Understanding The Potential Of Facebook's IT Assets In Accordance With Competitive Advantage
In this report, a proper and analytical consideration Facebook Inc.'s IT assets have been completed. With respect to realizing all possible strategies, it was necessary to highlight some of them with respect to their nature and value in accordance with the IT Portfolio framework. This eventually related both the specific target assets that Facebook utilizes to create a competitive advantage in the market environment, which it currently leads. However, many questions have been brought up, especially with regards to the competitive advantage potential of the social networking platform. So, to properly bring forth the necessary understanding about the true state of Facebook's competitive advantage a VRIO analysis was performed with respect to the perspective of resource-based view. The eventual result showcased that except for one single invested asset, all of the others represented the case of Facebook not having long term competitive advantage under any significant consideration.
Introduction and Organization Background
Facebook, Inc. is a social media and networking service that has become the largest of its kind in the world with more users than any of its competitors. This makes their publicly accessible platform one of the most valuable spaces for other businesses and organizations who vie for advertisement and promotional bases (Bellucci and Manetti 2017). The last update about Facebook's total active listeners was related in December, 2018, which was about 2.3 billion. So, its advertisers believe that they it is truly worthy of competing for space in terms of advertising and promoting. Many regard that the competitive advantage that Facebook is evidenced by the significant wide operating margins above the cost of capital.
Thus, in terms of market, Facebook's business model depends upon attracting the investments from advertisers, which are then promoted to their users directly. Thus, their market potential depends upon the users they possess. In terms of strategy, Facebook's main concerns lie with a host of distinct and interactive features for their users to value and utilize (Doyle 2015). The operations cover a wide range of concerns that usually utilize its already advanced IT software assets to properly support and keep track of the things around their social platform (Bellucci and Manetti 2017). This is particularly associated with implementing actions that reflect their adherence to their policies of use, which is applicable differently for users and advertisers. Being one of the very first social media platforms to become widely popular all throughout the globe, Facebook's model have been quite nearly replicated all across the board (Munnukka,Karjaluoto and Tikkanen 2015). This has resulted in the social media platforms to rise up in the wake of its success to obtain a great deal of users, as well as the time they spent on the platform over time.
This competitive environment is something that Facebook has as its main source of concern all across the board. In particular, the things people value across Facebook has changed greatly over time (Shiau, Dwivedi and Lai 2018). And, while they have responded appropriately over time, such actions have notably turned away much of its younger audiences over time. Additionally, controversies across the board has brought into question the sustainability of Facebook across a long terms perspective.
View through the Application of IT Portfolio Theory
According to Weill and Aral (2006), it is a factor of pursuit that many companies tend to adhere with respect to that of IT portfolio. This generally relates to the realization of the investments that Facebook, Inc. has made over the years. Generally, speaking the delineation of the acquisition of such assets should contribute to the company's concerns at large (Weill and Aral 2006). This is because every investment should strategically benefit any company, which makes the investment in any case. The effects of the investment generally has the potential to create effects upon four domains, namely transactional, informational, infrastructural and strategic respectively.
For Facebook specifically, it becomes imperative to address the fact that it has made investments across all the four domains of IT portfolio. Transactional investments across generally refers to when a company is able to cut costs, or raise the throughput at the same cost margin (Taplin 2017). A case that needs to be made is with regards to Scribe, which has been a very prominent feature of Facebook's internal use since 2014, and was a result of the conscious development efforts made by the company itself(Adamowicz et al. 2019). It is basically a flexible logging system that has many other additional features that allows for its developers to handle the significant data being entered into different categories of its logs, which tend to have hundreds of categories (Munnukka,Karjaluoto and Tikkanen 2015). Since this technology is vastly better at resolving one of the most elemental and necessary tasks, the transactional value of this asset becomes apparent.
Informational investments are generally for the purposes of accounting, reporting, communication or analysis. This shall make Facebook's usage of 'Hadoop' certainly showcases this fact, which is an open source map-reduction and implementation. It makes possible the fast and effective generation of representation of the data (Munnukka,Karjaluoto and Tikkanen 2015), and it showcases the spontaneous and dynamic implementation across the Facebook's public analytics services (Adam, Manca and Bell 2016). Strategic investments generally involve the investments that mainly involve the case of gaining advantage through the development of new products, services or processes, or a new entry into a market (Bellucci and Manetti 2017). This is evident through the introduction of the open marketplace where its users have the opportunity to buy and sell products.
Infrastructural investments mainly highlight the actions taken with respect to shared IT services that could be utilized by multiple applications. This is mainly to save upon future IT investments that could take place, and offers flexible solutions at large (Doyle 2015). 'Thrift' is a notable example of this, and it highlights the research and development performed by the company's own teams. It is essentially a cross-platform development language that ties all other languages making it possible for Facebook's present and future implementation of a wide variety and number of other languages to find a common ground of implementation (Manca and Ranieri 2016). For this reason, Thrift has become open-sourced through the efforts and actions by the company itself. Except for this one, all the others mentioned above are essentially transactional in nature.
RBV Theory and VRIO Analysis
There are, in general, some notable cases with respect to understanding what exactly makes a firm possess competitive advantage. In the specific perspective of the Resource based View (RBV) (Barney and Hesterly 2006), it is entirely possible that the entire circumstance is reflective of the situation with respect to heterogeneity and immobility of the resources. However, in this case, Facebook's IT assets are being discussed in detail, which specifically highlights all the case with regards to this specific view as well (Barney and Hesterly 2006). This means that these assets that the company has invested in must be evaluated fully with respect to Facebook's strategic outlook in getting the competitive advantage in its market environment (Arvidsson 2016). For this purpose, the VRIO Analysis should serve as a fairly acceptable pathway in determining in what specific values the assets identify and delineate at large (Doyle 2015). It analyses a particular asset with respect to Value, Rareness, Imitability and Organization respectively.
In the purest terms of value, Facebook's transactional investment of Scribe reflects a significant value in the company's internal operations. It basically makes possible careful arrangement of log data in an automated fashion all across the board (Doyle 2015), and reflects the situation with respect to realizing the constant and widespread use of the social network(Adamowicz et al. 2019). However, this specific asset is not rare as its competitors have replicated their own logging systems after Facebook initially did (Arvidsson 2016). This relates to this asset as just having competitive parity and no advantages specifically.
Utilization of Hadoop also relates to a similar situation at large wherein the conceptual-mapping program has long been in use. Although this particular Facebook IT investment has a great terms of value as it contributes a significant amount of revenue flow (Adam, Manca and Bell 2016), they have been presented by its main competitor with respect to social network platforming competitors, most notably in the case of Google Inc. (Manca and Ranieri 2016)However, in the case of its implementation of marketplace as a strategic investment, one can see the manifestation of realizing three specific factors, namely value, rareness and imitability (Adam, Manca and Bell 2016). Upon this specific instance, the potential for high occurrence of rareness and imitability is specifically tied to the fact that the company has the largest social network channels in the entire world (Adamowicz et al. 2019). Nevertheless, it is an unused competitive advantage since the company has not entirely based all its operations around it.
In the final case, Thrift is representative of all the values with respect to driving the necessary operations in a robust fashion (Doyle 2015), it is something that its competitors have not fully able to imitate, and as such, effectively projects a rare capability in terms of investment at large (Arvidsson2016). This also highlights the basing off of the organization's operations around it at large, which makes the investment allow for a truly advantageous competitive state across the board.
Therefore, the determination on an overall outlook of competitive advantage for Facebook seems to be quite low, especially with respect to the long run. It is apparent that the questions about its long-term sustainability are something that must be focused upon quite exceptionally across the board. It is necessary for Facebook to invest more thoroughly and intelligently upon its capabilities, which its competitors are actually doing. However, many other factors are certainly affecting those plans. In particular, Facebook's business practices with regards to their use of all the user's data has been put under the microscope. It is quite a definitive statement to say that internal focus upon its processes and overall infrastructure is greatly necessary in order to strengthen it all across the board.