The three texts below provide information about the business environment for the Facebook company in May 2012. For this task, imagine you work for Facebook, and you have been tasked with carrying out a SWOT analysis on the company to determine whether this is the right time for the company to grow. Your job is to write a SWOT analysis and a report based on this analysis. You are writing this analysis and report for the senior management team. Your analysis should provide the team with a complete overview of the situation and should end with suggestions for what the company should do based on your analysis. This task requires you to demonstrate your skill in selecting and organising information to produce a company analysis. You should include a SWOT table or grid in your analysis and organise the document according to the SWOT framework. You should focus on the interaction between the Facebook’s internal environment (strengths and weaknesses) on the one hand, and its external environment (opportunities and threats) on the other.
Your SWOT analysis should form the basis of the suggestions you make about the company’s future actions. To accomplish this task you will need to draw on the case study analysis skills covered in Book 1 of the module and the report-writing skills covered in Book 3. Remember to use the referencing conventions that have been taught in the module when you refer to the sources of information that you use. You may benefit from writing one or more drafts before you produce a final version of your report. The Influential Document Checklist will be a useful reference in this process (see the Appendix to Book 3). Your answer for Task 2 should be about 1000 words in length. Please note that all tables and diagrams included count towards your word limit. Your reference list does not count, however.
Facebook (Facebook IPO, May 2012)
Facebook is the world’s largest social network, with 845 million active users around the world, and roughly 200 million in the United States, or two-thirds of the population. Created in 2004 by Mark Zuckerberg in his dorm room at Harvard, Facebook grew from being a quirky site for college students into a popular platform that is used to sell cars and movies, win over voters in presidential elections and organize protest movements. It offers advertisers a global platform, with the exception of China, where Facebook does not operate. Facebook took its first step toward becoming a publicly traded company in February 2012, when it filed to sell shares on the stock market. The service is on track to be the largest Internet initial public offering ever — trumping Google’s in 2004 or Netscape’s nearly a decade before that. In its filing, Facebook said it was seeking to raise $5 billion.
On May 3, Facebook set the estimated price for its I.P.O. at $28 to $35 a share, according to a revised prospectus. At the midpoint of the range, the social networking company is on track to raise $10.6 billion, in a debut that could value the company at $86 billion. Investors have been eagerly awaiting the Facebook offering, lured by the prospect of strong growth: in the first quarter, Facebook’s daily active users, a measure of engagement, increased by 41 per cent, to 526 million. Still, Facebook is experiencing the growing pains typical of a technology start-up. While revenue continues to rise, profit sputtered in the first three months of the year, falling 12 per cent, to $205 million, as expenses jumped significantly. Seeking to Offer More Disclosure to Users
Facebook, unlike any other site, has come to define the social era of the Web. More than a portal, its value lies in its dynamic network of social connections and the massive amount of information shared by its users. Facebook, in many ways, is a data processor, archiving and analyzing every shred of information, from our interests, to our locations, to every article and link that we ‘like’. The collection of data is a potential goldmine for advertisers. On the other hand, all that information raises questions about Facebook’s privacy practices. Over the years it has faced intense scrutiny from privacy advocates and regulators worldwide over how it handles the data it collects from its 845 million users. As it prepares to go public, it has been seeking to offer more disclosure to users. In April 2012, it announced it was expanding its downloadable archive feature, called Download Your Information, to provide greater transparency on the types of data on individuals that the company stores. More Advertising, More Dollars
Facebook’s hundreds of millions of users could soon be faced with a lot more advertising — in their newsfeed, on their mobile devices and even when they log off. In early March 2012, the company announced a new suite of advertising products intended to insert more ads into Facebook’s traditionally clean interface and to take more advantage of mobile ads, where the company has struggled. The announcement was made at the company’s first marketing conference, held at the American Museum of Natural History in Manhattan. For users, the announcement could mean many more ads on Facebook. For advertisers, the effort offers a chance to reach more users in more places. Despite aggressively courting Madison Avenue for the last few years, Facebook has been an anomaly in the world of digital advertising. The ad units offered less creative options for advertisers who want to, say, take over the site’s home page or add moving text to an ad.
Rather, the value in Facebook’s ads was in their data and personalization. The potential for more ad dollars was reflected in the company’s first filing for a public offering in February. At the time, analysts said the company was expected to be valued at $75 billion to $100 billion. But according to the filing, Facebook made only $3.7 billion in revenue last year, the bulk of that from advertising. Until now, advertisers were largely limited to a variety of ad spaces that were positioned on the right side of the Facebook home page, in addition to creating their own Facebook pages. The company said a new set of ‘premium ads’ will run at different points in the site, with a special emphasis on ads running throughout a user’s mobile feed. Facebook’s Biggest Stumbling Block: Privacy Practices
Facebook’s biggest stumbling block has been its privacy practices. As the world’s largest social network, Facebook has been under intense scrutiny from consumers, courts and regulators worldwide over how it handles the data it collects from its 845 million users. But as a company preparing to go public, it is under pressure to find new ways to turn that data into profit. The company has repeatedly alienated users over privacy — as in the case of the 2007 controversy over Beacon, a tool that automatically posted on Facebook what its users did or bought on other sites. It has also faced lawsuits over the use of its members’ ‘like’ endorsements in ads and drawn scrutiny for a facial recognition feature. The scrutiny is at its most intense in Europe, where Facebook’s data collection practices have tested the boundaries of stringent privacy laws. In the United States, Facebook faces government audits for the next 20 years about how it collects and shares data, along with an assortment of lawsuits that accuse the company of tracking users across the Web.
In November 2011, the company announced a settlement agreement with the Federal Trade Commission, which accused Facebook of having deceived its customers about privacy settings. After the F.T.C. order, Mark Zuckerberg conceded in a blog post that the company had made ‘a bunch of mistakes’, but he said it had already fixed several of the issues cited by the commission. In August 2011, Facebook made changes that it said were aimed at helping users get a grip on what they shared. When users added pictures, comments or other content to their profile pages, they could specify who could see it: all of their Facebook friends, a specific group of friends or everyone who has access to the Internet. Revamping Its Profile Design
In December 2011, Facebook rolled out a revamped profile design called Timeline, which makes a user’s entire history of photos, links and other things shared on the site much more accessible with a single click. That could be when many of Facebook’s 800 million members realized just how many digital breadcrumbs they had been leaving on the site — and on the Web in general. The old Facebook profile page showed the most recent items a user posted, along with things like photos of them posted by others. But Timeline creates a scrapbook-like montage, assembling photos, links and updates for each month and year since they signed up for Facebook.
For better or worse, the new format is likely to bring back old memories. Going forward, it could also make it harder to shed past identities — something that people growing up with Facebook might struggle with as they transition from high school to college, and from there to the working world. Analysts said Timeline was a significant evolutionary shift for Facebook. For starters, linking Facebook more closely to memories could make it harder for people to abandon the service for rivals. Buying Instagram for $1 Billion
In early April 2012, Facebook said it had agreed to buy Instagram, the popular mobile-centric photo-sharing service, for $1 billion in cash and stock, giving it a stronger foothold in the market for mobile apps. It would be Facebook’s largest acquisition to date by far. Instagram is a social network built around cellphone photos. It lets people add quirky filters and effects to their snapshots and share them with friends, who can ‘like’ and comment on them. The service has been something of a rising star in the start-up world. Barely two years old, it has attracted close to 30 million users, even though it worked only on iPhones until early April, when it released an Android version of its app.
Facebook Cites Google+ With Mobile Shift Among Potential Risks By Brian Womack on February 08, 2012
Feb. 2 (Bloomberg) – Facebook Inc., the social network that filed for an initial public offering yesterday, listed rivalry with Google Inc., regulatory scrutiny, hacker attacks and the shift to mobile technology among the risks it faces. Facebook’s competition with Google, Twitter Inc. and other social-networking providers could impede growth, the company said in the risk-factors section of its filing. Facebook also said it would face competition in China if it manages to gain access to that market, where it’s currently restricted. ‘Certain competitors, including Google, could use strong or dominant positions in one or more markets to gain competitive advantage against us in areas where we operate,’ Facebook said. Their tactics may include ‘integrating competing social-networking platforms or features into products they control,’ the company said. Facebook, the world’s biggest social-networking service, has attracted more rivals as its popularity among users and advertisers soars.
The company said it faces ‘significant competition’ in almost every aspect of its business. The company also cited concerns about its mobile strategy. Almost all of its revenue comes from ads delivered to computers, not phones and tablets. Facebook’s mobile software currently generates no ‘meaningful revenue,’ the Menlo Park, California-based company said. Facebook further cautioned that key mobile devices, such as Apple Inc.’s iOS products and gadgets running Google’s Android software, may not feature Facebook in the future. If either of these companies gives preference to another social network – say, if Google promotes its own Google+ more aggressively – Facebook’s growth could be jeopardized. Unforeseen Threats
Bigger pitfalls could yet emerge, said Kevin Landis, the portfolio manager for the Firsthand Technology Value Fund, which holds Facebook shares. Google, for instance, couldn’t have foreseen the emergence of Facebook in 2004, when it went public. ‘Let me put it this way: If you go back to Google’s S-1 in their risk factors, there’s no mention of Facebook,’ Landis said. Facebook was founded in 2004. Facebook also has considered entering China, which would bring its own challenges. The country has censorship laws that have kept Facebook and other social-media companies, including Twitter Inc. and Google’s YouTube, from operating there. ‘We continue to evaluate entering China,’ Facebook said. ‘China is a large potential market for Facebook, but users are generally restricted from accessing Facebook from China. We do not know if we will be able to find an approach to managing content and information that will be acceptable to us and to the Chinese government.’ Dependent on Zynga
Another risk: Facebook relies on Zynga Inc. for 12 percent of its revenue, according to the filing. San Francisco-based Zynga is the biggest developer of Facebook games, including ‘CityVille’ and ‘Texas HoldEm’. The revenue comes from Zynga’s sales of virtual goods and from direct advertising purchased by Zynga. In addition, Zynga produces a ‘significant number’ of pages on which Facebook displays ads. The dependence goes both ways. Zynga gets more than 90 per cent of its revenue from the social network. ‘If we are unable to successfully maintain this relationship, our financial results could be harmed,’ Facebook said of Zynga. Facebook also said it faces pressure from governmental bodies. It’s possible that a regulatory inquiry might lead to changes to policies or practices, the company said. Regulatory Constraints
‘Violation of existing or future regulatory orders or consent decrees could subject us to substantial monetary fines and other penalties that could negatively affect our financial condition and results of operations,’ according to the filing.
As Privacy Concerns Grow, More Social Media Users Are ‘Unfriending’ FEBRUARY 24, 2012 AT 7:00 AM PT
by Lauren Goode
As concerns about online privacy grow, users of social media sites are increasingly looking to unfriend other users and ‘prune’ their personal profiles, according to a new report out today from Pew Research Center. More than 60 per cent of social media users said last year that they deleted people from their friends lists, up from 56 per cent in 2009; and 26 per cent of users who keep their profiles private say they apply additional privacy settings to limit what some friends can see. Profile ‘pruning’ – deleting comments friends leave and untagging photos – is also on the rise, the report says. Women are significantly more likely to keep their profiles private, and are more likely to unfriend people than men are, with 67 per cent of women saying they’ve removed friends, compared with 58 per cent of men. Young people are more likely to manage their social media presences by deleting comments and untagging photos. The report comes just as the White House has moved to create a privacy bill of rights aimed at governing online data tracking.
One of the issues at hand is a ‘do not track’ tool which Web companies like Google have just agreed to support. Last week, Google was reported to be using deceptive practices to track Web users in certain browsers. As The Wall Street Journal notes, though, a ‘do not track’ button would allow for some Web data collection – such as the data gathered through Facebook’s ‘Like’ button. Pew is careful not to point to Facebook directly throughout the report, but notes that Facebook is by far the most popular U.S. social network (in its recent S-1 filing, Facebook showed that its user base has ballooned to more than 845 million). Pew’s report says that the term ‘privacy settings’ – as well as ‘unfriend’ – is part and parcel of the Facebook experience. The Pew survey on Internet usages was conducted between April and May of last year, and sampled more than 2,200 U.S. adults 18 and older.
The survey found that two-thirds of U.S. Internet users had profiles on social networking sites, up from just 20 per cent in 2006. In terms of who was more likely to post things on social networks that they later admitted they regretted, males were almost twice as likely to do so, with 15 per cent copping to it, than were females, at 8 per cent. Young adults, age 18 to 29, were also more likely to post content that they’d later regret on
Write a reflective piece on your experience of participating on this module. Consider the questions that follow to guide you with your writing. * What was your overall experience of studying on LB160?
* What were the most useful skills you learned on this module? Why? * If you engaged with the online activities on the module, what was your experience of using the Tutor Group Forum (TGF)? What were the strengths and weaknesses of the TGF you participated in? How would you evaluate the process of working collaboratively with other students? What did you learn from them? What skills did you develop through your online participation? * If you did not participate in the online activities, how did you find working on your own on the module? Do you think you would have benefited if you had been able to participate online? How? * Guidance notes
* Your reflective piece should not be written in a question and answer format but as continuous text. Be sure to use examples as evidence to support your claims. * For this task we advise you to organise your text as Problem–Solution. Here, Problem implies a ‘gap’ in someone’s skills. You need to demonstrate in your text how such a ‘gap’ (if any) was addressed by LB160. You may also like to see your reflective piece as Claim–Evidence because generally you make a claim that certain skills were improved by presenting some evidence. If you like, you may want to use sub-headings too but they are not essential. * It is important to be honest in your evaluation.
Negative experiences of the module are as valid as positive ones and you will not be penalised for reporting negative experiences. For the same reason, you will be assessed on the way you reflect on your learning, not on whether or not you were involved in the online activities. So feel free to use this opportunity to feed back to the module team on what the module experience was like for you. * Your reflective piece for Task 3 should be about 500 words in length.