Facebook Inc.’s success as one of the biggest online social media businesses is based on effectively addressing the 10 strategic decision areas of operations management (OM). Each of these areas pertains to operational concerns to maximize the productivity and overall efficiency of the corporation. In this business analysis case of Facebook, human resources and facilities are developed to ensure that operations management is effective in achieving the strategic objectives for these 10 OM decisions. For example, jobs are designed with consideration for optimizing work efficiency along with the effectiveness of Facebook’s organizational structure. With a growing number of users worldwide, the company must support its social networking website and mobile apps with best practices in operations management. Through continuous improvement, the company ensures that it meets its objectives for the 10 strategic decision areas of operations management. Such a business condition facilitates strategic management success in optimizing Facebook Inc.’s operations, productivity, and corresponding financial performance.
Operations management (OM) at Facebook Inc. is developed and maintained based on the company’s strategies and objectives for efficiency and continuous improvement in all business areas. The company satisfies the 10 strategic decisions for maximum productivity of its social media operations. The consequences of this OM situation include competence in dealing with the competitive effects of firms like Google LLC (parent company of YouTube LLC), Amazon.com Inc., Twitter Inc., and Snap Inc. (Snapchat).
Facebook Inc.’s Operations Management, 10 Decision Areas
1. Design of Goods and Services. Part of Facebook’s design strategy is to continuously innovate its products. In this decision area, the objective is to achieve a product design that aligns with business goals through operations management streamlining. In this case, continuous innovation of the social media network and mobile apps, along with new product development, is seen as a strategic approach to ensure the company’s competitiveness in the long term. Facebook’s marketing mix or 4P is partially based on the outputs involving this OM area. The company develops its marketing strategies to accommodate the design of services offered to target customers.
2. Quality Management. Operations management focuses on meeting customers’ quality requirements in this strategic decision area. Facebook meets such requirements through suitable human resource policies. For example, the company uses small teams to rapidly innovate and continually improve the quality of the multinational social network and related services. In addition, the company collects feedback from users to address issues based on user experience. These operations management efforts facilitate the fulfillment of Facebook Inc.’s vision and mission statements. For instance, high quality of social media services leads to better global communication that attracts online users. In turn, a larger user base satisfies market penetration, which is among the approaches included in Facebook Inc.’s generic competitive strategy and intensive growth strategies.
3. Process and Capacity Design. Considering its online nature, Facebook Inc. addresses this strategic decision area through automation. Operations managers are concerned about the processes and resources needed for adequate social media service capacity for users and advertisers. In Facebook’s operations management, online technologies are used alongside an innovative approach to human resource management. For example, iteration of product improvement and innovation is supported through online technologies that facilitate efficient dissemination of data among work teams in the company’s facilities. The competencies identified in the SWOT analysis of Facebook Inc. are supported and enhanced through effectiveness in maintaining processes and capacities that suit the specific needs of the social media and digital advertising business.
4. Location Strategy. The operations management objective in this strategic decision area is to optimize nearness to resources and markets. In the case of Facebook Inc., nearness to markets is not an issue because the company’s social media services are accessible around the world through the Internet. However, the firm is concerned about nearness to resources. Facebook’s approach is to keep its operations near the best talent pools. For example, the company’s headquarters are located in Silicon Valley, which provides access to the area’s high quality talent suitable for computing technology businesses. Also, Facebook maintains most of its overseas offices in urban centers for ease of access to the labor market.
5. Layout Design and Strategy. The efficiency of internal communication and movement of human resources and materials is the strategic objective in this decision area of operations management. Facebook addresses this objective through innovative layouts of its offices. For example, the company integrates open spaces to encourage brainstorming and creative interactions. Such interactions are essential in supporting Facebook’s product development processes to improve the social media business. On the other hand, for facilities that house web servers, Facebook’s operations managers use industry standard layouts to maximize capacity and utilization.
6. Job Design and Human Resources. Facebook Inc.’s operations management is concerned with developing human resources in this strategic decision area. The company’s aim is to maintain an adequate and capable workforce for the online social media business. For example, the company uses a continuous recruitment strategy. Facebook’s corporate social responsibility strategy addresses this concern through a Ph.D. program that allows students to work at the company’s offices. This program also allows the company to access high quality talent and future hires. Such efforts in this operations management area influence the implementation of Facebook Inc.’s organizational culture, which depends on the social dynamics among workers.
7. Supply Chain Management. The bulk of Facebook’s operations management concern in this strategic decision area focuses on corporate facilities. Most of these facilities are located where supplies are accessible or where cost effectiveness can be maximized. For example, many of the company’s data centers are located in areas with optimal access to equipment supply, the labor market, energy, and suitable environmental operational conditions. Collaborative effort with suppliers helps minimize their competitive force determined in the Porter’s Five Forces analysis of Facebook Inc. In addition, the company develops and maintains its data centers, instead of outsourcing operations. This approach supports the competence of Facebook’s social networking website, mobile apps, and related online advertising services.
8. Inventory Management. The objective in this strategic decision area is to optimize inventory purchasing and holding. Facebook Inc.’s approach for this area is just-in-time inventory, which involves same-day purchasing and installation of supplies, especially equipment used for the data centers. The company designs its data centers and outsources the manufacturing of equipment. Strategic efforts in this area of operations management contribute to technological enhancement to address relevant technological trends, such as the ones identified in the PESTEL/PESTLE analysis of Facebook Inc.
9. Scheduling. Facebook focuses on continuous iteration to address this strategic decision of operations management. This area’s objective is to ensure that intermediate and short-term schedules satisfy business needs. In this case, scheduling for data centers is regular, while scheduling for offices is flexible. For example, at data centers, equipment arrives and is installed on a daily basis. At offices, Facebook Inc. uses flexible schedules to enable and empower work teams to creatively discuss and solve problems. Such flexibility supports the continuous improvement of the company’s social networking website, mobile apps, and advertising services.
10. Maintenance. Facebook Inc. operations managers use a variety of approaches for adequacy of business processes. Such adequacy is the operations management objective in this strategic decision area. For example, the company has a data center located in Sweden to take advantage of the country’s cold climate to minimize maintenance costs for equipment temperature control. Facebook Inc. also has dedicated IT teams for iterating and producing new versions of the company’s social media website and mobile apps.
Productivity at Facebook Inc.
Facebook’s productivity depends on the effective application of operations management principles. The company uses a wide variety of criteria or measures to determine actual productivity in supporting its social media business. The following are some of the criteria the corporation uses for this purpose:
- Number of servers per day (Data center productivity)
- Issues solved per day (Work team productivity)
- Number of tickets/reports processed per day (Customer service productivity)
Facebook Inc.’s productivity objectives aim to match the capacities of technological resources used in the business. Such matching helps maximize the actual operational outputs and benefits of the company’s assets. Also, various subsidiaries, such as Oculus VR and WhatsApp Inc., apply different sets of productivity criteria in their strategic operations management.
References
- Facebook Inc. – Building the most efficient data centers on Earth.
- Facebook Inc. – Form 10-K.
- Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An Integrated Perspective. INTECH.
- Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in operations management: a framework for executive decisions. International Journal of Management and Decision Making, 9(3), 310-327.
- Schrunder, C. P., Galletly, J. E., & Bicheno, J. R. (1994). A fuzzy, knowledge‐based decision support tool for production operations management. Expert Systems, 11(1), 3-11.
- Vance, A. (2013). Inside the Arctic Circle, Where Your Facebook Data Lives. Bloomberg.
- Verdaasdonk, P. (1999). Defining an information structure to analyse resource spending changes of operations management decisions. Production Planning & Control, 10(2), 162-174.
- Verdaasdonk, P., & Wouters, M. (2001). A generic accounting model to support operations management decisions. Production Planning & Control, 12(6), 605-620.