The Business of Facebook

The tune lesson of any organization is rattling important in befriending a business be settle b byo or unsuccessful. They help guide the leaders in the company to pass around the goals and purpose of their organization. In late(a) news, the business model of thorn has been to a lower place a large amount of scrutiny.I entrust be analyzing the business model of key using the definition of business model from the standard which states A business model defines how an organization interacts with its environment to define a laughable dodge, attract the resources and fabricate the abilities required to execute the strategy, and create value for each stakeholders (Applegate, Austin & Souls, 2009). STRATEGY There are four key dimensions to strategy market situation, product positioning, business mesh topologying positioning, and boundary positioning.These four dimensions combined help an organization develop a strategy which by definition of the textbook is the series of choi ces that determine the opportunities you pursue and the market potential of those opportunities (Applegate, Austin & Souls, 2009). In come out to analyze the business strategy of an organization you must set-back determine what kind f business it is (Applegate, Austin & Souls, 2009). In E. B.Bodys (2012) phrase What is Passbooks Business she states horse sense creates a place for bulk to hang out and upload photos or pithy notes on what they are doing right that second, and indeed it posts denote along the side of that status update high vogue. Backbone services 845 cardinal members all over the world, excluding China where Backbone has been blocked by the Chinese government. In December of 2011 Backbone averaged a total of 483 one million million mundane alive(p) users worldwide (Form S-l, 2012).For a company such as Backbone, merchandise position is very(prenominal) important. auguryet positioning determines the selection of customers that a business sinks to serv e (Applegate, Austin Souls, 2009). One of Passbooks ten main principles is One demesne which states The Backbone Service should transcend geographic and national boundaries and be visible(prenominal) to everyone in the world (backbone. Com, 2012). Passbooks customer meanspirited is two-sided. They flummox the 845 million individuals that pull in profiles on the site and then they have the companies that advertise.Considering the fact that Backbone already has 845 million users and there are only seven billion people on the earth, here is not much room for Backbone to mystify their consumer introduction. With China off significant growth in the user base of Backbone is very unlikely (Boyd, 2012). The another(prenominal) side to Passbooks customer base is the companies that purchase advertising on Backbone. Jonathan Blue (2012) states, Any business would be foolish not to consider Backbone as an ongoing market option. According to Blue, Passbooks advertising costs are incre dibly cheap.For a monthly fee advertisers can run ads and in return they receive a report on viewers impressions and click-through (Blue, 2012). In 2011 Backbone brought in $3. Billion in revenues from advertising alone. This accounts for eighty-five percent of their revenues. Backbone receives revenues from advertisers with umteen different objectives ranging from long-run brand awareness to stimulating an immediate purchase (Form S-l, 2012). The advertising on Backbone is based on the likes that users have on their accounts.Advertisers can decide what type of audience they think would be interested in their product, then Backbone displays adds on the sides of peoples news feeds based on their likes and preferences (Blue, 2012). Product positioning is the choice of products and services hat a company offers. It includes the features of these products and the price at which they will be offered. Backbone offers a variety of product including pages, profiles, ads and sponsored stor ies and platforms (backbone. Com, 2012). contrasting sides of their customer base use different products that Backbone has to offer.Although the bulk of Passbooks revenues come from advertising, they also receive income through other platforms where users purchase virtual and digital goods (Form S-l, 2012). The majority of the payments that Backbone receives from third-party applications come from Zingy, a social network swordplay company (Boyd, 012). Business networking is the role that an organization plays and the activities it performs within an extended network of suppliers, producers, distributors and partners. Over the years Backbone has partnered with many different companies in order to offer more(prenominal) to its users and make it become more enticing to use.Backbone has form partnership with many companies such as Microsoft, Cell Partners, Digital sky Technologies and more. Boundary positioning is when an organization determines the markets and products that they wi ll not pursue. Backbone has not specified any specific market that it has not decided to pursue. The founder, Mark Seersucker even traveled to China to speak with some of Chinas top applied science executives in hopes of them removing the ban that had been placed on the use of Backbone in China. In 2009 the enumerate of Backbone users in China plummeted from one million to 14,000 due to the ban.While user numbers in China have slightly risen, many users are still blocked from accessing the site (Chaos, 2010). CAPABILITIES Capabilities help a company implement their business strategy while paving the way for future growth. It also helps a business see what resources are undeniable in order o successfully execute their strategy (Applegate, Austin, Souls, 2009). In order to service its consumers, Backbone has created an intricate infrastructure, including custom-built servers, racks and UPS units.In an article by Rich Miller, the CEO of Backbone, Mark Seersucker is quoted saying, B eing able to design more efficient servers Is a big part of enabling us to build the features we add (2011). When Backbone has not released a definite number of servers that it runs off of, it is believed that by 2009 the company was running at least 60,000 servers in its data centers (Miller, 2010). We can conclude that since Backbone has began to design more efficient servers, that they have the resources and technology needed to support their user base.As the number of users increases, Backbone increases the number of servers and data centers so that their consumers can receive the best in class. The Backbone team is also comprised of very well educated people, who have the expertness needed in order to run and continue to improve the operations of Backbone. In my research of the company I did not run into anything that do me believe that the employees of Backbone were not fully qualified and competent in order to run the business. I also believe that the company has industria l-strength leadership and is comprised of people who are committed to making Backbone successful.Mark Seersucker is very involved in all aspects of the company. VALUE The majority of Passbooks stockholders are privileged stockholders. Mark Seersucker, the CEO and founder of Backbone, owns twenty-four percent of the shares of Backbone. Some of the other leading stockholders include Cell Partners, Digital Sky Technologies, Microsoft, and co-founder Dustin Muscovite as well as many more (Carlson, 2010). Backbone has made recent headlines when GM decided to withdraw TTS $10 million contract with Backbone for advertising (Junk, 2012). This raised a very important question for many investors.Will Backbone be able to attract and retain key customers? The majority of Passbooks revenue is generated through advertising and in their S-l that was filed in January of this year Backbone warns investors that there is a high degree of risk that is involved in investing in Backbone. In order for Ba ckbone to continue generating revenues, it will need to continue selling advertisement. While these revenues from advertising are purchased by business OTOH big and small, the success of Backbone selling advertising relies generally on the individuals that have profiles on Backbone.In their S-l Backbone states If we fail to retain exist users or add new users, or if our users decrease their level of betrothal with Backbone, our revenue , financial results and business maybe significantly harmed (2012). One of the biggest marketing factors that Backbone has in selling advertisers is that a company who purchases advertising on Backbone could potentially reach the more than 800 million monthly active users on Backbone. This is also the downfall of advertising on Backbone. If the number of users decreases or people become less active, then that is less people that the advertising is reaching.