Facebooks Risks Case Study

Some of these risks may be necessary and worth it while others may be unnecessary and completely disastrous. One of the main risks big or established companies undertake is the buying of small companies in the hope that they will grow into bigger entities, and hence make a major return on the investment made. Companies like Facebook and Amazon have been buying smaller companies that have shown promising futures of the years. Of course, not most of the companies bought succeed. Some end up being total failures and the companies that bought them have to write them off as losses. One of the ways Facebook is exploring in a bid to monetize the messaging platform is offering businesses, corporations and companies a way to connect directly to their consumers.

This has seen the birth of the new WhatsApp version popularly known as ‘WhatsApp business’. This can be used like the normal version of WhatsApp, the only difference being it allows the business owners to directly communicate and mange conversations with their customers at a large scale. The initial model allows business owners to respond for free within twenty four hours, but they charge a small fee for every reply after that period. The charges are a fixed rate according to the country. The initial version of WhatsApp built to be user friendly and free of adverts. This is what the initial founders, Brian Acton and Jan Koum, had in mind while developing the messaging app. They were also promised there would be no pressure in trying to monetize or sell adverts in the platforms during the sale to Facebook.

However, Facebook has recently not been keen to keep that promise and this has seen the departure of the two founders from the company. Therefore, the Facebook team runs a risk of being faced by strong resistance from its users as it tries to monetize the platform without its original founders thereby eroding the values that made it appealing to users in the first place. This could lead to lose of initial appeal to the public if they no longer find the vision of the current directors to be satisfying. Therefore, Facebook should strive to keep alive the original vision and purpose of the messaging platform in order to satisfy and retain all its users (Cao et al. , 223) Moral Hazard Recently Facebook has been hit by privacy scandals, the most notable one being the Cambridge Analytica.

It was responsible for the leaking of multiple private user information despite the company’s firm assurances over the years of the concrete security measures it takes to ensure the privacy of its users is well protected. However, the company hides behind its user policy instead of taking responsibility and then blames it on third party companies. Under him there is the Chief Operations Officer, Chief Technology Officer, Chief Financial officer and Chief Product officer all heading their respective departments to ensure smooth operations. However, Facebook’s organizational structure has the disadvantage of possible difficulty in implementing directives throughout the corporate structure. This arises from variations in regional management initiatives, based on the company’s geographical divisions. This does not mean the divisions are unnecessary, as they ensure the socio cultural and political variations among countries and regions are satisfied.