Management Case Analysis: Facebook, Inc.

Running head: FACEBOOK, INC.1
Facebook, Inc.: Case Analysis
Student Name
College/University Affiliation
FACEBOOK, INC.

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Facebook, Inc.: Case Analysis
I. Case Summary
In current case, Facebook, world’s dominant social network, is facing mounting
pressure against a backdrop of an emotional contagion research conducted by National Academy
of Sciences (PNAS). The study, intended to identify social contagion among Facebook users by
using network’s platform, has been conducted without user/participant approval. The study
concludes by confirming widely-held beliefs of Facebook's influence on positive and negative
and negative behaviors by means of social contagion mediated by content sharing. Despite
requested by Facebook, PNAS’s is widely criticized for failing to obtain user’s consent in
advance. More, many critics suggest to hold Facebook accountable should some users, already
depressed, sink more into depression or commit suicide by continuing to use Facebook. In
response, Facebook confirms users already know (and hence approve) given platform’s Terms of
Service. The controversy highlights a dilemma snowballing for years at Facebook. In order to
generate revenue, Facebook uses user information to help advertisers identify and approach
specific user/potential customer segments. Meanwhile, Facebook continues to grow by having
more user base. The constant changes in privacy settings, coupled by unclear disclosure of
information-sharing, has raised eyebrows on ways Facebook employs to manage user
information. In essence, Facebook is between a rock and hard place to balance out business
needs and user privacy protection.
II. Case Questions
FACEBOOK, INC.

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As matters stand, Facebook’s situation involves several key management and strategic
issues. The following subsections offer a more detailed account of current situation and followed
by suggested recommendations for action.
II.I. Facebook (Early) Response
Facebook has grown over years to become a global social network for individual end
users, businesses and many more. This growth has initiated a series of controversies about
Facebook’s use of user information largely in favor of advertisers, company’s primary source of
revenue. In current case, Facebook has played by a fairly common playbook. There has been,
initially, a state of denial of any wrongdoing. Then, in response to mounting pressure, Facebook
resorted to justification to clear company’s grounds, if not to defend company’s reputation – and
stock prices. This (very) common business playbook has well-known outcomes including, mot
notably, partial if not complete loss of reputation and declining customer confidence. Should
Facebook have chosen to respond earlier, following controversies could have been at least
contained. Specifically, Facebook could have acknowledged at least partial wrongdoing by
saying user consent should have been obtained first. In so doing, Facebook would have shielded
an avalanche of negative response and, more importantly, would have avoided projecting
company’s ethical conduct into public...