BÀI TẬP 14/10 - QUẢN TRỊ CHIẾN LƯỢC

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K214101928 Nguyễn Thanh Tú K21410C

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K214100739 Nguyễn Quốc Mai Hoa K21410C

1. Case study summary:

Facebook is a social networking giant with over 1.3 billion active users. Founded in
2004 by Mark Zuckerberg and his Harvard roommates, the platform has experienced
phenomenal growth, evolving from a Harvard-only network to a global phenomenon.
Facebook's mission is to empower people to share and connect, fostering a more open world.
The platform's vision revolves around staying connected with loved ones, discovering global
happenings, and sharing individual expressions. Facebook's organizational structure is a
hybrid, segmented by both region and product. The company's financial performance is
strong, with net income doubling in 2014.

Facebook's marketing strategy is dynamic, adapting to the evolving digital landscape.

The company introduced product ads tailored to user interests and locations, and launched a
professional service akin to LinkedIn, aiming to attract professionals seeking to separate
personal and work content. The company's vast user base provides a significant competitive
advantage, commonly referred to as the network effect. In the realm of digital marketing,
Facebook is pioneering the shift beyond cookies with its Atlas ad server. This move is
significant as digital advertising constitutes the primary revenue source for tech giants like
Facebook.

The company's future is intertwined with the broader trends in social media. The
exponential growth of social media raises questions about data storage, control, and potential
government intervention. Facebook's collaboration with Google to expand internet access in
developing countries highlights the evolving landscape of partnerships and initiatives.

Facebook's success is attributed to its ability to adapt and innovate. The company's
strategic acquisitions, like Instagram and WhatsApp, have fortified its position in the market.
The development of Atlas reflects Facebook's commitment to staying ahead of the curve in
digital advertising. However, the company must address concerns surrounding privacy and
the potential misuse of user data to maintain trust and ensure continued growth. The social
media landscape is dynamic, with evolving user preferences and emerging platforms.
Facebook's ability to anticipate and respond to these changes will be crucial for its long-term
success. The company's vast user base and financial resources provide a solid foundation for
future growth. However, Facebook must remain vigilant about potential disruptions and
continue to innovate to maintain its position as a leader in the social media industry..

2. Key success factors, most impressive factor and detailed analysis:

Key success factors of Facebook:

- First-mover advantage: Facebook was one of the first social networking sites and this
allowed them to quickly gain a large user base.
- Network effect: The value of Facebook increases as more people use it. This network
effect has made it difficult for competitors to catch up.
- Innovation: Facebook has consistently innovated and added new features, such as the
Like button, News Feed, and Timeline.
- Acquisitions: Facebook has made several strategic acquisitions, such as Instagram and
WhatsApp, that have helped it to expand its reach and capabilities.
- Strong leadership: Mark Zuckerberg has been a visionary leader for Facebook. He has
been able to guide the company through many challenges and maintain its position as
the leading social networking site.

The most impressive factor is its network effect.

The network effect is a phenomenon where a product or service becomes more valuable as
more people use it. This is particularly powerful for social networks like Facebook, where the
value proposition is directly linked to the number of users and their interactions.

Some reasons why the network effect is so impressive in Facebook's case:

- Growth explosion: The network effect fueled Facebook's rapid growth. As more
users joined and invited friends, the platform's value increased exponentially,
attracting even more users in a self-reinforcing cycle. This led to a massive user base,
which is a key asset for any social network.
 - Enhanced User Engagement: The rapid growth of Facebook was achieved through
the network effect. The more users the platform has, and created word of mouth so
that even more people were likely to join in a self-perpetuating cycle It provided a
huge user base, the most important resource any social network has.
- Platform Stickiness: The network effect creates a strong "stickiness" that keeps users
loyal to the platform. Switching to a competing social network would mean leaving
behind established connections and a wealth of shared content, making it less
appealing for users to migrate.
- Data-Driven Advertising: Facebook's massive user base and high engagement
generate a vast amount of data about user behavior, preferences, and interests. This
data allows Facebook to offer highly targeted advertising, which is a major source of
revenue for the company.
- Competitive Moat: The network effect creates a significant barrier to entry for
competitors. It's difficult for new social networks to attract users when Facebook
already has such a large and engaged user base. This gives Facebook a strong
competitive advantage and helps to maintain its market dominance.
3. Facebook current situation:

It's important to clarify that when this case study was first published,
"Facebook" referred to both the company and the social media platform.
Since then, the parent company has undergone a significant rebranding,
changing its name to "Meta" in 2021. This reflects its expanded focus
beyond social networking and into the metaverse. Therefore, throughout
this analysis, we will use "Meta" to refer to the company that owns and
operates Facebook, Instagram, WhatsApp, and other related services.

Meta is facing a complex situation in the current social media landscape. While it's
not accurate to say they're "out of trend," they are certainly facing challenges in keeping up
with newer platforms like TikTok and evolving user preferences. Based on the data from
Statista, Meta is now still the king in the social media platform market. Therein, Facebook is
the biggest existing social network with over three billion monthly active users recorded in
early 2024. In 2023, Facebook's parent company Meta reported annual revenues of 133
billion U.S. dollars, more than doubling its revenues in 2018; also, the brand new platform
called Threads is having positive growth. Despite losing ground to its social video
competitors, especially with young audiences, the number of Meta's Family of Apps users -
Facebook Messenger, Instagram, WhatsApp, Threads - has experienced a positive growth
trend over years. Still, Meta has to face many different challenges, such as:

- Declining User Engagement: Meta is facing a decline in user engagement,

particularly among younger demographics like Gen Z and Millennials. This trend,
observed over the past few years all around the world, especially in some mature
markets like US, UK, Australia, etc is driven by several factors, including competition
from platforms like TikTok, the rising popularity of short-form video content, and
growing concerns about data privacy. Users are spending less time on Facebook and
Instagram, engaging less with content, and posting less frequently. This decline poses
a significant challenge to Meta, as it threatens the long-term viability of its core
platforms.
- Revenue Generation: Another challenge for Meta is slowing revenue growth and
declining profits. This is primarily due to increased competition for ad revenue, rising
costs associated with the metaverse, and the impact of privacy changes on ad
targeting. This trend is occurring globally, but it is particularly pronounced in markets
where Meta faces strong competition. Revenue declined year-over-year, and this trend
is expected to continue in the near term. This impacts Meta's overall financial
performance and its ability to invest in future initiatives. While the company is
exploring new revenue streams like in-app purchases and subscriptions, advertising
remains its primary source of income.
- Metaverse Uncertainty: Meta's heavy investment in the metaverse carries significant
uncertainty. The long-term viability and profitability of this venture remain unclear.
User adoption is still low, the technology is evolving rapidly, and there are concerns
about the metaverse's potential impact on society. While the metaverse is a global
concept, Meta's efforts are focused on developing its own virtual world platform.
Meta has been investing in the metaverse for several years, but it is still early days.
The success of the metaverse will depend on attracting a wide range of users and
developers. To achieve this, Meta is building VR/AR hardware, developing software
and platforms, and creating content for the metaverse.
- Regulatory Scrutiny: Meta faces increasing regulatory scrutiny worldwide.
Governments are concerned about antitrust issues, data privacy, content moderation,
and the impact of social media on society. This is a global issue, with regulators in the
 US, Europe, and other regions taking action. Regulatory scrutiny has been ongoing
for several years and is intensifying. This impacts Meta's operations, potentially
leading to fines, restrictions, and changes to its business model. Regulators are
investigating Meta's market dominance, data collection practices, and content
moderation policies.
- User Preference Changes and the rising competitor: Meta faces intense
competition from various players in the digital landscape. TikTok, a short-form video
platform, has gained immense popularity, especially among younger users. TikTok's
algorithm is highly effective at serving engaging content, and its focus on creativity
and trends appeals to younger audiences. TikTok is a global platform with a strong
presence in many markets. Its rise has been rapid in recent years, and it competes
directly with Instagram Reels and Facebook Watch for user attention and ad revenue.
TikTok offers a user-friendly interface, a powerful algorithm, and a wide range of
creative tools. User preferences are constantly evolving, posing another challenge for
Meta. Users are increasingly consuming and creating short, engaging videos.
Short-form videos are easy to consume, entertaining, and shareable. This trend is
evident across various platforms and globally. The popularity of short-form video has
exploded in recent years. This trend is particularly strong among younger users but is
also growing in older demographics. Platforms like TikTok and Instagram Reels have
popularized this format, and users are creating and sharing videos on a massive scale.
- Privacy Concerns: Another significant shift is the growing concern about data
privacy. Users are more aware of and concerned about how their data is being
collected and used. Data breaches, privacy scandals, and increased awareness of data
tracking have fueled these concerns. This is a global concern, with users in many
countries demanding greater control over their data. Privacy concerns have been
growing for many years and are now a major factor in user behavior. This impacts all
social media platforms, but particularly those that rely heavily on data collection and
targeted advertising. Users are using privacy tools, demanding transparency from
platforms, and choosing platforms that prioritize data protection.
4. Identification of current advantages compared to the past (versus 2013 Case)
Facebook in 2024 boasts several advantages compared to its 2013 version, primarily
stemming from technological advancements and evolving user needs:
● Diversified Revenue Streams:
In 2013: With its historical roots in advertising revenue from a single platform, Facebook.
In 2024: Expanded revenue sources through:
- Instagram and WhatsApp: Make money from these platforms through advertising,
business features, and potentially transaction fees.
- Facebook Marketplace: Earning revenue through seller fees and advertising.
- Metaverse Investments (Reality Labs): Though still in early stages, potential for
future revenue from hardware sales (VR headsets), software, and virtual experiences.

Image source: The Motley Fool. Data source: Meta Platforms.

● Enhanced technological capabilities:
In 2013: Primarily a social networking platform with basic features.
In 2024: Advanced technological capabilities in:
- AI and Machine Learning: Used for content moderation, targeted advertising, and
personalized user experiences.
- Virtual and Augmented Reality : Investing heavily in metaverse technologies through
Reality Labs, with potential applications in social interaction, gaming, and work
collaboration.

AR applications in Instagram filters

● Expanded user Base and Engagement:
In 2013: Predominantly a platform for personal connections.
In 2024: Expanded user base and engagement through:
- Facebook, Instagram, WhatsApp or Threads (newest) cater to different demographics
and usage patterns.

Meta apps
- Facebook Groups, Workplace, and Marketplace cater to broader needs beyond
personal connections.
● Increased Global Reach:
In 2013: Focused on growth in established markets (North America, Western Europe,
Australia and New Zealand)
In 2024: Expanded global reach with significant user bases in developing countries (in Asia
such as India, Indonesia…), tapping into new markets and revenue potential.
5. Estimation of advantage Duration and why
Meta currently dominates the social media market with its massive user base and significant
influence. However, to assess its ability to maintain a competitive advantage in the future, a
deeper analysis of both internal and external factors impacting its growth is necessary.
Factors Strengthening Meta's Position:

- Network Effect: With over 1.3 billion users, Meta possesses a vast network of
connections, creating added value for users as more people join. This creates a
significant barrier to entry for new competitors and reinforces the loyalty of existing
users.
- Strong Brand and Global Recognition: Meta has built a powerful brand with
widespread global recognition, synonymous with connection and sharing.
- Diverse Ecosystem: Meta is not just a social networking platform; it has evolved into
a diverse ecosystem with integrated applications and services like Messenger,
Instagram, WhatsApp, and Oculus VR. This allows Meta to cater to a wide range of
user needs and expand into new areas like virtual reality.
 - Financial Capacity and R&D Investment: Meta has strong financial resources,
enabling significant investment in research and development (R&D) to continuously
improve its products, enhance user experience, and develop new technologies.
- Robust Organizational Structure: With 14 subsidiaries operating globally, Meta has
a robust organizational structure, ensuring efficient management and operation at
scale.

Potential Challenges:

- Intense Competition: While Meta leads the market, competition from rivals like
Instagram (owned by Meta), Snapchat, TikTok, Twitter, and LinkedIn remains a
significant challenge. These platforms are attracting users, particularly younger
demographics, with innovative features and experiences.
- Shifting User Behavior: Social media usage trends are rapidly changing, with the
rise of short-form video platforms, live content, and real-time interactions. Meta needs
to adapt quickly to these changes to maintain its appeal to users.
- Privacy and Data Security Concerns: Meta has been involved in numerous scandals
related to privacy and data security, impacting user trust. Addressing these issues
effectively is crucial for sustainable growth.
- Regulatory Scrutiny: Increasingly stringent data protection and antitrust regulations
globally could affect Meta's operations.
- Reliance on Advertising: Meta's revenue is primarily generated from advertising.
Changes in the online advertising market or the emergence of new business models
could impact Meta's performance.

Prediction:

Based on this analysis, it is predicted that Meta will maintain its leading position in the social
media market for the next 5-10 years. However, to sustain its competitive advantage in the
long term, Meta needs to:

- Continue to Innovate and Adapt: Meta must constantly update and develop new
features, meeting evolving user needs and keeping pace with technological trends.
- Strengthen Privacy Protection: Rebuild user trust by prioritizing privacy and
personal data protection.
- Diversify Revenue Streams: Develop new business models beyond advertising, such
as e-commerce, paid content, or financial services.
- Expand into New Areas: Continue investing in and developing new technologies
like virtual reality (VR) and augmented reality (AR) to create breakthrough user
experiences.