Sample Essay on Porter’s 5 Forces Analysis of Facebook

Porter’s 5 Forces Analysis of Facebook

Facebook is one of the greatest social networking services that have been creating a lot of hullabaloo everywhere. Facebook wad founded in 2004 by Mark Zuckerberg and college roommates at Harvard University. Facebook has gone through a lot of transformation to satisfy the needs of many users. Facebook has impacted media through marketing and developing brand promotions. It has also impacted social life and activities of many people globally.  However competition from other online social networking services has been the core issues impacting its operations.

Social networks such as Twitter, Instagram, Bing and many others have played a lot of roles in the growth and development of Facebook.  Porter’s five forces analysis is a tool that has helped learn more about the impact of Facebook in the online market. There are detailed Porter five forces to look at and learn more on their impact on Facebook. These are;

  • Bargaining power of customers

Facebook has control over its customers when it comes to negotiating for online deals and this has made it easy to increase the average advertising rates and this has led to inability to add new users or lose existing customers. Hence, it has become hard to maintain its user number and this has increased customers bargaining power.

  • Power of suppliers

Facebook does not have any cost-entry blockade for suppliers, but it has been experiencing complications adding more users. Some of the users have opted for other social networking services, and so bargaining power for suppliers as remained medium.

  • Competitive rivalry within the social networking world

Facebook has to face competition from huge rivals like Google. Google has introduced services like Google+, a new social networking service that has been making news amongst internet users. Facebook also faces stiff competition when it comes to retaining users as there is a high rivalry for huge market share.

  • Threat of substitutes

Services like WhatsApp, iMessage and Skype are a threat to Facebook. Most of these services involve internet based short messaging services that make it easy for customers to use their phonebook and send short messages. Facebook users have also opted for video calling services as they can use their PCs and mobile phones. Hence, Facebook has been pushed to work together with these services in order to cancel out the threat of substitute products.

  • Threat of new entrants

Mobile journal path is a huge threat to Facebook as it has been gaining popularity rapidly. It is a mobile social networking has added millions of users over a short period of time. As millions of users who should be relying on Facebook opt for new social networking services, this is a vast threat due to new and unexploited user experience.

Facebook’s huge resource and asset is its information database on millions of users and it has paid much attention on how to gain a bigger number of users and satisfy their needs. It has introduced a functionality strategy that will easily push in merchant websites with its like button. This has given Facebook a competitive advantage over new entrants and competitors, hence its ever-increasing number of users and revenues.

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