Problem Statement
The main problem identified in the case was that “Facebook” had faced highly disappointing initial public offering (IPO) although it was anticipated to be quite high. The prices of Facebook stocks declined quite steadily. Although the number of users within a few months had reached up to one billion, still Facebook and its team had to identify the available growth opportunities, specifically because of the users accessed Facebook through mobile phones. Facebook management has to further invest on new advertising products.
Recommendation
Differentiated Focus
The recommended strategy for Facebook is to opt for differentiated focus. The reason it is the recommended strategy because as for now the current business model of Facebook depends upon generating revenue and business through the customers and their social media activation. Facebook has focused on helping companies to develop platforms for application of customers. This has been the business model for Facebook. Although it is a successful one, but moving in the future Facebook needs to think differently. To reduce or eliminate the over reliance of customers, Facebook should look to focus on differentiated focus.
Over here, Facebook needs to come up with its own gaming website. This is the best way of attracting those customers that generally visit various other gaming websites to play online games. Although Facebook is perceived as a social media company, but to grow further, and to reduce its dependence on other companies, Facebook can launch a gaming website for itself. This will help the company to enter a new market. Along with this, Facebook should remain intact with developing mobile advertising products. This will again be a long term strength for the company.
Rationale: Alternatives
Vertical Integration
Vertical Integration is the first recommended strategy for Facebook. This will help Facebook in the future because it will ensure that all the business activities are owned and operated by the company itself. Previously the company was dependent on other companies such as Zynga to provide them the money and funds to promote their brands and Facebook was promoting their games through its website. However, once they launched their gaming portals the revenues of Facebook declined dramatically. To overcome this issue, Facebook, should itself launch the games and other entertainment activities to engage its clients. For this, Facebook should have an in house system where the company can concentrate on promoting different pages on behalf of the clients and famous personalities. This will ensure more defined and strategic business move for Facebook.
Differentiated Focus
Another recommended strategy for Facebook will be, to opt for the differentiated focus strategy. Over here differentiation will look on to introduce new applications and features in the business. As for now, the main focus of Facebook has been to ensure socializing of customers as the utmost priority. But since, more similar websites have come up such as Twitter, Instagram, etc. Facebook needs to rejuvenate the business model. Although the core business should remain socializing, but to engage a larger client base, Facebook can introduce online gaming portal for Facebook users. This can be an innovative move because no social media website has launched such a website which is specifically focused on gaming. With this move of an entire gaming website, Facebook can attract more users. As for now, it does not have such a place where gamers can come over and play online games. But if Facebook comes up with such a plan they can enter into a new market instantly.
Continue with the current business model:
The third recommended strategy for Facebook is to continue with the existing business model. This means that the company should focus on helping companies in developing platform applications for different companies. This has been a successful business model for the company where the client’s company is promoted through social media applications. Facebook charges a certain amount to ensure large viewership of the company page. This has been a successful way of attracting customers and also attracting those customers who are using Facebook to promote their own organizations. This can be rather reactive move because eventually, Facebook will be dependent upon customers to generate revenues.
Implementation Tactics
The implementation of differentiated focus for Facebook can be done in the following ways:
Facebook should develop a separate department specifically focused on developing online games. Over here, the team, department should be responsible to make innovative games that are of better quality and improved versions of existing games.
Secondly, Facebook should hire gaming developers from the industry who have specific experience to initiate games that are based on the requirements of the customers. This has to be accurate and precise as per the needs and requirements of the industry....................
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