Mini Case Study – 1 Does Facebook Have a Strategy
Why is Facebook the number-one social media company, and not Myspace which enjoyed a first-mover advantage?
The reason Facebook was easily able to replace Myspace as the number-one social media was the difference in strategy they each employed. Myspace dedicated its time and resources towards obtaining more profit by concentrating on a few developed markets, being a public company Myspace was under a lot of pressure to turn a profit. Facebook stayed a private company with a couple small investments from investment groups, allowing them to operate without the pressure to make a lot of revenue. With the need for profit left behind, Facebook was able to concentrate on a global strategy of more users everywhere first, profit came after a user base was established. With Facebooks strategy they attracted users from all over the world, while Myspace suffered in the financial crisis from 2008.
Given the hallmarks of good and bad strategy (discussed in Chapter 1), do you think Facebook has a good strategy? Why or Why not?
I believe Facebook employed a good strategy. First reason is that Facebook chose to pursue a global strategy, considering that the developed market is a lot smaller than the developing one, with more opportunities available in the developing market. Second reason is that Facebook continues to be innovative and pushes out new content and updates consistently. With the newsfeed introduced in 2006, timeline in 2011, and the graph search in 2013. New functions and updates provide a better user experience. My last reason is that Facebook treats its users as important, they improve functions from user feedback, and every update is meant to help the user in some way.
The first step in creating a good strategy is to diagnose the competitive challenge. What do you believe is Facebook’s number-one competitive challenge?
Myspace was the first in the social media craze, Facebook entered the market fairly...