Facebook’s SWOT Analysis and Its Profile (Explained)

Facebook is a social media network that Mark Zuckerberg founded in 2004. Initially, it started as a project by Zuckerberg and his friends during their college days at Harvard University. However, sooner they realized the platform has a high potential and began to market it worldwide. Initially, they called it TheFacebook. Later, however, they changed it to Facebook.

Facebook is the world’s largest social media network. No other platforms or social media networks come close to its popularity or user count. As of mid-2020, the platform has over 2.7 billion active users, unmatched by any other social network. Facebook is also available in almost all countries in the world. Some countries, however, have banned it for various reasons. Facebook is also available in 111 languages.

While Facebook stayed a private company for most of its early life, it went public in 2012 through an Initial Public Offering (IPO). The company managed to collect $16 billion, which was the third-largest IPO in US history. After a few months of its IPO, Facebook also started hosting 1 billion monthly active users, almost 60% of mobile users. The company also joined the Fortune 500 list in 2013.

In 2019, Facebook generated $70.697 billion, an approximately 27% increase from the $55.838 billion in revenue generated in 2018. The company, ever since its inception, has experienced rapidly growing revenues, thanks to its services and products.

The main source of income for Facebook is and always has been its advertising income. Facebook earns 97%-99% of its revenues from the ads it displays for which it charges advertisers. The other source of its income is from its secondary products or services.

Facebook, Inc.’s company profile is as below.

Facebook’s Company Profile

NameFacebook, Inc.
Websitefacebook.com
FoundersMark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes.
Chief Executive Officer (CEO)Mark Zuckerberg.
Chief Operating Officer (COO)Sheryl Sandberg.
Chief Financial Officer (CFO)David Wehner.
HeadquartersMenlo Park, California, US.
Type of corporationPublic.
Year founded2004
Revenues (2019)$70.697 billion.
Company valuation (appr.)$820 billion.
Key products/servicesSocial network and advertising.
Key competitorsGoogle, Snap, Twitter, LinkedIn, YouTube, WeChat, Amazon, Pinterest, Microsoft, Apple.
SubsidiariesWhatsApp, Instagram, Oculus VR, Onavo, Beluga, etc.

Facebook’s SWOT Analysis

By performing Facebook’s SWOT analysis, users and investors can better understand its main features. Furthermore, they can also establish the company’s current and prospects, whether positive or negative. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Each of these components of the analysis is below.

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I) Facebook’s Strengths

The strengths of Facebook show areas that the company gets right. Through these strengths, the company gains a competitive edge and increases its revenues. Some of Facebook’s top strengths include the following.

1) Brand name

Facebook’s biggest strength comes from its highly recognizable brand name. All around the globe, people recognize Facebook as the world’s top social media platform. The social network has established its brand name through its quality services and products. Therefore, its brand name brings the social network a lot of users.

2) Market position

Facebook has captured a large portion of the social media market. No other platforms or competitors come close to its popularity and demand. Therefore, Facebook has a competitive edge over others when it comes to its market position. Compared to Facebook, its biggest competitor, Instagram, has less than half the active users.

3) Userbase

While Facebook has used many promotional and marketing techniques to attract more users, its biggest strength has been its userbase. Its established userbase has attracted more users to the platform than any of its promotional campaigns. The platform has become popular as a result of word-of-mouth publicity more than any other way.

4) Strong leadership

Facebook always had strong leadership. Since its inception, Mark Zuckerberg, the company’s CEO, has taken charge of its activities. Through his ideas, innovation, and creativity, the social media network has developed and overtaken many of its competitors. Strong leadership continues to be one of Facebook’s strong points.

5) Research and development

At the time of increasing technological developments, Facebook has done a great job in research and development. The social media network has often been the first to introduce new features and products through its efforts in the R&D department.

The company spends a decent proportion of its revenues on research and development. It allows Facebook to stay ahead of the curve and attract new users.

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6) Subsidiaries

Another significant strength of Facebook is its selection and acquisition of subsidiaries. The network has significantly expanded its userbase and popularity through its subsidiaries, such as Instagram and WhatsApp. Similarly, the company has also eliminated the competition from these platforms by acquiring them.

II) Facebook’s Weaknesses

Despite its strengths, Facebook also has some weaknesses. These weaknesses relate to areas where the company has fallen short of its competition. Similarly, these are also areas that the company should look into to survive in the long run. Some of Facebook’s weaknesses consist of the following.

1) Privacy

In recent years, Facebook received a lot of criticism due to its inept privacy policies. Some experts also blamed the company for selling its users’ data to third parties. It has resulted in many people leaving the social media network because of privacy concerns. Similarly, it has resulted in damaging the company’s brand name.

2) Fake news

Facebook allows its users to share content with millions of people online. The company believes in freedom of speech and giving everyone equal rights. However, it has also given room for fake news to spread through it. The social media network has notoriously been quiet about the fake news shared on it. It also hasn’t been able to control or prevent fake news from spreading, which has resulted in criticisms and loss of business.

3) Reliance on advertisements

Facebook earns almost 99% of its revenues from advertising income. As mentioned above, the strategy has worked for the company as its revenues have increased annually. However, its reliance on advertising income also means that the company does not have any other sources of income to fall on if its primary source fails.

4) User experience

As stated above, Facebook’s revenues have increased due to its advertisement income. However, some of its users have complained of receiving more ads on their devices than in the past. Overall, the increase in advertising on the network has deteriorated the user experience. It creates a weakness for Facebook.

III) Facebook’s Opportunities

Opportunities represent possible future events that Facebook can exploit and turn into a strength. These generally come from external sources rather than internal ones. Some of Facebook’s opportunities are below.

1) Expansion into other markets

Facebook has the resources and financial prowess to allow it to expand into other markets. Many other online tech companies have diverted from their initial product ideologies to expand into new markets. If Facebook can exploit the opportunity, it can easily create new services and products, which users will adopt due to its strong brand name.

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2) Product innovation

Facebook’s primary and only product is advertising. It is a product that the company has almost perfected. However, many users still don’t use the feature. It is because not all businesses need advertising or wants to invest in it. Therefore, Facebook has the opportunity to innovate new products to meet the demands of its users.

3) Investments

Facebook has made some highly successful investments in the past through its acquisition of WhatsApp, Instagram, Oculus, etc. The company also can imitate the same success through investments in other platforms, either similar or diverse. All these can add more users to the platform and its overall network.

IV) Facebook’s Threats

Threats are the opposite of opportunities. They represent external factors that can negatively impact the business of a company in the future. Facebook’s threats consist of the following.

1) Competition

The biggest threat that Facebook faces is that of competition. Several tech companies have the resources to imitate Facebook’s success. If these companies enter the market, Facebook will have to fight for the existing market share. In the past, Facebook has faced some competition as well. However, due to advancements in technology, the threats are increasing with time.

2) Government policies

Recently, governments around the world introduced stricter policies related to user privacy targeting social networks. In fact, Facebook was one of the reasons behind the enforcement of these policies. With a stringent emphasis on privacy each day, Facebook faces the threat of losing its users.

These policies aren’t limited to privacy issues. Other regulations related to data breaches, sexual harassment, violent content, terrorism, etc., can also negatively impact the platform.

3) Bans

Many countries around the world have banned Facebook, including China. For some of these countries, the main concern is the freedom of speech provided by Facebook, which can encourage fake news. For others, Facebook represents a network they can’t control. Facebook faces a threat of similar bans in other countries where it has an existing userbase.

4) Hacking

Facebook users always the risk of hacking or unauthorized access from third parties. However, Facebook itself can be subject to such attempts. In the past, the company has suffered due to data breaches or hacks. While the company has improved its security procedures, it still faces similar attempts to garner a negative reputation.

Conclusion

Facebook is the world’s largest and most well-known social media network, with over 2.7 billion active users. Facebook, Inc., the company behind it, is also highly profitable and considered one of the largest tech companies in the US. Given above is a detailed analysis of the company’s strengths, weaknesses, opportunities, and threats.

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