Facebook is losing customers : is it time for Facebook to invade China?

Facebook could files S-1 to the SEC in the end of this year or first quarter of 2012, a lot of investors are super-excited about this upcoming IPO. The IPO valuation of Facebook could be around $100 billion. Facebook is currently worth about $80 billion on secondary markets. It's set to turn in revenues surpassing $4 billion this year.

If Facebook actually through its IPO at a valuation of more than $100 billion, then its way surpasses others social network which recently went public such as LinkedIn and Groupon. Facebook value would put them as massive as Microsoft, Apple and Google.

The shocking news arise following the IPO of Facebook later this year, Facebook reported lost lots of customers, mainly in their mature market. According to Inside Facebook's data service, Facebook lost 6 million users in the U.S. last month, dropping from 155.2 million to 149.4 million. That's the first time U.S. numbers have dropped in more than a year. It also lost around 1.52 million users in Canada.

Although total of Facebook users is increase 1.7% but big drops in the countries where Facebook is become popular is cannot be good. There is indication a saturation condition to respective countries that Facebook lost their customers. A forecast by Google insight might suggest that after the decline in the first quarter, the growth of Facebook users will be steady in the second and third quarter this year and will increase at the end of this year. An indication of saturation condition in the countries such as U.S, Canada and U.K will force Facebook makes a breakthrough to maintain sustain customer growth, otherwise a valuation of more than $100billion for its IPO will be over-value for a social network company.

The question is, how Facebook increase their users significantly but also losing lots of them on the other side of the world? Given that Facebook has not been able to break into the Chinese market – the world’s largest internet market with more than 457 million Web users – taking away a very significant number of potential members, there is some speculation regarding how sustained Facebook’s popularity and growth is likely to be in the future. The only way Facebook can keep growing, then, is to add big new countries, and that country is China.

Facebook was said to be trying to break into the Chinese market through partnering with a local technology firm. The coming IPO for Facebook is the good opportunities to attract investor that have good relationships in China.

It is time for Facebook to invade China.

Balance Scorecard Framework

The balanced scorecard is a strategic planning and management system that is used extensively in business, industry and non-profit organizations worldwide to align business activities to the vision and strategy of the organization

The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback to both the internal business processes and external outcomes in order to continuously improve strategic performance and results. Balance scorecard is linking strategy and operation

Balance Scorecard framework is consist of a strategy map and four perspective of the balance scorecard.

Strategy map is a visual framework for integrating the organization’s objectives with the four perspectives of a Balanced Scorecard.
The four perspectives of balance scorecard are :

1. Financial perspective : Describes the tangible outcomes of the strategy in traditional financial terms.

2. Customer perspective : Defines the value proposition for targeted customers.

3. Internal process perspective : Identifies the critical core processes that are expected to have the greatest impact on the strategy.

4. Learning and growth perspective : Identifies the intangible assets that are most important to the strategy.

Here is some illustration of the architecture of balance scorecard

check this Balance Scorecard presentation slide

Strategic Planning Steps - Total Quality Management Approach

Once the vision of the organization and the mission of the internal work groups have been identified and communicated, a documented business plan of the organization is followed upon and the results are compared and analysed against the objectives.

Total Quality Management (TQM) is a powerful, yet simple method of process improvement to achieve customer satisfaction, without the need for substantial additional resources. TQM anticipates customers’ needs and encourages employees’ participation and ownership of work processes. It is an essential first step, which allows an organization to define its own quality standards, compete on a higher level, exceed customers’ expectations, and increase profitability. Successful implementation of TQM requires a focus

on processes, systematic thinking, teamwork, cross-functional management, and an understanding of how and why the output or result of one’s work can have an impact on the next process. That means coordination and communication across, as well as through the hierarchies of the organization is essential.

Applying TQM requires understanding and applying methods to identify and solve problems, and improve on process cycles. The approach is an applied variation of the scientific method and process of problem-solving, called PDCA, “Plan-Do-Check-Act”.

 

The cycle (Shewhart cycle) below consists of the four steps from which the basic systematic analytical approach can be applied to improve quality and raise business standards. In short, to elevate the quality of the entire business process in a dealership, four basic steps must be taken as follows;

Step 1: Develop a business plan.

Plan to improve your operations first by finding out what things are going wrong (that is identify the problems faced), and come up with ideas for solving these problems. A business plan by definition is a written document describing the nature of the business, the sales and marketing strategy, and the financial background, of which contains a projected profit-and-loss statement. A business plan is also a road map that provides directions so a business can plan its future to avoid bumps on the road. Once the business plan is thorough and accurate, and kept up-to date, it will be an investment that pays big dividends in the long term.

Step 2: Operate according to this plan.

Do changes designed to solve the problems on a small or experimental scale first. This minimizes disruption to routine activities while the changes are tested for their workability. This can be summarised as testing the theory, recommending the action, and implementing the planned change, initially on a small scale. Measures are also to be established and data is to be collected.

Step 3: Understand and analyse the results of the plan.

Check whether or not the small scale or experimental changes are achieving the desired result. At the same time, continuously check nominated key activities to observe the results. With these results, summarise the data, identify the root causes, analyse, evaluate, and compare the effects, of the actual change with expected or planned outcomes.

Step 4: Take necessary countermeasures so that results are reflected in the future plans.

Act to implement changes on the results. Make changes in the “plan” where expectations are not met. At the same time, involve other persons (other departments, suppliers, or customers) affected by the changes and whose co-operation is needed for the changes to be implemented on a larger scale, or those who may simply benefit from what has been learned (of course, these people could already have been involved in the Do or Check stage). Grab this advantage and repeat the process to

achieve higher performance levels.

Planning is vital to increase profitability. Despite criticisms, many researchers suggest that formal planning systems do help managers make better strategic decisions. For strategic planning to work, it is important that top-level managers plan not just in the context of the current competitive environment but also in the context of the future competitive environment. To try to forecast what the future will look like, managers can use scenario planning techniques to plan for different possible futures.

The great virtue of scenario planning is that it can push managers to think outside the box, anticipate what they might have to do in different situations, and to learn that the world is a complex and unpredictable place that places a premium on flexibility rather than on inflexible plans that may turn out to be incorrect. Managers can also involve operating managers in the planning process and seek to shape the future competitive environment on strategic intent by prioritization of opportunities, management of risks, co-ordination of activities, communication of expectations, motivation of

organization and personal learning.

10 level of intimacy in today's communication

Today communication is effected by the rapid change of technology communication. Today there are many ways to communicate with other people, but not all the communication way is has same level of intimacy. There are different level of intimacy in each type of communication.

There are 10 level of intimacy in today's communication, the highest level of intimacy is the best way to make a conversation, which are :

1. Level 10 intimacy : Talking
2. Level 9 intimacy : Video chat
3. Level 8 intimacy : Phone
4. Level 7 intimacy : Letter
5. Level 6 intimacy : IM
6. Level 5 intimacy : Text Msg
7. Level 4 intimacy : Email
8. Level 3 intimacy : Facebook Msg
9. Level 2 intimacy : Facebook status
10. Level 1 intimacy : Twitter


presentation slide

Business Model Canvas

Business model is basically a mental model and concept of set of strategies and investments a company should pursue, so that they can be integrated into a congruent whole, thus enabling company to gain a competitive advantage and achieve superior profitability and profit growth.

To be able understand the business model, instead of doing a mental model it is better if the company can sketch the business model. Sketching the business model can help the owner and the executive of the company to understand the strategies that the company want to pursue. The sketch will give a clear picture of the business and help the executives to plan a strategy to achieve the goals.

Whenever we want to sketch or draw something, we need a canvas to draw on. In this case we need the BUSINESS MODEL CANVAS. Business model canvas is a set of drawing blocks that build a business model. There are 9 blocks that use as a representative to build the model, which are :

1.       Customer  segment

2.       Value proposition

3.       Channels

4.       Customer relationships

5.       Revenue streams

6.       Key resources

7.       Key activities

8.       Key partners

9.       Cost structure

Every block is a representative of the key factor that should be consider when build a business model. Each building block has connection to others that linking each other  as a system. This canvas is use to sketch the business model, from defining customer segment until breaking down the cost structure.

A complete business model will encompasses the totality of how company will :

1. Select its customer.
2. Define and differentiate its product and service.
3. Create value for its customers.
4. Acquire and keep customers.
5. Provide value-added product and services.
6. Deliver the products and services to the market.
7. Configure its resources.
8. Achieve and sustain a high level of profitability.
9. Grow the business over time.

The Formal Strategy Making Process

People think that strategy is the output of the formal planning process and most of the thinking and planning process is done by the top management. This opinion has basic reality but that’s not the whole story. Valuable strategies often emerge from deep within the organization with the input from the team who are constantly tackling problems on the ground, this could be the manager, executives or section head, etc.

The formal strategy planning has 5 main steps:

1.     Select the corporate vision, mission and values and goals/objectives.

Vision is a statement of some desired future state, mission is the reason for existence- what an organization does, and values is a statement of key values that an organization committed to.

2.     Opportunities and threats

Analyze the external competitive environment to identify opportunities and threats.

3.     Strengths and weakness

Analyze the organization’s internal environment to identify its strengths and weakness.

4.     Select a set of action that :

·         Build on the organization’s strengths and fix its weakness- in order to take advantage of external opportunities and counter external threats.

·         Consistent with the organization’s vision, mission, values and goals/objectives.

·         Congruent and constitute a viable business model.

5.     Implement by aligning the organization’s people and activities with the action plan/strategies.

The main task is to analyzing the organization external and internal environment then selecting the appropriate action that constitutes strategy formulation. But the hardest part is the implementation, which is taking actions consistent with the selected strategies of the company at the corporate level, allocating roles and responsibilities among managers, allocating resources, designing reward systems.

Some organizations go through a new cycle of the strategic planning process every year. This does not necessarily mean that managers choose a new strategy each year. In many instances, the result is simply to modify and reaffirm a strategy and structure already in place. The strategic plans generated by the planning process generally look ahead for a period of one to five years, with the plan being updated or rolled forward every year. In most organizations, the results of annual strategic planning process are used as input into the budgetary process for the coming year so that strategic planning is used to allocate resources within the organization.

Business Strategic Planning

Goals should be crafted based on the strategy of the company. There should be a cascading linkage of aligned goals throughout the company as shown on the picture below. Each department in company has goals that support the strategic objective. In term of an ideal condition, every employee has to understand his/her own goal, how to deliver the goal of their department and how the department goal can give impact to the company strategic objective.

What is strategy?

Manager has a responsibility to direct the employee to do the right things and to do things right. Doing the right things require the manager have a strategy. Doing things right is about effectiveness. These two are require to be a success company. Doing the right things is possible with the strategic planning which is a set of actions that develop a business competitive advantage to increase the performance of the company.

Competitive advantage is to be found in differences. The differences between the company and the competitor. The differentiation arise because the performance of each company. See picture below to understand how competitive advantage creates value for company.

Strategic leadership, strategy planning and strategy implementation.

Strategic leadership is how to most effectively manage a company's strategy-making process in order to create a competitive advantage. The strategy formulation is the task of selecting strategies. Strategy implementation is the task of putting the strategies into action, which is include designing, delivering, supporting, improving the efficiency and effectiveness of operations, organization structure, control system and culture.

A company is said have a competitive advantage over competitors when its profitability is greater than the average profitability and profit growth of the competitors. The managers must have the strategies that increase and grow the profitability of the company, known as ROIC - return on invested capital. To do this the company has to outperform its competitor then the company will have the competitive advantage.

A company must have a sustained competitive advantage to outperform the competitors. A company has a sustained competitive advantage when its strategies enable it to maintain above average profitability for a number of years. If a company has a sustained competitive advantage, it is likely to gain market share and achieve a higher profit growth compared to its competitors.

Business model

Basically a mental model and concept of the set of strategies and investments a company should pursue is called a business model. A business model draw a totality of how company will :

1. Select its customer.
2. Define and differentiate its product and service.
3. Create value for its customers.
4. Acquire and keep customers.
5. Provide value-added product and services.
6. Deliver the products and services to the market.
7. Configure its resources.
8. Achieve and sustain a high level of profitability.
9. Grow the business over time.

See below picture to understand defining a business. A fine tuning of a business model can make a huge impact and expected result.

click here to see the presentation slide

Goal setting as the essential part of strategic business planning

“Good grief, it is business planning or budgeting time again” is a common refrain among many managers. Business planning and budgeting can cause stress and conflict and is extremely time-consuming. However, good business plans that are properly budgeted are worth the time and trouble.

If one is the owner or manager of a small company with few cash resources, a good business plan can be the difference between financial success and the business’s inability to expand to its full potential, which may ultimately result in insolvency. The business planning and budgeting process forces the management team to estimate how many individual goods and services the company will sell, the cost of these item, the rate at which receivables will be collected, general expenses, and lastly taxes. These figures provide a forecast of the months or year ahead. A good business plan and budget helps the management team to assess whether the business will have adequate financial resources to stay the course. Business planning and budgeting for business as a whole can be a powerful control mechanism. It is also an action plan that guides organisations to reach their strategic goals.

Goal setting is a process for defining targets one plans to achieve. It is one of the essential functions of the management team. When one sets goals, one commits to outcomes that can be accomplished personally or through one’s subordinates. Goal setting makes it possible to focus limited resources and time on the things that matter the most. It sets the course of action. A goal is a precise and measurable aim that a company must desire to realise. In this context, the purpose of goals is to precisely specify what must be done if the company is to attain its mission or vision.

Key characteristics of well-constructed goals:

• Precise and measurable – this is to provide a yardstick or standard against which managers can judge the performance.

• Address crucial issues – this is to maintain focus. Managers should select a limited number of major goals to assess the performance of the company.

• Challenging but realistic – this is to provide employees with incentives for improving operations of the organisation. If a goal is unrealistic in the challenges it poses, employees may give up. A goal that is too easy may fail to motivate managers and other employees.

• Specify a time period – this is to motivate and inject a sense of urgency into attaining that particular goal. Time constraints remind employees that success requires a goal to be attained by, and not after, a given date. However, not all goals are constrained by time.

By setting the goals and measuring their success, one can focus on what is most important, waste less energy on non-critical tasks, and achieve greater results. The manager is responsible for setting personal goals and subsequently organisational goals for the department. Although most companies operate with a variety of goals, the central goal of most companies is to maximise shareholders’ returns, and doing this requires both high profitability and sustained profit growth.

However, it is important than top managers do not make the mistake of over-emphasising current profitability to the detriment of long-term profitability and profit growth. Therefore, some companies are more driven by the satisfaction, profit and wealth creation it brings than others and some are better at managing capacity and capital constraints and risks than others.

click here to see the presentation slide.