Assessment 1 Instructions: Strategic Process and Analysis
Please follow example and the instruction,
Follow the distinguished scoring guide
Complete a VRIO or Value Chain analysis, a PESTLE analysis, and a Five Forces model for an organization. (The Organization should be Facebook).
Prepare a 3-6-page executive report that analyzes the internal and external environments of the organization and recommends a course of action based on the analysis.
Introduction
AFI, VRIO, and value chain are just three concepts you need to understand as a business strategist. This assessment focuses on these important facets of business analysis.
Introduction
For this³ assessment, you will analyze the internal and external factors that shape and influence an organization\’s strategy. Your work on this assessment will demonstrate your understanding of industry forces and how an organization can leverage its strengths to its advantage.
This portfolio work project asks you to analyze the strategic process using the AFI framework. This analysis will clearly demonstrate your ability to think critically and strategically, and to use evidence to support your thinking.
Scenario
The vice president of strategy has asked you to prepare an objective analysis of the internal and external environments of the organization. She is hoping that your insight can be used to plan for the future direction of the company.
Your Role
You are a strategic analyst for the company you have selected to use in this course. The company has recently started the strategic planning process and needs to analyze the current internal and external environments.
Requirements
To complete this assessment, be sure you understand the AFI framework as presented in your text. Conduct your own research to find recent articles on the value of strategic planning and the role of leadership in the strategic planning process. (Note that the Strategic Management Process Map on pages 30 and 31 of the course text will be very helpful in completing this assessment.)
For this assessment, you will need to complete a VRIO or Value Chain analysis, a PESTLE analysis based on research of the organization (not conjecture or opinion), and a Five Forces model (pay attention to the relationships of elements from both PESTLE and Five Forces). These must be included as appendices in the document you submit.
You should also research the industry your company is in, as well as the company\’s website for information and supporting evidence. Once you have this research completed, prepare an executive briefing report that will be distributed to senior executive leadership. In your report, address the following:
- Analyze the key components of the AFI strategic planning framework. Assess the value of using a strategic planning framework for long-term success and sustained competitive advantage.
- Analyze the internal environment of the organization.
- What are the key findings from your VRIO or Value Chain analysis?
- How well does the organization leverage its strengths to execute the business strategy?
- How effective is the organizational structure and management system design?
- Analyze the external environment of the organization.
- What are the key findings from your PESTLE analysis?
- What are the key findings from your Five Forces analysis?
- How can the organization respond to these forces to better position itself?
- Explain the role of leadership in the strategic planning process. Be sure to address the ethical responsibilities of leaders in the strategic planning process.
- Recommend a course of action for leadership based on your analysis.
Deliverable Format
The strategic process and analysis is a professional document and should therefore follow the corresponding MBA Academic and Professional Document Guidelines, found under Writing in the MBA Program Resources, which you can find in the Tools and Resources for this course. Pay attention to the sections on APA formatting and citing references.
In addition to the analysis, include:
Title page.
Table of contents.
Executive summary.
References page with APA formatted references from at least five sources.
Appendices: VRIO or Value Chain analysis, PESTLE analysis, and Five Forces analysis.
Target length of 3-6 content pages in addition to Title page, Table of Contents, Reference pages, and Appendices\” including your VRIO/Value Chain, PESTLE, and Five Forces analyses.
Written for an audience of executive leaders.
Evaluation
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies through corresponding scoring guide criteria:
Competency 1: Assess the importance of strategic management for supporting long term success and sustained competitive advantage.
Analyze the key components of the AFI strategic planning framework, assessing the value of using a strategic planning framework for sustained competitive advantage.
Explain the role of leadership in the strategic planning process.
Competency 2: Apply strategic thinking approaches to resolve business-related challenges.
Recommend a course of action based on an internal and external environmental analysis.
Competency 3: Analyze the internal and external environments of an organization in order to formulate and implement successful strategies.
Analyze the internal environment of an organization.
Analyze the external environment of an organization.
Competency 5: Communicate business needs, opportunities, and strategies with multiple stakeholders.
Address assessment purpose in a well-organized text, incorporating appropriate evidence and tone in grammatically sound sentences.
Apply the standard writing conventions for the discipline, including structure, voice, person, and tone.
Solution
Facebook Business Strategy
Student’s Name
Institutional Affiliations
Table of Contents
Executive Summary 3
AFI Strategic Planning Framework 4
Role of Leadership in the Strategic Planning Process 5
Internal Environment Analysis 6
External Environment Analysis 6
Recommended Course of Action 7
References 8
Appendices 10
Appendix A: Facebook VRIO Analysis 10
Appendix B: Facebook PESTLE Analysis 12
Appendix C: Facebook Five Forces Analysis 14
Executive Summary
Facebook is one of the leading social media networks used by several people around the world. Technological advancements have helped Facebook to expand its market size and customer segments globally.
While continuous technological advancements enable Facebook to constantly improve its features, repeated data breaches are attracting lawsuits that tend to damage the company’s reputatihe company needs a strategic plan that will enable it to achieve long-term success and competitive advantage.
The AFI Strategic Planning Framework will help Facebook to formulate and implement strategies that consider factors within the company’s external and internal environments. Based on the internal and external analysis, it is recommended that Facebook develops and implements strategies that enhance customer retention, limit substitutes, and promote data safety.
Facebook Business Strategy
AFI Strategic Planning Framework
Organizations should develop clear strategies that will enable them to meet their goals, mission, and vision. Rothaermel (2021) defines strategy as an art and science that describe whether a company will succeed or fail.
Effective strategic management entails the completion of important tasks to generate results and achieve a competitive advantage (Hamel & Prahalad, 2005). The AFI Strategic Planning Framework comprises three major components namely Analysis, Formulation, and Implementation which define the interdependent stages of strategic management in an organization.
Applying these key components can help Facebook to achieve long-term success and sustained competitive advantage (Rothaermel, 2012). For instance, during the Analysis phase, Facebook leaders should understand the meaning of strategy, explain why it is important, describe the internal and external factors affecting the company’s performance, and identify sources of its competitive advantage.
The leaders should then move to the Formulation phase where they develop the business-level, corporate-level, and global-level strategies for Facebook. Once these three levels of strategies have been formulated, Facebook leaders should proceed to strategy execution where they design an appropriate organizational structure, set control, and create policies that foster strong corporate governance and business ethics (Mahoney, 2018).
Using the AFI Strategic Planning Framework will help Facebook to achieve long-term success and sustained competitive advantage in that it will enable the company to formulate and implement strategies that allow adequate utilization of its strengths to address its weaknesses, take advantage of existing opportunities, and mitigate potential threats. The AFI Strategic Planning Framework is shown in figure 1.
Figure 1. Rothaermel’s AFI Strategic Planning Framework
Role of Leadership in the Strategic Planning Process
The leadership of every organization plays an important role in the strategic planning process. For example, the leadership is charged with the responsibility of creating a vision and goals that offer the direction of focus when developing strategies (Rothaermel (2021). Using the strategic management stages identified in the AFI Strategy Framework, Facebook leadership plays a key role in ensuring that every phase is successfully executed.
For example, the leadership sets the stage for strategic analysis. Additionally, it guides the development of business-level, corporate-level, and global-level strategies for the company (Jabbar & Alfartoosi, 2017). Most importantly, Facebook leadership ensures that relevant strategies are successfully implemented to help the company to realize long-term success and competitive advantage. The ethical responsibilities of leaders in the strategic planning process include adhering to relevant laws and involving stakeholders in the decision-making process.
Internal Environment Analysis
A company’s internal environment comprises factors that are viewed as its strengths and weaknesses. The VRIO or Value Chain Analysis entails an evaluation of factors within the value chain that help a company to achieve a competitive advantage (Grunig & Kuhn, 2018). It helps evaluators to establish whether a company’s resources are valuable, rare, inimitable, and organized.
The key findings from the VRIO analysis indicate that the five key resources that drive competitive advantage at Facebook include strong global presence, financial strength, technological innovation, complementary product range, and brand awareness (Mazzucchelli et al., 2021; Coelho et al., 2014).
Additionally, it is evident from the analysis that Facebook adequately leverages its strengths to execute its business strategy. For example, Facebook highly invests in digital advertising as well as research and development. This helps in to expand its brand awareness and innovate technological features which serve as its greatest sources of competitive advantage (Coelho et al., 2014). Facebook also has an effective organizational structure and management system design both of which help it to balance its key resources.
External Environment Analysis
Strategic planning and management should consider factors that present opportunities and impose threats to an organization. These factors form the external environment. The key findings from the PESTLE analysis revealed that Facebook is widely used to spread fake political news (Dudovskiy, 2017).
Additionally, the company incurs huge expenses and costs associated with expansions, advertising, and high exchange rates. The company’s core value has changed from a social connection platform to a business platform where businesses meet customers. While continuous technological advancements enable Facebook to constantly improve its features, repeated data breaches are attracting lawsuits that tend to damage the company’s reputation.
It is also evident that the company should replace its coal power generation source with renewable energy to curb climate change (Dudovskiy, 2017). Porter’s Five Forces analysis on Facebook revealed that the company has a moderate competitive rivalry, the bargaining power of buyers is high, the bargaining power of suppliers is moderate, the threat of substitutes is high, and the threat of new entrants is low (Young, 2018). Facebook can respond to these forces to better position itself by relying on the strengths that help it to achieve a competitive advantage.
Recommended Course of Action
The insights generated from internal and external analysis should be used to plan for the future direction of Facebook. The recommended course of action for the company’s leadership should focus on three main areas. First, in order to maintain Facebook’s core purpose of promoting social networking, the company’s leadership should develop and implement strategies that enhance customer satisfaction.
This will enhance customer retention and support the achievement of competitive advantage (Amadeo, 2019). Second, Facebook should make its advertising services more attractive than those of its competitors to limit competition and reduce the degree of threat caused by substitutes.
Third, the company should tighten user policies to control people’s behaviors on its platform, especially those policies that promote data safety and limit data breaches (Young, 2018). These recommendations will help Facebook to improve resources identified in the VRIO analysis while at the same time being able to control factors in its external environment thereby achieving long-term success and competitive advantage.
References
Amadeo, K. (2019). What is competitive advantage? Three strategies that work. https://www.thebalance.com/what-is-competitive-advantage-3-strategies-that-work-3305828
Coelho, J., Nobre, H., & Becker, K. (2014). The impact of Facebook presence on brand image. International Journal of Technology Marketing, 9(3):320 – 332. doi:10.1504/IJTMKT.2014.063859.
Dudovskiy, J. (2017). Facebook PESTEL analysis: Two-way relationships between external factors and social media giant. https://research-methodology.net/facebook-pestel-analysis-two-way-relationships-between-external-factors-and-social-media-giant/
Grunig, R. & Kuhn, R. (2018). The strategy planning process. Springer.
Hamel, G., & Prahalad, C. K. (2005). Strategic intent. Harvard Business Review, 83(7/8), 148–161.
Jabbar, A. A. & Alfartoosi, A. (2017). The role of leadership in strategic management. International Journal of Research, 5(99-106), 71-81. doi:10.5281/zenodo.583890
Mahoney, J. (2018). What is strategy. https://josephmahoney.web.illinois.edu/BA449_Fall_2018/BA449Chap001_Fall%202018.pdf
Mazzucchelli, A., Chierici, R., Di Gregorio, A., & Chiacchierini, C. (2021). Is Facebook an effective tool to access foreign markets? Evidence from international export performance of fashion firms. Journal of Management & Governance, 25, 1107–1144. https://doi.org/10.1007/s10997-021-09572-y
Rothaermel, F. (2012). Why do we need the AFI framework? Analysis, formulation, implementation [Video]. | Transcript. https://www.youtube.com/watch?v=nXOVGMVNZ7Y
Rothaermel, F. (2021). Strategic management (5th ed.). New York, NY: McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link.
Young, J. (2018). Facebook Inc. Five Forces Analysis (Porter’s Model) & recommendations. https://panmore.com/facebook-inc-five-forces-analysis-recommendations-porters-model
Appendices
Appendix A: Facebook VRIO Analysis
Facebook’s VRIO Analysis will cover the company’s strong global presence, financial strength, technological innovation, complementary product range, and brand awareness. The aim of the analysis is to evaluate whether Facebook will have a sustained competitive advantage.
Strong Global Presence: Facebook has a strong global presence supported by a large audience that is distributed throughout the world. Individuals and businesses extensively use the platform for networking, marketing, and product promotion. It will be difficult for competing organizations to outperform Facebook in the market since it is a brand that is well-recognized worldwide.
Due to its global presence, Facebook generates substantially high revenue, a factor that will help it to continue enjoying a competitive advantage in the media industry.
Financial Strength: Facebook has a strong financial position. The company’s financial position as of June 2022 was 28.82 billion. The strong financial standing allows Facebook to spend heavily on marketing as well as research and development. Its substantial revenue comes from digital advertising done by billions of active users. The company’s strong financial position is a good source of competitive advantage.
Technological Innovation: Facebook depends heavily on technology to be able to reach its audience. In this regard, it spends heavily on technological research and development to identify innovations that can help it to maintain a competitive advantage. One of the reasons why Facebook has earned increasing revenue in the recent past is due to the innovative features on its platform that users get to enjoy.
It is highly likely that the company will continue to maintain a competitive advantage in a market where close competitors still lag on issues related to technological innovation.
Complementary Product Range: Facebook offers a wide range of products through mergers and acquisitions with other brands. Although the company’s main source of revenue is digital advertising, it is also able to earn additional revenue from acquisitions with expanded products like WhatsApp and Instagram.
As Facebook continues to grow in popularity through its expanded products, it will continue to have a sustained competitive advantage in the market compared with its close competitors like Twitter and LinkedIn.
Brand Awareness: Facebook takes pride in the high brand awareness among its users. It is committed to giving its users a unique experience through innovative features. The company attributes its increasing revenue and growth to high brand awareness among global users. The fact that Facebook invests heavily in marketing and advertising helps it to strengthen brand awareness and increase user engagement, a factor that will contribute to continued competitive advantage.
Resource Valuable Rare Inimitable Organized
Strong Global Presence Yes Yes No Yes
Financial Strength Yes Yes No Yes
Technological Innovation Yes Yes Yes Yes
Complementary Product Range Yes Yes No Yes
Brand Awareness Yes Yes Yes Yes
Appendix B: Facebook PESTLE Analysis
Political
• Widely used to share news about local and international politics
• Some users have made the platform a place for sharing ‘fake news’
• Countries like North Korea and China have restricted their citizens from accessing Facebook to control fights among political parties
• Facebook has enhanced political ties with many countries, and this has influenced people’s thoughts about politics and policies
Economic
• Facebook incurs huge expenses and costs associated with expansions, advertising, and high exchange rates
• The company contributes greatly to the growth of the global economy
• It is anticipated that Facebook with create employment for many people and increase revenue growth in the near future
• The company acts as a business platform where buyers meet sellers
Social
• The company’s core value has changed from a social connection platform to a business platform where businesses meet customers
• The information posted on Facebook lacks quality owing to the fact that users are worried about connecting to other websites that they do not trust
Technological
• Continuous technological advancements enable Facebook to constantly improve its features
• Facebook is more than a website as it also has a messenger application where users can interact
• Data safety is compromised due to data leaks and hacking attempts
• Expansions and acquisitions with other products such as Instagram creates platforms where users can connect with their friends and relatives
Legal
• Data breaches are attracting lawsuits which tend to damage Facebook’s reputation
• Facebook users frequently violate data privacy policies such as the European Union’s General Data Protection Regulation (GDPR)
Environmental/Ecological
• The carbon footprint generated from data centers causes some damage to the environment
• The company should replace its coal power generation source with renewable energy to curb climate change
Appendix C: Facebook Five Forces Analysis
Competitive Rivalry: Facebook is facing medium rivalry from its close competitors such as Twitter and LinkedIn. This is attributed to the small number of competing firms with less variated products.
Bargaining Power of Buyers: The bargaining power of buyers in the media industry is high. The reason is that there are substitutes that customers can consider characterized by low switching costs.
Bargaining Power of Suppliers: Facebook faces moderate force regarding the bargaining power of suppliers. This is attributed to the availability of many suppliers which are of moderate sizes.
The Threat of Substitution: There is a high threat of substitutes in the media industry where Facebook operates. This is attributed to low switching costs and the availability of almost similar products and services offered by its competitors.
The Threat of New Entrants: The threat of new entrants is low. This is caused by the high costs associated with brand development. Additionally, the cost of customer loyalty is high and switching costs are low.