Research Portfolio. Facebook Venture into Crypto-Currency

Facebook Venture into Crypto-Currency
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Facebook Venture into Crypto-Currency
Introduction
Social media platforms have gained tremendous momentum for the past two decades, providing people all over the world with sites to interact and exchange various ideas at reduced fees. While there are several social media platforms, Facebook Inc. has managed to outcompete its rivals such as Twitter Inc. and LinkedIn Corporations, in terms of the number of users and revenue. Hanson et al. (2016) suggest that a robust business strategy gives a company a competitive edge over its rivals. Facebook business strategy emphasizes the use of market penetration as the main tool to move the business to the next level. Besides, the company uses merger approach to expand its presence in different segments and platforms, which has further boosted its revenues. For instance, it has acquired various social media platforms such as WhatsApp, Instagram, and Oculus over the past few years. The company is also diversifying into other areas such as crypto-currency with the aim of providing financial services to its users all over the world. The current paper examines the external environment in which Facebook operates and its crypto-currency strategic plan.
Facebook External Environment
There are several external factors such as politics, economy, social, and legal affecting how Facebook operates its business. Political factors such as freedom of speech, political stability, and human rights, among others, have a huge influence on how Facebook operates in different countries (Koshy, 2013). These factors affect the company either directly or indirectly. In some countries such as China and Arab nations, Facebook has faced a number of political obstacles that have had an adverse impact on its operations. Some governments are accusing Facebook Inc. of providing people with a platform to perpetuate political propaganda. Millions of people all over the world use Facebook and other social media platforms to voice their disagreement with the government’s corrupt practices and poor policies. For instance, the Chinese government blamed Facebook for the Urumqi riots because it believed that activists used the platform to incite violence. Following this, the company’s operations in China were shut down in 2009 (Zucchi, 2019). Besides, political stability in various countries affects how the company operates. Thus, social media platforms operate in a highly tense political environment compared to companies in other industries.
Facebook business is also affected by economic factors such as strengthening and weakening of the US dollar. For instance, strengthening of the US dollar has a negative effect on Facebook revenues as a result of the global scale of its business. Studies indicate that economic factors may influence the survival of a business (Hanson et al. 2016). Moreover, the income of social networking platforms is affected by tax rates, inflation, human resources costs, and the overall macroeconomic climate in a given country. Similarly, advertisers in different industries use social media platforms to promote their brands, which means that Facebook earns huge revenues from these marketers. A favorable economy will promote establishment of more companies, which will have a positive effect on Facebook’s revenues and vice versa.
In addition, a number of social factors affect how Facebook operates its business across the world. Unlike in the past, more and more people, including middle-aged are now using smartphones (Cha, 2010). Furthermore, the number of people using smartphones is expected to rise significantly in the next ten years. Consequently, Facebook has massively improved its income and profit margins because more people using smartphones have subscribed to Facebook. In addition, in the sector of social media, people have become more concerned with high-quality services such as the use of live videos. Some companies such as Periscope, SnapChat, and YouTube pose a stiff competition to Facebook as far as quality live videos are concerned. There are also technological factors affecting how Facebook operates. For instance, the emerging 5G is expected to offer Facebook with an opportunity to grow because it is ten times faster than the current 4G. Other technologies such as crypto-currency are being embraced...