Within only a few years, Facebook.com has grown to become the 5th most active website on the internet. This success is a result of its business strategy and technical innovations related to user acquisition, revenue generation and a large partner ecosystem. Facebook was able to become the leading social networking website by using proven business strategies from other industries and then successfully applying these ideas to the social networking space. Facebook has built its products around a single core concept – “the social graph” – which helped them innovate and strengthen their core product offerings.
Facebook’s success can also be attributed to ‘being at the right place at the right time.’ However, in order to drive future growth, the company will need to properly evaluate their business model and make proper decisions. The company has several core strategies related to HR, financing, corporate locations and external partners that will help them further innovate. Based on their corporate strategy, we believe that there is a high probability of future success.
Innovation is one of Facebook’s main sustainable competitive advantages. They primarily focus on technological improvements that enrich the user experience. However, Facebook needs to go through a transformation from being “too focused on technology and user experience” towards “building a strong business model.” We made several recommendations that should allow Facebook to expand into new demographics and markets that will offer additional growth beyond its current 120 million users. We also believe that there are viable strategies that will allow the company to generate additional revenue from existing users that will fuel future profitability.