Facebook Inc. has a generic strategy and intensive growth strategies that maintain business competitive advantage based on efficiency and accessibility of online social media services. Michael Porter’s model for generic competitive strategies indicates the company’s approach and strategic direction for business growth. In this business analysis case, it is determined that Facebook’s generic strategy ensures growth and competitive advantage through the social network’s features and ease of access to capture a bigger share of the market, addressing competition against companies like Google, Twitter, and Snapchat, which have significant presence in the online advertising market. In relation, based on the Ansoff Matrix, Facebook’s intensive strategies emphasize the use of market penetration as the primary thrust to grow the business. The company’s generic strategy and intensive growth strategies align with business strengths (see SWOT Analysis of Facebook Inc.) and enable the company to keep its market position as one of the world’s leading online social networking firms.
Facebook’s generic competitive strategy (Porter’s model) supports the business through operational efficiency and customers’ ease of access. Related intensive strategies grow Facebook’s market position and revenues by making the social networking website accessible in more regions worldwide. The effects of these intensive strategies and generic strategy impact the competitive landscape (see Porter’s Five Forces Analysis of Facebook Inc.) and the external factors that influence the company’s business performance relative to the multinational industry.
Facebook’s Generic Strategy (Porter’s Model)
Facebook Inc. uses the cost leadership generic competitive strategy. This generic strategy involves minimizing the costs of doing business. Cost minimization enables the company to reduce its prices competitively. The company also broadly provides its online social media services to the global market. This condition is achieved through the nature of Facebook’s business. For example, the company uses computing technologies to maximize the efficiency of its social networking website. The online nature of this business enables Facebook to easily reach Internet users across the international market, thereby satisfying the broad competitive scope of the cost leadership generic strategy.
The cost leadership generic competitive strategy leads to the strategic objective of expanding Facebook’s online social network user base. A related financial strategic objective would be to increase the company’s revenues by at least 35% annually. In this generic strategy for competitive advantage, Facebook has the potential to satisfy such strategic objectives by focusing on growing its membership, which currently stands at more than 2 billion monthly active users. Cost leadership is strongly linked to the company’s intensive growth strategies.
Facebook’s Intensive Strategies (Intensive Growth Strategies)
Market Penetration. Facebook achieves growth primarily through the market penetration intensive strategy. The objective of this intensive growth strategy is to maximize current market share. For example, as one of its strategic objectives, the company increases its share in current markets by establishing alliances with telecommunications companies to increase the number of users who access the company’s social media service through the Facebook mobile app. This intensive growth strategy supports the company’s generic competitive strategy of cost leadership by maximizing market reach using existing assets.
Market Development. Market development is the secondary intensive strategy that Facebook uses for business growth. The objective in this intensive growth strategy is to enter new markets. For example, one of Facebook’s strategic objectives is to coordinate with governments to allow their citizens to access the online social network. This intensive strategy aligns with Facebook’s corporate mission and vision statements, which emphasize growth through global market reach. Such market reach maximizes business effectiveness and efficiency, and satisfies the company’s cost leadership generic competitive strategy.
Diversification. Facebook Inc. uses diversification as a supporting intensive strategy for growth. The main objective in this intensive growth strategy is to establish new businesses. For example, the company acquired the firm Oculus VR to offer virtual reality technology that complements social networking services. Through this intensive growth strategy, Facebook Inc.’s strategic objective is to purchase or establish new subsidiaries or businesses to increase revenues and market reach. The cost leadership generic competitive strategy involves cost minimization that supports the implementation of this intensive strategy.
Product Development. Product development is a supporting intensive growth strategy used in Facebook Inc.’s social media business. This intensive strategy involves offering new products. For example, as a strategic objective, Facebook Inc. developed mobile apps to complement the social networking website. The company continues to develop new product offerings. This intensive strategy influences Facebook’s marketing mix or 4Ps. New products attract more individual users and advertisers, which are the main source of the company’s revenues. The cost leadership generic competitive strategy optimizes profit margins when implementing this intensive growth strategy.
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