MPM703: Business Strategy & Analysis - Business Strategy Report Writing Assessment Answers
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Question: MPM703: Business Strategy & Analysis
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Business Strategy Report Writing
Business Strategy Report
In this assignment you are going to prepare a strategy report for a business.
FIRST,
you must decide whether to do the Assignment alone (which counts as a group of just one student) or as a member of a group of up to three students. The Assignment is a lot of work and we do not recommend doing it alone, particularly if you do not yet have much experience of assignment writing at Deakin or if English is not your first language.
SECOND,
once you have formed your Group, of one person if you are doing the Assignment alone or of 2 or 3 people, you must register your Group and all its members in the Groups tab under ‘More’ on the Unit’s DeakinSync webpage.
Remember, you MUST enrol in a Group even if you are doing the Assignment alone: if you don’t register you won’t be able to submit your assignment and the system won’t let us give you a mark!
Your group (of one, two or three) have been asked to prepare a strategy report for a business.
After completing the two steps above, the next step is to select a real, existing business as the subject of your assignment. The business can be a publicly listed company in Australia or overseas which is of interest to you or to other members of your group, or it may be a large private or family business located either in Australia or overseas. It could also be a government agency or a non-government organisation, so long as it has an internal organisation and has some form of annual reporting. If you are in any doubt about the suitability of any organisation, please ask the Lecturer. Do not use or refer to assignments completed by students for this unit in previous trimesters. (A record of past assignments is kept.) Note also that the requirements of the assignment change from trimester to trimester.
The focus of this assignment is on the business level of analysis (rather than on corporate or operational levels). Therefore, if you select a diversified company then make sure you focus on only one of the company’s business units. The report must be specific and applied to the business. In other words, you must apply the relevant concepts and tools of business strategy to the particular conditions and circumstances of the business you are studying. General statements and references to theories and models that are not applied to your specific business will not add value to your assignment. Similarly, data about the business that is not analysed and presented from a strategic perspective – using the relevant concepts and tools of strategy – is of little value. To help you in this exercise, consider the position of the CEO of the business. Assume that he or she will be reading your report and will be looking for a strategic analysis and a set of recommendation that is practical and specific to her or his business. The CEO does not want to read a broad analysis that could apply to any number of organisations and does not ‘speak’ to his or her business.
Group or individual submission
This assignment may be completed either as a group submission (two or three people) or as an individual assignment (one person only). Either way, you must sign up in one of the group assignment spaces online. The Assignment is time-consuming, and we strongly suggest that you do it with some colleagues rather than alone.
Marking will be done without regard to whether the assignment was a group or individual submission. In other words, an individual assignment should be of a similar standard and quality to that of a group assignment. For group assignments all members in the group will share the mark equally. Therefore:
Allocate the various tasks among your group members and agree on interim due dates for the stages of work. Make sure your interim due dates allow for drafts to be circulated and edited so that the final submission is of the highest standard.
Each group member must make a relatively fair and reasonable contribution to the report, in whatever form or shape that might take, in order to share equally in the mark. In the rare event that there are any issues you should contact me two weeks prior to the report due date so that a resolution can be reached.
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Solution:
Introduction: This paper focuses on the business of the company Facebook. The aim of this paper is to perform a strategic analysis of the company. The reason behind doing this analysis is that it will provide an in-depth critical analysis of the business of Facebook. This will help different types of readers, ranging from laymen to professionals, develop a detailed understanding of the strategies used by Facebook and their scale of effectiveness. The company Facebook has been chosen in this paper as it is one the leading companies in the world and is one of the most recognized and biggest brands globally. Facebook is a social network in which registered users can create networks and groups to share messages and pictures (Malkin, 2015). In January 2014 the number of users around the world amounted to about a billion, and every month more than 1 billion photos and 10 million videos are uploaded, the total numbers of which is now 265 billion (McGrath, 2015). The average age of users of the service is 22 years.
Data collected on Facebook is more than 980 petabytes, every 24 hours more than 0.5 petabytes of data arrives. The project was launched February 4, 2004 at the Harvard University (in Massachusetts) and was originally designed primarily for high school students and students of higher education institutions (colleges, universities). Its main author is Mark Zuckerberg (now acts as CEO). The company employs approx. 1,000 employees (as of August 2009) (Brown, 2015). Planned revenues exceed $ 150 million. In March 2008, the author of the portal, 23-year-old Mark Zuckerberg, ranked in the 735th place in the Forbes list of the richest people in the world, and became the youngest billionaire in the world (1.5 billion USD). On May 18, 2012, Facebook appeared for the first time on the American stock exchange NASDAQ, becoming the most valued stock on the first day in history (Malkin, 2015).
Estimates of the value of the service proved to be greatly exaggerated, because investor expectations were too high in relation to the real possibilities of the service. In this paper the external and internal environments, the competitors, the different types of strategies used by Facebook, etc. have been analyzed with the help of different strategic analysis tools and models. However, a limitation of the paper is that it involves secondary research only and does not use primary research. Also, it assesses the business of Facebook with respect to the Australian market. Due to this reason, the conclusions of the research cannot be considered to be valid for all markets.
Strategic analysis
Methods:
This paper has used the qualitative research method. In this method, the focus is on acquiring high quality information and analyzing it in order to develop a detailed understanding. The research approach used is exploratory. This approach has helped in detailed exploration of the business of Facebook in Australia. The research involves secondary data only and the data has been collected from a wide variety of literary sources accessed primarily online. These include newspaper articles, press releases and annual reports of the company, journals, previous researches, books, etc. The literary sources were searched in search engines like Google and Google Scholar with the help of relevant keywords like “Facebook business in Australia,” “Facebook competitors in Australia,” “Facebook market share in Australia,” “Facebook business strategies,” etc. The data collected has been analyzed with the help of different tools such as SWOT, PESTEL, Porter’s five forces, strategy canvas, VRIO, etc. This research has critically analyzed different existing information on the business of Facebook in order to provide a detailed picture of the business of the company in Facebook. This research can be used by the company itself to reflect and improve its strategies.
External analysis
PESTEL analysis
Political factors:
The laws of Australia can change with changes in the political party in power. This can affect the business of Facebook. In Australia, there is immense support for Facebook at the moment and the site is used by political parties, government bodies, communities, etc. It is even used for election campaign and political promotions (Caverly, 2014).
Economic factors:
The economy of Australia is very strong and its GDP is AUD$1.62 trillion. Unemployment rate is lowering and is 5.8% at present. The disposable income is high and people can afford to spend more on technology like smartphones, tablets, laptops, broadband and 4G internet. All these factors have made Facebook easily accessible to the people of Australia (Lee, 2014).
Social factors:
Facebook is the most popular social media site and app in Australia. It has become an integral part of the society and culture of the country. The number of users in Australia is 13,800,000. The site has penetrated over 60% of the population of the country. The largest segment of users is people in the age group of 25-34. They stand for 26.3% of total users (Brown, 2015).
Technological factors:
The easy access and high availability to latest technologies like smartphones, tablets, laptops, broadband and 4G internet have made Facebook extremely popular in Australia. It is accessed through multiple mediums and at present, people can use it on the go through smartphone based apps (Yum, 2015).
Environmental factors:
While Facebook supports and provides financial aid to numerous organizations that focus on environment protection, sustainable development, etc., it acts as a highly effective platform which hosts official pages for numerous environmental protection initiatives. It is used by numerous Australian organizations to raise awareness and take action about environmental impacts. For example, Hope is one such organization which has high Facebook activity (Kirkpatrick, 2014).
Legal factors:
In order to function in Australia, Facebook needs to comply with the laws of the country. It has faced criticism in recent times for apparent tax evasion. It paid less taxes by not revealing details of revenues gathered in Australia. It accepted major payments for advertisements through a subsidiary in Ireland to avoid paying higher taxes in Australia. It is being investigated for this and its reputation in Australia has damaged due to huge media coverage of this issue (Arrington, 2015).
Identification and explanation of two most significant influences that can be the main drivers of change in the future:
From the PESTEL analysis, it can be assessed that the two most significant influencing factors for the business of Facebook are social factors and technological factors. At this moment, Facebook is highly popular in Australia. But, in future, one of the existing competitors or a new social media site, can gain popularity and can make Facebook obsolete. In this aspect, the case of Orkut is a valid example. Orkut was a social media site which was globally popular. But, with the rise of Facebook from 2010 onward, its popularity feigned and ultimately the site closed down (Lee, 2014). Thus, the social trends can have a lot of impact. Also, the latest technology and future evolutions of technology can dictate the direction Facebook goes to in the future. For example, though it started off as a website, Facebook had to create smartphone apps in order to keep up with the changing times and make its services available in mobile platforms. A new technology can force Facebook to change its strategies and direction in future too (Schroeder, 2015).
Porter’s five forces analysis:
From the Porter’s five forces analysis, it can be seen that the two most significant forces that work in the Australian business environment are bargaining power of customers and intensity of competition. For Facebook, the users are customers. Also, the different businesses which use its services for promotion and advertising are customers. If these customers lose interest in Facebook and start using other options, then the company will lose business and its revenues will reduce. In Australia, while Facebook leads the market, its main competitors are Twitter and LinkedIn. While Twitter has 2,791,300 users, LinkedIn has 3,100,000 users (Lee, 2014). These sites are gaining popularity very fast and giving tough competition to Facebook based on their respective differentiations. In the future, they can end up exceeding Facebook.
Strategy Canvas:
The following image shows the strategy canvas of Facebook in comparison with its two chief competitors in Australia – Twitter and LinkedIn:
The strategy clock has highlighted that the factors of competition between Facebook, Twitter and LinkedIn are number of users, penetration, and variety of services, user-friendliness and revenues generated. From this, it can be assessed that the most critical success factors in the Australian market are variety of services offered, user-friendliness and penetration. In the penetration and variety of services domains, Facebook is way ahead of Twitter and LinkedIn. However, the user-friendliness of the competitors is high. It must be noted that despite of the higher penetration and higher number of users, the revenues generated by Facebook is only slightly higher than revenues of the other two companies. While Facebook generated around 60 million AUD in 2015, Twitter and LinkedIn made 59.9 million AUD and 55.7 million AUD respectively (Miller, 2015). Thus, competition is tough.
Strategic Capability:
VRIO analysis:
The strategic capabilities of Facebook can be analysed best through the VRIO analysis. The VRIO analysis of Facebook is as follows:
Facebook has been able to capture the latest social trend of the social media websites and today, more than 1 billion people are registered with Facebook. The users regularly use Facebook in order to stay in touch with their friends and relatives. Facebook has been leader in the trend for better part of the decade and they have also continued to improve with the user experiences through acquisition of Instagram (Ellison, Steinfield, and Lampe, 2015). Facebook has been market leader in the social media platform for a long time but presently, they are facing competition with companies like Twitter, Tumblr and Google+.
Another major competitive advantage of Facebook is the open source platform used by them in which the developers can create customized applications which are compatible with the Facebook page. A number of gaming companies have made partnership with Facebook and they have developed games such as Jetman and Farmville. Since inception of Facebook, Mark Zuckerberg has developed the open source platform to the new level and they have also been in the peak of their innovation (Acquisti and Gross, 2014). Facebook has also developed a new operating system which is called as Facebook Home. It helps the users to know about their posts in their phone homepage.
Facebook has been able to capture the latest social trend of the social media websites and today, more than 1 billion people are registered with Facebook. The users regularly use Facebook in order to stay in touch with their friends and relatives. Facebook has been leader in the trend for better part of the decade and they have also continued to improve with the user experiences through acquisition of Instagram (Ellison, Steinfield, and Lampe, 2015). Facebook has been market leader in the social media platform for a long time but presently, they are facing competition with companies like Twitter, Tumblr and Google+.
Another major competitive advantage of Facebook is the open source platform used by them in which the developers can create customized applications which are compatible with the Facebook page. A number of gaming companies have made partnership with Facebook and they have developed games such as Jetman and Farmville. Since inception of Facebook, Mark Zuckerberg has developed the open source platform to the new level and they have also been in the peak of their innovation (Acquisti and Gross, 2014). Facebook has also developed a new operating system which is called as Facebook Home. It helps the users to know about their posts in their phone homepage.
SWOT analysis:
The SWOT analysis of Facebook is as follows:
| Strengths |
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| Weaknesses |
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| Opportunities |
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| Threats |
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Strategy and culture:
The relationship between strategy and culture of Facebook can be analysed using cultural web analysis. The cultural web analysis of Facebook is as follows:
Competitive strategy:
In order to achieve competitive advantage in the market there are some strategies that have been adopted by Facebook. Porter’s Generic Strategies can be used to assess the strategies used by Facebook in order to achieve competitive advantage in the market. Differentiation is a major strategy under Porter’s generic strategic. Facebook uses this strategy to set itself apart from competitors like Twitter and LinkedIn. Though, Facebook was introduced first in the social networking market, there are many companies present that came to market after that such as Twitter, Google + etc. and they have also started to provide services which are presently provided by Facebook (Ross et al, 2015). So, Facebook tried to differentiate some services from the competitors. Facebook introduced a new system in which the customers can develop their own online selling portal through their Facebook page and sell products through this. It also offers numerous entertainment options like games. Facebook has also introduced a system in which the users can post in their own language. Facebook also provides services to the users based on their geographic locations. One of the leading competitors of Facebook in Australia is LinkedIn which is basically a professional social networking site. If Facebook can set a new system to help professionals to connect to each other, it can help to bring a large number of users to Facebook. Another significant strategy of Porter is cost leadership. In this strategy, a company establishes competitive advantage by keeping costs low. Facebook’s scale is huge, so it can gain high revenues through economies of scale even if it lowers costs. However, its quality of services might fall. So, this is not a viable strategy option. Facebook should continue using the differentiation strategy. This is a major strength of the company and it will give it more opportunities. It can differentiate further and introduce a ‘dislike’ button in the posts. It can add more entertainment options and add more unique marketing tools.
Business strategy statement:
Since its inception, Facebook’s mission statement is, “to give the power to people to share their thoughts and to make the world more connected and open. The vision statement of Facebook is, “to provide a platform which can help people to stay connected with their families and friends and enable them to also discover the things happening across the world.”
The scope of Facebook includes:
- Helping people discover the things happening across the globe
- Providing opportunities to the people to connect with their loved ones
- Reaching millions of people across the globe through their business portfolio
The advantages of the business of Facebook are:
They are quite old in the market. Facebook started their operations in the year 2004 and today they are market leader.
- Facebook has tremendous brand power, reputation and brand identity. It has become one of the most
recognized brands of the world.
- Facebook has significant financial stability. So that they can spend money on marketing activities.
- The employees working with Facebook are highly qualified and experienced. Employee loyalty and
retention are high.
- Facebook has the advantage of providing a huge variety of features that add value to users. This
includes basic social networking features as well as options of playing numerous games.
- Facebook has become an indispensable marketing tool for almost all industries globally, ranging from
consumer products to even films. Its features are used extensively for marketing purposes and this
element generates high revenues.
The strategy statement of Facebook is: “Though Facebook has helped many people to connect with their friends and relatives, they should differentiate their services from the competitors and should use their strengths and opportunities in different countries to expand their business.”
Conclusion:
It can be concluded that Facebook is the leading social network in Australia and it can be accessed through computers as well as mobile devices. While it is the market leader, it faces significant threat from its competitors, Twitter and LinkedIn. It maintains competitive edge primarily through the fact that it provides a huge variety of features which other sites and apps do not offer. For example, apart from basic social networking features like sharing photos and videos, Facebook offers numerous entertainment options like playing games which can enable people to relax and have a good time. Also, Facebook has become a major marketing platform and is used extensively by numerous businesses globally. In the Australian market, its reach and penetration are high, but, it still has room for expansion. It can increase the number of Australian users and can grow significantly in the future. Also, it revenues can increase in Australia too due to increasing popularity of its marketing and advertising features.
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