MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1 Table 1_Seven Cs 1.

1-First mover advantage: attracting more conservative users(1) 1.2-Passes Google as the most popular site(2) 1.3-Huge market share: 845m users; Leading photo sharing site: more that 14 Strengths million photos uploaded daily(3,4) 1.4-Most innovative company beating Google and Apple, offering popular platform for apps developers(5,6,7) 1.5-Available in over 70 languages(8) 1.6-Safety & Privacy issues: user accounts hacked and misused, users quit(9,10) 1.7-Too dependent on Zynga: 12% revenue 2011 of games & virtual goods, a Weaknesses significant number of pages generated by Zynga applications(11,12) 1.8-Shut down because of Islam cultural clashes, blocked because of conservative moral concerns(13,14) 1.9-Industry first mover knowledge and experience(1) Resources 1.10-Huge user base & market share(3,4) 1.11-Highly skilled staff, $0.5m~$1m/engineer(15,67) 1.12-Strongly innovative and effective R&D, better than what Google, Intel & Microsoft did in their lifecycle stages(5) 1.13-B2B Partnership: ads for marketers & social apps for developers(57) Core 1.14-B2C Innovation: Timeline(8-B), Like Button & Open Graph(59) Competences 1.15-Ecosystem relationship management: bring in a head of mobile developer for its mobile ecosystem(16) 1.16-Continuous enhancements of business processes, design and applications: exchange server capabilities, profile design & security applications(17,18) 1.17-Beating Google, Twitter & MySpace through capability of strong innovation and R&D(5) 1.18-Launching new products & applications: more advanced & higher speed than rivals(19,20) 1.19-Building barriers to entry & switching costs: establishing strong relationships, partnerships, strategic alliances such as with Microsoft for advertising & Skype for video chat(21,22) 1.20-More popular than competitors at colleges: started in 2004 as a site for college students(23) 1.21-Building a search engine on Microsofts search engine with its own data to rival Google(24) B2C 1.22-Connecting people with people, everywhere permitted(68) 1.23-Marketers, free channels; Advertisers with budget, solutions to audience; B2B Developers with resource, offer platform(69) 1.24-International revenue: 33%, 38%, and 44% of revenue in 2009, 2010, and 2011; as a net receiver facing risks of exchange rate and US Dollar strengthening(25) 1.25-Euro/US Dollar exchange rate uncertainty: affecting companys revenue and other operating results as expressed in U.S. dollars, the exchange rate forecast to suffer significant losses(26,27) 1.26-Government policies & control in China cause Facebook blocked(12) Political 1.27-Use of Facebook in US politics: increasing Obama fans to 19 million(28) 1.28-Increasing trend towards social networking, work related, colleges and Social universities; Everyone on it, pressure to belong(29) 1.29-Web 2: new Internet tools and technologies(30) Technological 1.30-Mobile technologies and devices(53) 1.31-OSN sites developing software: easy to build, low barrier to entry(31) 1.32-Environmental protection awareness, energy saving system, server center Environmental in cold area of Sweden(18) 1.33-Dell and Facebook: alliance to save energy(32) 1.34-Issue of uploaded materials ownership: certain use rights transferred(33) 1.35-US Federal Trade Commissions investigation: Facebook tracking user Legal activities after log-out, selling data of users to third parties(34) 1.36-EU Data Law: explicit consumers consent before data used (35) 1.37-Blocked in Saudi Arabian because of local conservative moral concerns(14) 1.38-Shut down in Pakistan & Bangladesh because of Islam cultural clashes(13) 1.39-Chinese culture: preferring productive activities such as studies and work (36,37)

Company

Competition

Customers

Currency

Country

Culture

MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1 1.40-Facebook & Microsoft: advertising, search engine(21) 1.41-Facebook & Dell: energy saving and environmental protection, providing Alliances cloud computing service, establishing data centers(32,38) 1.42-Facebook & Skype: video chat(22) Collaborators 1.43-Zynga: social games for Facebook network(52) Partners 1.44-Pandora: music apps on other sites(54) 1.45-HTC: a device for Facebooks mobile strategy(53) 1.46-Dell: providing infrastructure servers for a cloud computing project(39) Suppliers 1.47-Intel: supplying server technologies(40) Table 2_Ecosystem 2.1-Microsoft: alliance in advertising to reduce competition(41) 2.2-Beating Google, Twitter & MySpace through capability of strong innovation and R&D(5) 2.3-Launching new products & applications: more advanced & higher speed than rivals(19,20) 2.4-Building barriers to entry & switching costs: establishing strong relationships, partnerships, strategic alliances such as with Microsoft for advertising & Skype for video chat(21,22) 2.5-Talent acquisition by recruiting from competitors: David Fisher from Google(42) 2.6-Facebook Platforms: tools for companies development(43,44) 2.7-B2C: connecting people with people, everywhere permitted(68) 2.8-B2B: marketers, free channels; advertisers with budget, solutions to audience; developers with resource, offer platform(69) 2.9-Facebook & Microsoft: advertising, search engine(21) 2.10-Facebook & Dell: energy saving and environmental protection, provide Alliances cloud computing service, establish data centers(32,38) 2.11-Facebook & Skype: video chat(22) 2.12-Zynga: social games for Facebook network(52) Partners 2.13-Pandora: music apps on other sites(54) 2.14-HTC: a device for Facebooks mobile strategy(53) 2.15-Dell: providing infrastructure servers for a cloud computing project(39) Suppliers 2.16-Intel: supplying server technologies(40) 2.17-Continuing innovation & Privacy issues(45,56) 2.18-Gifts & Credit cards: virtual currency enabling fast and easy transactions across games on Facebook(46) 2.19-Virtual goods: purchase of virtual goods on social gaming applications(47) 2.20-Facebook platform: serving 1 billion Likes on the web in 24 hours, users sharing over 25 billion things a month(48) 2.21-Element of internet ecosystem: Like button & Open Graphs(59) 2.22-Risk: Zynga breaking away and a new Zynga.com(49) 2.23-Larger user base: 845m users 2011(61) 2.24-Finance: $240m investment of Microsoft & $5b IPO 2012(62,63) 2.25-IT Infrastructure: Linux system, MySQL database, PHP programming language(64) 2.26-Web 2: new Internet tools and technologies(30) 2.27-Mobile technologies and devices(53) 2.28-OSN sites developing software: easy to build, low barrier to entry(31) 2.29-Current shareholders(top 3): Mark Zuckerberg-28.4%, Jim Breyer & Accel Partners11.4%, Dustin Moskovitz-7.6%(41) 2.30-IPO: raise $5billion, new legal requirements & shareholders, dilution of control(25,50)

Competitors

Customers

Collaborators

Other Innovation

Interconnectivity

Related and Supporting Infrastructures

Other Stakeholders - Shareholders

MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1 Table 3_B-M Canvas Key Partners: 3.1-Microsoft: $240m (1.6%) investment; a new service of social network through Bing search(51) 3.2-Zynga: social games for Fb network(52) 3.3-HTC: a device for Fbs mobile strategy(53) 3.4-Pandora: music apps on other sites(54) Key Activities: 3.5-Privacy concerns: new products, marketers & developers on personal information(55), new privacy features announced(56) 3.6-B2B Partnership: ads for marketers & social apps for developers(57) 3.7-B2C Innovation: Timeline(58), Like Button & Open Graph(59) 3.8-Site Maintenance: account temporarily unavailable due to site maintenance(60) Value Proposition: 3.27-845m users, more than 70 languages(76) 3.28-B2C: social network platform for connecting people with people, everywhere permitted (68) 3.29-B2B: marketers, free channels; advertisers with budget, solutions to audience; developers with resource, offer platform(69) 3.30-Privacy concerns: new products, marketers & developers on personal information(55), new privacy features announced(56) 3.31-User friendly: search feature improvement for relevant & time saving, See More Results menu(70) Customer segments: 3.12-B2C: connecting people with people, everywhere permitted (68) 3.13-B2B: marketers, free channels; advertisers with budget, solutions to audience; developers with resource, offer platform(69)

Key Resources: 3.9-Larger user base: 845m users 2011(61) 3.10-Finance: $240m investment of Microsoft (62) & $5b IPO 2012(63) 3.11-IT Infrastructure: Linux system, MySQL database, PHP programming language(64) Cost structure: 3.21-Electricity: over $1m/month(65) 3.22-Datacenter Rent: $20m~$25m/year(66) 3.23-Server & Storage Hardware: $30m in 2007, $60m in 2009(66) 3.24-Talent acquisition: $0.5m~$1m/engineer(67)

Customer relationships: 3.14-User friendly: search feature improvement for relevant & time saving, See More Results menu(70) 3.15-Privacy: new features announced(56) 3.16-Customer support: databases answering, Get Satisfaction forum, human contact(71) 3.17-Royalty: US most visited site, users more loyal to Facebook than to Google News, major brands shifting online ad dollars(72) Distribution Channels: 3.18-Website: user login(61) 3.19-Facebook Platform: tools for companies & developers(73) 3.20-Mobile: HTC device(53), 350m of 800m users accessing(74)

Revenue streams: 3.25-Ads: $0.738b in 2009, $1.86b in 2010, $3.8b in 2011(75) 3.26-Facebook Credits: $39m in 2009, $140m in 2010, $470m in 2011(75)

Table 4_Ansoff EXISTING PRODUCTS Market Penetration 4.1-B2C user growth: 132% users growth in India, significant potential to expand further(80)(84); +609m/1001days, +0.6m/day, +7/second(82) 4.2-B2B: dominating in the U.S: 1/11 internet visits, 1/5 page views(83); 88% revenue growth in 2011, $3.7 b in 2011, $1.9 b in 2010(85) NEW PRODUCTS Product Development 4.5-Innovation: B2C website(61)(68), B2B platform(69) 4.6-Augmentation: larger user base(61), 70+ languages(76), privacy concerns(55,56), user friendly(70) 4.7-Extension: website new features Timeline(58), Like Button & Open Graph(59); 10,000 apps in 2007, 550,000+ apps in 2011(77)

EXI STI NG MA RK ET

MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1 Market Development Diversification 4.3-Mobile market: Fbs mobile strategy(78), channel 4.8-Facebook Zero: a service for developing NE & demand(74), HTC partnership(53), countries(81) W 4.4-Market monopoly: exporting new countries(61), 4.9-B2C diversify its services: Facebook Credits MA at least 127 countries No.1 spot & killing local social payments, transactions on Virtual Goods on gaming RK network competitors(79) apps(86,87) ET 4.10-B2B F-commerce failed: proving a less than inspiring venture for brands(88,89) Table 5_SAF Matrix 5.1_Acquisition Suitability 5-cases(99,100) Acceptability 3-failures(97) Feasibility 5-plans(101) Total 13 5.2_Strategic Alliance 5-licensing out(103) 5-licensing in(102) 3-risk(49) 13 5.3_Organic Growth 1 5 4 10 (in millions) 2008 58 145 150% 3% $272 78% $(55) 56% -20% $(56) 59% $(0.06) $297 $279 $131 $505 13% $174 $273 $11 $170 $335 $8 -27% $(55) $(55) $(70) $(88) -60% 2009 360 148% 1,218 6% $777 186% $262 576% 34% $229 509% $0.12 $633 $703 $148 $1,109 120% $241 $868 $155 1,838% $(33) $66 175% Apple(91) 2010 2011 $65,225 $108,249 52% 66% $18,385 $33,790 57% 84% 28% 31% $14,013 $25,922 70% 85% 16(93) 2010 608 69% 2,127 12% $1,974 154% $1,032 294% 52% $606 165% $0.34 $1,785 $1,857 $574 $2,990 170% $828 $2,162 $698 350% $(293) 2011 845 39% 3,200 16% $3,711 88% $1,756 70% 47% $1,000 65% $0.52 $3,908 $3,705 $1,475 $6,331 112% $1,432 $4,899 $1,549 122% $(606) Merger 2 2 2 6 Joint Venture 3 1 1 5

Table 6_KPIs-Valuation 1: Market-based Method 6.1_Facebook(25) Number of users Growth Rate Number of full-time employees Time spent online(98) Revenue Growth Rate Income(loss) from operations Growth Rate Operating Margin Net Income(loss) Growth Rate Earnings (loss) per share Cash, cash equivalents, and marketable securities Working capital Property and equipment, net Total assets Growth Rate Total liabilities Total stockholders equity Net cash provided by operating activities Growth Rate Purchases of property and equipment Free cash flow Growth Rate 6.2_Competitors Revenue Growth Rate Income from operations Growth Rate Operating Margin Net Income Growth Rate Current P/E Ratio 2007

2% $153 $(124) -81% $(138) $(0.16) $305 $250 $82 $448

Google(90) 2010 2011 $29,321 $37,905 24% 29% $10,381 $11,632 25% 12% 4 35% 31% $8,505 $9,737 30% 14% 20(93)

$188 $470 185% 150% LinkedIn(92) 2010 2011 $243 $522 102% 115% $20 $26 676% 32% 8% 5% $3 $12 185% 250% 695(95)

MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1

Table 7_Valuation 2: DCF to Calculate Enterprise Value and CLV Method 7.1_CLV diagram User Numbers USA DEVELOPED DEVELOPING X Revenue per user Direct costs per user = Contribution per user __ Overhead s = _ TAX _ 1 Attrition % X Terminal Value + Discounted Lifetime Value Per User by User Group / Type 5 = + Terminal Value Enterprise Value EBIT CAPEX

MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1 _ Acquisition cost = 7.22_6 Largest Countries(96) United States 94,748,820 United Kingdom 22,261,080 Turkey 14,215,880 France 13,396,760 Canada 13,228,380 Italy 12,581,060

7.2_Customers segments 7.21_Age(96) 13-17 18-25 26-34 35-44 45-54 55-64

20.6% 25.8% 26.1% 14.9% 8.0% 4.6%

MSC CAPSTONE---FACEBOOK 7-SLIDES APRIL 2012 Group Members: 139301/279269-1129313/1, 139337/279589-1129314/1 139189/278687-1129311/1, 139321/279499-1121916/1 References 1. www.diversity.net.nz/ accessed 08/03/12 28. http:// 2. www.dailymail.co.uk/sciencetech/ accessed 03/ techcrunch.com/2011/04/04/ accessed 24/02/12 02/12 29. http:// 3. http://newsroom.fb.com/content/ accessed 03/ blacklifecoaches.net/2011/09/ accessed 05/03/12 02/12 30. www.techsoup.org/ 4. www.insideFacebook.com/2009/02/23/ toolkits/ accessed 24/02/12 accessed 03/02/12 31. www.theinquirer.net/ 5. www.telegraph.co.uk/technology/ accessed 04/02/12 inquirer/news/ accessed 19/02/12 6. http://techcrunch.com/2007/05/24/ accessed 32. www.itnewslink.com/ accessed 28/02/12 04/02/12 33. http:// 7. http://developers.Facebook.com/docs/ accessed open.salon.com/blog/ accessed 04/02/12 04/02/12 34. http://jurist.org/ 8. www.Facebook.com/ accessed 04/02/12 paperchase/ accessed 25/02/12 9. www.thehindu.com/news/cities/ accessed 09/ 35. http://blogs.wsj.com/ 03/12 accessed 11/02/12 10. http://tech2.in.com/news/all/ accessed 11/02/12 36. http://laowaiblog.com/ accessed 01/03/12 11. http://news.cnet.com/ accessed 11/02/12 37. http://techrice.com/2010/12/02/ accessed 01/ 12. www.theatlantic.com/business/ accessed 11/02/ 03/12 12 38. www.eetimes.com/ 13. www.pcworld.com/article/ accessed 01/03/12 electronics-news/ accessed 01/03/12 14. www.foxnews.com/world/ accessed 28/02/12 39. http:// 15. http://thenextweb.com/Facebook/ accessed 06/ news.cnet.com/ accessed 24/02/12 03/12 40. www.readwriteweb.com/cloud/ accessed 05/03/12 16. www.readwriteweb.com/archives/ 41. www.incomediary.com/ accessed 03/03/12 accessed 04/03/12 42. http://allthingsd.com/20100326/ 17. www.forbes.com/sites/tomiogeron/ accessed 17/03/12 accessed 03/03/12 43. http://www.facebook.com/platform/ 18. http://inhabitat.com/ accessed 02/03/12 accessed 14/02/12 19. http://content.usatoday.com/communities/ 44. Evelyn M. Rusli. As Web Game Maker accessed 02/03/12 Negotiates, an I.P.O. Is Expected in 2012, New 20. http://techcrunch.com/2010/08/23/ York Times. February 18, 2011 accessed 17/03/12 accessed 03/03/12 45. Privacy 2.0, The Economist. January 21. www.microsoft.com/presspass/ 28, 2010 accessed 17/03/12 press/ accessed 29/02/12 46. http://developers.facebook.com/blog/ 22. www.nytimes.com/ accessed 17/03/12 2011/07/07/technology/ accessed 29/02/12 47. www.forbes.com/sites/greatspeculations/ 23. www.rasmussen.edu/ accessed 17/03/12 student-life/ accessed 05/03/12 48. http://techcrunch.com/2010/04/ accessed 24. http:// 21/02/12 venturebeat.com/2007/11/11/ accessed 01/03/12 49. www.msnbc.msn.com/id/46596047/ 25. UNITED accessed 17/03/12 STATES SECURITIES AND EXCHANGE 50. www.keynoodle.com/ accessed 01/02/12 COMMISSION Washington, D.C. 20549 Form S51. www.bloomberg.com/news/ accessed 18/02/12 1 REGISTRATION STATEMENT Under The 52. www.paymentsnews.com/2010/05/ accessed Securities Act of 1933: Facebook, Inc. accessed 06/ 18/02/12 03/12 53. www.hypebot.com/hypebot/ accessed 11/02/12 26. www.fx-mm.com/ 54. http://news.cnet.com/ accessed 18/02/12 12811/ accessed 08/03/12 55. www.insideFacebook.com/2010/05/11/ 27. www.futurecurrencyforecast.com/ accessed 08/03/12 accessed 14/02/12

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