Facebookmodel

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According to Slywotzky (1996),” the business model is ‘‘the totality of how a company selects its customers, defines and differentiates it offerings, defines the tasks it will perform itself and those it will outsource, configures its resources, goes to market, creates utility for customers and captures profits.’’ (1) Having a good business model is crucial for a company’s success, especially in the long term.

“Facebook is an online social networking service, whose name stems from the colloquial name for the book given to students at the start of the academic year by some university administrations in the United States to help students get to know each other”.[2] “It was founded in February 2004 by Mark Zuckerberg with his college roommates and fellow Harvard University students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes.[3]” After two years in 2006, Facebook becomes worldwide, and people from different parts of the world know about Facebook and start using it. Nowadays, Facebook, with 1.01 billion users world wild, and 584 million active users each day, has its unique and successful business model.

Let’s take a look at the different aspects of Facebook’s business model:

How Facebook selects its customers:

Facebook focuses on people over 13 years old with certain amount of social needs, mainly including high school students, college students and recent graduates. They are the majority users of Facebook. As a result, Facebook provides its product and service based on the need of this group.

How Facebook defines and differentiates its offerings:

Facebook is different from other social medias, for example My Space. Facebook allows people to communicate with their classmates or friends in a real-world environment where users are asked to use their real name, use their real pictures as profiles and communicate with the people they know directly or indirectly (friends’ friends). Through the searching engine, users can find...
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