS

17. PORTERS FIVE FORCE ANALYSIS
1. Competitive rivalry or competition (moderate force)
- There are only a small number of companies that offer online display advertising services similar to that of
Facebook Inc.
- The low switching costs
2.Bargaining power of buyers or customers (strong force)
- Substitutes are highly available
- Low switching costs
- High demand from buyers
3. Bargaining power of suppliers (weak force)
- High overall supply
- Large population of suppliers
4. Threat of substitutes or substitution (strong force)
- Substitutes are highly available
- Low switching
5. Threat of new entrants or new entry (weak force)
- High cost of brand development (weak force)
- High cost of customer loyalty

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