Category: Facebook

Executive Summary

This investment report seeks to present information about the financial position, performance, and liquidity of Facebook, Inc., as well as its relation to the industry and major competitors to provide recommendations for investing in the company. The financial analysis shows that the performance of Facebook, Inc. has been consistent with the growth of the tech industry and social networking all over the world. Although the company’s stock prices were affected by the recent data privacy scandal, its position in the tech industry remains solid. Moreover, Facebook, Inc. outperforms most of its major competitors in the tech industry, showing excellent results in return on assets, return on equity, and gross profit margin. Therefore, the report suggests that the recent drop in stock prices presents a good investment opportunity and that Facebook, Inc. could contribute to the company’s investment portfolio.

Introduction

Facebook, Inc. originated in 2004 when Mark Zuckerberg developed and launched Facebook (Bellis 2018). Within several years, Facebook became the leading social network, widely used across the United States, Europe, and the rest of the world. The company went public in 2012, which was followed by a list of high-scale mergers and acquisitions (Boyd 2018). Today, Facebook, Inc. is a major tech corporation that owns a significant share of the tech sector in the U.S. and Europe. Apart from owning social networking giants, such as Instagram, Facebook, and What’s App, Facebook, Inc. has also acquired smaller companies, such as Friendster, Sofa, Friend.ly, Lightbox.com, Oculus VR, and more (Toth 2018).

The recent controversy surrounding Facebook, Inc. originated during the 2016 Presidential election in the United States, when Facebook was “accused of failing to thwart Russia’s attempts to manipulate the 2016 U.S. election and enabling the rapid spread of fake news” (Spangler 2018, para. 3). In addition to that, reports of data privacy violations affected the users’ trust in the company. The most recent issue for Facebook, Inc. was the Cambridge Analytica scandal, which revealed that the personal data of 50 million Facebook users was obtained by a major political-advertising company, which could have influenced the 2016 elections (Grant 2018). The information will likely lead to congressional hearings to determine if there was a deliberate privacy violation, as well as in new regulations imposed on the tech industry (Grant 2018). Consequently, the market value and share price of Facebook, Inc. have already suffered due to the events, and so did the trust of social network users: according to a report released in March 2018, 84% of Facebook users are concerned with the incorrect use of their private data, whereas 43.4% will either use Facebook less or stop using the website altogether if the reports of data misuse by Cambridge Analytica will be confirmed (Spangler 2018). Potentially, such reactions would lead to financial and performance losses.

Following the controversy, Facebook, Inc. lost about $100 billion in market value (Klein 2018). Many consider this to be a sign not to invest in Facebook until the company manages to recover its reputation and return market value. Indeed, if evidence of an intentional violation of privacy is found, the company will suffer a major reputation crisis, which will affect not just Facebook but all other social networking apps and platforms owned by the corporation. However, some believe that the current situation presents an excellent opportunity for companies or individuals to invest in Facebook, Inc. (Divine 2018; Parks 2018). One of the best ways to determine if this is true is to look at the company’s present financial position, performance, and other factors affecting future growth.

Financial Position

The financial position of the company represents its current status and includes an explanation of its assets, liabilities, and owners’ equity (Wilkinson 2013). The financial position of a company provides important information about its financial health and is thus a good source of information for prospective investors. It is particularly useful to perform a horizontal analysis of financial position metrics to determine how they developed over time (Dyer et al. 2016)

Assets

As seen in Table 1, in 2017, Facebook, Inc. had 84,524 million USD in total assets, an increase of almost $20 billion from the previous year, and an over 200% increase from 2014. The most prominent types of assets increased were marketable securities, and property and equipment (Facebook, Inc. 2017). Both developments were probably linked to the 2016-2017 acquisitions, as well as to the company’s geographical expansion, prompting an increase in the number of offices and servers. Although an increase in property and equipment could help the company to develop and grow, it could also prompt increased costs in the future, and thus requires precise attention. On the other hand, the growth of current assets through marketable securities is beneficial, as it contributes to the company’s liquidity.

Table 1. Total assets by year.

Liabilities

For a company of its size and scale, Facebook Inc. has a rather low value of total liabilities (10,117 million USD). However, Table 2 shows that the company’s liabilities have grown by $4billion in 2017, which was mainly due to the increase in “other liabilities” (Facebook, Inc. 2017). A share of these liabilities came from unrecognized tax benefits and financing obligations, which will either be written off or paid by the company once the position is resolved. Overall, the change in the company’s liabilities is explained and does not pose a concern since total liabilities can be covered by assets.

Table 2. Total liabilities by year.

Owners’ Equity

Stockholders’ equity is another important determinant of the company’s financial position, especially if it is considered for investment. In this regard, Facebook, Inc. paints a positive picture, with $74,347 million in total stockholders’ equity in 2017. As seen in Table 2, compared to 2013, owners’ equity of Facebook, Inc. grew by almost 500% and increased by 15 billion USD during the 2017 fiscal year. The increase is attributable to the growing popularity of online services, as well as by the corporation’s strong list of subsidiaries. Owners’ equity could suffer some fluctuations due to the recent scandal, but as long as the company retains its major performance contributors, such as Instagram, What’s App, and Facebook, the stockholders’ equity will continue to grow.

Table 3. Stakeholders’ equity by year.

Financial Performance

The financial performance of the company also has a significant impact on investment decisions. However, not all financial measures and ratios apply to Facebook, Inc. in the current situation. The three key metrics that are important to the present analysis are the Return on Assets, the Return on Equity, and the Gross Profit Margin.

The Return on Assets is important as it shows if the company makes good use of its assets. Given that Facebook’s assets have grown considerably throughout the year, it is useful to include it in the analysis. In 2017, the company’s net income was at 15.93 billion USD, whereas its total assets were 84.52 billion USD. The ROA is 18.8%, which is a good figure for the tech industry. For instance, one of the major competitors of Facebook Inc., Twitter, Inc. has a ROA of -1.4% (Twitter Inc. 2018).

The Return on Equity, on the other hand, is useful for determining if the company uses investments effectively, which is also an important metric for making investment decisions (Dyer et al. 2016). In Facebook, Inc., the ROE is 21.4%. This is also a plausible value for the tech industry, considering that the result of Alphabet, Inc., which is considered to be among the industry leaders, was at 8.3% (Alphabet Inc. 2018).

Lastly, the Gross Profit Margin (GPM) is among the key indicators of financial performance as it shows the relationship between revenues and costs (Dyer et al. 2016). In 2017, Facebook’s GPM was at 86.58%, which is an excellent result for the industry (Facebook Inc. 2018). One of the reasons for such a high GPM is that the products offered by Facebook, Inc. have a relatively low cost. For instance, advertisement on Facebook and Instagram is highly profitable due to the low costs associated with it. The high GPM positively distinguishes Facebook from many of its competitors. Alphabet, Inc. has a GPM of 58.94%, whereas Twitter, Inc. has a GPM of 64.77% (Alphabet Inc. 2018; Twitter Inc. 2018).

Liquidity

Liquidity is essential for analysis as it determines whether or not the investors are likely to experience any financial trouble after investing funds into a company (Kennon 2018). For instance, if a company has significant liquidity issues, it might fail to cover its debt and become bankrupt, which would harm all stakeholders. In the case of Facebook, Inc., liquidity is critical, as the company might be subject to fines or losses due to the data privacy issue. Two metrics help to evaluate liquidity: the current ratio and the acid-test ratio (Dyer et al. 2016).

Evaluating the current ratio and the acid-test ratio is relatively easy and can be done using a rule of thumb. Dyer et al. (2016), note that a good value of the current ratio is above 2, whereas the acid-test ratio should be above 1. Facebook, Inc. has excellent results in both ratios, with a current ratio of 13.2 and an acid-test ratio of 22.8. Such results are probably due to a significant share of current assets and low debts and other liabilities; this means that even if the company faces fines or other financial trouble as a result of the controversy, it will not become bankrupt and investors will not lose their money.

Major Competitors and the Industry

Overall, Facebook, Inc. occupies a solid position in the tech sector. The corporation has some large competitors, including Snapchat, Google, Twitter, and other big industry players (Bhasin 2018). However, the position of Facebook, Inc. in terms of profitability and liquidity is more favorable, meaning that it will likely stand the competition despite the current turmoil.

The general outlook for the tech industry is promising, which will likely result in the continued growth of Facebook, Inc. For instance, as noted by MacBride (2017), Facebook now seeks to expand its presence in new markets, including Russia and China, which will bring more profits to the organisation. Besides, Facebook, Inc. is determined to develop new features and services to attract more customers, which will also aid in its development.

Recommendations

All in all, the decision to invest in Facebook, Inc. would be rather controversial. On the one hand, many analytics predict a further decrease in stock price, and the customers are increasingly dissatisfied with privacy protection (Brumley 2017). On the other hand, Facebook is now taking action to restore its reputation and maintain a positive course of development in the future. Furthermore, even if the company faces any financial trouble as a result of the events, it will be able to cover any fines or debts using its current assets. It is also notable that the company remains an industry leader in social networking and outperforms its competitors in terms of ROA, ROE, and GPM. Overall, the future outlook for Facebook, Inc. seems promising, and the low stock price can thus be a valuable opportunity for investment, and the company can use Facebook, Inc. to enhance its investment profile.

Conclusion

On the whole, Facebook, Inc. is an example of an excellent investment opportunity. The company has a long history of success in the tech industry and remains one of the key industry players despite the recent accusations. The financial analysis of Facebook, Inc. showed that the company has excellent profitability and liquidity and outperforms its competitors in ROE, ROA, and GPM. Given this information, it is likely that Facebook, Inc. will be able to recover from the trust crisis and grow the stock price, making it a worthwhile investment opportunity.

Reference List

Alphabet Inc.2018, Web.

Bellis, M 2018, The history of Facebook and how it was invented, Web.

Bhasin, H 2018, Top 13 Facebook competitors – Facebook competition analysed, Web.

Boyd, J 2018, The history of Facebook: from basic to global giant, Web.

Brumley, J 2017, ‘2018 could be the year Facebook, Inc. stock becomes just another issue’, Investor Place, Web.

Divine, J 2018, ‘Why Facebook is one of the best stocks for 2018’, U.S. News, Web.

Dyer, J, Godfrey, P, Jensen, R, & Bryce, D 2016, Strategic management: concepts and tools for creating real world strategy, John Wiley & Sons, Hoboken, NJ.

Facebook, Inc. 2017, Annual report, Web.

Facebook Inc. 2018, Web.

Grant, N 2018, ‘Facebook data scandal has left Zuckerberg isolated in tech’, Bloomberg Technology, Web.

Kennon, J 2018,The importance of liquidity and liquid assets, Web.

Klein, E 2018, ‘Mark Zuckerberg on Facebook’s hardest year, and what comes next’, Vox, Web.

MacBride, E 2017, ‘Facebook’s seven largest emerging markets competitors’, Forbes, Web.

Parks, P 2018, ‘Facebook Inc (NASADAQ:FB): is it a smart long term opportunity?’, Simply Wall St., Web.

Spangler, T 2018, ‘Facebook under fire: how privacy crisis could change big data forever’, Variety, Web.

Toth, S 2018, 66 Facebook acquisitions – the complete list (2018), Web.

Twitter Inc. 2018, Web.

Wilkinson, J 2013, Financial position, Web.

Introduction

The concept of profit refers to the financial benefit an organization realizes when the revenue acquired from various business activities is greater than costs, expenses, and taxes combined for sustaining the activity. Profit is often used when it is needed to describe the business activity as it denotes the reward that business owners gain for investing in their further operations and processes. It has also been differentiated into such types as gross profit, operating profit, and net profit (Leon 2016). Gross profit refers to the first level of profitability and denotes the funds that result from extracting the cost of goods sold from sales. Operating profit represents the second level of profitability and is calculated through deducting operating expenses from gross profit. Therefore, gross profit considers profitability from the perspective of direct expenses while operating profit looks at profitability after expenses that went towards the operation.

These range from administrative to general costs and can depend on the scope and the size of a company. Net profit is the last level of profitability and denotes the income that has been left after all expenses an organization had to pay out, including interests and taxes. Net profit is determined through deducing taxes and interests from the operating profit. It is the most accurate representation of how much money a company is making because it considers all possible expenses needed to operate a business successfully.

Sources of Profit

For decades, profit has been considered the main driving force behind capitalism. This is so because if the profit cannot be made, goods cannot be produced regardless of how many consumers value it subjectively. While the question of where does profit come from may seem easy to answer, it considers many details. In order to make money from the business, it should be transformed into capital, which refers to human resources, equipment, workplaces, and other capital goods. However, by itself, capital cannot produce anything because it can only become productive with the help of the labor force when workers use the capital that was assigned to producing a profit. Within the capitalist framework, workers do not only create sufficient value for an organization, such as produced commodities for maintaining existing capital but also deliver a surplus. It is usually expressed through having a surplus of goods, which means that there is an excess of commodities in comparison to the number the wage of a worker can buy back. Thus, the price of all goods produced by a company is greater than the monetary value represented by the wages of workers as well as available raw materials and overheads such as the wear and tear on equipment.

It should be noted that pro-capitalist economics do not agree with the theory of arising surplus. However, in order for profit to be generated within capitalism, it is required to achieve two things. The first thing is the group of employees to work the available capital. The second thing is the production of value that is greater compared to the value they are paid in wages. Therefore, profit plays an important role in capitalism because it represents the monetary reward to both owners and shareholders of a business. In a capitalist economy, profit is needed for creating incentives for entrepreneurs and businesses.

Comparison of Schools of Thought

Milton and Friedman’s school of thought discusses the power of the market in the sense that the majority of economic fallacies are driven by the lack of attention to simple insight and the tendency to assume that one party can gain profit at the expense of others. According to Milton and Friedman, the accumulation of physical capital, which ranges from office buildings to various types of machinery. Without the accumulation of large economic growth that companies have enjoyed, raising profit would not have been possible. Also, without the maintenance of inherited capital, the economic gains of one generation would likely be dissipated by another. Milton and Friedman have argued that the accumulation of human capital in the form of increased skills and knowledge as well as improved longevity and health all play essential roles. Due to the connections of skills and knowledge and prosperity, the physical capital can become very productive through offering a range of tools to enhance the quality of work. Within the capitalist framework, it is imperative to consider that each type of resources companies or individuals own is partially the result of chance and partially the result of choice. Similar to this principle, the price that markets set on services and products is also affected by the combination of chance and choice (Argyrous & Stilwell 2011).

To contrast with Milton and Friedman’s approach, it is imperative to mention corporate capitalism and laissez-faire. The golden age of competitive capitalism was associated with quick economic growth throughout most of Europe between 1840 and 1873 (Hunt 2003). At that time, when there was an evident shift toward corporate capitalism, new theories proposed by Jevons and Menger emerged. Their theories offered the perspective on the economy that is made up of a great number of small companies and consumers that separately have no sufficient power to influence the market to a great extent. Prices of final products are beyond their control, which means that companies could only manage processes with specifically chosen amounts. This approach is different from Milton and Friedman’s who suggested that prices are defined through the combination of chance and choice. The principle of laissez-faire applies to the market context in which there are many small companies and consumers.

Capitalism and Profit

Capitalism represents a system of predominantly private ownership that is open to new ideas, developments, and technologies as a means of production and their operation to gain profit. Several points should be mentioned in regards to the role of profits in capitalism. For example, higher profits enable an organization to spend more money on research and development. This subsequently leads to better technologies, lower costs and expenses, as well as dynamic efficiency. For industries such as car manufacturing or drug research, profit is the driving force of research and development because of the need to invest a lot into the creation of new market offerings. Without profit and investment, the economy is highly likely to stagnate and lose competitiveness on the global scale, leading to the loss of jobs in multiple sectors.

Another example associated with the role of profit in capitalism is associated with rewards for shareholders. Since they receive dividends, higher profits mean that they will be given higher dividends, which, in turn, results in them purchasing more shares. Shareholders are essential contributors to maintaining the profitability of firms while profit represents a measure that can help in remunerating shareholders. In addition to increasing firm attractiveness in the eyes of shareholders, high profits can help to attract new companies into the industry. For instance, if the prices on oil are high, companies operating in this industry will be more profitable. At the moment, mobile applications are becoming very popular and profitable, which enables more firms to enter the market.

Other roles of profit within capitalist economics include risk bearing, tax revenues, wages, and the incentive effect. In regards to risk bearing economies, profits can be used for providing insurance for an unexpected economy downturn ranging for exchange rate appreciation to the recession. Earning as much profit as possible is important for volatile industries such as luxury goods which are more likely to gain profit in the times of economic elevation but losing money during a recession. In regards to tax revenues, it should be mentioned that governments charge corporation tax on their profits to provide several billion dollars of tax revenue each year. Also, higher profits enable higher wages for workers, which is another important contribution of profit to capitalism. The incentive effect is notable to mention since higher profits play the role of incentives for entrepreneurs to start their business. Without the positive reward of profits, there would be less investment into companies, and fewer individuals will be willing to take risks in order to reach their business objectives.

Example of Facebook

The example of Facebook can be used for explaining the connections between profit and capitalism. At its conception, the social networking website was intended to offer Internet users such unique features as online profiles, listings of friends, and the ability to browse the other pages to enable interaction. Through research and development, Facebook managed to establish a reputation of a reliable and safe service, which subsequently attracted millions to the platform. As the company began earning more and more money, it implemented a controlled growth strategy to gradually develop a robust and reliable infrastructure of technologies that did not have the same issues with which its competitors were dealing (Press 2018).

The initial success of Facebook was linked to a positive reputation as well as significant research and development efforts for building new technologies and tools. Human capital was at the forefront of the company’s success because skilled engineers were at the center of the development of new products and options to integrate into the Facebook platform. The leadership of the company was also interested in driving competition in the market and offering the best range of services to customers. Public relations were also integral components of Facebook’s rising profits. With the increased focus on advertising when catering 2.2 billion active monthly users, the company had to be inventive in terms of data mining, new content, and other actions.

However, similar to other social networks, Facebook was placed in a unique position of facing consumer revolt when it changed its privacy features. The recent developments associated with the company’s violation of privacy and ethics showed that Facebook had gained such popularity that even such scandals do not make people leave the platform. Facebook has been found to engage in surveillance capitalism, the harvesting of data, and predictive analytics to provide private information of its users to advertisers (Spencer 2019). The unique characteristics of surveillance capitalism show that companies have taken extreme measures to gain profit at the expense of customers (Chakrabarti 2019). The new logic of profit accumulation suggests that the main operational mechanisms and economic imperatives have been placed on the backburner because such companies as Facebook have abandoned the past tools and practices that defined the history of capitalism. In many ways, the company’s attempts to monitor customer activities and share this information with advertisers is dangerous as surveillance capitalism has led to significant systematic shifts in attaining a profit. Facebook’s example showed that relying on such categories as monopoly or privacy is not effective anymore and that companies can develop new ways in acquiring a profit that was not communicated in their initial proposal.

Concluding Remarks

Capitalism and profit are closely interconnected, with the former implementing all available measures in order to reach the latter. Businesses usually analyze all three types of profits to reveal how well they use their revenue. For example, a high ratio means that a business generates a lot of money per revenue dollar. A low ratio implies that the costs that a company spends are greater than profits. The example of Facebook shows that businesses that have captured a large customer base can resort to unethical measures for the purpose of gaining a profit. The recent scandal with the harvesting of customer data showed that capitalism often pushes organizations to commit fraud against its customers. This means that the objective of gaining a profit within the capitalist environment is not always rooted in positive actions for companies.

Reference List

Argyrous, G & Stilwell, F 2011, Readings in political economy: economics as a social science, Tilde University Press, Melbourne.

Chakrabarti, M 2019, ‘How tracking and selling our data became a business model,’Wbur, Web.

Hunt, E 2003, Property and prophets: the evolution of economic institutions and ideologies, Routledge, New York, NY.

Leon, S 2016, Financial intelligence for supply chain managers: understanding the link between operations and corporate financial performance, Pearson, Old Tappan, NJ.

Press, G 2018, ‘Why Facebook triumphed over all other social networks’, Forbes, Web.

Spencer, M 2019, ‘Facebook’s monopoly shows we are okay with surveillance capitalism,’ Medium, Web.

Abstract

Employers are increasingly using Facebook as a profiling tool to assist in the hiring process. This report analyzes the effects of using Facebook for background checks on job candidates. This paper establishes that there are dangers in Facebook profiling for both the employer and the potential hire.

These dangers include: inaccurate information, mistrust by employees, and the loss by the employer of individuals who have high potential. The use of Facebook to profile candidates should therefore be stopped and where it has to be used, great caution should be exhibited.

Introduction

Social networking tools have become very popular attracting millions of users all over the world. Facebook is the most active and popular Social Networking Site (SNS) and its most frequent users are college students and recent graduates (Brandenburg 598). These frequent users also happen to be the people who are in the job market, seeking employment opportunities. The information that the users reveal on Facebook might have some implications on their employment chances.

A recent study by the Society for Industrial and Organizational Psychology indicates that over 12% of employers used social networking sites during the hiring process. Of this group, 63% made the hiring decisions based on findings from the social networking sites (Spon 1). The aim of this report will be to analyze the effects of using Facebook for background checks on job candidates.

The focus will be on the implications of using Facebook for background checks both for the candidate and the potential employer. This paper shall argue that while Facebook has some positive contributions to the hiring process, its negative impacts far outweigh the positive and as such, the use of Facebook as a profiling tool is mostly detrimental to both the potential hire and the employer.

Employers Use of Facebook to Run Background Checks

There has been a notable increase in the use of Facebook by Employers to check the background of potential employees. This rise has been attributed to a number of reasons. The use of Facebook in the hiring process also contains some inherent dangers to the employer.

Why Employers use Facebook

There are a number of reasons why employers find it necessary to use facebook in their recruitment process. Some of the major reasons for using Facebook are as follows:

The difficulty of the hiring process

There are an increasing number of applicants competing for similar jobs in all industries. This has made the task of hiring even more difficult than it was in the past since competition is fierce. When faced with applicants of equal qualifications, Facebook profiles can be a useful tool in the hiring process.

A recruiter can screen potential employees based on the information they reveal about themselves on their profiles. Hooker and Rathke state these an employer can single out candidates with desirable traits such as conscientiousness, agreeableness and emotional maturity from the person’s Facebook profile (2).

The cost of the hiring process

The cost incurred during the process of seeking out new employees is high and for this reason, it is in the company’s best interest to reduce turnover by selecting the most appropriate applicants. One of the means through which a company can lower the rate of turnover is by employing people who are dependable. Hooker and Rathke assert that while a resume and interview were sufficient in the past, this traditional means cannot help in the detection of employees who are reliable (2).

SNS profiles may assist in this since an employer can look at a potential hire’s profile and accurately determine their dependability based on what the user’s friends say about them. Facebook can therefore assist by providing information on this trait of dependability thus enabling the company to employ a dependable person who is least likely to leave the company on short notice.

Better information on character

Employers would be interested in finding out whether their potential employees have any questionable relations or interests. Facebook allows users to post anything they wish concerning their lives on their personal profiles. This is information that the potential employer may find useful as they decide on whether to hire the person or not. Brandenburg reveals that by simply clicking on group titles and following the link of Facebook, an employer can find potential employees who have questionable interests (599).

Employers can get useful information that a person may never willingly share in their resume through their Facebook page. Albrechtslund states that younger people are in particular are prone to sharing their uncensored thoughts. The employer is therefore in a better position to judge the real character of the individual from their social networking activities (1).

Public scrutiny

Some of the positions that employers seek to find candidates for are public. This means that the profile of the employee will be open to public scrutiny. For this employee who will be working in a public capacity, the information that they present on Facebook is of importance since it reflects directly on the company.

Lory declares that since such a person will be a representative of the organization, their background information as appearing on Facebook can be subject to scrutiny (40). By running a background check, the employer will avoid any embarrassing revelations about the user in future.

Dangers of Using Facebook

Even as Employers use Facebook in large numbers, there are dangers that are inherent in this screening method for the employer. These dangers are articulated below

Inaccurate information

A study by the National Association of College and Employers revealed that as of 2007, 12% of employers intended to use social networks to screen potential hires (Brandenburg 600). Most employers who use Facebook for vetting purposes view the information on the person’s profile as entirely accurate. They therefore tend to judge the character of a potential employee based on their character on Facebook. As the employers goes through the profile of an applicant, they are bound to find information that is meant to be a joke.

Taken out of context, this information may lead to the employer automatically rejecting the applicant. Engler and Tanoury assert that “Employers may be prematurely dismissing very qualified candidates due to inaccurate assumptions based on a few snippets of their life on Facebook” (9). Employers may therefore lose out on applicants who have huge potential based on conclusions reached on the information in a user’s profile.

Fosters mistrust

Employers carry out the Facebook profiling mostly without the consent or knowledge of the candidate. Facebook plays a huge role in the social and private lives of millions of people.

The use of this site as a background checking tool results is an invasion of user’s personal privacy. In the event where the candidate becomes aware of this unauthorized screening, they may develop a felling of distrust towards the employer (Engler and Tanoury, 11). While it is not wrong for employers to want to know more about their applicants, using Facebook is inappropriate.

Leads to polished profiles

There is a real danger of Facebook profiles being misused. Engler and Tanoury predict that as recruiters continue to use Facebook as a means of screening, Facebook users will polish their profiles to suit the eyes of the recruiter (10). As a matter of fact, students have become more reserved and hesitate to post personal information in their profiles since they fear how a prospective employer may view the same information.

A user will more likely remove all information that may be seen as “inappropriate” from their profile so as to entice recruiters. This will not mean that the user has changed their lifestyle. As such, an employer will not be able to get a glimpse into the character of the potential employee through their profile. Instead, the employer will be presented with an eloquent profile which was edited specifically to impress them.

Impact of Facebook Profiling for Potential Hires

There are various impacts that are associated with Facebook profiling for the potential Hire. These impacts may be positive or negative depending on the profile of the particular potential hire.

Positive Impacts

A potential candidate can use Facebook to improve their chances of landing a job. A user can create a Facebook profile that aids in their professional life. Hooker and Rathke discovered that the professionalism exhibited on the Facebook profile of an individual influenced the employer’s decision on whether to hire them for a professional role (6).

Research indicates that social profiles have an impact on an employer’s first impression of the potential hire. With this in mind, a person can create a favorable online presence that endears them to the potential employer. Lory states that college graduates can use Facebook to network and increase their likelihood of landing a job (40).

Negative impacts

Many people post information on their Facebook profiles that is meant to be seen by their friends only. With this notion, the users post items with their friends in mind and they do not anticipate that potential recruiters will be recipients of the information. This means that the information posted is casual in nature and is not necessarily an accurate representation of a person.

A recent study states that some Facebook users intentionally misrepresented themselves in an attempt at humor or so as to gain social approval (Peluchette and Karl, 96). Users therefore exaggerate their alcohol or drug use in Facebook posts and join groups that do not depict who they are. An employer going through the user’s profile will not know that the profile content is false and a person may therefore be judged wrongly from their profile.

While potential job candidates can exploit Facebook to increase their likelihood of being hired, most do not. The reason for this is because most candidates remain ignorant of the effect that their Facebook profile has on their employability. If properly used, Facebook can assist a person to advance their careers through the construction of professional relationships.

However, at present, many recent graduates’ Facebook profiles contain information that would damage their employment opportunities. Research by Peluchette and Karl indicate that students were somewhat naive about the potential negative consequence that the material they posted on Facebook could have on their employment prospects (96).

Discussion

Facebook has been credited with enhancing the social lives of many people. This site has enabled people to both keep in touch and also meet and befriend new people, therefore widening their circle of friends. Even so, the site has many dire consequences when a person is seeking employment. While ideally, a person’s social life should be separate from their work lives, this is not the case. One’s personal life as articulated in social networking sites can have an implication on their professional life.

From the numerous uses highlighted for employers using Facebook to screen potential employees, it may be assumed that Facebook leads to employers hiring better employees. Engler and Tanoury argue that Facebook screening could actually have the opposite effect (10). Facebook user’s knowledge that prospective employers may look into their profile will result in false profiles. The user will actively try to come up with a “clean” profile which only lists what the user thinks the recruiter may approve of.

Engler and Tanoury point out that that if employers continue to rely on Facebook to vet candidates, Facebook as a social networking website stands the risk of being changed into a collection of impersonal resumes (11). Hooker and Rathke actually advise users to place information on their Facebook profiles with potential employers in mind (8). Such a trend will result in professionalization of profiles since such profiles are noted to positively influence the decision making process of recruiters.

Even so, Facebook will at least for the near future continue to be a favored recruiting tool by many employers. Lory asserts that more and more employers continue to use Facebook to assess candidates and there is nothing to prevent this behavior (28). Employers see Facebook profiles as a useful hiring tool and as such, it can be projected that they will keep using it. It is therefore up to the candidate to change their privacy settings and ensure that they only post appropriate information on their pages.

Conclusion

This paper set out to argue that the use of Facebook for profiling potential hires has a negative impact both for the potential employee and the employer. Descriptions of the reasons why employers make use of Facebook for vetting purposes have been articulated. From the discussions presented, it is clear that many employers deem Facebook to be a valuable tool in the hiring process.

Even so, this tool has many inherent disadvantages which place both the employer and the potential employee at a loss. For the potential hire, the information that appears on their profile may be used to judge their character with negative results. The employer may also be misled about a candidate’s personality from their profile.

While Facebook has gained great relevance in contemporary society, this paper has demonstrated that there are risks that a user faces. A person seeking employment may suffer some loss as a result of the information that appears on their Facebook profile.

The employer on the other hand can make false judgments concerning the potential employer based on their Facebook profile. The use of Facebook to profile candidates should therefore be discouraged and in the instance that it is used, great care should be taken to avoid the pitfalls that this paper has highlighted.

Facts of the case

As the need for brand visibility increases in the Arab World, Facebook and Nielsen Company have established a working partnership to assist marketers on the best approaches of online product development and sales. For instance, the Nielsen’ ‘BrandLift’ product allows marketers to make use of streaming Facebook polls on product reception and perception.

Since Facebook allows a potential client to stream in live response, companies are in a position to modify their products to suit customer preference. The Sarmady Communication Company is presented as the visible beneficiary of the Facebook-Nielsen ‘BrandLift’ product.

As a result of embracing this product, Sarmady has been able to double its online sales returns in addition to the customer base. The Facebook-Nielsen alliance targets to have control of the $9 billion marketing industry in the Arab world.

Problem statement

Over the years, there has been a need to develop an online platform for companies within the Arab world to increase their product visibility. Specifically, online marketing has grown substantially and the current statistics indicate that social and entertainment websites were the most visited in the Arab world.

The actual data captured a 48% visits as compared to other sites with a total of 34% search engine growth. The survey further indicated that 28% of the participants admitted online purchase of their products.

Thus, it is necessary for the Facebook-Nielsen alliance to establish strategies that will increase their presence in the online marketing segment of the Arab eMarketing industry. This alliance may have to revise its strategy to benefit from the expansive and under-exploited Arab world online marketing industry.

Objectives of the case study

The objective of the case study is to explore the significance of online marketing in the expansive Arab world marketing industry. The case study aimed at quantifying the underlying variables that positively and negatively interact to achieve the above objective. Basically, the case study endeavored to establish the scope of operation of the online marketing industry from the practical and quantifiable perspectives.

Areas of consideration

The main areas of consideration were the methods of data collection and sensitivity of the data because the Arab world online marketing industry is dynamic. Besides, the scope of the study was expansive, hence, there was a need to balance observable and testable variables of research analysis.

The case study considered different business partnership models in penetrating the expansive industry. The proposed products were positioned to increase product visibility and modify the perception of the clients as desired by the Facebook-Nielsen alliance.

Alternative courses of action

The incorporation of uniqueness of products and improved online platform

The incorporation of uniqueness of products and improvement of the online platforms is necessary as an alternative to successful merging of the consumer preference and increased traffic as a result of more sales.

Modifying the purchasing process through poll feedbacks

The buying process normally begins with the need for a particular product or good as indicated in the Kotler’s models of intention, adoption, and continuance on the process of online consumer purchasers. The need that was created prompted the consumers search for available information concerning the good or service that can satisfy that need.

Evaluation of the courses of action

The incorporation of uniqueness of products and improved online platform

The incorporation of uniqueness of products and improvement of the online platforms is necessary to allow easy integration of the market along with customer preferences. This model is an integration of two models of consumer behaviors, Kotler’s expectation-confirmation model and Ira’s attitudinal theoretical model.

The attitudinal theoretical model is used in examining the variables informing consumer purchasing intention and adoption. This model is used in explaining consumer satisfaction with a service or good through their repeat purchases.

Modifying the purchasing process through poll feedbacks

Personal innovativeness of individual consumers is key personality characteristic that gives an explanation of consumer online behavior. Consumers’ trust on the internet is a significant determinant of online shopping. E-commerce is non-discriminate on the size of business since even retail chains are in a position to trade online. Moreover, this model of business operation functions exclusively online.

Conclusion

From the above research, markets are provided with a rich knowledge of consumer behavior as dependent on the degree of perceived positive and negative beliefs on a brand. Therefore, through improved advertising, balanced prices, and quality, markets will be in a position to monitor emotions and motivations which serve as the emerging forces within consumers that activate certain behaviors.

Recommendations

It is important for small, medium, and large business to embrace technology in order to remain competitive in the expansive Arab world online marketing environment by using the Facebook-Nielsen platform. Every aspect of life is actively influenced by the revolutionary technological orientation and customers would gladly go for convenient purchasing tools.

Central to the theories of consumer behavior is the conviction that different consumers go through markedly complex decision making process that is influenced at different stages by a number of possible variables.

Management Lessons

Perceptions are unique ways through which consumers internalize and interpret information about a product. Consumer engagement is essential towards winning and maintaining a client especially in a competitive market setting where the best offer carries the day.

The offer could be in the form of price, quality, and quantity. When information on perception is verifiable, it is easy for a company to execute a well researched plan within allocated resources.

Despite the success and public appraisal, Facebook is still reluctant to become public. The IPO opportunities and advantages for the public, however, will still be enormous because can also share this success with the company. However, the profit of distributing share among individuals can be beneficial for those who buy shares, but for a short period of time.

The point is that if Facebook become a public company, the social network it created will become a place of advertising, but not a place where individuals could communicate (Jacobs 199). So, being a member of an online community, I would be annoyed with other information posted on Facebook since many users buying shares could use it for other than communication purposes.

Facebook should be aware of the fact that the IPO can have a great number of advantages. This is of particular concern to the problem of confidentiality and information security since many other social-networking companies can have a wider access to the innovative concepts introduced by Facebook. Legal and accounting cost can also cause problem because the social network has been considered one of the largest companies.

It is impossible to predict whether the success of Facebook, as a financial project will continue to grow or not because many other social networks emerge, gaining competitive advantage. At this point, the risk of failing while buying shares of the company is huge because of shifts that might occur to the company shifting to a public organization (Jacobs 200).

Hence, there is no guarantee for Facebook as a public company to succeed in its domination over other social networks, such as MySpace, another network that can soon become serious competitor for the company (Jacobs 200). Therefore, there is no need to buy shares of companies whose success eventually dependent on its unique private status.

Receiving share of the company, one can face the risk of lawsuits because the possession of the company’s asset imposes a legal responsibility on all activities and operations carried out with Facebook. Therefore, the company is not a good choice to be invested. Recently, the company launched its campaign on gaining money from introducing mobile devices.

However, the majority of investors are very concerned with the way company gains revenues from the constantly increasing mobile audience. At the same time, Facebook is a promising company that has proved its prime position on the market. Therefore, investing money into the company could be significantly beneficial.

Although the official Fabook’s IPO has recently been introduced, there is a great risk of being overpriced (Jacobs 211). The point that when investors buy and sell shares on private markets and contribute to massive prices augmentations in companies, there are no shares left upside. Shares released through IPO can receive momentum as soon as accumulate new markets, which provides new economic perspectives.

However, because secondary trading has long been practiced, the majority of large companies are already invested and, therefore, new investors can fail to gain benefits (Jacobs 211). For instance, Facebook currently serves about 700 million users, but it is impossible to define whether all of these users are actively engaged into the social network. So, in case the majority of users is not active, than the value of Facebook stock can be decreased significantly.

Facebook continued to be of the great interest to the investor (Carr 210). By introducing initially $ 200 investment, the company launched an offer of $ 100 million for the stock of Facebook Company (Carr 210). Later, in January 2011, the DST co-led a $ 500 million offer together with Goldman Sache and, as a result, the company has become the largest institutional investor holding nearly 10 % of the company (Carr 210). Therefore, Facebook’s recent IPO has introduced greater financial opportunities for the DTS and other leading institutional insiders.

Because the company’s stock level have dropped, retail investors have face significant risk because they were sold stocked at much higher price due to the increased inflation rates. The inflated estimates have been made by the investment banks, which were mistaken.

Despite the wrong predictions, Facebook has still preserved its highly beneficial positions. The company has taken the advantage of the investors’ little concern with inflation levels (Research n. p.). Therefore, Zuckerberg can be regarded as the once receiving most of the benefits in this situation.

Because Facebook was put in operation much earlier, there is not guarantee that all the visitors are actively engaged into social-networking procedures. Therefore, though oversubscribing phenomenon can take place, the demand for the company’s share can be significantly weaker.

Despite the skeptic prediction concerning the valuation, Facebook market stock has been supported by incredible demand. In particular, the float is expected to raise up to $ 16 billion. However, the figure can increase, in case underwriters issue more stock. Moreover, Zuckerberg can succeed in releasing more shared to increase the potential growth of the company.

Further offers introduced through IPO can allow Facebook to take control of the market segment that was previously occupied by social networking companies with fewer capital rates. However, turning private tendencies to public ones because “public markets many benefits that make it easier for more investors to trade” (Miller n. p.).

Despite negative tendencies that can be introduced with the transition of Facebook to a public company, there are still predictions that the company can receive wider opportunities for connecting more and more people all over the world, as well as develop new business ties with other companies.

‘Instagram’ acquisition can be regarded as an initial step of Facebook in initiating IPO. However, the contract between Instagram and Facebook can mark a delay in IPO because the company could face a threat of lawsuit (Research n. p.).

Such a situation can force the investors to rely on the awareness of the social network that the company is not financial flexible, despite the fact that the majority of Facebook users have an access to Facebook via their mobile devices, rather than vie their computers.

At the same time, the acquisition of the device can help the company turn its mobile content into a marketing-friendly space. In particular, Facebook Company gains a full control of launching IPO, but Instagram issues can foster this promotion because of the new opportunities it opens to potential investors (Research n. p).

What is more important is that the Facebook Company can expand their market segments and make their services more available for users all over the world. In such a way, its economic potential grows. Despite the predictions, Facebook has succeeded in launching the IPO campaign in a timely manner.

Works Cited

Carr, Jeffrey. Inside Cyber Warfare: Mapping the Cyber Underworld. US: O’Reilly Media, 2011. Print.

Davies, Rob. Facebook Stock is Set to Raise $16 bn. This is Money. 2012. Web.

Jacobs, Yoni. Gold Bubble: Profiting From Gold’s Impending Collapse. US: John Wiley & Sons, 2012. Print.

Miller, Nancy. The Facebook IPO Primer. US: eBook.com., 2012. Print.

Research, Casey. “Who’s Winning and Who’s Losing from Facebook Botched IPO”. The Market Oracle. Web. http://www.marketoracle.co.uk/Article34858.html

Executive summary

Strategic management practice has emerged as important framework that influences companies’ profitability and overall success (Abu Bakar et al., 2011, p.140). Latest research has shown that if best implemented, strategic management can lead to positive influence. Torun (2011) named Facebook as one of those large global companies where strategic management practice has been best implemented to ensure profitability and dominance in the social networking industry (pp. 3-4).

It is from the above motivating scenario that this study purposed to carry out a critical evaluation and discussion of Facebook’s strategic management practice. The following was the breakdown of the paper:

The author began with an introduction that reviewed the background literature and revisited the problem statement. This was succeeded by a critical evaluation of the five major strengths. Following this was the evaluation of literature on four weaknesses. Having tackled the body of the paper, the writer documented suggestions to aid in addressing the identified limitations and improve the existing strengths. The paper ended with a conclusion that summarized the main study findings.

Introduction

Halibozek and others (2007) elucidated that in Today’s fast-paced business environment, there were many looming threats (p.159). These threats emanated from factors such as financial crises, complexity, the existence of many laws and regulations, the large volume of daily transactions and the stiff competition resulting from globalization.

To sum up the many challenges facing modern-day businesses, one manager pointed out that there were a myriad of risks and opportunities which organizations were in positions to tackle but which needed clear understanding and focus to ensure sustainability.

To provide a solution to the described problem, the writer established that strategic management practice provided a fair model of tackling the above case. To define it, Pock (2007, p.6) stated that strategic management practice defined “the process of formulating and implementing company strategies”.

To simplify it, it was also defined as the planned analysis of both the external and internal factors associated with an organization, its customers and competitors to provide the framework of achieving and retaining optimum management engagements. Lawrie (2005) expounded on the meaning of strategic management by asserting that it provided for the involvement of the entire company in managing its processes, people, and products towards achieving successful objectives and goals (p.8).

The following were delineated as the minimum components of any strategic management practice: formulation of a mission statement, environmental scanning, resource allocation, development of an action plan, resource allocation and performance measurement (Lawrie, 2005, pp.8-9).

To help managers in the formulation and maintenance of successful strategic management practice, this business report selected Facebook as a case scenario. The selection was backed up the fact that Facebook was launched in the year 2004 and by late 2011, it had emerged as the leading and the most visited social networking site (Karlicek et al., 2012).

To add, its success story showed that the site was second to Google on the most visited sites in the World with over 800 million users. Interestingly, the site ranked higher than Google+ as was evidenced in the monthly statistics below (Ebiz MBA, 2012).

Table 1 showing the monthly rank of social networking sites as at August 11, 2012

Source: Ebiz MBA, 2012.

The succeeding paragraphs provided an informed critical evaluation of the identified strengths and weaknesses of Facebook’s strategic management practice.

Critical evaluation of facebook strengths and weaknesses

Strengths

Aggressive and innovative culture

Since its launch in 2004, several key developments have been accomplished by Facebook thus weaving it into a fabric of culture and human media. This was also supported by the study conducted by Hitt and others (2012) who acknowledged that the Facebook team had invented many new features which had transformed it into a site that played pivot roles in people’s daily lives. In one of its nice features, the site had allowed users to ‘create a Profile Badge’ which can be used to host one’s blog, website and at the same time act as a business card.

Figure 1 showing the ‘Profile Badge’, one of the many features that have proved an instant hit for Facebook

In another example, the author found out that the year 2009 saw the ‘like’ element incorporate on its site to enable users express their liking of social content by a click of a button.

Figure 1 showing the incorporation of the ‘like’ element on the Facebook platform

Source: Facebook, 2012.

Technological know-how

Maver and Popp (2009) provided proof of the technological know-how that has enabled Facebook handle the millions of daily visitors on its site without failure. The two researchers achieved this when they brought to users’ attention that Facebook embraced the use of a customized Apache, Linux, MySQL, and PHP operating interfaces (Maver & Popp, 2009, p.). These in turn facilitated interoperability, scalability and standardization of URLs (Deans, 2009, p.187). To add, Facebook had bought over 12,000 servers to store users’ data.

Strategic acquisitions and partnerships

According to the findings of a latest study by Daft and Marcic (2012, p.192) Facebook’s top management team boasted of a renowned reputation of negotiating lucrative partnerships. This strength was corroborated by the assertion that its management was able to negotiate a successful partnership with Microsoft which ended with Microsoft contributing millions of dollars to facilitate its growth.

This finding was also supported by Weintraub (2011) when he said that the negotiations between Facebook and Microsoft in 2007 led to Microsoft taking an equity stake valued at $240 million. In addition, Microsoft accepted to enter into an international advertising campaign with Facebook which attracted membership of millions of marketers who wanted to create awareness on the existence of their products (Weintraub, 2011).

Provision of cheaper adverts

Various studies alluded to the notion that Facebook had cemented its popularity by encouraging a culture of outside companies using its platform to provide services to their target members (Merisavo et al., 2007). This reasoning was interchangeably interpreted to mean that most persons harbouring intentions of creating the next eye-catching social networking sites have continued deactivating their wishes the moment they still used Facebook to reach their customers.

Moreover, it has been argued that Facebook adverts offered a unique competitive advantage as compared to those offered by rivals. This was due to the reason that advertisers were offered unique opportunities of targeting their users based on their genders, geographical locations, ages, interests, and even religion. This positioning had enabled Facebook to attract many advertisers thus strategically positioning it to have a bigger share of the anticipated 2015 $8.3 billion revenue from the Social Media Ads.

Simplicity/ease of use

One of the major strengths of the improved Facebook platform is the ease at which even new entrants can interact with its multiple applications. After signing in, users are presented with a ‘clean and easy’ to use layout. To add, major elements such as a friend’s profile provide quick updates on any engagements that users may have participated in. This is via the ‘wall’ element.

Weaknesses/Limitations

Little management expertise

There is an on-going debate on whether Facebook has the requisite management personnel to drive its vision forward. While some studies argue that lack of management expertise has contributed a primary weakness to its operations, some have come out to counteract this assumption.

Those in support of the lack of management expertise cited the unpopularity and the arrogance of its founder (Zuckerberg) as the core weakness that threatened its rapid expansion. Contrary to this, those opposing acknowledge that its owner has done a commendable job of bringing executives who surpassed his management skills. Examples of these include David Ebersman, who possesses vast experience as a Chief Financial Officer, and Sheryl Sandberg who has a bias in the operations field.

Privacy issues

Despite allowing individual members to configure their security settings, it has been established that many people do not still understand how to protect some of the data on this site (Mui, 2011). There are many cases where users are sharing information which ought to have been classified as confidential. This uncontrolled and exposure of personal data has led to the emergence of start-up social networking rivals such as Google+, who are capitalizing on this shortcoming to pose a serious threat to Facebook’s future survival and dominance.

To show how serious this weakness is, a Wallstreet Journal of 2010 revealed that privacy issues had triggered disagreements in the company which threatened to force Facebook’s Chief Executive, Mr. Zuckerberg into scaling efforts that encouraged users to share more of their information publicly (Vascellaro, 2010).

Less customization of pages

Facebook has been accused of allowing users less freedom to customize pages (Hall & Rosenberg, 2009, p.68). Most users wishing to look ‘unique’ with regard to their profile appearances have often been annoyed by the existence a single uniform profile page. In a related incident, it has been ascertained that Facebook relied on boxes to hide multiple applications created by users. This was done to create few clusters.

Flash distractions and lack of a real-time feedback mechanism

Salvendy (2012) postulated that with the provision of advertising services came the annoying animated flash graphics on Facebook (p.1390). These have proved a nuisance and distracting to some users.

Elsewhere, Facebook has had a shortcoming of lacking an online Help Centre where users’ inquiries or product suggestions can get quick response. The site has only availed Frequently Asked Questions (FAQs) which are limited and ineffective with regard to user inquiries.

Recomendations for improvement

Having discussed the strengths and weaknesses of the strategic management practice employed by Facebook, the following recommendations were advanced to assist in mitigating the weaknesses and improve on the strengths:

• Facebook should make efforts to address the problem of animated banners distracting users by changing the positioning and interaction of the banners with users. This will prevent the annoyance of users.
• Facebook should make efforts to provide a real-time online help centre to improve on the level of its feedback. Direct and quick response will show that the company values its users and can be used as a marketing and customer retention tool.
• With regard to strategic management, it is suggested that the company continues with its current trend of hiring highly experienced and successful managers and entrepreneurs to take its vision to its next level. This will enable the company to retain its leadership role despite the existence of stiff competition from new entrants such as Google+.

Conclusion

At the onset of this study, the author had purposed to carry out a critical evaluation and discussion of the strategic management practices in Facebook. To summarize the major findings, the author points out that Facebook presented a successful story of how best strategic management practices can propel a company into a powerful force. This is the case because of its innovative plans that have captured users’ attention thus propelling it into a social networking power house. As such, the 2012 Facebook can be best described by use of the following paradigms: utter dominance, rapid rise, high marketing power and global reach (Weintraub, 2011).

Notwithstanding the success story above, it was also established that Facebook possessed a number weaknesses that included the failure to neither control privacy nor allow for customization of pages. These have partially caused disrepute to its operations. Arguably, as Hitt and his friends (2012) reasoned, these trends can be explained by the famous saying that popularity has its ups and downs (p.240).

References

Abu Bakar, A.H. et al. (2011). Implementation of strategic management practices in the Malaysian Construction Industry. Pakistan Journal of Commerce and Social Sciences, 5 (1), pp.140-154.

Daft, R.L. & Marcic, D. (2012). Understanding management. 8^th edn. Mason, OH: Cengage Learning.

Deans, P.C. (2009). Social software and web 2.0 technology trends. USA: Idea Group Inc (IGI).

Ebiz MBA (2012). Top 15 most popular social networking sites. Retrieved from http://www.ebizmba.com/articles/social-networking-websites

Halibozek, E., Jones, A. & Kovacich, G.L. (2007). The corporate security professional’s handbook on terrorism. Oxford, UK: Butterworth-Heinemann.

Hall, S. & Rosenberg, C. (2009). Get connected: The social networking toolkit for business. Madison, WI: Entrepreneur Press.

Hitt, A., Ireland, R.D. & Hoskisson, R.E. (2012). Strategic management: Concepts and cases: Competitiveness and globalization. Mason, OH: Cengage Learning, 2012

Karlicek, M. et al. (2012). Social networking sites in the Czech Republic: An empirical study. Management & Marketing Challenges for the Knowledge Society, 7(1), pp. 15-28.

Lawrie, J.J. (2005). Strategic planning and management in transit agencies. Washington D.C: Transportation Research Board.

Maver, J.J. & Popp, C. (2009). Essential Facebook development: Build successful applications for the Facebook platform. Boston: Addison-Wesley Professional.

Merisavo, M. et al. (2007). An empirical study of the drivers of consumer acceptance of mobile advertising. Journal of Interactive Advertising, 7(2), pp. 41-50.

Mui, C. (2011). Facebook’s privacy issues are even deeper than we knew. Forbes. Retrieved

Pock, A.V. (2007). Strategic management in Islamic finance. Wiesbaden, Germany: Springer.

Salvendy, G. (2012). Handbook of human factors and ergonomics. 4^th edn. New Jersey: John Wiley & Sons.

Torun, D. (2011). How social networking (Facebook and Twitter) can be used for tourism marketing. Norderstedt, Germany: GRIN Verlag.

Vascellaro, J.E. (2010). Facebook grapples with privacy issues. The Wall Street Journal. Retrieved

Weintraub, M. (2011). Killer Facebook ads: Master cutting-edge Facebook advertising techniques. New Jersey: John Wiley & Sons.

The Internet has made the world to become a small place because it provides a platform for people to interact and do business. There are so many websites that have been developed for purposes of interconnecting people using Web 2.0 technology, and they include Facebook, Twitter, and MySpace, among several others.

Facebook is the most popular social networking site, and this is evidenced by the number of users that continue to increase every day. When in Facebook one can find a friend, job and many other things. Therefore, this paper focuses on how Facebook has influenced people’s lives.

Importance of Facebook

Almost everyone is talking about Facebook because on this site one can trace his/her childhood friends and get new ones. Popoola (2011) argues that the main reason why many people prefer to use this social media to communicate is because it is cheap and convenient.

This is because Facebook is not like mobile phones that require to credit, which is perceived to be very costly. In fact, all that one need is a computer that is connected to the Internet or an Internet enabled mobile phone.

The popularity of this social network has made many people to seek for literacy in the use of computers because everyone, whether old or young, wants to move as the world moves.

Anderson (2007) explains that before the coming of social networking sites such as Facebook, people used to communicate through the mobile phones and letters, which were very expensive and unreliable. Facebook provides information about people by displaying individual details of every user, which is useful for security purposes.

When on Facebook, one befriends the people he/she likes by looking at their profile information, but then the person that is being requested for friendship has to confirm that he/she is known to the person making the request.

Communication is made possible on Facebook through an electronic mailing service that allows users to send and receive messages. Alternatively, users can chat in real-time through a chat utility integrated in Facebook.

According to Bronk (2008), Facebook has helped to retain their friends, unlike before when many friendships ended as people went their different ways after going through the education system.

On Facebook, people are not required to meet physically because they can interact virtually, just like they would if they were in close vicinity. Friendships are based on interests and this has led to the rise of cross cultural interactions. In such a case, interaction is not biased because the users can befriend anyone regardless of race or gender.

Uses of Facebook

Facebook is informative because users are able to update one another on what is happening in different parts of the world. Many users are using the platform to express themselves through the status updates that are posted regularly. For instance, activists have continued to use Facebook to express their grievances.

In countries like Egypt, the government disabled the Internet because the revolution against the government was perceived to be coordinated through Facebook. By barring people from accessing the Internet, the Egyptian government was able to control the revolution, but that was not enough. This is because the stage for protesting against the government was already set.

Politicians too have changed the way they conduct their campaigns. This is because holding political rallies has many disadvantages: they could be met with a lot of hostility, and the amount of money spent on fueling their vehicles is extremely expensive (Fox, 2009).

Politicians have therefore embraced Facebook by staging their campaigns on the site because they are assured that their message will reach many people and will not be blocked in anyway. Once a user has posted something on the wall, it cannot be manipulated in anyway like in the posters that can easily be tainted or torn into pieces.

But this has not hindered politicians from holding rallies on the ground because by having alternatives of reaching their target audience their chances of success become broadened. In essence, Facebook is a useful tool especially to political aspirants who do not have all the money to go around.

Business people and companies also benefit from the capability of Facebook. For anyone who wishes to market his/her goods and services, Facebook is the ideal platform for advertising. This is because it is cheap and efficient, unlike other methods of marketing.

Facebook has many users who reside in various parts of the world, and it is ideal for companies that wish to expand their businesses. Greenstein (2009) argues that the popularity of Facebook has made many companies to include a link to the site in their websites.

In addition, there are many companies that advertise their jobs through Facebook and thus, it is a useful tool for jobseekers and employers. Most companies use the site to conduct surveys about their products and services.

This is cost effective because it would be very expensive to hire another party to conduct the survey. Moreover, the awards that are issued nowadays are influenced on the polls that take place on the social network.

Facebook has become a tool in decision making processes in most companies. This is because there are many employees who have been sacked because of the comments they posted on Facebook. Hawkins (n.d.) states that employers use social networking sites to track what their employees are doing and that way they are able to tell about the personality of their employees.

There are some employers who argue that Facebook has been contributing to their company’s decline in performance. They further explain that their employees sneak into the social network and leave their duties unattended.

Moreover, Facebook is identified as one element that fosters unity in today’s world. This is because people are able to communicate from different parts of the world without the barrier of their cultural differences.

Perhaps this is because Facebook allows people to communicate in their interactive languages, thus eliminating the problem of language barrier – the users are only present virtually and none of the communicating parties can identify any weaknesses in the other person, and judgments can only be made by the comments one posts on the wall.

Similarly, Facebook has enabled many people to find marriage partners. According to Lecky-Thompson (2009) there are so many people who are in successful marriages, owing to their interactions on Facebook. However, there are many marriages that have been ruined by this social site.

This is because most couples fight and argue about the comments made by one of them, especially towards opposite sex. The only problem here is that someone can put somebody else’s picture and thus, hide their image.

Criticism

A major drawback of Facebook is that it is difficult to understand someone’s character while interacting with them on the social network. There are also criminals who use the site to trap unsuspecting users and later holding them as hostages and sometimes end up killing them.

However, people are encouraged to meet strangers in public places to know the person much more. Facebook enables users to establish their own social circles called groups. These groups are formed by people who share common interests such assisting each other in the time of need (Lecky-Thompson, 2009).

The children are also affected by Facebook, and this has caused their performance in school to decline. Most teachers are complaining about Facebook because they say that learners have become obsessed with it such that they finish their homework in a rush, just to please the teacher.

Children are now spending most of their time chatting with their friends on the social network such that they don not have time to play constructive games like soccer, which plays a major role in making them creative and discovering their talents early enough.

However, to others, Facebook is their source of consolation because when they are annoyed, they pour it out on the network. There are many people who pass their time by just chatting or playing games on the site for the sake of avoiding boredom.

Siegler (2009) argues that the emergence of social networking sites such as Facebook is trying to bring the world together in an effort to seal the gap that was left by modernization where everyone had to go his way in search of livelihood.

Today everyone belongs to a social network because they are many and one can join and leave at their own pleasure. It is surprising to find that everyone is busy such that even parents don not have time for their children and some use the social network to interact with their children while they are away from home.

This is much better than having no time at all. Likewise, smart teachers make good use of Facebook to communicate with their learners about the lessons that require detailed explanations. Some even go a step ahead to post the assignment on the site.

Sometimes, professionals use Facebook to share information, which makes their work easier because when they are more knowledgeable they can solve issues much faster. Since most people are obsessed with Facebook, they are not able to work on their interpersonal skills on face-face basis. This is because Facebook enables people to express themselves without feeling ashamed, which is beneficial to poor communicators.

Conclusion

Currently, Facebook is the most popular social networking site that uses Web 2.0 technology, and is useful in creating awareness. The site is used frequently as an exhibit of crime where some people were found on the wrong side of the law, such as displaying explicit pictures. In some countries the site is used to spread hate speech among ethnic communities.

In such a case the government of the concerned country has had to monitor the statements posted on the site so that situations leading to civil unrest can be avoided.

Similarly, there has been a problem of hackers who manipulate users profile and pose as those individuals. However, Facebook management has put safety measures in place so that the details that can be accessed by a user are limited according to specifications of the user.

References

Anderson, T. (2007). Web 2.0 and New Media Definitions. NewCommBiz.com. Web.

Bronk, C. (2008). Convergence and Connectivity: 1 of 2. YouTube. Web.

Fox, P. (2009). Friends and Neighbors. Guardian.co.uk. Web.

Greenstein, H. (2009). Facebook pages vs Facebook groups: What’s the Difference? Web.

Hawkins, K. What is a Social Networking Site? Web.

Lecky-Thompson, G. (2009). Facebook: Good or Bad for Communication. Web.

Popoola, J. (2011). What are the Effects of Social Networking Websites? Ezine Articles. Web.

Siegler, M. (2009). Location is the Missing link between Social Networks and the Real World. Web.

Client Brief

The need to communicate and connect with other people through viable media has been indisputable in the current world. Contextually, the emergence of social networking sites is revolutionizing the world. This sites help in knowing new products in the market, enhancing relationships, passing vital information to masses, and instant chat provisions.

Facebook is leading in this context following its viability, appropriateness, novelty, design, and vastness in its application and registration of users. It is possible to meet numerous friends and personalities in facebook. Social networking is helpful in numerous contexts. It is feasible to contact and communicate to strangers without compromising one’s security (Lantos 2011).

Additionally, individual sites and profiles are secured such that none can interfere with other people’s details. Nonetheless, information can be passed out to everybody within the same network. This is helpful in the marketing arenas since limitless people can be contacted for the promotional deals. Additionally, facebook is free and open to all users provided one has registered (Stay 2011).

Social networks have helped in receiving up to date information globally. This provision never existed before; hence, it was difficult to attain important information regarding new products in the market. The adverts, which sometimes appear on the mass media provisions, occasionally provide bias information.

The emergence and use of social networks have helped numerous people to connect to the entire world while exchanging instant messages and viewpoints (Romm-Livermore & Setzekorn 2009).

The Research Proposal

Identifying the research objectives

This research intends to unveil various facts related to the application of social networks in the society with respect to facebook. Evidently, the technological developments have transformed business relationships, market trends, transaction mechanisms, and remission of information from one place to the next. Numerous consumers have established and embraced the use of social networks within the society.

In this context, the significance and facts behind social networking are evident (Nelson, Shaw & Strader 2009). Embracing this novel interaction and communicational technology has proved quite lucrative to numerous individuals.

From this study, there are numerous objectives set to help in unveiling the relevant and demanded information. This relates to the use and attitudes of consumers towards social networking sites like facebook and others in the similar category. Objectives are numerous and not limited to the following;

• To know the exact uses of social networks within the community.
• Knowing the attitudes of consumers towards social networking sites with regard to facebook.
• To understand the impacts of social networks in people’s lives and marketing.
• Unveiling the nature of products. This can be promoted using social networks.
• Understanding the use and penetration of facebook in the marketing arena.

It is evident that social networks and the networking phenomenon can influence the behaviour of consumers towards a given product in the market. Positive information in such sites is helpful in promoting given brands within the market. The application of facebook has spread worldwide since its inception in the recent past.

Identifying the information to be collected to meet the set objectives

To meet the mentioned objectives, some information will be required to make the research a success. The first one is how people perceive facebook as a social networking site and how they value it with respect to marketing. This information will help in understanding the entire provisions regarding this research. Importantly, the use of facebook has increased tremendously in the recent past.

It is crucial to recognize how one came to know about it and what benefits has he or she realized since her registration. Obviously, this will help in understanding how people perceive it (attitudes) and whether it serves their total interests.

Additionally, relevant attitudes of the public towards facebook form viable information, which should be collected and analyzed. This will provide an understanding on whether facebook is usable for marketing purposes and which other challenges might occur in the use of such social networking sites.

Additionally, information that will help in meeting the mentioned objectives incorporate how people perceive products marketed through facebook. Do they like the ads presented on the social networking sites. This is helpful in determining whether the use of facebook can aid the marketing desires. It is also important to know the frequency at which people visit the social networking sites.

This relates to how often they chat with each other, send social blogs, respond to social concerns, and value the information achieved from such sites. Knowing the social networking sites preferred by the concerned individuals and why is equally important in this aspect.

This phenomenon helps in knowing how competitive social sites operate and what makes others more preferable than others. This provision relates to the use of facebook as a social networking site of the current age. Knowing how facebook has penetrated into the minds of the public is helpful in determining other purposes the site can serve.

Data collection tools to address the selected research problem

The information required in this context can be attained proficiently using appropriate instruments aimed at collecting the required data. These are the data collection tools demanded in this research. One of them is the development of E-research approach where a specific site is designed in the internet to help in collecting the required information capable of handling the identified research problem (Pitler, 2007).

In this context, a site, which is easily accessible and formulated in an interactive manner, is used to probe the public to provide their opinions with regard to the research topic. The site should have links to where the required questions are situated such that respondents can easily access them and provide their answers. Appropriate E-forms/questionnaires is used in this context.

Respondents will fill or chose their appropriate answers for further analysis (Anandarajan 2010). The questions should be interactive enough to allow people to share their viewpoints with others. Additionally, some of the questions posted for data collection should be specific to the demanded information while others should be open enough to elicit varying opinions. This will help in understanding the situation extensively.

The need to know the uses and attitude of consumers towards the social networking sites with regard to facebook is a critical topic. People who frequently use facebook should be in a position to respond to the demanded questions such that their perceptions and utilization of the site can be unveiled.

The E-site tool used should be linked to the social networking sites such that those who visit such sites can easily access E-approach questions. In this context, using the facebook site can massively help (Brown, 2011). It is from this move that the demanded information concerning the research topic will be attainable.

The questions used in the site should be set in a probing manner and also in a form that the resultant answers can be easily analyzed. This is helpful in simplifying the research schedules in numerous contexts. Consequently, the data collected electronically are analyzed to unveil the findings and provide lucrative recommendations.

Another data collection tool helpful in this research is the interview guide. The guide contains open questions that will help in probing the concerned respondents to give viable give information regarding the use and attitudes towards facebook as a social networking site (Kelsey, 2010). Evidently, uses of social networking sites are numerous and the attitudes of people with regard to these sites are evident.

While designing the interview guide, it should act as a promoter to attainment of the desired information. The questions set in this design are slightly directive but intends to give in-depth information regarding the concerned research. Additionally, the design will not contain the entire list of information; nonetheless, an answer to a given question will lead to another question.

This will help in eliciting information on matters, which were unexpected. Additionally, varying answers will emerge hence giving the researchers options to choose. Since the research intends to unveil numerous aspects of facebook use and other characterizing attitudes, the collection tool is critical (Kurtz & Boone, 2011). Designing a prominent interview schedule will allow numerous respondents to commit to the research.

This will give viable information regarding the matter. It is crucial to unveil the concerned details regarding the use of social networking sites. Having firsthand information regarding the matter is vita. This data collection tool will translate the research objectives into researchable questions.

The design might assume a questionnaire form to ensure relevancy and consistency during data collection. The utilization of facebook as a social networking site is an international phenomenon with varying stipulations and applications (Tomlinson, 2010).

These tools should be ready for use in varied contexts. This aspect relates to the preparation of constructive questionnaires, which will be piloted for their viability in this research. Additionally, the matter relates to the preparation of the topic guides meant to provide directions regarding the matter.

Piloting the study helps in unveiling the feasibility of the research and any other probable challenges that might occur during the study (Wankel 2012). While designing the exact tools or instruments to be used in this research, various stipulations are evident and considerable.

The interviewer in this context will fill out the list of question regarding the research topic as answered by the respondent. Concurrently, the use of questionnaire is featuring in this context since respondents will be required to fill out a form containing the research questions. This will occur either electronically or manually depending on the nature and stage of the concerned research.

Outlining the processes, which devised and developed these tools

The development of these data collection tools has observed a critical outline meant to achieve viable research instruments with regard to this research. Firstly, there is determination and creation of the need for the concerned data. This process leads to the determination of preferable tools for data collection. If the objectives of the research have been determined, appropriate data collection tools are chosen.

This incorporated scheduled interview and E-research, which is executed online. The demanded data will be attained as stipulated earlier. Precisely, the type of information needed dictates the choice and construction of the data collection tool (Hawknis, Mothersbaugh & Mookerjee 2011).

It is imperative to determine the need for data collection. This will act as a motivator in this research. The next step in the outline is the preparation of a dummy table, which indicates the data to be collected. This process imitated the real data to be collected hence helpful in developing the exact data collection tools mentioned above.

Concurrently, another step in developing and devising these tools is the determination of the respondents’ level of knowledge and prowess. In this research, the respondents include those individuals who frequently use social networks in their operations. Determining who the respondents are in this context is crucial.

This process equally determines whether the preferred respondents have the desired exposure to the emergence and application of social networking sites with regard to facebook (Müller, Alt & Michelis 2011).

The level of expertise and understanding among the desired respondents are helpful in drafting the questions, choosing the right and appropriate language, and formulation suitable approach to the concerned respondents. Data gathering method is the next step in this outline. Decision on this provision determines the kind of tools to be used while collecting the data.

From this study, the collection tools identified incorporated the E-approach and structured interviews, which require initial determination of the data gathering method. Data collection methods relates to the aspects of communicational modes, instant interviews, and mailing of questionnaires (Carter 2011). Precisely, the choice of the data collection tool required depends on the nature of research and other characterizing factors.

Consequently, it is important to draft the instruments that will be required in the data collection and the entire study. This research will ensure that all the stipulated instruments conform to the demands of the study. This process entails the compilation of all items necessary in the collection and utilization of the concerned data. Next is the evaluation of the concerned data instruments for their viability in the research.

These steps help in developing exact appropriate tools for the data collection phenomenon. Evaluation can occur successfully through the consultation of experts in the social networking research. This will help in evaluating the viability of the data collection criteria chosen for this project (Treadaway & Smith, 2010). Next, the execution of pre-testing procedure for the identified instruments is critical.

This aims at unveiling the viability of the chosen instruments. Additionally, pre-testing allows for the identification of the weaknesses and strengths of the chosen data collection tools for an extensive revision to correct the looming loopholes and augment the realized strengths. This is equal to the piloting procedures executed to serve varying variables and showcase the feasibility of the concerned research.

Next in this outline is the specification of the relevant procedures and instructions required in probing the respondents and collecting the relevant information from them. This enhances the use, potentiality, and viability of the collection tools used in the entire research (Porterfield, Khare & Vahl 2011).

Designing the preferred format for the data collection is the last step in this outline. This should suit the objectives and desires of the concerned research. The data collection instruments should be scheduled in varied sections, which handle specific aspects of the research problem.

Reference List

Anandarajan, M 2010, E-Research collaboration, Springer, Berlin.

Brown, B 2011, How to use the Internet to advertise, promote, and market your business or website– with little or no money, Atlantic Pub. Group, Florida.

Carter, B 2011, The like economy: how businesses make money with Facebook, Que Press, Indianapolis.

Hawknis, D., Mothersbaugh, D. & Mookerjee, A 2011, Consumer behavior building marketing strategy. Tata McGraw Hill, New Delhi.

Kelsey, T 2010, Social networking spaces: from Facebook to Twitter and everything in between : a step-by-step introduction to social networks for beginners and everyone else, Apress, New York.

Kurtz, D. & Boone, L 2011, Contemporary business, Wiley, Hoboken.

Lantos, G 2011, Consumer behavior in action: real-life applications for marketing managers, M.E. Sharpe, Armonk.

Müller, J., Alt, F., & Michelis, D 2011, Pervasive advertising, Springer. London.

Nelson, M., Shaw, M. & Strader, J 2009, Value creation in e-business management: 15th Americas conference on information systems, AMCIS 2009, SIGeBIZ track, San Francisco, CA, USA, August 6-9, 2009 : selected papers, Springer, Berlin.

Pitler, H 2007, Using technology with classroom instruction that works. Association for Supervision and Curriculum Development, Alexandria.

Porterfield, A., Khare, P., & Vahl, A 2011, Facebook marketing all-in-one for dummies, Wiley, New Jersey.

Romm-Livermore, C., & Setzekorn, K 2009, Social networking communities and e-dating services: concepts and implications, Information Science Reference, Hershey.

Stay, J 2011, Facebook application development for dummies, Wiley, New Jersey.

Tomlinson, T 2010, Beginning Drupal 7, Apress, New York.

Treadaway, C. & Smith, M 2010, Facebook Marketing an Hour a Day, John Wiley & Sons, New Jersey.

Wankel, L 2012, Misbehavior online in higher education, Emerald Group, Bingley.

Facebook decision of going public impacts on users

Users of Facebook should expect a renewed Facebook with many new applications, and services that will ensure they maximize use of Facebook. The company will create seamless applications using mobile platform for convenience of its users.

Facebook will have a challenge of raising money for its shareholders. Thus, Facebook must generate lots of revenues from its users. Users can expect Facebook to increase frequencies of advertisements than previously experienced. In addition, it shall also development new forms of advertisements for its users.

Users can also expect Facebook to enhance its customer services. This shall present a challenge to the company because it must balance its revenue growth and customers’ satisfaction.

You use Facebook almost every day. So, is this an IPO you think you should’ve bought?

Having used Facebook for quite some time, buying shares would have been futile as a small investor since the shares of an IPO initially get to the hands of influential clients like enormous institution investors, mutual funds, and risk taking investment companies. Buying the share on the initial day of trading would not make sensible return.

The stock trades below 40% of the initial public offer for quite a while. Also, the demand of shares has shot up resulting to Facebook raising the target price range for its stock. The company changed its share prices several times from $28 per share before settling on $35 per share.

How is it already overpriced?

Facebook had overvalued IPO shares. A number of investors noticed that Facebook IPO share prices were too high. The share price of $ 35 overvalued the company 70 times against Facebook earnings of 50 cents per share. In addition, the share price also overvalued it 18 times against the projected revenue of five billion dollars. According to behavioral finance, such overvaluation of the IPO price could have occurred as a result of many investors overconfidence in the company’s shares (Mishkin 147).

IPO pricing has been a challenge for many companies. Facebook preferred high prices in order to maximize revenues. On the other hand, investment banks do not pay much attention to pricing because they have interests in luring large number of investors. Investment banks believe that such small investors will increase demands and increase share prices of the company. This gives Facebook opportunities for further offering of its shares to many investors. Consequently, investment banks shall benefit from their deals.

Did Mark Zuckerberg and his banker buddies deliberately hose retail investors on behalf of institutional insiders?

Most investors did not like the extent to which Facebook exercised control over its IPO and the action of the company’s underwriters. Observes argue that Facebook came up with its own prospectus. There are also reports that the company’s Chief Financial Officer shared his doubts about the value banks would make of the IPO.

The issue is that Facebook used implied valuations from “thinly traded secondary markets such as SecondMarket or Sharespost. The company prospectus claimed that valuation relied on recent private stock sale transactions between periods Q1-2011 and Q1-2012” (Pepitone 2012).

There is also the issue of selective disclosure. Some shareholders claim that Facebook executives revealed the company’s financial position to some banks before the IPO. This was the basis of lawsuits. They claim that the company did not disclose problems with its mobile revenues.

Facebook admits that it had “follow-up conversations” with analysts from investment banks that were underwriting the IPO. The plaintiffs claimed that the banks’ investments analysts revealed their opinions about the future of the IPO with some intuitional investors (Caseolus 2012; Koba 2012).

There are conflicting reports about demand. How can Facebook’s IPO be oversubscribed and still suffer from weaker demand?

According Bloomberg, Facebook IPO was “generating lower-than-expected demand from shareholders”. On the other hand, Reuters claimed that Facebook IPO demands outpaced numbers of offered shares.

No investor can ascertain the claims of these reports. Some argued that such claims could have emanated from competing interests such investments banks to enable them manipulate the share prices. This is a caveat of rational expectation theory i.e. not everyone in a “financial market must be well informed about a security or have rational expectations for the efficient market condition to hold” (Mishkin 147). Thus, Facebook IPO did not operate in an efficient market.

How will Facebook change as a public company?

Like any other public company, Facebook will focus on creating values for its shareholders by generating more revenue than ever before. Shareholders will demand steady and ever-increasing profits. Facebook will also spend in acquisitions and takeovers of other companies especially those in a photo-sharing business. The company shall engage in innovation than before to increase its customer base and retention. Both the public and the government shall scrutinize operation of the company for compliance.

Is that where the “Instagram” acquisition comes in? How does that affect the IPO?

Facebook looks at Instagram as a platform to solve its mobile revenue issues. Mobile industry will be the next source of revenue for Facebook. Instagram will offer what Facebook lacks (advanced photo sharing platform). The price of $1 billion shows that Facebook has a niche for mobile revenue in its plans.

There are also issues with the acquisition of Instagram leading to its probe. The probe may force most investors not to purchase Facebook shares as they weigh risks that come with investment in Facebook shares. On the other hand, some investors may consider acquisition of Instagram as a positive move for Facebook so that it can generate revenue from the mobile industry.

Works Cited

Caseolus, Stephen. Facebook IPO Investors: Muppets Or Mavericks? 2012. Web.

Koba, Mark. Facebook’s IPO: What We Know Now. 2012. Web.

Mishkin, Frederic S. A Rational Expectations Approach to Macroeconomics: Testing Policy Ineffectiveness and Efficient-Markets Models. Chicago: University of Chicago Press, 1983. Print.

Pepitone, Julianne. Facebook: IPO debacle was Nasdaq’s fault. 2012. Web.

Facebook was founded in 2004 by Mark Zuckerberger. It was initially meant for students of Harvard University. Over the years, it grew to include all universities in Boston and presently it has become global (Phillips 3). There are no charges for registration on the site.

Facebook generates its income from advertising (Phillips 4). It is the biggest site of its kind that focuses on education. Facebook’s management structure has Mark Zuckerberg as Chairman and principal executive officer.

The company has operations in many countries around the globe. There are staff members that autonomously manage operations in these countries. The staff may be based in any part of the world because Facebook is Internet based. These people are responsible for daily decisions regarding Facebook operations in the host country.

Policy guidelines are laid out by the principal executive officer, and board of directors has to be considered for every decision. This method of management is quite effective. It allows individuals with knowledge on certain aspects of an economy to guide the business accordingly for achievement of objectives. One of Facebook’s objectives as a business is to connect all people who were part of a school, college or University.

A key aspect in the success of any media platform in a country is knowledge of the spoken indigenous language (Kreitner 210). A country like Vietnam has its indigenous language as the official language. This means operation in that country has to be in Vietnamese, and that is what Facebook has done in Vietnam.

Vietnam’s economy is growing at a very fast rate. This economic growth and development comes with increased use of certain services. One of these services is the Internet. Many people in developed and emerging economies access information and disperse news through social media.

The economy in South East Asia has not been left behind. There is a rampant use of social media use in Vietnam, and Facebook has the majority of users. Vietnam has become the leader in relation to Facebook users in the region. Users of Facebook in Vietnam are very aggressive in sharing information on political injustice. At the moment, 71.4% of all the people who use the Internet in Vietnam are registered (Thang 20).

There are about 32 million Internet users in this country going by the latest records. Facebook has around twenty two million users in Vietnam. These are many people by any standards. The rate at which these users increase is also fast. In 2012, there existed only 8.5 million registered users in Vietnam (Thang 20). Fourteen million new users joined Facebook in Vietnam within that time.

Compare this with Six million users of Facebook who dropped its use in America in a period of one month. No other country in the world has this record of Facebook growth. Examining the two nations in terms of Facebook’s growth, they are the exact opposite when parameters like registrations and usage are considered. Such rates are encouraging to those keen on marketing their businesses in the Vietnamese economy.

There is another good side to a population that is aggressive on Facebook. It is the ability to share opinions on issues. Facebook has empowered the people of Vietnam to share their opinion using Facebook. They are no longer afraid to air their opinion through social media (Do 2).

The environment in Vietnam is not very conducive for the press. The Vietnamese administration uses a number of tactics to suppress members of the third estate. The targeted are people who raise questions about the conduct of government, and activists who inquire about state accountability on matters related to public finance. These methods of suppression are both physical and legal in their manner of orchestration.

The legal means is misuse of permissible instruments meant for ensuring justice. Intimidation from the state has left very few options for dissenting voices. The only way to give one’s opinion on political issues without becoming a target is through the Internet. This is mostly done through social media and blogs (Freedom House 10).

Three well known bloggers are under prosecution on charges made up by the government to silence their opinion. They have a good chance of being sentenced to two decades in prison. The charges are dubious and branded as influencing the Vietnamese population through propaganda against the government.

The bloggers stirred up the wrath of authorities by questioning the unlawful acquisition of land by the state, and irregularly granting China territorial concessions (Borders (RWB) 4). The International Federation for human rights (FIDH) had concerns with the way the Vietnamese authorities were unpredictable and lacked transparency on the topics that the bloggers were barred from covering.

According to FIDH, it was a way of intimidating the bloggers (Gaydazhieva 6). There has been an increase in the surveillance of bloggers in Vietnam. Ten years ago, bloggers were not under strict government surveillance. The government has realised that blogs are a “safe haven” for critics of its policies. It views these platforms as dangerous and capable of igniting a revolution (Thang 26).

There is a unit under the ministry of Public Security that monitors Internet users who visit sites that cover politically sensitive issues. The government also perceives websites like Facebook as threats in dispersing information. It is in this regard that it has created its own social network platform. It probably plans to utilise this platform to fortify its Internet monitoring programs for the citizens (Opennet 5).

Things are worse at the moment with the state’s enforcement of a Decree called 72. This was done in 1^st of September 2013. This legislation is not very clear on issues concerning the media, and touches on certain aspects of bloggers and users of popular social media such as Facebook (J. Phillips 2).

Under the legislation, there should be no discussions about political issues or any other information that is not personal in relation to the definition of the authorities in any form of media. It would be criminal to engage in the mentioned exchanges. The state claims that its aim is to protect citizens from becoming corrupt because of the influence of information streaming from other nations (Shubber 3).

Most people registered on Facebook in Vietnam could not access it for a while because of government restrictions. There is some amount of truth in this belief because Vietnamese authorities believe Facebook has a hand in the social unrest that plagues the country. The conflict is about the high cost of living in a country whose economy used to be stable.

Inflation is now over 10%, and the price of rice has considerably increased. The state believes that demonstrations witnessed recently are coordinated through this social media platform. The people of Vietnam are aware of other means to go around government restrictions on access of Facebook. Most of them can access their Facebook accounts through a trick from Google called Domain Name System (DNS).

Previously, this go-around did not work. It was only possible to gain access through other advanced tools for bypassing the security checks such as HotpotShield, Tor and a Virtual Private Network (VPN). This troubled access has been on for about two years (Do 1).

The method of blockage implemented by Vietnamese authorities does not guarantee that users are denied access compared to what happens in China. China blocks use of such sites from the Internet Service Providers (ISP). Using Internet service providers is more effective than Vietnam’s method (Clark 5).

Facebook is the only means Vietnamese can use to share opinions on political matters. Close monitoring and stringent rules leave no other option. People in this country are scared of arrests by the police that results in long sentences or death in police stations (Great Britain Foreign and Commonwealth Office 166).

The impact of Facebook in Vietnam cannot be underestimated. This was witnessed on October 4^th 2013 with the death of independence hero Vo Nguyen Giap. Many Facebook users in Vietnam put his face in their profiles. Use of pictures without any words was a coded message that is political in nature. It is difficult to prosecute a person on the basis of a morally upright picture that has been posted on his profile.

There was something similar when China and Vietnam were not in agreement over territorial ownership of some islands. Vietnamese posted pictures showing a Chinese naval officer guarding what was marked as Vietnam territory. Coded message was shared before the restriction on Facebook was imposed in Vietnam.

It resulted in demonstrations against China that many Vietnamese believed was violating their country’s sovereignty. Obviously, many of them were not happy about the way their country was run. Citizens of Vietnam believe that there is no capable leader in their country.

The only leader that the citizens saw was the late Giap because he liberated them from the colonialists. They find themselves colonised by a waning economy and corrupt leaders (‘’How a Facebook profile has become a political tool in Vietnam’’ 2).

It is obvious that the state has noticed this trend. Another Facebook blockage would likely expose the leadership at this moment as undemocratic and against any reforms. This means that social media users have a chance to continue with their coded messages. In a country where media freedom is controlled by a regime keen on taming real democracy, this is the citizens’ only platform to express discontent.

Vietnamese government has a number of times tried to control Facebook in the same way it does other formal media and blogs. This has not been easy because the Facebook servers used by Vietnam are not within its borders. It has on many occasions requested that Facebook maintains an office in the country. Facebook is reluctant because it wants to protect its revenue generated by users registered in the country.

This gives Vietnamese another opportunity to continue sharing coded messages that are political. In Vietnam, the government controls the media directly or indirectly. Editors and many journalists employed in media houses are under a strong influence of the government. In some cases, the Vietnamese government or a high-ranking state official is the majority shareholder of media companies.

In addition, the government keeps media chiefs in check by holding regular meetings with them on the content they put out to the public. Foreign journalists are controlled by being given short government work permits. Foreign journalists who do not report favourably about the government will most likely have their work permits revoked (Nguyen 3).

The media that lean on only one side of a political divide cannot be trusted to drive change that citizens of Vietnam yearn. In Facebook, users have the option of engaging one another even through the use of coded messages unlike other media controlled by the state. The Internet and Facebook have the ability to bring political change in a society. The Arab spring is a good example of how this feat is achievable.

It can be concluded that it brings about liberation to the common man, whether real or imagined (Storck 4). Facebook as an Internet tool is useful in convincing people about political opinions. This should not be overlooked by any person in power in today’s age.

Facebook could become the genesis of involving people in the governance of their country. It can also be a useful way of communication between the government and its citizens (Bunyavejchewin 69). It can be used to propagate harmony in the society. Governments should harness this characteristic because it is a powerful media platform.

The legislation proposed by the government of Vietnam cannot be implemented. Even if it is implemented, the costs involved will be so much for the government. Vietnamese administration is trying desperately to keep people from sharing opinions on how their country is governed.

This is not the right approach in a world that is connected and full of tech savvy individuals. Vietnamese government should tackle issues of governance raised by its citizens through the same means. There is no use creating replica services that are expensive to run. A well-informed government can counter embarrassing demonstrations that it desperately tries to contain by using media professionals.

The country stands to benefit from a government that allows media to operate in such a way through increased foreign investment in the sector. In this case, we see how the structure of this social network giant in management helps it in navigating an environment that is not very friendly. Its decision to host servers outside Vietnam has made it the only option for expression of political discontent in an ingenious and immune way.

Facebook enables the leaders in Vietnam to realise that they cannot be fully in control of the way people express themselves. It is a simple case that depicts the impact of social media on governance and leadership of nations. Facebook and other social media have been use to bring down governments- case in point the Arab spring.

The world is changing in term of the way information is relayed. Governments will soon realise that silencing media platforms is not easy. People can voice their concerns through social media platforms like Facebook when the government gags the main stream media.

Works Cited

Bunyavejchewin, Poowin. “Internet Politics: Internet as a Political Tool in Thailand.” Canadian Social Sciences. Vol 6, No. 3, 2010, pp. 66-72. Academia.edu. Web.

Clark, Helen. Facebook in Vietnam: Why the block doesn’t work. 2010. Web.

Do, Anh-Minh. How a Facebook profile picture has become a political tool in Vietnam. 2013. Web.

Do, Anh-Minh. Vietnam’s Facebook penetration hits over 70%, adding 14 million users in one year. 2013. Web.

Freedom House. Vietnam. 2013. Web.

Gaydazhieva, Stanislava. Media: Activists criticise Internet freedom in Vietnam – New Europe. 2013. Web.

Great Britain: Foreign and Commonwealth Office. Annual report on human rights 2009. 2010. London: The Stationary Office. Print.

Kreitner, Robert. Management. 2008. New York: Cengage Learning, Print.

Nguyen, Giang. Vietnam. 2010. Web.

Opennet: Vietnam. 2012. Web.

Phillips, Jak. ‘The Civil Disobedience of the 21st Century’: How Vietnamese Bloggers Evade Controls. 2013. Web.

Phillips, Sarah. A brief history of Facebook. 2007. Web.

Reporters Without Borders (RWB). Special report: Crackdown on the media and dissent in Vietnam. 2013. Web. .

Shubber, Kadhim. Vietnam to ban discussion of news on social media sites. 2013. Web.

Storck, Madeline 2011, The Role of Social Media in Political Mobilisation: a casestudy of the January 2011 Egyptian Uprising. PDF file.

Thang, Nguyen Lang. Vietnam’s press freedom shrinks despite open economy. 2012. Web.