Friday, September 23, 2011

Yes, Google Really Should Worry About Facebook

Remembering back to when only college students could join Facebook, I realize how much their strategy has changed over the years. Initially Facebook was a niche company who aimed to gain popularity through prestige and limiting the number of users allowed. Currently, Facebook is undergoing another strategy change and expanding their market segment of "social networking" to "connecting people to each other, things, ideas, and media." Facebook is now encroaching on Google's market by being a quasi search engine.

Looking at Porter's Five Forces, Facebook is in an extremely attractive industry. There is hardly any rivalry within the industry (as Facebook dominates 10% of all nationwide Internet activity), there are fewer and fewer substitute products, and there is limited to no buyer/supplier power. Facebook has been so innovative and cutting edge that no other company has been able to sneak into their market.

Facebook's once niche strategy has morphed into a broad differentiation strategy. After their F8 announcement, Facebook is planning on using all the data collected from users to predict what we will like and engage in. From target advertisements to grocery ingredients we prefer, Facebook will soon have a hand in just about everyone on the Internet.

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