Stakeholder Analysis Report: Facebook

Executive summary-

Facebook is a global technology company that is a well-known provider of online social media platforms. The company is US based and Mark Zuckerberg is the key management personnel. Facebook has been a huge success in online social media and is immensely popular with billions of users globally however in the recent past the company has been facing certain challenges especially with regards to improper use of user data etc. The report aims to study the stakeholders of Facebook and present an analysis on the key stakeholders, the behavior pattern and what needs to be done by Facebook to manage its key stakeholders in a better way.

Introduction to Facebook

Facebook is a US-based company that was founded in the year 2004. The company is into online social media and networking and has billions of users all across the globe today. Mark Zuckerberg, Eduardo Saverin, Dustin Moskovitz and Chris Hughes were the promoters of this company which was started by them when they were still students at the Harvard University. Today the company is a big name in technology and comes in the top four technology company along with Apple, Amazon and Google.

The company’s mission is - “to give people the power to build community and bring the world closer together”.

The vision of Facebook is –“People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them” (Smithson 2019).

The vision and mission statement of Facebook clearly states that it provide a platform to people to stay connected and share useful information. The company was started as a social media platform but today it has grown huge and hence there have been number of changes and developments to make the company more beneficial and user-friendly. Also a number of challenges have been faced by the management in the recent past.

Challenges being Faced by Facebook -

Negative publicity- Recently it was found that Facebook demographic data was used in a Russian campaign in an unfair way (Studart 2018). This incident has given a lot of bad image to the company and even called for a boycott of Facebook by The National Association for the Advancement of Colored People (NAACP).

Negative publicity of Facebook is a cause of concern for the company as it has caused users to lose trust in the company. Even employees of the company have been hit adversely by reports on negative publicity. There have been increasing demand to make the company more transparent especially strong governance is needed on activities of its key management Mark Zuckerberg and COO Sheryl Sandberg (Gaus 2018).

Misuses of public data – There have been a number of incidents of misuse of public data on Facebook. Facebook has been facing issues on falling credibility as people have started losing trust over the use of this social media platform.

Advertisements on Facebook media- Political advertising on Facebook has been criticized in the recent times and needs to be more transparent (Mercer and Macaulay 2018). The advertisements posted on Facebook need to be more transparent in order to make the company safe from legal issues and also to reduce the number of cases of negative publicity.

Ever-changing Technology- Every day new changes are noted in the field of technology, more advanced techniques are required by Facebook to keep their data safe and stay ahead from the competitors. The nature of technology is such that it keeps on changing and hence social platforms like Facebook need to invest huge amount to keep them updated.

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Technology addiction- It has been found that Facebook works upon engaging its users by means of attracting the users and keeping them addicted however this model is not good for the users in the long run as it causes social media addiction and should not be promoted. Some technology giants like Apple have joined hands with US and other developed nations governments to reduce the dependency of people on social media (Gaus 2018). Problem on tech addiction and steps being taken to reduce this is another pain area as Facebook management has a lot to think in this area. As a trend in industry now the focus is to bring down technology addiction and Facebook must partner in this.

The strategic direction of Facebook-

Currently the company has faced negative publicity due to misuse of its data hence there is need for the management to critically analyze this area and strengthen the safety of data available on its platform. The advertisers are its major income generators and the recent cases of unfair use of Facebook data has led to decline in trust of this group of stakeholders for Facebook. It is essential that Facebook’s management consider news of its negative publicity very seriously and implement adequate safeguards to protect its data. Also there is need for Facebook to look on areas of corporate social responsibility and reduce the growing rate of human dependence in such platforms which is a challenging task for the management.

Stakeholder View-

Stakeholders are the people who owns stake in a company. Every company has a different set of stakeholders depending on the size and nature of the company. Small companies have the stakeholders like – employees, promoters, suppliers etc. while big companies may have more complex and elaborate list of stakeholders. Stakeholder management is an important aspect in managing any company because it is essential that the stakeholders are updated and happy with the progress of the company. Stakeholder management primarily aims to manage all the key stakeholders of a company this may involve steps like identifying the key stakeholders, studying the behavior of the key stakeholders, laying down company goals and keeping the stakeholders aligned with these goals etc. (Kenny 2012,pp.40-46)

Stakeholder analysis is an extremely important aspect in contributing towards the success of a company. All types of companies need to study the nature and attitude if its stakeholders keep them informed and satisfied by keeping them well aligned and keeping the views of the key stakeholders in mind when making crucial decisions for the company (Thor 2016, pp.9-17).

Stakeholder model Facebook-

Below figure represents the stakeholders identified for Facebook-

Key stakeholders of Facebook-

Users- The users of Facebook social media are the most important stakeholders of the company since they are the ones who actually use the services and make the company popular and successful. It can be said that without popularity amongst the user group Facebook could have never been such a big name in technology hence it is of utmost importance that the interests of the users are given topmost priority in stakeholder management by the company. This group has the ultimate strength to initiate change and force the management to take big steps and important decisions.

The actual behavior of this group is that there is huge popularity of Facebook and this group is promoting the company and its business. However the recent incidents of data piracy on Facebook have made the users more careful in posting information on this media. The users may turn towards other social media platforms in the future and also there may be chance that the popularity of social media may start coming down due to trends in reducing the excessive dependency of social media. The cooperative potential of the user group is that this group supports Facebook and its business currently.

Advertisers- Another important group of stakeholders for the company are the advertisers who fuel money by giving advertisements in the Facebook media. The major source of income for Facebook is through advertisements and it becomes essential to manage the advertisers effectively. The advertisers should be given good services. However the recent incidents of unfair use of data on Facebook and its negative publicity can have an adverse impact on this stakeholder group and the management must take required steps in the interests of its advertisers. There is need for better governance to make things transparent and protect the interests of this group. This stakeholder group is non-supportive as it can easily choose other competitors of Facebook for business and this is a big threat to the company. The advertisers pose high risk for the company as the level of participation of this group is least. The general behavior of this group is non-supportive and needs to be handled with a cautious approach (Freeman 1984, pp.11-75).

Shareholders- The current shareholders of the company are another important stakeholder group as they have invested in the company. This group is generally non-participative and less risky for the company (Freeman 1984, pp.11-75). The behavior of this group is less participative in general. Facebook can adopt an approach of providing regular updates and monitoring of this group. This approach can help in better management of this type of stakeholders.

Employees – Employees are an important stakeholder group for Facebook as “satisfied employees” are the key to success for any company including Facebook. Employees as stakeholders are supportive and pose least threat for the company. (Savage et al. 2011, pp.2-6).The management gets support from this group and it is considered the ideal stakeholder group. Facebook should build a participative environment with its employees this can be very useful in managing the employees. Involving employees in the management of the company can be a useful tool to cope with this group.

Recommendation-

Managing stakeholders of any company can help the company be successful in the long run. It is essential to categorize the various stakeholders based upon the behavior and then take an informed approach to manage the key stakeholders (Freeman 1984, pp.11-75). Facebook’s major stakeholders are its users, shareholders, employees and its advertisers. All of these groups have a different level of participation and pose a varied level of risks for the company if not handled carefully. Companies like Facebook need to take participative, monitoring and collaborative types of approaches to manage their key stakeholders. It is suggested that the company’s like Facebook should carefully study the behavior of the stakeholders and device-specific strategies to manage each group.

References:

1. Freeman, R. E. 1984, Strategic management: A stakeholder approach, Boston, MA: Pitman, pp.11-75.
2. Gaus, A 2018, 4 Key Challenges Facing Facebook in 2019, The Street. Retrieved from
3. Kenny,G 2012,'From the stakeholder viewpoint: designing measurable objectives', Journal of Business Strategy, Vol. 33 Issue: 6, pp. 40-46.
4. Mercer, C and Macaulay, T 2018, Facebook news and announcements, Techworld. Retrieved from
5. Savage et al. 2011, Stakeholder Collaboration: Implications for Stakeholder Theory and Practice, Springer Publication, Journal of Business Ethics, Vol. 65 No.3, pp.2-6.
6. Smithson, N 2019, Facebook Inc.’s Mission Statement & Vision Statement (An Analysis), Business, Management, Panmore Institute. Retrieved from
7. Studart, M 2018, NAACP Calls for Weeklong Boycott of Facebook and Instagram, The Street. Retrieved from
8. Thor, D 2016, Understanding Stakeholders: Professional perspectives on working with stakeholders, 1st Edition, Bookboon.com, pp.9-17.