Business Studies Project:Naitik JainTable of Contents:Nature of BusinessType of organisationRecruitment policyOrganisational structureProducts/services provided by the companyPricing strategy of the companyChannels of distributionPromotional strategiesSources of financeLegal issues faced by the companyNature of BusinessFacebook is an American online social media and social networking service based in Menlo Park, California. The Facebook website was launched on February 4, 2004, by Mark Zuckerberg, along with fellow Harvard College students and roommates, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes.Facebook’s mission: Facebook’s mission is to “give people the power to build a community and bring the world closer together.
” People use facebook to stay connected with friends and family, to discover what’s going on in the world, and “to share and express what matters to them.” Facebook’s Culture: Facebook is defined by its hacker culture – an environment that rewards “creative problem solving and rapid decision making.” Their employees are encouraged to ‘be bold’ and their open culture keeps everyone informed and allows people to move around and work on what they find interesting, as opposed to work being appointed by a manager.
The company works in small teams which move fast in order to develop new products, while constantly improving and working on existing ones. According to their website, “The phrase “this journey is 1% finished” is posted on our walls, reminding us that we’ve only begun to fulfill our mission to bring the world closer together.” Type of organisation: Through its long history, which started off in 2004 as an LLC, to being a Fortune 500 company in 2018, Facebook has been through a lot in its journey to become one of the most revolutionary companies of our generation.2004: Facebook was initially incorporated as a Florida LLC, in which Mark Zuckerberg and Eduardo Saverin, were the owners of the equity shares. LLC: Similar to a corporation, a limited liability company or “LLC,” is a separate and distinct legal entity. This means that an LLC can open a bank account and do business, all under its own name.
Advantages: One of the primary advantages of an LLC is that its owners, called members, have “limited liability,” meaning that, under most circumstances, they are not personally liable for the debts and liabilities of the LLC.Flexibility: LLCs aren’t bound by the same rigid rules of corporations, as there’s no requirement for special meetings, extensive corporate records, or many other formalities.2012: On February 1, 2012, Facebook filed for an initial public offering, where it was listed on the NASDAQ stock exchange. The company first sold its shares on May 18, where the stock price was 38.23$, but through consistent growth, the share prices followed and as of Jan 2018, the shares hover around 180$ for a single share. Recruitment Policy: Recruitment Policy: “A recruitment policy is a statement on how you hire.
It outlines your company’s preferred hiring practices and promotes consistency within your employee recruiting process.”A recruitment policy is essential for any business. In a large company like Facebook, where there are so many vacancies and job interviews and demand for employees, it can provide the people responsible for recruitment and selection a basis on which they hire potential candidates.
Through an interview with Julie Zhuo, director of product design at Facebook, we can understand the different ways through which Facebook recruits.Finding/Scouting for potential employees: According to Ms. Julie, the “The best way to find great talent is to look at the products you admire and figure out who built them,” Shortlisting employees: After Facebook has determined what candidates are to be recruited, further shortlisting is done for the next step, which is interview process. This is done when the potential candidate would demonstrate what they have created. In this process, Facebook’s top priority is not just a functional product, but one which can convey to the user that the creator cares about the product, and one which can leave a lasting impression on the user.Sidenote:While Facebook does employe a lot of graduates from top universities, they also employ self-taught designers and developers. Their reasoning: Sometimes, designers without traditional training possess an ingenuity that you don’t usually see. We’re really just looking for people who have that element of extreme pro-activity.
Even if they did go to a great school, they should have experience stretching themselves on projects both inside and outside of the classroom. Great candidates take the initiative to experiment, design and build on their own. Strength in numbers: As mentioned earlier, employees in Facebook are part of small teams which choose to work on what they are interested in, as a team. Facebook prioritises team-working ability a lot, so “Facebook will sometimes have a candidate work with three or four other designers to see what the team dynamic would be like.
” Through these three factors, we can understand that Facebook hires developers who go the extra mile to create something which impacts the user in a meaningful way, where the product is not treated like something only functional or mechanical. They want employees to be able to work well in teams, and constantly exchange ideas, feedback, etc, which allows Facebook to be a constantly iterative and revolutionary company, with fresh new ideas constantly being produced by bright minded teams. Organisational Structure:Organizational structure is a system used to define a hierarchy within an organization. It identifies each job, its function and where it reports to within the organization.Since Facebook is a very big company, its organisational structure is very big. Facebook uses a flat and wide organisational structure.
The advantages of doing so are:Communication is quicker and more accurate. Top managers are more easily accessibleSpan of control is wider: the advantage of this is that superioris will delegate more, hence workers will fell more trusted, they will take decisions by themselves and hence job satisfaction would increaseProducts and ServicesLike any other big company, Facebook provides a wide range of products which reaches a huge audience.Facebook’s biggest service is … Facebook, the social media platform. It has been estimated that about two billion people use Facebook on a somewhat regular basis. That shows the impact Facebook has had.
Products through acquisitions: The main reason that Facebook would acquire another company is not because they want to own what the company has produced, but they want the talent which has produced it. However, there have been a few exceptions to this rule, where an acquisition has taken place for a product; These products are now offered under the ownership of Facebook. WhatsappInstagramBoth of these companies were in charge of producing social media platforms which have been just as innovative as Facebook, and have touched people in a similar way. Oculus VR: This company is responsible for producing Oculus Rift headsets, which are Virtual Reality based gaming device.Pricing strategyFacebook’s social media platforms are free of charge, however, they charge for advertisers to put news in their news feed. This is how they price their news feed.The basis of Facebook’s pricing strategy is competitive pricing.
Facebook uses competitors’ prices as basis for pricing its display advertising services. These prices are typically applied per view and per click, among other user-generated actions on the company’s social networking website and mobile apps.However, this is just used to set the minimum price. The real price is set through an auction, where different advertisers bid on a certain type of Advertisement.
There are a few factors which can affect the competition for an ad space, and hence, naturally increase price. Audience: The wider your audience, more the competition and hence higher the cost Quality of the ad: If your ad is highly relevant to the audience and has a high click through rate, it won’t have to reach a very high audience and price would be low TIme of the year: There are certain times of the year where more and more advertisers want to advertise and hence costs are higher during these timesChannels of distribution:Since most of Facebook’s products are services, they don’t need traditional distribution channels, because the products can be distributed via the internet.Facebook’s services are available on a wide range of platforms, as its services are provided through a website, as well as an app.Promotional StrategyFacebook relies on 4 types of promotional strategies:Word-of-mouth:Because of persuasion from friends, new members create accounts with the company’s social networking website. Direct marketing:Facebook directly recommends advertising campaigns to Facebook page owners, such as businesses and other organizations.
This tactic involves showing samples of display advertisements to page owners to persuade them to pay Facebook for display advertisements on its social media website and mobile apps.Advertising:Facebook advertises its online social network through various display advertising networks, including Google’s.Public relations:Facebook’s corporate social responsibility programs promote its brand and social media services around the world.
This component of the marketing mix shows the significance of viral marketing in Facebook’s global success.Legal issuesMost of legal issues faced by Facebook has to do with privacy. There have been quite a few major lawsuits taken against Facebook.Class action Lawsuit challenging Facebook for alleged privacy violations:This lawsuit was led by a 27 year old Austrian law studentHe requested Facebook to pay each of the signatories of the lawsuit 500$ (25,000$ people had signed) However, Facebook had shut the lawsuit down on the grounds that the student was an activist and not a consumer of facebook and hence, he can’t file a class-action lawsuit A high-profile coalition of privacy groups filed an official complaint with the US Federal Trade Commission (FTC) regarding Facebook’s privacy issuesSource (Reuters):The text of the FTC complaint alleges that “Facebook’s changes to users’ privacy settings disclose personal information to the public that was previously restricted and disclose personal information to third parties that was previously not available.”It continued: “These changes violate user expectations, diminish user privacy, and contradict Facebook’s own representations.”The complaint was co-signed by Epic and nine other major privacy groups, and calls on Facebook to “restore privacy safeguards”.Facebook responded that it had discussed privacy ramifications widely before introducing the new settings, and said users still had complete control over their personal information – in fact, more so now than ever before.Bibliography: