Comparison between Facebook and Tuenti

1. An analysis of the online social network industry
supported by the comparison of the strategy of two
online social networks: Facebook and Tuenti.
By
Celia Pape
Placement University: ICADE, Madrid, Spain
Word count: 5233 words excluding headings, figures, references, appendices.
May 2013
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2. Executive summary
The expansion of the Internet led to the development of the online social
media industry in the 1990’s, which is nowadays very powerful.
This report is an analysis of the social networking industry based on a
comparison between a global and well-known online social network,
FACEBOOK and a lesser known national and Spain-based one, TUENTI. This
report will first provide information about the industry in general, social
consequences that arose from the apparition of online social networks shown
by a literature review, and also an external analysis of the industry is made
demonstrating the threats and opportunities in the industry. The external
analysis of the social network industry will include a PEST (political, economic,
social and technological factors) analysis which is used to show companies their
possible threats and influences, and by Porter’s five forces model which will
give us a global idea of the status of the social network industry and market.
This report will also give information about two social networks, Facebook and
Tuenti, showing the strengths and weaknesses of their strategies towards the
external analysis and we will demonstrate how these two companies acquire
the sources of their possible competitive advantage. To provide this
information, an internal analysis will be done based on the resource based
theory and a complete analysis of the value chain of both businesses which will
show us how both Facebook and Tuenti adapt their strategies to the external
environment.
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3. Table of content
Chapter 1: Introduction………………………………………...p.4
Chapter 2: Literature review…………………………………...p.6
Chapter 3: Background information: Facebook and Tuenti…p.8
Chapter 4: External analysis of the social network industry…p.12
4.1 PEST analysis
4.2 Porter’s 5 forces
Chapter 5: Internal analysis of Facebook and Tuenti………..p.18
5.1 Value chain
5.2 The resourced based Theory
Chapter 6: Conclusion…………………………………………p.27
Bibliography……………………………………………………p.28
References………………………………………………………p.30
Annex…………………………………………………………....p.32
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4. Chapter 1: Introduction
In the past few decades, the internet went from being a marginal medium of
searching information and communication to a massive way of interaction and
acquisition of knowledge. Nowadays, it is well known that the Internet is the
major and most common medium of communication. Personal interactions
between people through the use of the internet are now globalized, both for
personal and work related matters, thanks to the development of e-mail and
instant messaging (Bargh and McKenna, 2004). More generally, this is referred
to as online social media which is composed of internet forums, blogs, pictures
or videos, social networks and also many other ways that allow people to
communicate or give their opinions. Online social network sites are web sites
on which users create a public (or semi-public) profile giving personal data and
then interact with other users thanks to these communication tools (AGPD
(Spanish Data Protection Agency and INTECO, 2009). With the increase of the
use of the Internet and online social media, most of the social network web
pages have become the most attractive and frequently visited web pages in the
Internet. One of the most relevant examples is Facebook, which is the most
famous and attractive social network, with around one billion users worldwide.
Even though Facebook is the most global social network, spread in more than
200 countries1, there are also a lot of smaller national social networks, such as
Orkut which is mainly in Brazil, QQ in China, Tuenti in Spain and many others2.
In this report we will see the differences and similarities, the strengths and
weaknesses of the business strategies of both Tuenti and Facebook and how
they adapt to the external environment of the online social network industry.
1
2
www.socialbakers.com.
www.alexa.com/topsites
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5. In a first part, the report will analyse the social consequences of the online
social network industry based on a literature review, then it will provide
information about Facebook and Tuenti, their history and background. To
understand better how the online social network industry works, an external
analysis will be drawn with both the PEST (Political, Economic, Social and
Technological) analysis and Porter’s five forces model. Finally, to see how
Facebook and Tuenti adapt their strategies to the external environment, an
internal analysis will be made based on their value chain and on the resource
based theory to see how they both acquire their sources of possible
competitive advantage.
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6. Chapter 2: Literature review
Nowadays, online social networks are an integral part of almost
everyone’s life. Online social networking is an important and very often
discussed topic in newspapers, dissertations, theses and other studies.
As the concept of online social network is quite recent, scientific reports and
analyses about that subject started in the early 2000’s and were mostly about
the impact of online social networks on people’s life and behaviour (Álvarez
Fernández M., 2013)
Online social networks are known to have both positive and negative aspects.
Nowadays, most of the opinions are negative about online social
networks and people tend to not trust these websites (see annex 2). According
to papers, dissertations and studies, online social networks imply a lot of
negative externalities.
For example, according to a recent study from the University of Colorado
Denver (2013), we saw that “unfriending” people on online social networks has
real life consequences and that therefore, the actions people do on an online
social networks will affect their personal life in the real world.
Furthermore, another study by M. Litt and M.L. Stock (2011) shows clearly that
the consumption of alcohol at a younger age could be influenced by online
social networks. Online social networks would have an impact on normative
perception. Other researches show that 25%-37% of adolescents put up on
their profile, information that is mainly and directly related to the consumption
of alcohol (Moreno, Parks, Zimmerman, Brito and Christakis, 2009), which
influences directly younger users and gives alcohol consumption a normal
image.
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7. There is also a lot of a large amount of public bullying and identity theft
generated by the use of online social networks (the Australian Psychological
Society, 2010).
Despite all the negative points of online social networks there are still
many good aspects about this industry. Indeed, it is shown that the online
format permits shy people or people who have difficulties socialising to have
social interactions easily on the online social networks. Therefore, online social
networks can increase the sociability of people but it can also lead to creating
romantic relationships which could be considered as a positive aspect of the
online social industry (the Australian Psychological Society, 2010).
Therefore, from a psychological point of view, online social networks are
beneficial because in some cases it is the only way for a person to be able to
create a relationship with others. But online social networks can also be the
cause of many social problems such as bullying, identity theft, and creation of
new norms which can be a real burden for the society and it is why now the
question of privacy has become very important.
Now, in the report we will analyse the online social network industry,
identify its threats and opportunities and then we will study the strategies of
two online social networks Facebook and Tuenti to see how they adapt their
actions and identify their strengths and weaknesses.
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8. Chapter 3: Background Information: Face book and Tuenti
1. Facebook
In less than 10 years, Facebook has become the most popular online social
network and is now one of the most well-known and visited websites on the
Internet.
Facebook is similar to any other social networks, the users have to create a
profile page sharing some of their personal details and then they can add their
friends, create groups, like pages and many more actions. Facebook has
created a competitive advantage due to its format and design which is unique
and designed the same for everyone, which limits threats, like spam that
invade any other social networks.
The idea of Facebook came from Mark Zuckerberg who, in 2003 created
Facemash, the predecessor of Facebook, while he was studying in Harvard. This
website was used by people to give their opinion about other Harvard’s
students saying whether they were “hot or not” using the pictures of the online
facebooks of the University. This website was then banned by the University’s
administration considering that it was violating and violating privacy. Mark
Zuckerberg almost got expelled from Harvard but quickly the charges were
dropped. After this happened, Mark Zuckerberg continued working on several
projects, when in February 2004 in launched “thefacebook.com”, which in
March of the same year started expanding to other universities such as
Stanford, Columbia and Yale. At the time, it was already a huge hit and reached
one million users. A week after he launched “thefacebook”, he was accused by
Cameron Winklevoss, Tyler Winklevoss and Divya Narendra, Harvard seniors, of
stealing there idea of a social network. Then, in 2005, “facebook.com” domain
was purchased for US$200,000 and in September a new high school version
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9. was launched. As Facebook was growing bigger some investors invested a lot of
money and Facebook grew even bigger starting developing itself even more. A
lot of applications and changes have been made since (timeline, games,
groups...), it has expanded to many countries and today, more than 1.06 billion
people have joined Facebook. In 2007, Facebook started an initiative,
“Facebook Platform”, which led to the creation of new programs for the
service, such as games or photo tools, by third-party software makers, creating
more money and increased popularity. Up until now, Facebook has been the
most famous social network ever invented but there are still many trials and
law suits against Facebook and especially Mark Zuckerberg.
From 2013 figures we can see that Facebook has 618 million daily active
users, 10 million applications, 70 different languages available, and total 2012
revenue of S$5.09 billion, which makes Facebook the most important social
network of our time. Facebook is also available in almost every country and in
every continent (see annex 1).
2. Tuenti
Tuenti is the most famous and used online social network in Spain. Tuenti is
a Madrid-based website which is often considered as the “Spanish Facebook”.
The name Tuenti is pronounced like the English word “twenty” and actually
means “tu identidad” which means in English “your entity”. The CEO and
founder of Tuenti is Zaryn Dentzel and Kenny Bentley is the lead programmer.
Zaryn Dentzel created Tuenti in spring 2006 in Spain after having worked in
online social networking in the United States of America. This web site is mostly
targeted at the Spanish audience.
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10. Unlike Facebook, to join Tuenti, people need to have an invitation that only a
user can send which makes this web site more secure.
Tuenti is very similar to Facebook when it comes to using it. Users need to
make a profile page also sharing their details and then they can get access to
the numerous applications and activities that Tuenti offers, as well as staying in
contact with their friends.
To prove Tuenti’s fast success all over Spain, we can see that in 2008, according
to Google’s annual search report, Tuenti was one of the most searched terms
only two years after its creation and its popularity is still expanding especially
among Spanish adolescents and also worldwide with its recent internalisation
strategy.
In 2010, Telefonica, which is considered as one of the most important
operators in the telecommunication sector in the whole world, providing
services in Europe and Latin America, bought 100% of the capital of this social
network for approximately 80 million euros.
More recently, Tuenti launched “Tuenti movil” which is the online social
network’s phone operator that uses the services of the Spanish phone
company “Movistar”, also owned by Telefonica, and that offers very
advantageous prices.
We can see from 2012’s figures that Tuenti continues expanding, nationally and
internationally, indeed we can see that in 2012, there were 13 million of
registered users which represented 30% more users than in 2011. Furthermore,
we can see that in 2010, Tuenti’s capital represented more than $10.000.000.
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11. With the acquisition of Tuenti by Telefonica and Tuenti’s strategy of translating
the network into more than 12 languages, will allow Tuenti to succeed in
attracting more and more users and increasing exposure and popularity.
As a conclusion of chapter 3, we can draw a comparison between
Facebook and Tuenti. On the one hand, Facebook has more users worldwide,
has a greater influence and is a global social network whereas Tuenti is a much
smaller quasi-national social network. Facebook generates a much greater
revenue and is accessible in more countries than Tuenti and is available in a
much larger variety of languages. However, whilst Tuenti tends to copy the
successful attributes of Facebook such as the creation of applications or games
and the introduction of “Tuenti Movil” (Tuenti for mobiles), Tuenti’s privacy
system is considered more efficient than Facebook’s. It is also clear that
Facebook’s influence in Spain is not as high as in the USA and we can see that,
in 2012, in Spain, there were approximately 16,000,000 Facebook users and
more than 13,000,000 Tuenti users.
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12. Chapter 4: External analysis of social networking
In this chapter an analysis of the macro environment of the online social
network industry will be provided supported by the PEST (Political, Economic,
Social, and Technological) analysis and Porter’s five forces model.
4.1.
PEST Analysis
The PEST analysis allows companies to acknowledge better their threats,
opportunities and includes society factors that have a great influence on
companies. The PEST analysis uses four major factors to study these pressures:
Political, Economic, Social, and Technological factors.
 Political:
One of the main issue regarding social networks is privacy and security. Indeed,
in recent years, some governments have introduced many new policies and
laws in order to fight against the loss of personal privacy which means that with
these new laws, it will be more difficult for social networks to cope with the
new privacy conditions and more restrictions and tighter controls will have to
be made on the web site. If social networks do not take these actions into
consideration, there will be a significant increase of law suits and continuously
growing global distrust eventually leading to Government interference and
control as has recently been seen in Saudi Arabia and China. (See annex 2).
Websites such as Facebook and Tuenti set a minimum age limit of 13 years old
to create an account, but it is recognised that children do not respect these
conditions and the networks currently do little to enforce this condition.
In the social network industry there is also pressure to track down criminals
such as paedophiles that are known to hunt their victims using social networks.
This could be one of the main reasons why Governments would like to shut
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13. down any existing social networks. Therefore the social network industry needs
to have more strict policies in order to keep people’s personal lives secret and
more generally to keep people safe and avoid propaganda and subversive
activities.
 Economic
The economic factor for social networking is also very important. Indeed as we
saw in the description of Facebook and Tuenti (chapter 3), the social network
industry generates a large cash flow and profits. Social networks are mostly
financed by advertisers and important investors which will see in these online
social networks a way to promote themselves and a new way to target markets
through viral marketing techniques amongst others.
 Social
Social networking is nowadays a trend. There is social pressure to be signed in
in one or more social networks. Almost everyone is signed up in a social
network regardless of the age, gender, ethnicity… (See annex 3). There is also a
great risk for online social networks because they are highly correlated to the
existing trends and depend on it therefore a switch in consumer’s preferences
is a threat for the companies. For example, in 2004 when Facebook was
created, there was a significant change from Myspace to Facebook. Online
social networks have also changed significantly our behaviour, social networks
are part of our lifes and impact on it, with people spending much more time
surfing the net and visiting their online social network pages. According to the
“Daily Mail” (August 2011, United Kingdom) the new version of the Oxford
dictionary added a lot of new words directly related to the online social
networking industry such as “Retweet” which means to forward a message on
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14. Twitter, “cyberbullying”… which shows that online social networks even have
an influence on the way we express ourselves.
 Technological
There is a constant creation of new applications and widgets by developers.
With the appearance of Mobile social media which is a combination between
social media and mobile devices (Facebook and Tuenti with Telefonica) we can
witness that there is constant technical progress. The creation of mobile social
media has increased significantly the number of users of social networks, since
people now have access at all times.
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15. 4.2.
Porter’s five forces model
The Porter 5 forces analysis was named after Michael E. Porter and was
developed in 1979. It is a model that studies the five competitive forces that
shape all the industries and therefore helps to draw their strengths and
weaknesses. The five forces are: customer power, threat of substitute
products, supplier strength, threat of potential new entrants, and rivalry among
current competitors. Altogether, these five forces represent the main
components of an industry’s structure (Johnson, Schole and Whittington,
2011).
 Customer power
On average, every user of social networks has around 1.6 accounts and they
check their accounts in transition periods.
The customers exercise great power on these companies, since the main
income of the social network industry is advertising.
Social networks always have to attract more users and maintain their
customers happy with the service they provide since it is very easy to change
and get a similar service from another online social network, or another media,
at a lower cost.
 Threat of substitute products
The threat of substitute products is not very high. Other types of online social
media could be considered as a substitute product to social networks. Other
web sites with a large amount of users may be considered as a social
networking component such as: EBay, Amazon or Blockbuster. What also could
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16. be considered as a threat for the mobile social networks is that people are now
heading towards more direct message applications such as “WhatsApp” or
“WeChat”.
 Supplier strength
The supplier power is often very low and they have a very low bargaining
power because the providers of widgets and applications are often small
developers and there is a high level of competition between them, therefore
they do not have a great influence over the social network industry.
 Threat of potential new entrants
There are a lot of new social networks being created every day in the market.
There is also the apparition of smaller social networks that are more specialized
and organized around a specific topic or hobby aimed at niche markets, such as
“Last.fm” for those who love music or many other recruitment web sites such
as ‘’Linked In’’, for example.
Facebook and all the other social networks remain very popular but now they
are being overshadowed by new instant messaging applications, which might
be the start of a new trend, especially in Asian markets where we saw that
Facebook was not even the leader in the online social network industry (Annex
1). But even though a large number of new online social networks enter the
market and try to acquire a dominant position, the market is still dominated by
a few online social networks, therefore, we could say that the threat of new
entrants is not high at present but is a force to be considered in the future.
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17.  Industry rivalry
There is an intense competition between the current running social networks.
The most famous social network nowadays is Facebook, but there is also
Twitter, Tuenti and a multitude of others, therefore there is an intense
competition between online social networks. Nowadays, the online social
network industry keeps growing as new entrants come into the market making
the competition more intense.
Therefore, based on the PEST analysis and the Porter’s five forces model,
we can see how the external environment influences on the social network
industry. It is an industry that has a high level of competition and more and
more substitute products which constitute a high threat to this industry. In
recent years this industry has known a lot of problems, especially regarding
personal privacy which has led to the creation of new and harder legal actions
undertaken by most of the governments in order to lower the risk of sexual
predators or personal exposure. Even though social networks are still famous
and largely used across the world, the online social network industry, which is
approaching the end of its industry life cycle, is losing slowly its importance and
the interest of investors and major advertisers which represent the majority of
its revenue (Terry Corbel, 2009). Existing online social networking companies
will have to become more creative if they wish to retain their profits.
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18. Chapter 5: Internal analysis of Facebook and Tuenti
In this chapter, an analysis of the business strategies of Facebook and
Tuenti will be drawn showing how they acquire their source of competitive
advantage based on the resource-based theory and the value chain model.
1. The resource based theory (see annex 4)
The resource based theory is used in order to see what the resources of a
company are and how the company uses them and combine them in order to
acquire sources of competitive advantage and be the most successful company
in the market (Grant R. M., N/D)
 Facebook
Financially speaking, Facebook is a very wealthy online social network. As
we saw in chapter 3, its total 2012 revenue was more than US$5 billion. The
main sources of revenue of Facebook, like all the other online social networks,
are major advertisers and investors. According to the Business Insider web site,
Zynga (poker) is Facebook’s major advertiser and his second largest advertiser
is the web site FAB.com (designer company) which uses Facebook to build is
relationship with its customers.
Facebook uses a lot of technological and developer tools such as Codemod,
Phabricator, PHPEnbed… which are tools that make Facebook easier to use
both for users and developers. Furthermore, according to Bloomberg, a major
provider of financial news, Facebook spent US$1,219,000,000 in the year 2012
in Research and Development. The company has very flexible and efficient
employees and engineers who can switch tasks very quickly.
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19. From an organisational point of view, Facebook is a very powerful online
social network with, according to 2013’s figures, more than one billion users
and around 618 million daily active users. New words have been created such
as “facebookaholic” (Facebook addict) which proves the worldwide fame of this
online social network and even though its number of users dropped this past
year, Facebook still remains the most popular and visited online social network
worldwide.
Finally, according to the New York Daily News, the employees of Facebook
love working in this company and in 2012, Facebook was in the
“Glassdoor.com” list of the fifty best places to work in the web site.
Furthermore the article says that Facebook is considered to have a “fun” and
challenging work environment and that most of the employees are in
admiration of Mark Zuckerberg, the CEO. This shows how loyal and involved
the employees are in the company which is a positive aspect for Facebook.
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20.  Tuenti
In 2010, Tuenti’s capital represented more than US$10,000,000 and had
doubled from 2009. Like Facebook, Tuenti’s major revenue comes from
investors and advertisers. In 2010, Tuenti was bought by Telefonica, which is
Spain’s most influential operator in telecommunications with a capital of
currently 4.551.024.586€ and therefore has provided Tuenti with financial
support.
Tuenti is a technology company. The company counts more than 160
engineers and like Facebook, is always looking for the best talent in order to
continually provide the best service. Tuenti is continually innovating for
example with “Tuenti mobile” and its new designs of platforms.
Tuenti is a much smaller online social network than Facebook. In the
beginning, Tuenti was only a Spanish-based online social network but currently
it is gradually expanding abroad. According to the newspaper “el 20 minutos”
(july, 2012) Tuenti has adopted some internal strategy changes. Indeed, Tuenti
used to only target young Spanish people but the online social network now
wants to expand abroad, Tuenti is now available in more than 12 languages in
Europe, the United States of America and also South America and it is also
targeting a wider market and not only teenagers. Unlike Facebook’s recent loss
of users (1.4 million users in the US market and according to The Guardian,
600,000 in the UK), we saw that in 2012, with 13 million registered users,
Tuenti had gained 30% more users than in 2011 and that Tuenti, just after
Facebook, is one of the leaders of the online social network industry in Spain.
In 2012 Tuenti had 270 employees from 22 different nationalities which
proves the willingness of Tuenti to expand abroad. For its new expansion
project, Tuenti employed more than 100 new employees worldwide (“el 20
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21. minutos”, 2012). Moreover, according to Tuenti’s web page Tuenti’s employees
benefit from numerous advantages and there are a lot of group activities
organised by the company which favours communication and team building
between employees devised to increase their loyalty and generally improve
work conditions ultimately resulting in increased output.
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22. 2. Value Chain
The value chain is a process to see the organisation as whole system. It is
composed of subsystems which involve inputs, transformations and also
outputs. The value chain’s activities that are carried out will define the costs
that the enterprise will carry and consequently affect profits (Institute for
manufacturing, University of Cambridge)
 Facebook (see annex 5)
o Customer Value Requirements:
As well as providing a large platform for signed up people to exchange
information, Facebook allows an easy communications between users with the
help of a very wide range of applications such as the Facebook chat. Facebook
is also very easy to use and therefore we can say that it is “user-friendly“. (A
Lakshminarasimha and Ajay Vijayan, N/D)
o Design and development:
Facebook continuously improves and innovates its web site design. Facebook
has instituted an audience research support to allow it to match its design to
the desires of the users. According to the New York Times (March, 2013), in
order to regain people’s and advertisers’ confidence, Facebook has decided to
change significantly the home page of the web site. This will be a major change
after the launch of “Facebook Timeline”, introduced in 2011.
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23. o Procurement:
Facebook allows users to become part of a social circle. It's objective is to allow
users to create an environment where they can design applications which will
then be shared with other users, thus linking everyone.
o Production:
The new applications are created by small and not very powerful designers.
Then the back office of the website approves or not the applications and also
they verify the fact that new users provide a content-rich profile with their
personal details in order to be accepted. It also allows Facebook to put the
users in groups to allow communication and exchanges of thoughts or ideas.
o Marketing
Sponsorship is used to promote the website and social advertisements are
highly recommended.
There is also the use of viral marketing, which is a marketing process that
persuades people to pass on a message, and helps the website to encourage
more people to sign up. Words of mouth or emails are two great examples of
the viral marketing of Facebook.
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24.  Tuenti
o Customer Value Requirements:
Tuenti also provides a large platform for people to communicate and exchange
information. It also has a very wide range of applications such as
communication tools, games… Finally Tuenti is almost as easy as Facebook to
use, but unlike Facebook, to sign up on Tuenti, new users need an invitation
from people who are already signed up in order to make the web site safer.
o Design and development:
Just like Facebook, Tuenti makes changes in its web page very often. For
example, in 2012, Tuenti had designed a new interface for the users abroad but
then finally changed it to Spain too. Tuenti’s new design emphasize on
communication, the information is well organised thus the web site is a lot
easier to use.
o Procurement:
Tuenti allows people to sign up only with an invitation of a user. Tuenti is very
similar to Facebook and thus when signing up, people then become part of a
group. As we can see on their web site, Tuenti always adds or deletes
applications in order to always offer the best quality of service.
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25. o Production:
Tuenti always incorporates or deletes applications. Tuenti applications like
Facebook are done by small designers and then are approved or not by the
company. Design and application wise, Tuenti is often considered as a “simple
version of Facebook” (Lunden I. , 2012).
o Marketing
The promotion of the website is quite similar to Facebook’s. In order to sign up
on Tuenti, a user has to send you an invitation. Therefore Tuenti, like Facebook,
uses viral marketing. Tuenti also uses sponsorships just like Facebook and also
according to their website, visual communication; including promotional videos
are one of their main way to promote the website. The acquisition of Tuenti by
Telefonica was also a major marketing tool for the company, because as we
saw, Telefonica is the major phone operator in Spain, therefore this acquisition
increased Tuenti’s popularity and people’s awareness of this online social
website.
o Value delivery
The detailed activities explained above make the value delivery possible for
both Tuenti and Facebook. The objective of the sites is fully matched by the
value delivery.
25

26. To conclude, in this chapter we saw the internal analysis of both
Facebook and Tuenti. Facebook is clearly more powerful than Tuenti in the
online social industry with its large amount of users, its financial support and its
investigation and development skills. Tuenti on the other hand is a smaller
online social network with less financial support but which is now expanding
internationally and have a great potential to become famous worldwide in the
future. Tuenti, unlike Facebook who is now losing some of its users, is smaller
but more flexible, therefore has a greater ability to increase its number of
users. Facebook on the other hand, is a large corporation who is more exposed
to market erosion through new entries in the market and the competition from
smaller companies such as Tuenti. Facebook has now great difficulty in
maintaining its market share, hence its high investments in research and
development.
Therefore, with this internal analysis we can clearly see how both Tuenti
and Facebook acquire their source of possible competitive advantage and that
both have strengths and weaknesses.
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27. Chapter 6: Conclusion
In this report, we analysed the social consequences of the online social
network industry seeing the side effects which can be positive especially from a
psychological point of view but the online social industry also has negative
externalities that affects society. The online social network industry is a very
competitive industry with an extremely large amount of online social networks
and is nowadays considered as a mature industry almost in decline and
threatened by the apparition of substitute products. With numerous problems
arising because of online social networks such as public humiliation or identity
theft, governments are always trying to enforce legislation and laws especially
when it concerns personal privacy.
Facebook is nowadays the largest and the most famous online social network
worldwide but has recently been confronted with problems and a decline in the
number of users which will ultimately lead to an erosion of the trust of
advertisers and investors which is Facebook’s main source of revenue. From its
internal analysis we saw that even though Tuenti is still a small and not very
famous (outside of Spain) online social network, it has the resources and
capacities to increase its popularity and maybe become a more worldwide
reknowned online social network, like Facebook, and it is continually expanding
internationally in Europe, the United States of America and South America.
Therefore, the online social industry is still a very powerful industry in our
generation with Facebook as an industry leader but in the future things might
change and the online social industry might lose its power and substitute
products could take over.
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Bargh J.A., McKenna, 2004. The Internet and Social life, [online] Available at:<
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31

32. Annex
Annex 1
Annex 2
Source: www.cnbc.com
32

33. Annex 3
Source: http://pewinternet.org/Commentary/2012/March/Pew-Internet-Social-Networking-fulldetail.aspx
Annex 4 :
Source: “The Resource-Based Theory of Competitive Advantage: Implications for Strategy
Formulation“ (Robert M. Grant)
33

34. Annex 5:
Source: “Value chain analysis: Social Network Communities“ (A Lakshminarasimha and Ajay
Vijayan)
34