Facebook (in 2013) Will wall Street Hit the LikeButton Case Solution

2. Porter's Five Forces for Facebook

The industry which Facebook operates in is called the "social media" sector where a lot of recent changes have taken place. New Competition, new markets and new consumers are being created every day.

i. Threat of New Entrant

• This is quite high as most of these platforms are built quite cheaply and can be initiated with minimal investment.

• Due to the high growth rate, others are getting attracted towards such medium to make money.

• Legal restrictions are also limited or non-existent.

ii. Threat of Substitute

• Considering the influence and reach Facebook has generated over the past few years and the dynamic way in which they keep adapting to new rules, policies and environment is difficult to replicate. This threat is minimal for Facebook even with new entrants.

iii. Rivalry among Competition

• The competition is quite tough. For instance when Instagram was launched Facebook felt threatened by its growing clientele and eventually decided to buy the company. This shows that it considers its competition can impact its profits.

iv. Bargaining power of Supplier

• Yes, Facebook has shown a lot of bargaining power over the years and everyone as consumers accepts their changes on face value.

v. Bargaining power of Customers

• Individuals, on their own, wield very little or no bargaining power. However, corporations which use Facebook for marketing their products and services do have a sufficient bargaining power over Facebook.

3. Facebook's Resource, Capability and Core Competency

The 2 people currently responsible for Facebooks' continued success are its biggest resource. Both Zuckerberg and Sandberg are individuals who add a lot of value to the company through their experience. The main capability of Facebook is the way it has been able to establish such a massive footprint on the internet front and both these things combined create a lethal combination for its core competency i.e. balancing user privacy while generating advertisement revenue. These 3 things are helping Facebook stay ahead of the competition and their advantage cannot be easily taken up by others.

4. Graph Search & its Significance

It is a tool that helps users to search for people, places, photos, and interests. This search bar is important for a company's growth because it helps users discover and make new connections. Thus, it keeps the interest of the user alive and ensures that he or she is not bored with the same connections.

5. Facebook's Business Model

Facebook's business model comprises of three pillars:

a. News Feed: It allows users to check their friend's statuses and what's the recent update on them.

b. Timeline: This feature allows users to map their life and its significant events on Facebook itself as "Milestones."

c. Graph Search: A search bar that allows users to search for people, places, photos and interests.

The company makes money by providing advertising services and also by collecting social gaming fees from platform developers.

The only weakness which Facebook has is the balancing act which it must maintain between user data privacy and advertising revenue. In some instances its successful, whereas in some it still needs improvement.

6. Triangle Framework

The triangle framework helps businesses focus their strategic intention towards three areas:

a. Best Solution: The focus of this option is to achieve a good share of the product market by putting forward the product advantage. Here competitor rivalry may arise as others will always want to copy the idea.

b. Total Customer Solutions: Here entire customer requirements must be met which is not possible without a little bit of collaboration and cooperation with suppliers, customers and even competitors. This option helps gain the most market share in terms of customers. This approach is similar to Facebook's strategy.

c. System Lock-in: This means that the company starts even offering complementary services to make their business a one stop solution for all the needs. This option helps companies achieve market dominance.