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Facebook's Strategy

In: Business and Management

Submitted By bbbbx
Words 1026
Pages 5
In order to determine whether a strategy is a winning strategy, the company’s strategy must pass three tests, which include the fit test, the competitive advantage test, and the performance test. Passing the fit test means the strategy is well matched to the company’s situation. Moreover, the competitive advantage test is used to make sure the strategy can help the company achieve a sustainable competitive advantage. In addition, passing the performance test indicates that a winning strategy produces strong company performance.

Before IPO
The primary mission and goal of Facebook CEO, Mr. Zuckerberg, before the company’s IPO, is to “connect the world digitally with Facebook” and increase its total membership (Rusli, 2014). Mr. Zuckerberg kept his primary mission of Facebook and cared less about the revenue. His strategy of Facebook at this point was to attract as many users as he would without placing more importance on how to make a lot of money.
Facebook’s strategy before IPO is not a winning strategy. First of all, Facebook’s strategy at this point did not match well to the company’s best market opportunity of its initial public offering. Since Facebook wanted to go public, it needed a good performance to attract its potential investors and shareholders. The ability of gaining revenue is an important symbol and sign that potential investors will look for before deciding whether to invest. However, Mr. Zuckerberg’s primary mission of Facebook showed that “Facebook was not originally created to be a company” (Rusli, 2014), which would be harmful for the company to attract more potential investors. Therefore, Facebook’s strategy before IPO did not pass the fit test since this strategy didn't suit the company’s current situation at that point. Secondly, Facebook’s strategy could not help the company achieve a sustainable competitive advantage since this strategy...

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