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Face Book

By wownick Aug 13, 2013 1416 Words
When Facebook was first launched to the public, it was only available to some universities. Mark Zuckerberg, the CEO had planned to make a social network for certain universities to connect among each other. This was soon overlooked due to the rising popularity of the social network. Then he was driven to make the website available for anyone who wished to sign up. This brought a demand for him to look to others for help to maintain it up and running. Demand and supply both work together, the more demand for a product or the more jobs it will produce. The main factor a technological improvement can bring about an increase in the marginal production of labor, that means more workers are needed, in this case more developers. Facebook measures above all of its competitions, for example Myspace. The social network allows users to share information with others. At the same time they take privacy very seriously. Rules and regulations have been made to protect their users from hacker. Within the years the website has expanded and new rules are required to be brought up. The website also allows advertising to be done through it. This is one of the many ways it makes profit from users. Facebook is owned by many individuals, from employees to celebrities and to big name companies who profit from its advertising ability. Maintenance of such big phenomenon is costly and crucial, there for developers and web designers are in demand. Facebook is a very large company that needs to be on top of the changing market. The reason that it is at the top of its market is because of many reasons. For one, Facebook handles new, old and upcoming competitors in their market either by buying them out or at least making sure they stay ahead of the competition. They keep ahead of the competition by constantly making changes to their networking site and making sure they come up with new ideas as much as possible. Facebook was recently introduced to the stock market as a publicly traded company. In this case they have no choice but to keep up with current and expected government policies and regulations. Facebook is too large of a company to go unnoticed by the government. Global competition is very relative considering Facebook is an online networking site. The site is already recognized by the majority of the world as the number one networking site. The main competition comes from other large companies such as Google with their own version of a networking site called Google+. Fortunately for Facebook, they have such a foothold on the world’s population that they don’t necessarily need to worry about competition. Facebook’s labor resides in developers and a huge IT department which makes sure the servers are always up and running. As Facebook continues to grow it creates more jobs for the labor demand. With horizontal merging, Facebook has merged with Instagram which also helped create a larger market for jobs through the company. All these jobs help create a service for the general populous. Facebook supplies a service and as long as they keep it up and running, the supply will always be there. Facebook’s response to global relations was initially with making the subsidiaries such as Facebook Canada and Facebook France to name a couple. If Facebook continues to expand to other countries, their global relations will increase dramatically. According to "Popular Good Or Public Good? The Debate To Nationalize Facebook" (2013), “Thierer explains that heavy-handed regulation of industries participating in the digital economy is packaged as either government-led correction of economic market failure (commonly referred to as regulation of a ‘natural monopoly’), or government-led desire to realize a social value (universal provision of a service). In either case, the rationale for increased regulation or public ownership of a social media platform hinges on classifying the entity as a ‘natural monopoly’ and a ‘public good.’” The beginnings of creating a new social media site, typically has a low set up cost. Consumers can agree to the fact that there are many resources available and outlets of social media other than just Facebook. Facebook is a tool and not considered as a public good. If such related social media networking site go down, there are other resources consumers can access, such as cell phones, e-mail, skype, or even an in person conversation. Network externalities is a value on products or services that increase when the increase of consumers rise. The more people join Facebook the more useful it becomes. It is known that the more users a specific product has the greater preference one would be attracted to. Social media sites like Facebook already have such a vast amount of users that they have a huge advantage on dominating their market type it is or will be extremely difficult to create a competitor that is successful. There are many ways to enter, progress, and capitalize using the World Wide Web services. The web has expanded with the many devices consumers have been using. In the past three years alone consumers started depending on their mobile service to connect them. They’ve drifted away from occupying desktops and pc’s and need every piece of information in the palm of their hands. Those ambitions in most consumers might have never been there, if it wasn’t for people like Steve Jobs, and Mark Zuckerberg who brought their visions to life and created these demands. Markets evolve and expand with new technologies every day. To enter the online market one must consider things like the exact device consumers will be using for their services or business. For instance, is it an app, software, a social networking platform? Are your intentions to make the world more productive, is your focus on making money, entertaining the consumer. So to narrow down these choices we’ll elaborate and break down some of these ideas using the social networking service Facebook. Facebook joined the market in its start-up stage in 2004. It grew to be one of the world’s largest used tools next to typhoons such as Google and Yahoo. It started with a very small idea of entertaining local students at Harvard. It grew momentum with a large number of users; the founders recognized its potential and expanded their services to a larger demographic. Immediately capitalists and investors caught wind of the rapidly growing company and began to buy shares. Peter Thiel was amongst the first outside investor buying 10.2% of the company with an initial investment of $500,000. It grew larger picking up investments from many venture capitalist firms. The list to include: Bono’s Hedge Fund Firm, Elevation Partners; Yuir Milner, Digital Skt Technology; Microsoft; and many others. The companies billion dollar value gained reputation when Viacom (MTV) offered 1.5 Billion to buy out Facebook, but the company backed out because they felt it did not earn enough revenue. The people running Facebook continued to grow it, generating new ideas to continue earning revenues from their users. Using analytic systems, advertisements, and a large database of information, they began generating larger revenues. The real money started pouring in when Facebook opened its API. The API is a method for other technology and software firms to integrate their systems together, making the experience much greater. When game companies like Zynga began to integrate their games, partnerships were created and Facebook received a percentage of the profits. The facebook system allowed users to invite their friends and contacts to the game; it also updated their position in the game, which would land on various timelines advertising the game. Every time a transaction was made on behalf of the Facebook platform, they earned a percentage. As Facebook continued earning larger revenues and entered the stock exchange. The company began to buy out growing competitor. The largest merger is with Instagram for a 1 Billion dollar denomination, recognized as a Horizontal merger. They have merged with at least 10 other companies as well, creating not only horizontal mergers but verticals as well. They have bought companies out that produce photo sharing and recognition software, expanding the Facebook platform and tools, along with many other technology companies. Facebook recognizes the market threat of competitors and the impact they can have on the platform, but rather then attempting to diminish their competitors they invest in them. It’s obvious they intend to stay in the industry as well as continue expanding into others.

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