Introduction

With the growth of social media websites, such as Facebook, our

privacy has become increasingly more vulnerable to surveillance and

commodification. As we have uploaded personal information to social

networks, we have increasingly allowed others access to our data.

Moreover, most social media users remain largely unaware how

vulnerable their personal information has become to information-

aggregation and reselling activities. This study contends that our

ignorance of privacy settings and policies on social media websites such

as Facebook, has exposed us to potential increases in social harassment,

state intrusions, corporate surveillance and commodification, and has

also reduced our ability to control how others may perceive us. We may

only be able to reclaim our ability to control our privacy rights if we are

able to control who may access our personal information through opt-in

accessibility options, if we have sufficient groups to monitor our rights,

and if we have non-commodified social networks to use.

Statement of the Problem

Is the privacy of Facebook users at risk?

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Objectives of the Problem

This study aims to discuss some of the privacy and security

implications of social networks and offer some general advice for taking

steps to protect your privacy online.

Alternative Courses of Action

1. Supportive Communities

Building a global community that works for everyone starts with

the millions of smaller communities and intimate social structures

Facebook turns to for our personal, emotional and spiritual needs.

2. Safe Community

As Facebook build a global community, this is a moment of truth.

It’s success isn't just based on whether it can capture videos and share

them with friends. It's about whether it is building a community that

helps keep us safe -- that prevents harm, helps during crises, and

rebuilds afterwards.

3. Informed Community

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 The purpose of any community is to bring people together to do

things we couldn't do on our own. To do this, we need ways to share new

ideas and share enough common understanding to actually work

together.

4. Civically-Engaged Community

Facebook society will reflect our collective values only if we engage

in the civic process and participate in self-governance. There are two

distinct types of social infrastructure that must be built:

The first encourages engagement in existing political processes:

voting, engaging with issues and representatives, speaking out, and

sometimes organizing. The second is establishing a new process for

citizens worldwide to participate in collective decision-making.

5. Inclusive Community

Building an inclusive global community requires establishing a

new process for citizens worldwide to participate in community

governance.

Facebook is not just technology or media, but a community of

people. That means Facebook need Community Standards that reflect

our collective values for what should and should not be allowed.

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Analysis

A Five Forces analysis of Facebook Inc. reveals issues that affect the

company’s position as one of the top players in the international social

media market. Michael Porter developed the Five Forces Analysis model

to evaluate the external factors that influence companies’ industry

environment. In this business analysis case, such external factors

influence the level of competitive rivalry that firms like Facebook

experience in the global social networking market and the online

advertising industry environment. As one of the biggest competitors in

the multinational industry, the company enjoys the benefits of high

revenues and popularity among users and advertisers. This position

helps ensure the fulfillment of Facebook’s vision and mission statements.

However, to keep this market position, the company must counteract the

negative effects of external factors shown in this Five Forces analysis of

the business and the online display advertising industry environment.

This Porter’s Five Forces analysis of Facebook Inc. puts emphasis on

customers and substitutes as the strongest forces based on external

factors in the social media business. Nonetheless, all external factors in

the Internet advertising industry environment are significant in affecting

the company’s business performance relative to the performance of

competitors like Google LLC, Twitter Inc., and Snap Inc. (Snapchat).

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Overview: Five Forces Analysis of Facebook Inc.

Facebook’s market position as one of the world’s leading online social

media businesses provides a variety of benefits. However, this Five

Forces analysis shows that the company must keep satisfying customers

to reduce the potential negative effects of competition and substitution

against its social networking website, mobile apps, and related offerings.

The following are the strengths or intensities of the Five Forces that

influence Facebook Inc.’s business:

 Competitive rivalry or competition (moderate force)

 Bargaining power of buyers or customers (strong force)

 Bargaining power of suppliers (weak force)

 Threat of substitutes or substitution (strong force)

 Threat of new entrants or new entry (weak force)

Competitive Rivalry or Competition with Facebook Inc. (Moderate

Force)

Even with its leading social media market position, Facebook Inc.

experiences the significant impact of competition. This element of

Porter’s Five Forces Analysis model determines how competitors affect

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the company’s industry environment. The following external factors lead

to the moderate force of competitive rivalry against the company:

 Small number of firms (weak force)

 Moderate variety of firms (moderate force)

 Low switching costs (strong force)

There are only a small number of companies that offer online

display advertising services similar to that of Facebook Inc. For example,

YouTube LLC (a subsidiary of Google LLC) has a social media website

that offers targeted online advertising service. In the context of this Five

Forces analysis, the small number of competing firms exerts a weak force

against Facebook. However, the variety of these firms helps attract

advertisers, thereby imposing a moderate force in the industry

environment. In addition, the low switching costs (low difficulty of

transferring from one provider to another) make it easier for advertisers

to shift away from the company toward competitors. These external

factors create the moderate force of competition. Based on this element of

the Five Forces analysis, competitive rivalry is a major consideration in

Facebook Inc.’s management and strategic formulation.

Bargaining Power of Facebook’s Customers/Buyers (Strong Force)

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 Customers impose pressure on Facebook Inc. in terms of what

they want from the company. The impact of consumers or buyers on the

online display advertising industry environment is examined in this

element of Porter’s Five Forces Analysis model. The following external

factors lead to the strong force of customers’ bargaining power on the

company’s social network and related services:

 High substitute availability (strong force)

 Low switching costs (strong force)

 High demand from buyers (weak force)

Facebook provides social media services to its members/users.

However, advertisers are the company’s primary source of revenues.

These advertisers have the option to use substitutes, which are highly

available. For example, instead of advertising on Facebook, customers

could advertise on television, radio and print media, all of which are

widely available and effective in reaching target audiences. In this Five

Forces analysis, such a condition exerts a strong force against the

business, despite the social network’s strong popularity (see SWOT

analysis of Facebook Inc.). In addition, low switching costs are an

external factor that makes it easy for customers to shift away from the

company’s social networking website, mobile apps, and advertising

services. This factor exerts a strong force against the business. The high

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demand for online advertising buffers the potential shift of advertisers

and slightly weakens the bargaining power of customers. This element of

the Five Forces analysis shows that Facebook Inc. must prioritize its

customers to ensure competitive advantage.

Bargaining Power of Facebook’s Suppliers (Weak Force)

Suppliers are among the factors that influence Facebook Inc.’s

social network and display advertising services. This element of the Five

Forces analysis shows how suppliers affect firms and the industry

environment. The following external factors lead to the weak bargaining

power of suppliers on Facebook Inc.:

 Moderate size of individual suppliers (moderate force)

 Large population of suppliers (weak force)

 High overall supply (weak force)

Examples of Facebook’s supply needs include servers and related

computing and network technology/equipment, as well as office supplies.

Some suppliers are large firms that exert a moderate force on the

company. However, these supplies are available from many

manufacturers. In this Five Forces analysis, the large supplier

population is an external factor that exerts a weak force on Facebook Inc.

In relation, the high overall supply minimizes the influence of individual

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suppliers on the company. Based on these external factors in the Five

Forces analysis, suppliers are a minimal issue in the firm’s social media

and online advertising industry environment. However, the company can

improve its management of supplier relationships through suitable

strategies for the supply chain. These strategies can contribute to

Facebook’s corporate social responsibility fulfillment involving suppliers,

among other stakeholders.

Threat of Substitutes or Substitution (Strong Force)

Substitutes could potentially reduce Facebook’s business

performance and create challenges in the social media firm’s industry

environment. The impact of substitution is considered in this element of

the Five Forces analysis. The most notable external factors that create

the strong threat of substitutes against Facebook Inc. are as follows:

 Low switching costs (strong force)

 High substitute availability (strong force)

 Moderate cost of substitutes (moderate force)

It is easy for advertisers to pay for substitutes, such as television,

radio and print advertising, instead of paying for Facebook’s social media

advertising. In the Porter’s Five Forces Analysis framework, this

condition exerts a strong force on the company. In relation, the high

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availability of such substitutes strongly affects the industry environment.

Nonetheless, many of these substitutes, especially television advertising,

are more expensive than Facebook’s advertising services. Such cost

condition exerts a moderate force on the company. This element of the

Five Forces analysis shows that the threat of substitution is one of the

major issues facing strategic management at Facebook Inc.

Threat of New Entrants or New Entry against Facebook Inc. (Weak

Force)

The social media giant faces the negative effects of new entrants in

the industry environment. This element of the Five Forces analysis

covers the impact of new firms on the business. In this external analysis

case of Facebook Inc. and its social network and related products, the

following external factors lead to the weak threat of new entry:

 Low switching costs (strong force)

 High cost of brand development (weak force)

 High cost of customer loyalty (weak force)

New entrants exert a strong force against Facebook, due to the low

switching costs (low difficulty) of advertisers in moving from one service

provider to another. However, this Five Forces analysis also shows that it

is difficult to develop a popular and reliable social media brand similar to

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Facebook’s. It is also difficult to build the loyalty of advertisers and

users/members. This external factor weakens the threat of new entry

against the company. Based on this element of the Five Forces analysis,

new entrants are a minimal issue in Facebook’s strategic formulation

processes.

Facebook SWOT Analysis

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. While Facebook remains one

of the leading players in the market, this SWOT analysis highlights

issues that the company must address to continue in its global market

position. Also, the company must adjust its strategies and internal

factors along with changes in the external factors that affect the

business. In this way, Facebook can ensure that its weaknesses are

contained and its strengths are sufficient to compete in the international

market.

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 This SWOT analysis of Facebook Inc. indicates strengths that

support the organization’s leadership in the online social media

business. However, the company must continue innovating to ensure

such market position, considering the threats facing its social networking

and online advertising services. The business competes against firms

like Google LLC, Snap Inc. (Snapchat), and Twitter Inc. These

competitors influence the threats and opportunities that impact

Facebook’s strengths and weaknesses.

 Facebook’s Strengths (Internal Strategic Factors)

Facebook Inc.’s strengths support its market position as one of the

biggest players in the social media market and the Internet advertising

market. Such strengths are internal factors that build business

competitiveness. This element of the SWOT analysis enumerates the

company’s strengths and how they relate to business performance. The

following are Facebook’s main strengths:

1. Strong brand image

2. Large consumer base with externalities

3. High revenues

4. Innovative workforce

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 Facebook Inc.’s social network’s popularity comes with a strong

brand image, which is considered as strength in the context of this

SWOT analysis. The company develops its business as a reliable social

media service provider. In relation, the company’s large consumer base is

a strength that brings a number of beneficial externalities. For example,

the large number of users or members makes Facebook’s social

networking website and mobile apps more attractive to potential new

members, more attractive to advertisers, and more difficult for new social

media companies to compete with. Moreover, high revenues are a

beneficial internal strategic factor that supports the company’s financial

capacity for research and development (R&D) investments for new

products and new business ventures. Also, Facebook’s organizational

culture contributes to innovativeness in the workforce. This internal

factor enables product development, which is a growth strategy. Thus,

this element of the SWOT analysis shows that Facebook Inc. has the

strengths to maintain its competitive advantage and attractiveness in the

online advertising market.

 Facebook’s Weaknesses (Internal Strategic Factors)

The company suffers from a number of weaknesses based on the nature

of its business. Social media and online advertising technologies create

weaknesses that enable competition, which exerts a moderate force on

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firms in the industry (See Porter’s Five Forces Analysis of Facebook Inc.).

In this element of the SWOT analysis, weaknesses are internal factors

that prevent or reduce the company’s success. The following weaknesses

affect Facebook Inc.’s long-term success:

1. Imitable products and services

2. Negative impacts of online advertising on user experience

3. Low diversification of business

Facebook’s social networking website, mobile apps, and related

services are imitable in terms of basic features. This SWOT analysis

considers such internal strategic factor a weakness because it makes the

company vulnerable to competition. For example, other companies can

develop their social networking services to directly compete against

Facebook Inc. Also, the company’s online advertising mechanism is a

weakness because users could perceive advertisements as a nuisance in

their social media experience. In addition, the corporation suffers from a

low level of diversification, which maximizes market risk exposure. With

low diversification, the vast majority of the company’s earnings are

generated through its social networking website and related mobile apps.

Based on this element of the SWOT analysis, Facebook Inc. must

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address its weaknesses to reduce market risk exposure, and to increase

potential business growth.

 Opportunities for Facebook Inc. (External Strategic Factors)

A number of opportunities are available for the company to grow its

social media business internationally. This element of the SWOT analysis

enumerates the external factors that the company can exploit to improve

its business situation. The following opportunities are most relevant in

Facebook Inc.’s case:

1. Business diversification

2. Product innovation

3. Market penetration and development

Facebook Inc. has the opportunity to diversify outside its core social

media and online advertising business. The company has taken steps to

exploit this external factor. For example, the company acquired Oculus

VR, which is a virtual reality technology business that can complement

social networking services. However, this SWOT analysis points to the

need for further diversification to reduce Facebook’s business risk

exposure. Another opportunity is for the organization to innovate

products that are complementary to its social networking website and

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mobile apps. Furthermore, market penetration and development can

increase membership and revenues, in line with Facebook Inc.’s generic

competitive strategy and intensive growth strategies. This element of the

SWOT analysis indicates the need for the company to reform some of its

strategies and management direction to ensure continuous growth.

 Threats Facing Facebook Inc. (External Strategic Factors)

The company experiences risks linked to threats in the social

media and online advertising industry environment. External factors that

impede business growth are outlined in this element of the SWOT

analysis. Facebook must address the following threats against its

multinational business:

1. Imitation

2. Cybercrime

3. Market saturation

Imitation is one of the major threats to the business, considering

that other firms could develop social networking websites and mobile

apps similar to those of Facebook. In this SWOT analysis, imitation is a

threat because it has the potential to reduce the company’s market

share. Also, with increasing membership, the company is now an

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attractive cybercrime target. This external strategic factor can negatively

impact user experience and, consequently, business performance.

Moreover, the market is increasingly saturated, as pointed out in

the PESTEL/PESTLE analysis of Facebook Inc. Market saturation could

lead to business growth plateau or stagnation. Based on this element of

the SWOT analysis of Facebook Inc., it is crucial that the company

develop new products and related technologies, and enter new

businesses.

Competitive Profile Analysis/ Matrix

Established in the year 2014 by Mark Zuckerberg, Facebook has

since grown to become a popular social networking service and boast of

more than1.86 billion monthly users by the last year 2016. By 2015,

the company becomes the world fastest corporation in the

standard and poor’s index to reach a market cap of $250 billion

(Sun, 2015). A competitive profile matrix(CPM) describes a tool used

to compare a business and its competitors, and show their relative

strengths and weaknesses (Bhasin, 2016). The firm has a mission to

give people the power to share and make the world more open and

connected. In the case of competitive strengths, the company

boost of around three most right capabilities that include; the

integration with website and applications, it has over one billion

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active monthly users, excellent user experiences, and wider

understanding of the user’s needs and behaviors (Sun, 2015).

Facebook weakness includes a weaker click-through-rate (CTR) of

advertisement of about 0.05% and close to 4% respectively, lack

of website customization, weaker protection of its user’s

information, and poor attitude towards the user’s privacy. Other

weaknesses include its ability to have an advertisement on Facebook

only, and that the social network has limited features.

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 From the table, we can conclude that Facebook Company is

more stable regarding its competitive strengths over that of LinkedIn

and Google.

External Factor Evaluation (EFE) Matrix

EFE Matrix is an analytical technique related to the SWOT

analysis. EFE is an acronym of the External Factor Evaluation. EFE

Matrix evaluates the external position of the organization or its strategic

intents.

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 IFE matrix means Internal Factor Evaluation Matrix; is a popular

strategic management tool for auditing or evaluating major internal

strengths and internal weaknesses in functional areas of an organization

or a business. IFE matrix also provides a basis for identifying or

evaluating relationships among those areas

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Facebook SWOT matrix

Strengths Weaknesses

1. Integration with websites and 1. Weak CTR of advertisements

applications
2. Social network lacks of some

2. More than a billion active features

monthly users
3. One source of revenues –

3. Excellent users experience advertisements on Facebook

4. Understanding of user’s needs 4. Attitude towards users’ privacy

and behavior
5. Lack of website customization

6. Weak protection of users’

information

Opportunities Threats

1. Increasing number of people 1. Increasing number of mobile

using Facebook through mobile internet users

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 devices 2. Users using ad-block extensions

2. Expansion to China 3. Slow growth rate of online

advertising
3. Diversify sources of revenue

4. Identity thefts
4. Open Facebook marketplace

5. Weak business model

Strengths

1. Integration with websites and applications. To enrich user

experience and engage more users to use Facebook, the social

network has launched many features that would allow closer

integration with other websites and producers of applications that

run via Facebook. Easy integration and use of applications results

in competitive advantage over other social networking websites

that struggle to provide the same level of service.

2. More than a billion active monthly users. For a social network

to grow, it must have users. The more users the Facebook has, the

more socially connecting it is. With one billion active monthly

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 users, Facebook is able to connect people not only locally but

globally as well.

3. Excellent user experience. Facebook has an easy to use

interface, is integrated with many website, can connect people

through PC or mobile devices, is translated into more than 70

languages and has many more additional features that lack other

social networks.

4. Understanding of user’s needs and behavior. Except Google, no

other business has so many data collected on what users like,

dislike, needs and how the users behave online. With so much

data, Facebook knows what exactly to offer to its users (what

additional features, what advertisements) and how to further

improve their experience with Facebook.

Weaknesses

1. Weak CTR of advertisements. Facebook has a lower click-

through-rate (CTR) than an average website, which is only 0.05%

and about 4% respectively. In order to earn more income from the

advertisements Facebook has to change the way it displays the ads

(advertisements on wall posts have more than 6% CTR) but

without interfering users’ experience.

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2. Social network lacks of some features. Although Facebook has a

wide range of features that other social networks don’t, the website

still lacks: video chats, group chats, dislike buttons, ability to

unsubscribe from alerts and many others.

3. One source of revenues – advertisements on Facebook. More

than 80% of Facebook’s revenues come from advertising on its

social network. The growth of the revenues directly depends on the

growth of users. This leaves the business very vulnerable and

dependent on continuous growth of users, which will eventually be

only marginal as the social network has already attracted so many

users.

4. Attitude towards users’ privacy. Facebook collects private users’

information and then stores it, uses it for its own purposes or sells

it. Such treatment of users’ private information draws negative

attention that decreases popularity of Facebook.

5. Lack of website customization. Many Facebook’s users spend a

lot of time on social network and want the website to reflect their

personalities but are unable to customize the website to their

needs and are forced to use uniform template for all users. In

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 comparison, Google+ allows for much more personalization of the

social network account than Facebook does.

6. Weak protection of users’ information. Facebook, having so

many users that upload personal information to the social

network, is a target for attacks that steal passwords and other

personal information from the users. Such attacks occur every day

and thousands of passwords are stolen. Though, Facebook is not

doing enough to protect users’ from identity attacks.

Opportunities

1. Increasing number of people using Facebook through mobile

devices. Currently Facebook has more than 600 million users who

use Facebook through mobile devices. Despite that this group

makes 60% of all Facebook users, the mobile advertising only

accounts for only 14% income for the company. Facebook has an

opportunity to create a platform that could be used to display ads

for mobile users and increase firm’s income.

2. Expansion to China. Easing government regulations and newly

elected government may open a way for Facebook to enter China’s

social networking market. Until then, Facebook should prepare

itself for such an entry.

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 3. Diversify sources of revenue. Facebook heavily relies on

advertising on its social network as a source of income, but with

being the number 2 website in the world and more than 1 billion

active monthly users, Facebook could exploit other opportunities to

attract the money.

4. Open Facebook marketplace. With so many users and extensive

coverage of the world, Facebook is well positioned to open

Facebook marketplace. If successful, it would bring more revenues

than the advertising, thus boosting company’s growth and future

prospects.

Threats

1. Increasing number of mobile internet users. Currently Facebook

has more than 600 million users who use Facebook through

mobile devices. Despite that this group makes 60% of all Facebook

users, the mobile advertising only accounts for only 14% income

for the business. If the company will be unable to monetize mobile

users, it will face decreasing advertising income as more PC users

will turn to mobile users.

2. Users using ad-block extensions. Educated internet users often

install extensions that block advertisements from the websites. The

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 growing number of such users is threatening Facebook’s model as

they can’t see advertisements and click on them.

3. Slow growth rate of online advertising. Although online

advertising still grows in double digits (14% in 2012, down from

23% in 2011) that growth is slowing down, thereby threatening

growth of Facebook’s advertising income.

4. Identity thefts. Even today, identity thefts are common on

Facebook. The more identities are stolen the more criticism

Facebook will receive strongly damaging its brand for inability to

protect users’ private information.

5. Weak business model. Facebook’s aim is to attract social network

users, display the ads for them and charge the businesses for the

ads displayed. Although Facebook’s business model looks sound

for the moment, the company may face severe difficulties if some

conditions change that are not in firm’s control. For example,

slowing growth of online advertising, new social network, shift from

advertising on Facebook to other websites, growing number of

mobile users (Facebook is yet unable to monetize them) or failure

to diversify source of income.

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Pestle Analysis

Facebook Inc. evolves to address the issues identified in this

PESTEL/PESTLE analysis of the social media business. The

PESTEL/PESTLE Analysis model presents an external analysis of the

most important factors in the company’s remote or macro-environment.

As one of the top players in the international social media market, the

corporation has the capabilities to maintain such market position

through popularity, brand development, and research and development

investment. However, this PESTEL/PESTLE analysis of Facebook

indicates the need for adjustments in strategies to ensure that its social

networking website, mobile apps, and display advertising services remain

attractive in the face of significant competition from other firms, such as

Twitter Inc., Snap Inc. (Snapchat), and Google’s YouTube. Considering

the industry landscape and level of competition determined in

the Porter’s Five Forces analysis of Facebook Inc., it is essential to

implement strategies that strengthen the company’s competitive

advantages to support continued growth worldwide.

A PESTEL/PESTLE analysis of Facebook Inc. identifies the external

factors that significantly influence the condition of the firm’s remote or

macro-environment. These external factors require the company to

address issues in the industry, particularly political and technological

28|P a g e
factors. Strategic alignment with the conditions of the industry

environment helps in satisfying Facebook’s corporate vision and mission

statements, especially in providing effective tools for communication in

the global social networking market.

 Political Factor

Facebook’s business is linked to the political landscape. In this

element of the PESTEL/PESTLE Analysis, the effects of governments

as external factors in the company’s remote or macro-environment are

determined. Political movements have the power to shape the progress

of businesses and entire industries. The following are the major

political factors influencing Facebook Inc.:

1. Political stability in developed countries (opportunity)

2. Popular governmental support for globalization (opportunity)

3. Political barriers in the Chinese market (threat)

4. Political action on online data (threat)

The political stability of developed countries presents opportunities

for Facebook Inc. to continue diversifying its business in these

markets. Also, the company has the opportunity to expand its social

media and display advertising services worldwide, based on

governmental support for globalization. However, Facebook could

29|P a g e
suffer from political barriers in China. The company’s potential global

growth is limited because of Chinese censorship. In addition,

regarding data privacy and security issues involving organizations like

Cambridge Analytica, governments are increasingly working to limit

online data collection, sharing, and processing. This external factor

can slow down the company’s growth. Based on this element of the

PESTEL/PESTLE analysis of Facebook Inc., the company must

enhance data privacy and security, and continue negotiating with the

Chinese government to open up the display advertising market in the

country.

 Economic Factor

Economic conditions shape Facebook Inc.’s business growth. This

element of the PESTEL/PESTLE Analysis considers the impact of

economic trends and conditions on the firm’s remote or macro-

environment. The economic external factors that affect the company

are as follows:

1. Increasing stability of developing countries (opportunity)

2. Rapid economic growth of developing countries (opportunity)

3. Increasing disposable incomes (opportunity)

30|P a g e
 Facebook Inc. has the opportunity to increase its market

penetration efforts in developing countries with increasing economic

stability. In relation, the rapid economic growth of these countries

leads to an improvement of infrastructure, including

telecommunications infrastructure. In this PESTEL/PESTLE analysis,

such an external factor supports an expansion of access to

Facebook’s social network. Moreover, the increasing disposable

incomes in developing countries improve users’ capacity to purchase

devices to access the company’s services, thereby also contributing to

business expansion. Such conditions support Facebook’s generic

competitive strategy and intensive growth strategies. This element of

the PESTEL/PESTLE Analysis indicates that Facebook Inc. has major

opportunities to expand its multinational operations, especially

through market penetration.

 Social Factor

Facebook’s popularity and global reach is under the influence of

social conditions. The impact of sociocultural trends and changes on

the company’s remote or macro-environment is determined in this

element of the PESTEL/PESTLE Analysis. The following sociocultural

external factors are most notable in the case of Facebook Inc.:

31|P a g e
1. Increasing preference for high quality services (opportunity)

2. Increasing online buying (opportunity)

3. Increasing support for corporate social responsibility (opportunity)

With increasing financial capacity and improving living conditions,

people are increasingly emphasizing high quality in the services that

they use. In the context of this PESTEL/PESTLE analysis, such a

social condition presents an opportunity for Facebook Inc. to improve

its service quality standards to satisfy and retain clients who pay for

the company’s display advertising services. In addition, increasing

online buying worldwide creates opportunities for Facebook to develop

additional services to profit from retail sales generated through its

social networking website and related mobile apps. For example, the

company can offer better marketplaces to address this trend. The

company also has the opportunity to enhance its corporate social

responsibility programs as a way of satisfying the corresponding

expectations of users. Based on the external factors in this element of

the PESTEL/PESTLE analysis of Facebook Inc., there are major

opportunities to improve the company’s services to optimize

competitive advantage.

 Technological Factor

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 Technologies impact Facebook Inc., considering that it is a

business founded on online technologies. This element of the

PESTEL/PESTLE Analysis identifies the main technological influences

on the firm’s remote or macro-environment. The following

technological external factors affect Facebook Inc.:

1. Increasing use of mobile devices (opportunity)

2. Increasing number of online social media companies (threat)

3. Diversification of online retail firms (threat)

Facebook has the opportunity to improve user experience involving

its mobile apps. This opportunity is based on the trend of increasing

mobile device usage worldwide. However, this PESTEL/PESTLE

analysis points to the threat of increasing competition, as more online

social networks attempt to attract users away from the company’s

social media services. This technological trend also leads to market

saturation, which is a threat noted in the SWOT analysis of Facebook

Inc. Furthermore, the diversification of online retail firms threatens to

compete with the company. For example, giants like Amazon.com is in

a position to offer online advertising services through its network of

affiliate websites. This element of the PESTEL/PESTLE Analysis

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shows that Facebook Inc. must continue improving its social media

and display advertising services to retain customers.

 Environmental Factor

Facebook’s social media business is partly linked to the natural

environment. The effects of ecological issues and trends on the

company’s remote or macro-environment are determined in this

element of the PESTEL/PESTLE Analysis. The following ecological

external factors influence the company:

1. Increasing emphasis on business sustainability (opportunity)

2. Increase complexity of waste disposal standards (opportunity)

3. Climate change (threat & opportunity)

Facebook Inc. has the opportunity to enhance its social media

business sustainability to satisfy concerns regarding the natural

environment. Also, the company can implement better waste disposal

policies and standards for its corporate operations. Such effort can

address the increasing complexity of waste disposal standards,

especially in Western countries. Facebook faces the threat of climate

change, which could prompt the business to transfer its servers and

other equipment to another location in the future.

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Improving Facebook Inc.’s corporate social responsibility standing can

help address the external factors shown in this element of the

PESTEL/PESTLE analysis.

 Legal Factors

Laws impose requirements and limits on Facebook’s business. This

element of the PESTEL/PESTLE Analysis covers the effects of legal

systems and regulations on firms’ remote or macro-environment. The

legal external factors notable in Facebook’s case are as follows:

1. Improving patent laws worldwide (opportunity)

2. Increasing regulatory support for free Wi-Fi (opportunity)

3. Internet regulation in China (threat & opportunity)

4. Increasing regulation on online data (threat)

Facebook Inc. has the opportunity to innovate and introduce new

products, with the expectation of legal protection based on improving

patent laws around the world. In addition, this PESTEL/PESTLE

analysis points to the increasing coverage of free Wi-Fi as a beneficial

trend. For example, based on this external factor, the company can

expand its social media reach in more areas worldwide. However,

Facebook suffers from its ban in China. Nonetheless, the firm has the

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 opportunity to adjust its services and negotiate with the Chinese

government to gain access to the country’s online social networking

market. Online data collection, sharing and processing regulation

markedly increased in the aftermath of the Cambridge Analytica

scandal and related issues in 2018. This external factor threatens the

company and the online display advertising industry. Overall, this

element of the PESTEL/PESTLE Analysis shows that legal external

factors mainly provide opportunities that Facebook Inc. could take to

expand its operations and market reach.

Conclusion

History is the story of how Facebook learned to come together in

ever greater numbers -- from tribes to cities to nations. At each step, they

built social infrastructure like communities, media and governments to

empower us to achieve things they couldn't on their own.

Today are close to taking their next step. Their greatest

opportunities are now global -- like spreading prosperity and freedom,

promoting peace and understanding, lifting people out of poverty, and

accelerating science. Their greatest challenges also need global responses

-- like ending terrorism, fighting climate change, and preventing

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pandemics. Progress now requires humanity coming together not just as

cities or nations, but also as a global community.

This is especially important right now. Facebook stands for

bringing us closer together and building a global community. When we

began, this idea was not controversial. Every year, the world got more

connected and this was seen as a positive trend. Yet now, across the

world there are people left behind by globalization, and movements for

withdrawing from global connection. There are questions about whether

we can make a global community that works for everyone, and whether

the path ahead is to connect more or reverse course.

This is a time when many of us around the world are reflecting on

how we can have the most positive impact. We are reminded of our

favorite saying about technology: "We always overestimate what we can

do in two years, and we underestimate what we can do in ten years." We

may not have the power to create the world we want immediately, but we

can all start working on the long term today. In times like these, the

most important thing the Facebook can do is develop the social

infrastructure to give people the power to build a global community that

works for all of us.

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 Our hope is that more of us will commit our energy to building the

long term social infrastructure to bring humanity together. The answers

to these questions won't all come from Facebook, but I believe we can

play a role.

The job of Facebook is to help people make the greatest positive

impact while mitigating areas where technology and social media can

contribute to divisiveness and isolation. Facebook is a work in progress,

and we are dedicated to learning and improving. We take our

responsibility seriously, and today we want to talk about how we plan to

do our part to build this global community.

Recommendation

Among the possible courses of action available, it is recommended

that all must be considered to fully develop a social infrastructure that

work for all of us because one or two alone cannot build a positive global

community.

1. Supportive Community

The goal is to strengthen existing communities by helping us come

together online as well as offline, as well as enabling us to form

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completely new communities, transcending physical location. When we

do this, beyond connecting online, we reinforce our physical

communities by bringing us together in person to support each other.

2. Safe Community

Artificial intelligence can help provide a better approach. Their

researching systems can look at photos and videos to flag content. This

is still very early in development, but they have started to have it look at

some content, and it already generates about one-third of all reports to

the team that reviews content for our community.

It will take many years to fully develop these systems. Right now,

Facebook starting to explore ways to use AI to tell the difference between

news stories about terrorism and actual terrorist propaganda so

Facebook can quickly remove anyone trying to use our services to recruit

for a terrorist organization. This is technically difficult as it requires

building AI that can read and understand news, but they need to work

on this to help fight terrorism worldwide.

3. Informed Community

Research suggests the best solutions for improving discourse may

come from getting to know each other as whole people instead of just

opinions -- something Facebook may be uniquely suited to do. If they

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connect with people about what they have in common -- sports teams,

TV shows, interests -- it is easier to have dialogue about what they

disagree on. When they do this well, Facebook give billions of people the

ability to share new perspectives while mitigating the unwanted effects

that come with any new medium.

A strong news industry is also critical to building an informed

community. Giving people a voice is not enough without having people

dedicated to uncovering new information and analyzing it. There is more

Facebook must do to support the news industry to make sure this vital

social function is sustainable -- from growing local news, to developing

formats best suited to mobile devices, to improving the range of business

models news organizations rely on.

4. Civically-engaged Community

Facebook will work on building new tools that encourage

thoughtful civic engagement. Empowering us to use our voices will only

become more important.

5. Inclusive Community

The idea is to give everyone in the community options for how they

would like to set the content policy for themselves.

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 To further aid the problem of Facebook and for Facebook to serve

more people to stay connected and more open, Facebook needs to seek

the help of the people as part of this evolving community to have the

focus to take the long view and build the new social infrastructure to

create the world we want for generations to come.

References

http://www.firstmonday.dk/ojs/index.php/fm/article/view/5423/4466

https://www.cheshnotes.com/2017/01/facebook-mission-and-vision-

statement-analysis/

http://panmore.com/facebook-inc-vision-statement-mission-statement

http://panmore.com/facebook-inc-swot-analysis-recommendations

https://www.strategicmanagementinsight.com/swot-analyses/facebook-

swot-analysis.html

https://www.stock-analysis-on.net/NASDAQ/Company/Facebook-Inc

http://panmore.com/facebook-inc-pestel-pestle-analysis-

recommendations

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