Understanding Facebook: A Powerful SWOT Analysis

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Company Details

Founded:	February 2004, Cambridge, Massachusetts, United States
CEO:	Mark Zuckerberg (Feb 4, 2004–)
Headquarters:	Menlo Park, California, United States
Revenue:	85.96 billion USD (2020)
Subsidiaries:	PrivateCore, WhatsApp, Oculus VR,…
Founders:	Mark Zuckerberg, Andrew McCollum, Dustin Moskovitz, Eduardo Saverin, Chris Hughes

The internet has truly changed the way we think, work, and interact with friends and family. One of the companies that were instrumental in bringing about that change was Facebook. Since its inception in the early years of the 21st century, the brand truly took all things in the next century.

Now, it is a go-to platform for over two billion active users. People around the globe use the platform to connect with others, find work, shop for goods and services online, and much more.

Facebook, with all of its virtues and vices, is one of the most influential companies in the world.

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SWOT Analysis of Facebook

Through SWOT Analysis, we can determine what is working extremely well for Facebook, what is stopping it from working at optimum scale, how it can expand and grow further, and what are the banes the company is facing in both short and long terms.

Let’s start with internal factors and then move on to the external ones.

Facebook Internal Factors

The internal factors that are either giving Facebook a comparative advantage or hampering its growth are summed up in strengths and weaknesses.

💪 Strengths

Following are the strengths of Facebook that enabled it to become an internet giant.

Brand Name & Value

Facebook is synonymous with online presence and connectivity. For the last couple of years, the company has been selected among the most valuable brands in the world.

With over $90Billion in brand value and over 2 billion Facebook users, its name and logo stand for what’s hot and trending around the globe.

Product Diversity

Facebook, as a company, understands having a diversified portfolio gives its financial statements a clear boost. In terms of a diverse portfolio of products and services, Facebook has WhatsApp, Instagram, Messenger, Oculus (virtual reality device), Workplace, Portal, and so on.

The company also has an e-payment system in the form of Calibra.

Dominant Player

Facebook along with its family products is one of the most dominant players in the social media market. The estimates put the number of active users around 3 Billion in a month.

High User Retention

With small changes, Facebook offers a wide range of social media and communication products through desktop and mobile devices. That’s why it has over 40% population of the earth as its loyal customers.

Excellent Employer

As one of the technologically progressive social media platforms, Facebook harbors and promotes a culture with strong employee relations, laid-back vibes, and an excellent HR department. That’s why Facebook has been consistently named among the top employers in the world.

Exceptional Leadership

Unlike other companies with one-man shows, Mark Zuckerberg is not the man in charge. Rather, he defines his role to be as a leader that is steering the company toward a more profitable, innovative, and sustainable future.

Research & Development

Facebook understands that the competition is never fading. The company keeps its arsenal fresh and updated by investing large sums into its R&D, often around 20% of its revenue.

Ad-Based Business Model

Facebook is not only the name of popular social media around the globe, it is also the most successful ad-based business in the world. Often, the biggest part (95% – 98%) of its earnings comes from advertising revenue by running ads for Facebook users.

Superb Marketing Tactics

Facebook has created a demand among companies and businesses to use the platform as a lead generation tool. This is a testament to the fact how Facebook marketing tactics are working – over 2 Billion active monthly users and counting.

🤒 Weaknesses

After strengths, let’s take a look at the flaws in its business model and operations of Facebook.

Privacy Issues

Recently, Facebook has come under a lot of fire over misusing or showing negligence in sharing and storing Facebook users’ private data.

Advertisement Dependent

It would not be an overstatement to say that Facebook solely relies on its advertising revenue model for revenue generation on mobile devices. This is its biggest weakness.

Lax Control over Misinformation

Since it is one of the largest social media platforms, its share is naturally the biggest in spreading fake news and misinformation. The inability of the company in this regard poses a question to its long-term survival.

Lack of Managerial Harmony

Since Russia’s meddling affair, Facebook has seen a lot of disintegration in its rank where executives are blaming one another over this debacle and others.

Scandals of Racial Discrimination

Companies and individuals alike are suspecting that Facebook is supporting racially charged content and advertisements. With the lack of diversity in its workspace, the company is not a good shape to defend itself.

Poor Publicity

Incidents including the firing of employees over Donald Trump’s speech and the company’s inaction against violent speech and fake news have marred the name and brand of Facebook – the biggest social media platform.

Facebook External Factors

The external factors include opportunities that can improve the business and outlook of the company as well as the threats that can be put into the ground.

🤑 Opportunities

Being among the top social media companies in the world, Facebook is perfectly positioned to explore the following opportunities to expand its business.

Through product diversification, lead generation, and the development of AI products, Facebook can gain a stronghold in the market and overcome competition.

Portfolio Expansion

By adding more services and products with a clear focus on targeted advertising trends, Facebook can cover uncharted revenue territories and establish its hegemony in the online advertising market.

Refocus on Products

Facebook has an amazing portfolio in the form of WhatsApp, Instagram, Messenger, Oculus, Calibra, etc. By refocusing and reinventing these applications according to modern standards, the company can get back on track.

Enhanced Integration

These days, users want one size fits all. Facebook can exploit the demand by offering extensive integration of its company with other platforms, including e-commerce, surveys, blogs, etc.

Lead Generation

Even though Facebook is a global phenomenon, the bulk of its users is still those people who are young and tech-savvy. Through the introduction of new features that are easy to run and handle, the company can capture the market further deeper.

Acquisitions

Instead of starting on their own, large brands can assimilate micro-brands through acquisition. This saves them the trouble of entering the new market and starting all over again. Facebook has a string of acquisition that is perfectly working for it. By acquiring further companies and start-ups, it can broaden its revenue horizon.

AI Products

Facebook is one of the companies in the world with extensive knowledge and expertise in Artificial Intelligence and Machine Learning. For now, the company is using them for its core services and products – social media algorithms and advertisement.

By expanding the canvas of AI products, Facebook can cement its dominance in emerging markets, such as autonomous vehicles, space travel, and so on.

😨 Threats

Here are some of the issues that are threatening the company’s long-term survival and sustainability in the internet of things.

Thinning profit margins through taxes, censorship, and state regulations are some of the external factors that are threatening Facebook’s survival and sustainability.

Mounting Competition

Facebook is constantly facing mounting competition from both new and old competitors. These include TikTok, Snapchat, WeChat, etc. This is one of the most threatening developments for the company in a couple of years.

Tightening Regulations

Regulatory bodies are after Facebook due to its inability to take prompt actions against consumer private data safety breaches, pornographic content, fake news, and many more. With scandals like Cambridge Analytica, Facebook is up for facing tight regulations in the current and future market.

Regional Censorship

Many countries are not receptive or welcoming of technology changes or companies that rely on current information. That’s the reason Facebook is still having a hard time finding a home in countries like China, Iran, North Korea, etc. Lately, Russia also banned Facebook in the country.

Digital Tax

Facebook is already coping with thinning profit margins. Now, the UK and EU are planning to slap a digital tax on the company. If this regime is promulgated by other countries, the company could face further thinning profits in the future.

Poor Data Security & Fake Accounts

Estimates put the number of fake and duplicate accounts to be 5% and 11% of its active monthly users. This is a big number even in terms of the Facebook scale. Many long-time users are migrating toward other platforms with strong account security and rigorous screening practices.

Bad Reputation

New Zealand’s Facebook live mosque shooting to Russia meddling and Cambridge Analytica, the bad reputation these scandals brought has infused an image about the company that is not to be trusted.

Also, the company’s inability to curb hate speech from terrorists and racially-biased groups is forcing hundreds of companies to quit the biggest social media platform in the world.

Facebook SWOT Table

Strengths

💪 Brand Name & Value
💪 Product Diversity
💪 Dominant Player
💪 High User Retention
💪 Excellent Employer
💪 Exceptional Leadership
💪 Research & Development
💪 Ad-Based Business Model
💪 Superb Marketing Tactics

Weaknesses

🤒 Privacy Issues
🤒 Advertisement Dependent
🤒 Lax Control over Misinformation
🤒 Lack of Managerial Harmony
🤒 Scandals of Racial Discrimination
🤒 Poor Publicity

Opportunities

🤑 Portfolio Expansion
🤑 Refocus on Products
🤑 Enhanced Integration
🤑 Lead Generation
🤑 Acquisitions
🤑 AI Products

Threats

😨 Mounting Competition
😨 Tightening Regulations
😨 Regional Censorship
😨 Digital Taxes
😨 Poor Data Security & Fake Accounts
😨 Bad Reputation

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