Facebook Case Digital Management

Digital Business Management

Case Study 1 : Facebook Case

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Question 1: As an investor in a social network such as Facebook, which financial and customer-related metrics would you use to assess and benchmark the current business success and future growth potential of the company?

As an investor, I would focus on some general financial tools to analyse an enterprise as the margin, the creation of turnover, the profitability, its capacity for self-funding...

Then as Facebook’s revenue comes from ads on the website as you will see on the first picture. All those ads are targeting to the person who is using Facebook.

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As an investor my other financial metric would be CPM (Cost per thousand) & CPC (Cost per click). Indeed with CPM, an investor can know how much advisers pay Facebook to publish their 1000 of their ads. Then with the CPC, it is possible to know how much Facebook earn for each click on an ad.

As we can read in the case, Facebook will never sell members’ information to earn money.  

For customer-related metrics, I would check number of inscriptions per month,  it expansion at the international, number of posts, like and share. I’d check too,  Innovation of application, to catch new clients or create more customer loyalty.

Question 2:  Complete a situation analysis (SWOT Analysis) for Facebook focusing on an assessment of the main business risks which could damage the future growth potential of the social network. The professor is expecting an analysis based in the actual student’s experience with this social network.

Business risks for Facebook are the lack of revenue from advertising, problem of confidentiality, technical problem with weekly-updating application.

I think one of the main risks for Facebook is the fact that its main revenue comes from advertising.

Indeed, people try to avoid all ads from their internet connexion (installing Adblocks for exemple). Those softwares, limit the revenue earned from ads.

For example, I never click on ads on Facebook even if it is in relation with what I was looking for before.