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Running Head: FACEBOOK MOVES INTO E-COMMERCE
Facebook Moves into E-Commerce
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Institution
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FACEBOOK MOVES INTO E-COMMERCE
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To facilitate a solution for Facebook”s bridge to e-commerce, the SWOT analysis was
used to assess the strengths, weaknesses, opportunities, and weaknesses of the company to
focus on their relationship with generating advertising revenue in the evolving market of ecommerce. The information generated from this analysis would help the firm capitalize on
the internal factors, which compasses the strengths and opportunities, whereas being aware of
the external factors, including the weaknesses and threats.
Strengths
One of the company’s strengths includes the fast-growing client base, lucrative
database, developing user engagement, and the sustainable financial performance for all the
advertising strengths of the firm. This is attributed to its ability to cater to its users’
preferences that are essentially appealing to younger adult customers (Musonera & Weber,
2018). Further, the company has taken advantage of its grasp on the young demographic and
caters advertisements to all the people to attain a substantial revenue per user with mobile
advertisement. Further, the company has data it generates for all its users and turns it into
information that can be utilized to inform decisions concerning which advertisements the
clients might be interested in or, more probably, to interact with. Facebook collects
information concerning its users, and, in turn, the data is analyzed to customize every user’s
home page with relatable advertisements. Also, a number of other factors have recently
contributed to the client’s enhanced experiences on the social platforms. For instance, the
company 2016 launched the Facebook Sports Stadium that is dedicated space to experience
sport in actual with friends. Finally, the company caters to the lucrative database offering
value to developers and advertisers. Hence, the people who have a Facebook account are
connected to sign into other social media sites that have partnered with the firm rather than
requiring the user to register a new ID and password separately.
Weaknesses
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Although the company’s strengths seem to be the promising foundation for its success,
Facebook has exposed itself to numerous risks in being core dependent on the advertising
revenue. Other organizations that utilize Facebook for advertising could not fit their
respective budget, especially marketers who do not have a prolonged advertising commitment
with the firm. Most of their advertising budget spend merely a small portion. Also, since the
company relies on short-term advertisement commitments, there are no guaranteed prolonged
advertising objectives. This has created certain issues for the firm because the market is
continuously evolving. Hence, as the market evolves, there is an increment of the users
shifting to smartphones faster than the company’s ad revenue coming in (Musonera & Weber,
2018). Also, this shift forms a possible loss in the ad dollars because of the users swiftly
increasing, whereas the ad revenue is not used to its potential. also, Facebook is currently
facing certain challenges due to its negligence in protecting client’s privacy, plus it facing the
decline on its popularity in some areas globally.
Opportunities
There are numerous promising opportunities that the company can implement to
ensure its continued success. The market has been developing mainly in mobile advertising
and the wide industrial increase in in-app purchases. To capitalize on such opportunities, the
firm continues to provide new and exciting product offerings. The mobile advertisements
have shown no indication of slowing down; hence the ability of firms like Facebook to target
particular demographics have driven this growth (Kaur, 2016). The digital advertising market
within the US is expected to develop at the compound annual growth rate of about 11.3%
between 2015 and 2019 to reach 103.3% billion in 2019. Further, while the company
continues to develop with mobile advertising, in-app purchases are emerging as another
source of the firm’s revenue growth.
Threats
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With the several opportunities that the company has, there are always risks associated
with implementing them. The company has a dangerous regulatory environment and intense
competition. Due to the firm’s immense audience globally, it is subject to the laws both at
home and abroad. The firm offers its client numerous regulations they face, like privacy and
data protection, information retention and deletion, advertising and marketing distribution,
among others. As Facebook and its subsidiaries continue to develop, it has become subject to
additional laws and regulations, unintentionally unlawful actions, or increasing the risk of
penalty (Abu-Khater et al., 2017). Moreover, since the present laws surrounding social media
are new, it is unsafe to presume that they would be applied and interpreted around the
industry. Although the company should be careful about the regulations, the immense
competition is a more significant threat. With the booming social media setting, the firm has
a unique challenge to stay ahead of the curve.
Strengths
Weaknesses
➢ Fast growing client base
➢ Core dependent on the advertising
➢ Lucrative database
➢ User’s privacy concerns
➢ Sustainable financial performance
➢ User engagement
Opportunities
Threats
➢ Diversify portfolio
➢ Increased regulations
➢ Invest in in-app purchase
➢ Swift competition
➢ Increased integration with other apps
FACEBOOK MOVES INTO E-COMMERCE
References
Abu-Khater, H., Metzar, N., Alotaibi, M., Boulos, Z., Lally, W., & Daim, T. (2017).
Technology Management: Case of Facebook. In Research and development
management (pp. 199-225). Springer, Cham.
Kaur, P. (2016). Winning strategies and swot analysis of facebook. Asian Journal of
Multidimensional Research (AJMR), 5(4), 232-242.
Musonera, E., & Weber, J. M. (2018). Analysis of Marketing Strategies in the social media:
Facebook Case Analysis. Journal of Marketing Development &
Competitiveness, 12(1).
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