Bruns+Strategy+Report

TO: Proximity social networking team FROM: Amanda G. Bruns DATE: January 6, 2010 SUBJECT: Facebook strategy analysis

Here is my Facebook strategy analysis. Although Facebook is one of the dominating social networks, many analysts think it is in a position to compete for maintaining their popularity. Whether Gen Y users will adopt Facebook as their primary source of social networking, depends on whether Facebook can offer them the technology appeals that other social networking sites can not provide.


 * Profile**

Facebook is a social networking website that allows users to add and connect with friends, upload pictures, and update their personal profiles (Wikipedia 2010). Founded in 2004 by Mark Zuckerberg with co-founders Chris Hughes, Dustin Moskovitz, and Eduardo Savern, Facebook is headquartered in Palo Alto, CA. Facebook's CEO is Mark Zuckerberg (Facebook 2010). Initially the membership was restricted to students of Harvard university, and subsequently expanded to other colleges throughout the United States and Canada. Since September of 2006, Facebook has now become global to anyone with a valid email address.

Facebook's revenue comes from the following investments:
 * //advertisers// who invest their money to pay for ads on Facebook

Facebook currently has over 350 million active users (Facebook 2010) and in September 2009, Facebook claimed that it had turned cash flow positive for the first time (Wikipedia 2010). Facebook turned down a $1 billion purchase offer from yahoo in 2006. In 2008, private sales by employees, and purchases by venture capital firms, caused investments that put Facebook's revenue between $3.75 billion and $5 billion in August of 2008. Microsoft has also offered to buy a stake of up to 5% in Facebook for $300 million to $500 million valuing the company at more than $10 billion. The valuation in 2010 is expected to be very profitable with recent reports of Facebook proposing an initial public offering (IPO). IPO would allow equity shares in the form of stock to investors however, that would occur in the future. (Wikipedia 2010). Since facebook is privately owned, the revenue expected is strictly unsubstantiated estimates.


 * Competitive Landscape**

The primary force driving competition on the social networking landscape is the rivalry between Facebook and Myspace (Wikipedia 2010).While Facebook slightly dominates Myspace in this market, Myspace matches Facebook in most features available to users. Myspace allows users to modify their profile backgrounds, while Facebook still has standard white backgrounds.


 * Facebook's Business Strategy

Facebook must do whatever it takes to keep critical mass on the network, however, with the growth of the Facebook population blooming over 300 million, they’ve already demonstrated critical mass (Smith 2009). Facebook needs to make their users never want to use any other site. **

Gen-Y Implications**
 * Facebook has added applications on their site which replaces specialized websites. Facebook is in possession of video applications which allow uses to upload and record videos, display them on their profiles, and send out video messages (Facebook 2010). Facebook also has photo applications where users upload their photos, and event pages where users can view the information and RSVP. With applications, advertisements, games, and chats, Facebook never has to be left for a different site.

Although Facebook does dominate the social networking field, it's demographics are focused mainly toward Gen X rather than Gen Y. Facebook must become more attractive to Gen-Y consumers in order to maintain it's popularity. Facebook's United States audience has fueled by expansion primarily in users 26 and older, and has been growing particularly amongst ages 45 and older(Smith 2009).

I believe, however, that Facebook's biggest challenge is to attract younger individuals, in order to be successful in obtaining Gen-Y users. It needs to become a safe, secure network, and maintain the popular connection between friends. The ability for users to communicate efficiently and effectively by uploading pictures, accessing videos, and uploading game applications will help compel Gen-Y users to Facebook. With easy access to Facebook via internet and mobile I believe Facebook can accommodate both Gen-X and Gen-Y users, and remain dominate in the social networking field.


 * References

Facebook. (2010). Advertising. Retrieved January 07, 2010 from [].

Facebook (2010). Press Room. Retriever January 07, 2010 from [].

Smith, Justin.(2009 March 25) "Number of US Facebook users Over 35 Nearly Doubles in the Past 60 Days // ." Inside Facebook. Retrieved 2010 January 10. // [].

Wikipedia. (2010, January 10). Facebook. Retrieved January 10, 2010 from ** ** []. **