Facebook Case Study
Facebook Case Study
1. What is the decision Facebook faces with? What are the alternatives (options)?
When Facebook filed for IPO in February 2012, expectations were set extremely high. When it loomed some investors expressed concern that Facebook’s advertising growth won’t suffice. Facebook’s public trading debut did not go as well as planned and shares continued to drop over the next few months. Facebook faces the decision of what to do in order to reverse the fall in stock price. The alternatives are either concentrate on helping companies develop platform applications, what would lead them into the travel, media, sports, and financial markets, or focus on evolving its search engine and aim to compete with Google more directly.
2. What factors are important in understanding this decision situation?
There are a few factors worth considering. First, Facebook is the largest online social network in the world, which means they have a strong enough user basis to go in any direction they decide. Second, Facebook has a huge social data then can be used to personalize search results or advertisements and apps. Third, Facebook’s business approach is to constantly be innovating, to update the system so that is reflects what the current social norms are. As Zuckerberg put it, keep a beginner's mind and make decisions as if they were starting the company now. Finally, the Graph Search which is unique to Facebook and has more social aspects, but is backed by Microsoft’s search engine, Bing (for example, generating one paid search click per user could bring Facebook an additional $500 million of yearly revenue).
3. What decision(s) do you recommend?
In my opinion, Facebook should stick to what it does best and concentrate on improving itself as a platform for companies to advertise themselves. Facebook gives companies easy access to a mass amount of users and can use its social data to make advertisements more intriguing for users and more efficient for companies.
1. What is the decision Facebook faces with? What are the alternatives (options)?
When Facebook filed for IPO in February 2012, expectations were set extremely high. When it loomed some investors expressed concern that Facebook’s advertising growth won’t suffice. Facebook’s public trading debut did not go as well as planned and shares continued to drop over the next few months. Facebook faces the decision of what to do in order to reverse the fall in stock price. The alternatives are either concentrate on helping companies develop platform applications, what would lead them into the travel, media, sports, and financial markets, or focus on evolving its search engine and aim to compete with Google more directly.
2. What factors are important in understanding this decision situation?
There are a few factors worth considering. First, Facebook is the largest online social network in the world, which means they have a strong enough user basis to go in any direction they decide. Second, Facebook has a huge social data then can be used to personalize search results or advertisements and apps. Third, Facebook’s business approach is to constantly be innovating, to update the system so that is reflects what the current social norms are. As Zuckerberg put it, keep a beginner's mind and make decisions as if they were starting the company now. Finally, the Graph Search which is unique to Facebook and has more social aspects, but is backed by Microsoft’s search engine, Bing (for example, generating one paid search click per user could bring Facebook an additional $500 million of yearly revenue).
3. What decision(s) do you recommend?
In my opinion, Facebook should stick to what it does best and concentrate on improving itself as a platform for companies to advertise themselves. Facebook gives companies easy access to a mass amount of users and can use its social data to make advertisements more intriguing for users and more efficient for companies.