Analyse the macro environment of Facebook and the social media industry using Pestel and the impact of external factors followed by a Facebook Swot Analysis

• Porters Five Forces Analysis of Facebook 2019 

1.0 Introduction

Facebook is an American social media and social networking company with its headquarters in Menlo park, California, United States. It was founded in 2004 by Mark Zuckerberg and co-founders Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes (Barr 2018).

Subsidiaries include Instagram, WhatsApp, Oculus VR, Onavo, LiveRail, among others. In 2017, Facebook recorded annual revenue of $40.65 billion, up from $27.64billion in 2016 according to Statista (2018c) with profits of $15.934billion profit in 2017, up from $10.217billion in 2016 (Statista 2018d).  

2.0 Facebook Pestel Analysis 2018

The following Pestel analysis of Facebook describes how various macro factors like the China-US trade war, demographic changes, privacy regulations, technological advancements like 5G network technology, among others are affecting the macro environment of the social media industry in which Facebook operates.

Using pestel, the report identifies major key drivers of change that constitute external opportunities and threats in the macro environment of Facebook, examining how these factors have affected or are likely to affect Facebook’s performance currently or in the future.

2.1 Political factors

2.1.1 Chinas continued blockade on Facebook

One of the biggest political factors affecting Facebook is Chinas continued blockade of Facebook. In 2009, Facebook was blocked from operating in China on political grounds. This was a political factor resulting from the July Urumqi riots, when Beijing believed Xinjiang activists were using Facebook to incite violence (Pham and Riley 2017). 

In July 2018, Facebook opened a $30million subsidiary in China, Facebook Technology, headquartered in Hangzhou, where Alibaba is also headquartered. Facebook