Pair Analysis: Facebook and VK

It is beyond all doubts that social networks are getting more and more popular. The increasing number of people is using them all over the world. In spite of such world-known social networks as YouTube, Twitter, Facebook and MySpace, there are some national social networks as Xiaonei in China, VKontakte (VK) in Russia, Bebo in UK, and Mixi in Japan (Jain). Evidently, all of these social networking sites have many characteristics in common. On the contrary, there are a great number of points of difference that help distinguish one social media from another. Thus, the purpose of the research paper is to develop the analysis of social networks such as Facebook in the US market and VK in the market of Russia.

Pair Companies Analysis

Core Strategy. Facebook is a leading social network all over the world (Jain). The company was founded in 2004 in the USA. First Facebook was oriented on the domestic market. However, it managed to become an international social networking company with more than 1,000,000,000 users (Facebook). Facebook determines its mission as “Giving people the power to share and make the world more open and connected” (Facebook). The company focuses on student audience, namely young people that are socially active. Apparently, Facebook uses the strategy of worldwide expansion. Thereafter, the social network has a variety of languages with adopted interface for customers from different countries.

On the contrary, another social network for students is VKontakte. It is mainly oriented to young people living in Russia. However, from the mission of the company, it is obvious that it is targeting a range of customers throughout the world. Talking about VK mission, “VK is a social network for fast and comfortable communication of people all over the world.” As a proof, the social network’s interface is translated into 80 languages (VK). Importantly, the company has a smaller number of users than Facebook, which is 90,000,000 (VK). However, the social networking service takes the 5^th place of the most popular web-sites in the world (VK). Thus, the core strategy of the company is to capture as much audience as possible not only in Russia but all over the world.

Strategic Resources. In order to win tough competition while developing social media marketing strategy, the companies need to apply as many strategic sources as possible. First of all, due to the rapid development of smart phones usage, both companies Facebook and VK have launched the mobile version of their pages. In addition, both companies have already developed mobile and tablet applications that can be easily downloaded from Apple Store and Play Market for free.

Design is one of the most critical strategic sources that create a competitive advantage for the social media. Both companies are constantly working on their interface design in order to improve its comfortable usage and keep the users interested in updates and innovations. It is hard to say what social network design is better because this fact is dependent on the customers’ taste and likes.

Partnership Network. Both companies realize the importance of network partnership. They even have developed the partnership between themselves. For example, the registration in VK can be done with the help of customer’s Facebook account. Undoubtedly, such type of cooperation is mutually beneficial. For VK, it gives an opportunity to get fast registration and deliver a better service for users. On the contrary, Facebook receives the opportunity to develop public relationships that are oriented to the Russian-speaking society that the social network desires to capture (Kirk).

Customer Interface. Obviously, from a global point of view, Facebook is much more popular. It has the largest number of users and customers. On the contrary, during the last years, Facebook is struggling for the position in a large and desired market of social media platforms in Russia. However, the usage of VK as a social media among students in Russian-speaking countries is preferable to Facebook. On the contrary, Facebook is constantly changing its position in this market. Now, Facebook is orienting more towards politicians and business people of Russia. The strategy is rather effective because the popularity of Facebook in the Russian market is constantly increasing.

Revenue Model. Social networks are considered to be a rather profitable type of business. There are two types of resources from which social networks get money. The most profitable activity of social networks is advertisement. Thereafter, both Facebook and VK offer advertising to be placed on the side bars or in the news of the social networking. This option is possible on both websites and mobile applications. Moreover, the audience can be easily targeted because the main information about people is posted on their pages, namely gender, location, and interests. That is why the advertisement can easily reach the target audience (Miglani).

Another type of financial benefit that social networks receive is revenues from selling mobile applications. When users purchase virtual and digital products of VK and Facebook from the developer apps, these companies receive remuneration for it (Miglani). However, it is important to say that the advertisement revenue is much higher than the payment for digital products. Thus, the main source of revenues for such social networking as Facebook and VK is the advertisement.

Local Contextual Factors

Factor Conditions. Facebook is the US company with a head office in California. That is why the company needs to obey the policies of United States legislation relating to copy right, plagiarism and inappropriate content. One of the most discussed facts about Facebook is the minimum age of users. Children’s Online Privacy Protection Act determined that Facebook users below 13 years old need to get an explicit parental consent in order to register in the social network. However, this piece of legislation is aimed at drawing the attention of parents to their children internet usage.

VKontakte Ltd. is the full name of the company that owns VK social networking system. The head office is situated in Sankt-Petersburg, Russia (VK). Taking into account the fact that the company is situated in Russia, the governmental policy about social networks is rather specific. In fact, there have been many cases issued about the illegal usage of videos, films and songs by the VK users due to the fact that these works of art are the objects of copyright. The Supreme Arbitration Court of Russia stated in favor of the social network, stating that social media cannot be responsible for the actions of its users. However, management of VK has restricted the conditions of copyright objects usage. In addition, there is a policy about the pornography content restriction; nevertheless, such content still exists in VK posts.

Demand Conditions. The products of social networking industry are the websites that give an opportunity to communicate and share information with other users of social networking all over the world through the internet.

The global trend of social networking usage is constantly increasing. It is evident that people of all ages are using social networks all over the world. Both Facebook and VK that are oriented toward different markets have an increasing audience of active users. Thus, the demand for social networking platforms is increasing in Russia, the USA and worldwide. Moreover, in all countries, there is an increasing demand for mobile services and applications related to social networking. Thus, taking into account the Michael Porter’s theses of competitive advantage of nations, the United States is much more effective in creating competitive advantages for the industry of social networking (Porter).

Related and Supporting Industries. The supporting industries that provide the effective work of social networking are the industries of internet, telecommunications and high-technologies. Undoubtedly, all of these industries are much more developed in the US market. The country creates much more favorable conditions for these industries development; consequently, the support for networking platforms is much more considerable.

As for the Russian technological environment and industries supporting social networking services, they are not so developed as in the USA. In spite of the fact that considerable financial investments in high-technologies industry are made, it is still on the low level of development. However, the industry of social networking is being supported by imported products and services to Russia from well-developed countries. In such a way, the industry can reach a high level.

Firm Strategy, Structure, and Rivalry. Taking into account the trend of increasing popularity of social networks, both studied companies Facebook and VK are suffering from tough competitive conditions. The industry rivalry in the USA market of social networks is very intense. For example, there are such competitors as Instagram, Twitter and MySpace. These competitors are rather strong and have considerable market shares. However, Facebook is the leader in the US social networks market.

As for the Russian market, the main competitor of VK is Odnoklassniki that is the social networking platform oriented to people of middle age. However, VK is still more popular than its main competitor. In addition, it is important to say that the trend of globalization is taking place in the Russian-speaking market of social networking. Consequently, such world leaders as Instagram, Twitter and MySpace are capturing the market of Russia, thereby creating fierce competition for VK.

Both of the companies are adopting the strategy of capturing new markets and increasing the number of users and the market share. In order to reach this goal, they are trying to use such marketing means as public relations development and promotion. In addition, they are struggling for technical improvement of the product delivered.

Conclusion

Facebook and VKontakte are companies that are presented in different markets, namely Facebook in the US market and VK in the market of Russia. However, both Facebook and VKontakte are popular social networking platforms. They have similar purpose and the same scheme of earning revenues, mainly related to advertisement. Comparing these two companies, Facebook is more successful due to higher revenues and larger number of users. In addition, the environment in the USA is more favorable for social media networks development. This fact implies both technological and legislation criteria. As for the industry rivalry, main competitors for both social networks are Instagram, Twitter, and MySpace. However, the main competitor of VK is Odnoklassniki. Thus, the analysis shows that Facebook and VKontakte are successful and promising social networking platforms that satisfy internet communication needs of customers all over the world.

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