In this assignment, I will establish how Facebook utilizes the four components of a legally astute social media marketing manager who utilizes social media outlets for consumer transactions and how each component can mitigate the risk involved in doing business in cyberspace. Also, it will list and analyze methods of alternative dispute resolution and determine which would be most effective in resolving genuine disputes that arise with consumers who may make purchases from businesses that provide links via social media. I will also determine how the federal government can best control these transactions, since consumer transactions on social media can occur across state lines. In addition, I will also examine the three branches of government and discuss which can effectuate the most significant impact on regulation consumer transactions via social media outlets. Finally, I will explain the agency relationship that exists on social media sites between the social media provider and businesses that utilize the site for advertising. Facebook is the ranked number one is social media sites. The statute of this popular social media site is where users can share their ideas and feelings about events in an open environment. People exhibit this by writing statuses. The site is used to share pictures, videos, and other points of individual interest with the rest of the world, or at least the selected people that are able to view their profile. A growing trend, however, is the use of Facebook as a social media marketing area. Through social media many entrepreneurial individuals have been able to establish themselves as a social media marketing giants, and have gathered much attention and income from being able to do so. This new prowess is just a start of the technological marketing revolutions, as described by Savitz (2012), in his report for Forbes magazine; he states that seventy-three percent of Fortune 500 companies were active on Twitter, while more than 80 executives believed social media engagement led to increased sales. The social media market has a future marketing success, and Facebook is a prime marketing component in that success. For Facebook to achieve and maintain the business dominance it has achieved in the virtual world, Facebook has adopted the core legal knowledge that is a necessity for the business to be managed properly. As shown by Bagley (2013), in the “Managers in the legal environment” textbook, the four components of legal astuteness are:
• a set of value laden attitudes about the importance of the law to the firm’s success
• A proactive approach to legal issues and regulation
• The ability to exercise informed judgment when managing the legal aspects of business
• Context-specific knowledge of the law and the appropriate use of legal tools (Bagley, 2013 pg 11). These four components are used by Facebook ensure that the company maintains its proper legal balance between social media provider and social media marketing provider. This is accomplished through the establishment of corporate compliance directorates, and the inherent sponsor –client arrangements for the products that are marketed through the website. Facebook works to ensure that all legal issues are resolved as fairly, justly and timely as possible. Facebook’s ability to mediate any of these matters contributes to the company’s capability to manage the operations as a whole. Facebook has a working understanding of the context in which the services that are provided, so that in the likelihood of a legal issue, Facebook is able to mitigate the legal actions to the product manufacturer/seller. All of these aspects work to defend Facebook in the event of legal conflicts. The company legal compliance directorate ensures that all products advertised are in legal standing and does not support the sale of substandard products, such as pirated or copyright conflicted merchandise. The third and fourth aspects, with their ability to work as a mediator and in as such, have a working knowledge of any legal issues to ensure that all grievances are being addressed, and no other pending action will occur, or be left outstanding. If there is ever a situation that requires any type of mediation, Facebook works with the marketing directorates to provide some form of alternate dispute resolution (ADR). Bagley states, ADR methods, policies and procedures work to maintain the working relationship with the “opposing party”, and “reduce legal expenses, dispose of issues relatively quickly, and allow for flexible business-oriented solutions” (Bagley, 2013, pg. 67). In as such, there are three types of ADR: negotiation, mediation and arbitration. Bagley defines negotiation as “the give and take people engage in when coming to terms with each other” (pg 67). Mediation is defined as “a form of dispute resolution whereby the parties agree to try to reach a solution themselves with the assistance of a neutral third party who helps them find a mutually satisfactory solution” (pg 68). Arbitration is defined as “the resolution of a dispute by a neutral third party” (pg 70). Of these three methods of ADR, the most commonly utilized and generally accepted method would be the negotiation. In this format, the two parties would work together to reach an agreement and Facebook would not have to intervene, due to the sale being between the provider and the client that purchased the items. This method would work to benefit all parties, as it can be the quickest and easiest way to solve the problems that could arise from the sale of items utilizing a social media forum.

As a governmental standpoint, social media can cause some issues because there are fewer statues that govern electronic purchases and the impact when items are being taken from one state and purchased in another over the Internet. In order to standardize and regulate the traffic of material that is sold through social marketing, the federal government utilizes the Federal Trade Commission to regulate the transactions that occur, and to ensure that the purchases are properly coordinated, and the products are of legal standing. This federal entity is at the discretion of the legislative branch of the government, and according to the Federal Trade Commission is chartered “To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity” (FTC.gov). While the current governance is managed and mandated by the legislative branch of the government, all three branches play a part in the operation of an online business through a social media format. The laws are set into motion through the legislative branch of government, and are ratified by the representatives of the Congress and Senate. Any issues with interpretation and constitutional infringement by the laws and regulations are evaluated by the judicial branch, at either the local or federal levels, with the involvement of the U.S. districts and Federal circuit courts, all the way up to the Supreme Court of the United States. They are the final say in any proceeding. The executive branch enforces the laws that are written by the legislative branch. The most important branch of government that can exercise any control of social media marketing would be the legislative branch. The regulations established by this branch are critical to the proper administration of a business plan. These regulations can be as simple as a standardized price for an item or service, to something as complex as the development of a trade agreement with another foreign country. The FTC works with the legislative branch to ensure compliance is met for all items sold, and if there are violations, there can be corrective disciplinary action taken against the perpetrator or perpetrators. That is why it is important to understand the relationship that is established and maintained by the service provider and the person receiving the service. This type of relationship is most often called a “principal-independent contractor” type of agency relationship. The principal-independent contractor relationship is characterized by the independent contractor being given authority to provide the principal a product or service that is purchased by the principal ( Bagley, 2013, pg 130). Social media is a small market niche, with future marketing success that will be dictate how well a company transitions from traditional sales environments to one of a virtual environment. The earlier a company understands the social media impact, the better the future business should unfold. As long as social media marketing is properly facilitated and implemented, the sky is limit.

References
Bagley, C. (2012). Managers and the legal environment. 7th edition, 2013. Mason, OH – Cenage Learning
Federal Trade Commission. (2013). “Our Mission”. Retrieved from: http://www.ftc.gov/ftc/about.shtm
Savitz, E. (2012). “5 Ways Social Media Will Change The Way You Work In 2013”. Forbes. Date Published: December 11, 2012. Retrieved from: http://www.forbes.com/sites/ciocentral/2012/12/11/5-ways-social-media-will-change-the-way-you-work-in-2013/