Question

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Question: According to your knowledge and opinion, identify and discuss TWO actors in the digital environment (e.g. technological forces, economic forces, social forces, legal forces, consumers) that may contribute to the current business success of Facebook.

Answer 1

According to my Knowledge and Opinion the Two factors that contributed to the current Business Success of Facebook are-

1. Technological Forces.

2. Political Factors.

# Technological Forces-Technologies impact Facebook Inc., considering that it is a business founded on online technologies. This element of the PESTEL/PESTLE Analysis identifies the main technological influences on the firm’s remote or macro-environment. The following technological external factors affect Facebook Inc.:

1. Increasing use of mobile devices (opportunity)
2. Increasing number of online social media companies (threat)
3. Diversification of online retail firms (threat)

Facebook has the opportunity to improve user experience involving its mobile apps. This opportunity is based on the trend of increasing mobile device usage worldwide. However, this PESTEL/PESTLE analysis points to the threat of increasing competition, as more online social networks attempt to attract users away from the company’s social media services. This technological trend also leads to market saturation, which is a threat noted in the SWOT analysis of Facebook Inc. Furthermore, the diversification of online retail firms threatens to compete with the company. For example, giants like Amazon.com is in a position to offer online advertising services through its network of affiliate websites. This element of the PESTEL/PESTLE Analysis shows that Facebook Inc. must continue improving its social media and display advertising services to retain customers.

• Further, the Technology backed offerings of facebook, target a niche user base. appeals to a younger audience and is more popular among females. We expect this trend to persist and hence Facebook could not see competition intensifying within different user demographics.
• Apart from this, since desktop usage is being replaced with mobile usage, we believe rapid changes on the mobile landscape did nit pose a potential threat to Facebook. The mobile platform is inherently different, with apps being more targeted towards a specific functionality rather than a broad range of features.
• Currently FB provides a vast range of services such as photo-sharing, messaging, etc. We believe newer innovative apps could emerge providing one of these discrete services. In the event that any such app gains widespread popularity, it could lead to lower engagement on FB-owned platforms. This could also result in Facebook buying out upcoming competitors at steep valuations.

There are several regional social networks, such as Renren in China, Mixi in Japan, vKontakte in Russia, etc., and these compete with FB for users in their respective geographies. but if we see Facebook is a Global Player.

# Political Factors-Facebook made it easier for its users to take their online Identity with them accross the web, according to Zuckerberg. it also enabled them to share what they do online with their friends and stay updated on what friends doing, without having to create seperate accounts for every website or App.

Facebook’s business is linked to the political landscape. In this element of the PESTEL/PESTLE Analysis, the effects of governments as external factors in the company’s remote or macro-environment are determined. Political movements have the power to shape the progress of businesses and entire industries. The following are the major political factors influencing Facebook Inc.:

1. Political stability in developed countries (opportunity)
2. Popular governmental support for globalization (opportunity)
3. Political barriers in the Chinese market (threat)
4. Political action on online data (threat)

The political stability of developed countries presents opportunities for Facebook Inc. to continue diversifying its business in these markets. Also, the company has the opportunity to expand its social media and display advertising services worldwide, based on governmental support for globalization. However, Facebook could suffer from political barriers in China. The company’s potential global growth is limited because of Chinese censorship. In addition, regarding data privacy and security issues involving organizations like Cambridge Analytica, governments are increasingly working to limit online data collection, sharing, and processing. This external factor can slow down the company’s growth. Based on this element of the PESTEL/PESTLE analysis of Facebook Inc., the company must enhance data privacy and security, and continue negotiating with the Chinese government to open up the display advertising market in the country.

• Social networking space is prone to innovation, swift change and the introduction of new technologies. Hence, Facebook’s massive user base cannot be taken for granted; the company continuously needs to innovate and to adapt to changing customer trends Any failure to do so could potentially cause its user base to migrate to other social media networks.
• Competition stems not only from social platforms that vie for users, but also from companies that allow marketers with targeted advertising and new development platforms for application developers.
• Facebook commands a loyal user base across several user demographics and geographies. However, competition from Google+ and Twitter can cause a reduction in the average time spent by active users on the FB platform, as these platforms offer unique sets of features.