PESTEL ANALISIS

Political Factor
In essence, many governments and users have been expressing privacy issues, which may prevent the
company from using the information of users in delivering or allocating various advertisements. Further,
the class privacy lawsuit levered against the company has the potential of causing more financial damages
on the company. In addition, face book capability of collecting data from the users could be greatly
hampered and consequently, its advertising revenue. These concerns have been expressed in many other
countries such as German which has issued warning on Facebook investors that the operations of this
social networking entity breach the privacy rules of Europe.
In addition to the legal aspects, Facebooks users continue to regard the platform as a private space which
could limit the companys prospects. In a survey conducted, for instance, more than 50% of respondents
said they felt not safe at all using Facebook to make purchases. Excessive advertising or privacy fears
could lead to a mass exodus of users, which threatens the growth prospects.
But on the other hand Facebook is one of the modern communication means which were used by the
politicians to adopt their ideas, influence the individuals opinions, include them to adopt their ideas, and
vote for them in elections. They target the audience by the advertising messages and this is why workers
in the political marketing focus on Facebook

1. US Presidential Election
2. November 13 Attacks in Paris
3. Syrian Civil War & Refugee Crisis
4. Nepal Earthquakes
5. Greek Debt Crisis

Economic Factor
Over the years, Facebook has continued to record a strong rate of growth in comparison to its
competitors. During 2011, the entities revenue grew by 88% in comparison to the previous years. This
growth was an indication of the companys inherence capability of driving growth and making Facebook
undisputed leader in the world of social media advertising. Moreover, the company enjoys a low expense
base which has facilitated higher margin returns in comparison to its competitors. During 2015, the profit
margin of Facebook Company were 26.72, there is no doubt that this company is thriving well financially.
Facebook adds an estimated 15.3 billion dollars value to the European economy and helps to support
232,000 jobs across Europe. Increased businesses participation through advertising, customer referrals
and enhanced brand value is worth around $33.2bn. The Facebook App Economy is worth 1.9bn and
supports around 29,000 jobs.

Social Environment
Despite its success in the online networking environment, Facebook is operating under a tight competitive
environment. It helps small business to market themselves and grow and connect with their customers and
provide services in better ways .One of the largest competitors currently is Twitter which has attracted
more than 305 million users. However, this number is only a quarter of what Face Book harbors.
Alongside LinkedIn (NYSE: LNKD), twitter is continuously gaining users and this is one aspect which
Facebook must be wary of.

Technological
Among the most technological aspects of facing Facebook is that many Facebook users would wish that
the website reflects their personalities. However, this website is customizing according to the
requirements of their customers. On the other hand, Google+ harbors a more personalized network for its
users.

Legal
Facebook is currently passing through some legal aspects which it needs to leverage. Among these legal
aspects is the identity theft that has become so prevalent in the present day perspective. These stealing of
more identities have led to constant criticisms directed on Facebook. Consequently, the criticism has had
a negative impact on the brand for the inability to protect private information of its users.

Porters 5 forces Model

Threat of New Entrants
The world of smartphone applications and platforms is fairly inexpensive to enter, so the threat of new
entrants is definitely present. All you need is an excellent programmer and a secure server. The trick is in
getting enough brand recognition to attract users, inspiring enough confidence that users feel safe to share
their personal information on the platform, and creating enough economies of scale and economies of
scope to compete effectively with a company as large as Facebook.
So far, Facebook has been king, but all it takes is one new entrant that beats the odds. More importantly, it
would not mean that all users need to abandon Facebook. In fact, it would just take a single demographic,
such as teenagers. That is why Facebooks share price takes a dip almost every time a new report comes
out saying that teens are not active on the network. If an app comes out that really trends with teenagers
that could be all it takes to really hit Facebook hard. The risk here is moderately low for now.

Threat of Substitutes
Facebook has an enormous user base, but social networking as a whole is very vulnerable to new
technologies and shifting trends. If social networking becomes unfashionable, Facebook will lose many of
those current participants.

Similarly, much of Facebooks competition comes from niche sites. It could happen that instead of users
switching to a more direct competitor, they simply choose a substitute. New parents may opt to share
photos about their baby on a parenting site instead of Facebook or cooking enthusiasts may want to
interface more on recipe websites than Facebook.
Besides, as companies such as Apple could develop services that allow families and groups to share
photos and messages easily (and securely) among themselves, some close-knit groups may be less likely
to use Facebook and choose this type of inter-family messaging instead.

Customer bargaining power

Moreover, many people have and use accounts on several different social media platforms. The more a
user engages outside the Facebook family, the less time he spends on Facebook or its other platforms.
This gives Facebooks customers quite a fair amount of bargaining power. After all, Facebook is free to
use, so it does not cost anything for a user to switch networks and social media platforms are not
exclusive.
Even if Facebook can keep its users checking in at least once in a while, the company needs them to be
actively using the site if it is to make any money on ad space or the market research that can come from
all the data Facebook collects. In other words, Facebook has to work extra hard to keep users actively
using its services. That can mean limiting the number of ads, spending money on research and
development (R&D) to create more robust features and working hard to create integrations with Facebook
and other sites or services.

Supplier bargaining power

Facebook's suppliers also have bargaining power. Suppliers in this sense include everyone from the
people who build and maintain their servers to the software that runs Facebook's different social media
platforms.
Obviously, Facebook is large enough and powerful enough that supplier bargaining power is less of an
issue than it may be for a smaller company, but that does not mean the issue is completely negated.
Suppliers in this sense can also be complements that allow Facebook to operate as it does, such as the
Internet.

For instance, if Internet usage becomes capped or very expensive after reaching a set limit, users could be
forced to reduce the time they spend on social media, even if Facebook does everything right. The cost
and availability of fast Internet speeds could impact the amount of time Facebook users spend on the site.
Another factor could be the sites and services that offer Facebook login for identification purposes. This
helps provide Facebook with new information every time a user logs into an outside site this way, but if
that technology were to go out of favor or be replaced by a more secure identifier, such as a thumbprint
reader, Facebook could lose out on that integration.

Rivalry among current competitors

The Porter five forces model begins by looking at the current competition. Facebook is in competition
with a variety of social networks, from full-featured ones such as Google Plus or Tumbler to more niche
sites such as Twitter and LinkedIn.
Facebook has several different platforms, which helps it compete more directly with those competitors,
but they do not appeal to all demographics equally. For instance, many younger users prefer Facebook's
WhatsApp or its rival Snap chat, while professional users may look more towards LinkedIn, Twitter or
Facebook Pages. In this sense, Facebook faces a moderately high risk.
References:
https://ycharts.com/companies/FB/profit_margin
http://newsroom.fb.com/Productshttp://www.pcworld.com/article/2018704/microsoft-opens-ownsocial-network
http://www.emarketer.com/newsroom/index.php/emarketer-reduces-estimates-facebook

http://hubpages.com/technology/A-focus-on-FaceBook-Using-Pestle-and-Porters-Five-Forces
http://www.scoop.it/t/buss-4-research-alex-rees/p/3999787957/2013/04/11/pest-analysis-of-facebookmarketing-mix
https://www.google.com.pk/imgres?imgurl=http://www.statista.com/graphic/1/264810/number-ofmonthly-active-facebook-users