Facebood

9/14/2010

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Rafael Rodriguez | Facebook: Case Study MT460-01 |

Case Summary:

The case analyzes the situation that Facebook is currently facing. Over the last 5 years Facebook has seen an immense rise in its user base and has revolutionized Social Networking. Facebook has been valued at $4.9 Billion and has rejected bids from companies like Yahoo and Google for takeover. With this rise in its user base there are questions about Facebook’s ability to maintain such a meteoric rise financially. Microsoft has made a major investment in Facebook and it also has some plans of launching an IPO in the near future. Facebook now faces competition from many different networks. There is a rise of very niche social networks like college & school online networks which has seen a rise in its user base. Also LinkedIn is a major competitor of Facebook and professionals have started preferring to use LinkedIn over Facebook. Twitter has also been revolutionizing online social networking and real time sharing (this fact is not mentioned in the case but twitter has caused a stir in the social networking world). Currently the company’s CEO Mark Zuckerberg is being sued by some of his fellow Harvard classmates for allegedly stealing their idea.

Key problems faced by Facebook:

1) Facebook has deserted its core audience: Facebook started as a network only for university students and slowly it spread across as a social network for anyone. The demand for college specific networks still remains and websites like CollegeOTR.com, CollegeWikis.com, etc. are capturing that audience which still needs a very specific college social network to help them with their college needs. Advertisers also prefer such niche networks as marketing of products becomes easier for them. Hence Facebook is losing both its once upon a time core audience and in some way advertisers.

2) An older user base is growing on Facebook: What once was a place for young people (age 15-25) to socialize...