Vertical Vs. Horizontal Business Models

Disadvantages

Advantages

Opportunities & Threats

• Business decisions and actions are delayed when approval by each level of management is required.

• The quality of the effectiveness of those business decisions and actions is further diminished because of the limited freedom and responsibility of subordinate employees.

• Vertical business organizations incur a higher cost of management because managers are generally paid more than workers and each layer of management is paid a higher salary than lower layers.

• a clear management structure, such that the lines of responsibility and control are clear and the function of each layer will be clearer and more distinct.

• The ladder for promotion and progression is clear.

• Each manager has a smaller number of employees under his control, giving him a narrow span of control, which allows him to more closely supervise his employees.

Threats:

• A strong dollar could weigh down Facebook's top and bottom line over the next few quarters.
• Facebook faces ongoing questions about privacy in the EU, which could lead to a damaging probe of its business strategies.
• Data breaches could eventually turn hacked Facebook accounts into "skeleton keys" for SSO connected apps and websites.
• The rise of ad-blocking extensions like Facebook AdBlock could reduce the profitability of Facebook ads.

Opportunities:

• Owns WhatsApp and Instagram, but WhatsApp is not banned in China. This could open up the massive Chinese market.
• Citigroup analysts estimate that Instagram, which Facebook bought for $1 billion in 2012, could generate $2 billion in "high-margin" revenue annually after it is fully monetized with ads.
• Facebook is also evolving its stand-alone Messenger app, which can already be used for peer-to-peer payments, into a mobile platform of its own. This could eventually generate additional revenue from sponsored accounts, sticker sales, and e-commerce integration with third-party sites.

What makes Facebook successful?

Underlying Technology

What makes Facebook Different?

Why is Facebook easy to consumers?

• Facebook reproduces real, existing relationships, instead of just gathering contacts.
• Allows consumers to connect and develop relationships with others all over the world.
• Comes as an advertising tool for businesses

• Allows for quick access to friend database
• Navigation is explained through a tutorial when first signing up
• All writing and script is legible to all ages

Web 2.0 Principles

Vertical Business Model (Path)

Facebook has combination of concepts, trends, and technologies that focus on user collaboration, sharing of user-generated content, and social networking. They have embraced the change from static web pages to dynamic or user-generated content and to the growth of social media. People create the content, posts, and videos and are able to work together to network.

How is it Profitable?

The trick for social media companies like Facebook profiting as ad platforms is finding the best way to insert advertising into this "family-like" user experience without impacting the user in a negative way. They have integrated in-stream ads to the user experience. Consumers can even customize their own advertisements.

Disadvantages

When a company expands its business into areas that are at different points on the same production path, such as when a manufacturer owns its supplier and/or distributor. Target a specific industry or consumer.

Horizontal Business Model (Facebook)

• It may limit or hinder the growth of the organization, since upper levels management have a more direct and greater span of control of each lower layer, and taking on more departments will diminish their capacity to manage.

• Subordinates may have to answer to more than one superior, which may cause a conflict in their duties or an ambiguity in their work orders.

• the function of each department could become indistinct and merge into the job roles of others.

Opportunities & Threats

An organization that has an organizational structure with few or no levels of middle management between staff and executives. Targets all types of industries and consumers.

Threats:

1. Platforms that are more about media and less about communication

2. Consumers preferring platforms that profit through advertising, instead of functionality.

Opportunities:

1. Path is very popular among Asian markets, especially in Indonesia. They should exploit that market.

2. Keep creating diverse functions that consumers would be willing to pay for.

What makes Path successful

Underlying Technology

What makes Path different?

Why is Path easy to use

• Path creates a more intimate place for users to share with the people closest to them.
• There is a limit to the number of contacts users are allowed to share with.
• They do not use advertisements

• Path focuses on mobile, which makes it an even better tool for busy public figures who are always on the go.

• Path has a beautiful design and a clear interface

Web 2.0 Principles

Consumers can interact with this application and input information about themselves. Users add value to this platform and they are highly involved with the interface. They also have mobile commuting, so people can connect and post from anywhere. Most of the content is user-generated.

How is it Profitable?

Path is profitable through functionality. They do not want to deal with advertisements, so they offer an aspect they believe is more important to consumers. They will offer a platform of tools that, beyond the basic service, can be purchased and upgraded, including photo and video filters, advanced network management tools and Dropbox-like sharing capabilities.

Advantages

• better and increased communication between the levels of management and subordinates.

• Since there are fewer layers of management in the chain of command and less bureaucracy, making decisions is easier and of higher quality.

• The smaller number of layers results in lower costs to the organization in number of managers and a lower cap to their salaries. Also noteworthy is that there is better team spirit.

Vertical Vs. Horizontal Business Models

Facebook Vs. Everyone Else