Facebook: SWOT analysis

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Facebook Inc.’s strengths and weaknesses, as well as the opportunities and threats in the global social media and online advertising markets can be identified through a SWOT analysis of the business.

A SWOT analysis identifies the internal strategic factors (strengths and weaknesses) and external strategic factors (opportunities and threats) significant to the business.

In this case of Facebook Inc., such factors pertain to the dynamics of the online social networking environment and online advertising market.

Company: Facebook, Inc.
 CEO: Mark Zuckerberg
 Founders: Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz, and Chris Hughes
 Year founded: February 4th, 2004
 Headquarter: 1 Hacker Way, Menlo Park, California, U.S
 Number  of Employees (FY2019): 44,942
 Type: Public
 Ticker Symbol: FB
 Annual Revenue (FY2019): $70.7 billion
 Profit | Net income (FY2019): US$18.5 billion

Facebook’s Strengths

The following are Facebook’s main strengths:

  1. Strong brand image
  2. Large consumer base with externalities
  3. High revenues
  4. Innovative workforce

However, we can go more for details because there are other 5 interesting factors also contribute to the strength of Facebook.

1) Strong Brand

Having a strong brand is vital both for stability and long-term sustainability. In 2019, Facebook was ranked #5 most valuable brand by Forbes. With $88.9 billion in brand value, Facebook is the strongest brand in the social media industry globally.

2) Diversified Portfolio

Diversification enhances the stability of companies by protecting their core financial assets in case of revenues decline in one sector. Facebook clearly understands that you shouldn’t put all your eggs in one basket, opting instead to spread its investment across different areas.

With WhatsAppInstagramMessengerOculus (virtual reality device), Workplace (business tool), Portal (video calling device), and Calibra (electronic payment system) under its portfolio, Facebook’s diversification is a major strength.

3) Market Dominance

Companies that dominate the market can leverage their elevated positions to their advantage. The leading social network of the world, Facebook and its family products (Instagram, WhatsApp, Messenger), have Monthly Active People (MAP) value of 2.89 billion (Dec 31, 2019).

Infographic: Facebook Inc. Dominates the Social Media Landscape | StatistaYou will find more infographics at Statista

4) Loyal Customer Base

Nothing communicates a company’s strength, stability, and success more than a large and ever-growing number of extremely loyal customers. About 40% of the world population uses Facebook and its family products (Instagram, WhatsApp, Messenger), putting Facebook in an irreplaceable position.

5) World’s Best Employer

Facebook’s excellent HR policies are regarded as one of the best not only in the social media industry but also globally across all other industries. It is known to attract and retain top talent in the industry.  Forbes ranked Facebook in the following categories:

    • #147 Best Employers for Diversity 2020,
    • #144 World’s Best Employers 2019, and
    • #71 America’s Best Employers 2019

6) Visionary Leadership

The impeccable and visionary leadership of Mark Zuckerberg is a strength that most companies in the world can only dream of. The fruits of Zuckerberg’s strong visionary leadership include company culture, stability, increased profitability, innovation, and sustainability with minimum internal wrangles within its ranks and management, unlike most other companies.

7) Focus on R&D

Regardless of the industry, success in the digital age requires technological innovation through research and development. Facebook is one of the global leaders in R&D spending and has increased investment in R&D from $4.8 Billion in 2015 to $13.6 Billion in 2019, which is about 19% of its annual revenue.

8) Strong Advertising Business

Even though Facebook is synonymous with social media networks, the major source of its revenue is from the advertisement. In 2019, $69.66 billion (98.5% of its $70.70 billion annual revenue) came from advertising.

9) Effective Marketing Strategy

Facebook’s marketing is simple. The fact that over 2 billion people use their applications every day makes it a very powerful and effective marketing tool.

Facebook’s Weaknesses

1) User’s Privacy Concerns

Facebook is facing backlash over its negligence in the protection of user’s privacy, with the company experiencing a decline in popularity in some regions across the world. If the company does not address users’ privacy concerns promptly and effectively, it risks losing its popularity.

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