Facebook in Spain

May 1

2014 Certificate of International Studies Jason T. Raley Jr.

FACEBOOK IN SPAIN

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Jason Todd Raley Jr.

Certificate of International Studies

Facebook in Spain

There are many reasons why Facebook should be promoted and can be utilized in Spain.

The culture is now developing in the direction of social media and mobile apps just as the U.S.

did in the late 2000’s. To understand how to utilize Facebook to its full potential in Spain we

must first understand a number of factors. First a SWOT analysis must be conducted to

understand what makes Facebook thrive and operate so effectively. Next an analysis of the

culture and people of Spain will be addressed. Also we must find out how to utilize Facebook to

its full extent in Spain to achieve the most use and attention, while protecting Spain’s cultural

integrity.

Facebook is a worldwide online social networking service. It was founded on February 4,

2004 by Mark Zuckerberg with his college roommates and fellow Harvard

University students Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and Chris Hughes. It

was originally limited to only students who attended Harvard, but eventually spread to other

Ivey League schools and then to other colleges and then became public to anyone over the age

of 13. Users must register before using the site, after which they may create a personal profile,

add other users as friends, exchange messages, and receive automatic notifications when they

update their profile. Additionally, users may join common-interest user groups, organized by

workplace, school or college, or other characteristics. Also users are encouraged to add

pictures, personal life information, make status updates, and link their Facebook with other

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social medias such as twitter, Instagram, etc. It is still a free site to join with a registered email,

and makes its profit through advertising revenue. ("Guardian")

Facebook is the world’s leading social media webs ite for women, and people between

the ages of 18-29. Over a billion people worldwide use Facebook on a weekly basis. Among U.S.

Internet users, 73% with incomes above $75,000 are on Facebook. It is the most popular social

media app on smartphones and accounts for 66% of total social media sharing on iPhones.

Eight-six percent of Facebook's users are outside the U.S. Also 29% of its users log in from Asian

countries. Nearly 75% of U.S. Internet users who have had at least some education in college

use Facebook, according to Pew Research. ("Facebook Demographics")

REVIEW OF CURRENT MISSION AND OBJECTIVES

Facebook’s current mission is far too indirect, vague, and does not play to the

company’s true values and differentiating qualities. The changes recommended are as follows.

“At Facebook Inc., we provide a channel for individuals to openly connect to

the world and express themselves as we strive to widen the scope of human interaction

within our global landscape.”

This mission does many things to correctly demonstrate the purpose and idea that

Facebook is trying to get across to the user. The point of Facebook is to give users the ability to

express their individual thoughts and ideas to their friends and world much more so than they

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would by word of mouth. Furthermore this mission states the main purpose of Facebook an

outlet for users to connect with their friends, businesses, and the world through a revolutionary

social media internet outlet. Our purposed mission revisions will give the Facebook team a

better understanding of what they are doing, trying to accomplish, who they are serving, and

the importance of the company.

OPPORTUNITIES & THREATS

Opportunities

INCREASING USE OF FACEBOOK THROUGH MOBILE DEVICES

Facebook has over 600 million people who use Facebook through mobile technology.

Over 60% makes up all users of Facebook who uses their Facebook through their mobile devices

but only 14% of net income comes from the mobile advertising for Facebook. Facebook can

create additional platforms that could be used to show advertisements for mobile users and

increase the company’s net income. (“Facebook”)

SOURCE OF REVENUE

The company relies on advertising on its network as a source of income. With over 1 billion

users, and being the 2nd biggest website in the world, Facebook could increase its opportunities

through the internet and increase its cash flow. The revenue of sales has increased by 158%

since 2010. Facebook has been cooperating with Microsoft for advertising banners and other ad

being shown on Facebook. Many companies have understood the increasing number of

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internet users using Facebook and have increased their market budgets for internet marketing.

(“Facebook”)

CHINA ALLOWING FACEBOOK

China’s government has lowered its government regulations dealing with the internet. This will

allow Facebook to be used in China and other Asian countries through the countries’ internet

market. But Facebook should be aware and ready for this type of entry. (“Facebook”)

OPEN MARKET PLACE FOR FACEBOOK

There are a lot of users and expanding coverage of the world. Facebook is positioned to open

the Facebook marketplace. This would bring more revenue than Facebook’s advertisements in

which would boost the company’s future forecast and company growth. (“Analysis of

Facebook”)

APPLE ACQUIRRING FACEBOOK

Even though it is unlikely that Zuckerberg would let Facebook get acquired and their enormous

appraisal, Apple may find that having Facebook and putting it into their system could be benefit

from profit on both sides. (“Analysis of Facebook”)

Threats

NUMBER OF MOBILE INTERNET USERS

With the increasing number of internet users who are using Facebook on mobile devices, the

mobile advertising only represents 14% of income for the company. Facebook will have

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decreasing advertising income as PC users will turn more into mobile users if they do not slow

down or decrease their mobile users. (“Facebook”)

SLOW GROWTH FOR ONLINE ADVERSTISING

Even though online advertising is still growing and are in double digits, the growth is constantly

decreasing from 23% in 2011 to 14% in 2012. This is threatening the growth of Facebook’s

income. (“FB SWOT Trends”)

INDENTITY THEFT

Identity thefts are very high on Facebook. Facebook has received strong criticism while giving

Facebook a bad image for its incapability of not being able to protect its 1 billion active users

profile and private information. This is primarily due to the user’s lack of securing their own

profile and other content. (“FB SWOT Trends”)

USERS USING AD-BLOCKING EXTENSIONS

Online users usually install extensions that block advertisements from internet websites. This is

also threatening Facebook’s model as they can’t view the advertisements which decreases the

company’s main income. (“Analysis of Facebook”)

WEAK BUSINESS MODEL

Facebook’s main objective is to attract social network users who need to connect to the world,

show advertisements, and charge other companies for those advertisements. For right now,

Facebook’s business model is good but in the future, the company may face some serious

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problems if some circumstances changes that are out of Facebook’s control. For an example,

the growth of internet advertising, new social networks, the growth of mobile users, and

earning income from other different sources. In addition, this leads to Facebook users losing

interest and some other super social site might takeover and Facebook might be on the back

end of history. (“Analysis of Facebook”)

INVESTOR CONFIDENCE

Investor confidence was decreased dramatically with the IPO catastrophe and many a lot of

investors have lost confidence in Facebook as a main source of investment. Share prices could

also be under a lot of pressure as more shares will be open for early investors to sell. (“FB

SWOT Trends”)

INTERNAL ENVIRONMENT STRENGTHS & WEAKNESES

Facebook has many strengths playing in its favor helping to make it by far the leading

social media website in today’s market place. One of its key strengths is its integration with

other websites and applications such as Twitter, Instagram, Pinterest, etc. Another huge

strength they have is the over 1 billion average monthly users who log on. Also Facebook is

extremely easy to navigate and use which is why it is by far the most used social media for

people over the age of 40 contributing to the over 1 billion users. Facebook also has a very good

understanding of what its users need as well as their behaviors by keeping track of things such

as “likes” and collecting massive amounts of data.

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A few weaknesses plague Facebook, but some of only minimal concern. A lack of a few

new and popular features potentially puts the company behind the swing of technology. A few

bigger issues within the company are its heavy reliance upon sales of advertisements, its poor

disposition towards users’ privacy rights, and its questionable protection of its users

information. Most of these weaknesses have not affected the company’s bottom line just yet

but they are definitely creating a slippery slope to fall down if things go unmonitored.

MARKETING

Marketing for Facebook is a huge strength and has become basically free for them. This

is because almost every business has a page now and no matter what the advertisement it will

say almost every time “Like us on Facebook.” Through this strategy the business is encourage

people to get on Facebook or make a Facebook to like their page. Another reason marketing for

Facebook is so easy is because most everyone has one and people like to fit it and follow the

trend. People want to be able to connect with their group of friends in whatever way they can,

and by uploading pictures, making status, tagging location, etc. not just the user, but all of their

friends are drawn in as well. So basically the experience and features of Facebook are the

marketing and it sells itself to the users because of it.

RESEARCH & DEVELOPEMENT

Facebook is the site almost all other social media tie into and link to, because of the 1

billion users it has. For example when you create a twitter account you have the option to link

your Twitter account to your Facebook account. By doing this every time you post a “tweet” it

automatically posts to your Facebook page as your most recent Facebook “status”. Another

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example of this would be with Instagram accounts linked to Facebook. Every time you post a

picture on Instagram it automatically gets posted to your Facebook and added to your albums.

This is a major strength for Facebook because it betters the user experience and gets more

users to use Facebook. The social network has launched many features that would allow closer

integration with other websites and producers of applications that run via Facebook, because of

the massive amount of data it already has on the user. Easy integration and use of applications

results in competitive advantage over other social networking websites that struggle to provide

the same level of service. ("Strategic Management Insight")

Another key strength that gives Facebook a huge edge over its competitors is its over

one billion and growing users. For a social network to grow, it must have users. The more users

the Facebook has, the more socially connecting it will become. With 1 billion active monthly

users, Facebook is able to connect people not only locally, but on a global as well. To

understand how important and far the reach has become an interesting statistic to know is that

71% of adults use Facebook compared to the second most used social media LinkedIn at only

22% and that is just second place, third is Pinterest with 21%, and Twitter is fourth at 18%. After

seeing those numbers it is safe to assume that Facebook has a high competitive advantage over

its competitors by 50% more users than its closest competitor. Also with all these abundance of

users Facebook ads are seen by a larger group of people generating more profit for the

company attesting to the fact that the company is worth over an estimated $68 billion.

("Strategic Management Insight") ("Social Media Update 2013")

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Facebook is known for constantly trying to provide users with the best experience

possible. The user is the key to making the experience so excellent and stands out among other

sites. No other business, besides Google, has as much data collected on what its users like,

dislike, needs and how the users behave online. It gathers this data directly by user actions such

as likes, pages viewed, topics discussed with on your wall or with friends, etc. For example if a

user goes to Buffalo Wild Wings Facebook page and like it the user would then start to see

advertisements and other things on their page showing or related to Buffalo Wild Wings.

Thanks to all of this data, Facebook knows what exactly to offer to its users , such as what

additional features and advertisements to show on your page. This allows them to further

improve their experience with Facebook which draws users back to use the site consistently.

("Strategic Management Insight")

INFORMATION SYSTEMS

Navigation has become a key factor in the success of a website’s use in today’s internet

age. Many people, with the majority older than 40, will give up on understanding how to use a

new website fairly quickly if they cannot grasp how to use it efficiently. Facebook, however,

stands out from many websites and other social medias because it has an easy to use interface.

It is integrated with many websites, can connect people through PC or mobile devices, is

translated into more than 70 languages and has many more additional features that lack other

social networks. The website is very easy to understand, at the top of the page you have three

notification icons for friend request, messages, and notifications where you simply click it and it

shows you all the new updates you have in each area. Also the page has a simple home button

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so when you click it takes you directly back to your main page to post status, navigate to other

pages, and do other task you want to do. The finally thing that makes Facebook so easy to use

is the simple “Like” option that has changed the way we approve things we view. By simply

clicking this button you will now receive all updates on what you liked and all the information

you could want on that topic or business. ("Strategic Management Insight")

As strong as Facebook’s IT has become the only way to critique and improve it is to stop

asking what it does have and start questioning what it doesn’t. In a landscape with new

technologies around every corner Facebook’s wide range of features still are missing a few

things. More specifically with the recent trend in WiFi availability and the ownership of smart

devices, video chat capabilities are becoming increasingly more popular. Another critiqued

feature is the missing option to unsubscribe from alerts which is extremely inconvenient in our

have it your way society. ("Strategic Management Insight")

HUMAN RESOURCES

Facebook’s human resource department is always quite busy due to the massive

amount of data and usage of the over 1 billion users. According to the Fortune 500 rankings

Facebook is #482 as of 2012. It currently has 6,337 employees as of December 2013 along with

a board of directors and most employees either specialize in IT or business back grounds. It is

still a leading and fast growing company, and recently opened stocks as of 2012. Facebook has a

motto that all of its employees are reminded of everyday by CEO Mark Zuckerberg, The phrase

“this journey is 1% finished” is posted on our walls, reminding us that we’ve only begun to fulfill

our mission to make the world more open and connected. The company encourages users to be

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bold. They want Facebook to open our culture and keep everyone informed and allow people

to move around and solve the problems they care about most. The company employees work

in small teams and move fast to develop new products, constantly iterating and

improving. ("Our Mission")

Operations Management

Facebook’s whole business model is based on a set of operations that are somewhat

new to the business world and unique to its respective industry. It is built upon the premise of

direct marketing, that is the information that Facebook oversees and eventually collects from

the constant activity of its users is then sold to companies who in turn use that information to

form targeted marketing campaigns. An innovative strategy to say the least but it has turned

out to be quite profitable over the short term run. Although upon further deliberation the

stability of this strategy has come into question. To explain why attention first must be brought

to the fact that more than 80% of Facebook’s revenues come from the sales of advertising on

its own network. These sales are based upon the amount of users whose information can be

accessed. Eventually the number of users will hit a cap and so will the value of the advertising

bids. If this says anything it is that there is a limit on potential growth. It also highlights that if

anything were to happen to that main revenue stream, profits would surely suffer. This now

brings us to the biggest weakness that could harm Facebook’s profits; Privacy rights. Facebook’s

collection of private user’s information attracts a lot of negative attention to the company.

Activists as well as governments in different countries have taken action against Facebook and

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companies like it. Internet privacy rights could truly decrease the amount of revenues gained

from the sale of user information.

FINANCIAL ANALYSIS

The way Facebook makes its profit is also a strength and is currently the 36th most

valuable brand. This is because by gaining its profit through advertisements and selling

information gathered through what users like and view, it allows Facebook to not charge users

to use the site. Since Facebook is a free site it dramatically increases the usage and retention

rate over time, because no matter what the situation or business when something is free more

people will use it. As a part of a 2007 ad deal, Microsoft sells some ads on Facebook and its

payment for the privilege reached $50 million in 2009. Also the Facebook Gifts and other virtual

goods such as sending amazon gift cards or iTunes cards account for between $30 million and

$50 million in 2009. With all this said it is a brilliant idea, because the more users on the site

seeing advertisements and generating data and gift giving the more profit Facebook makes.

Facebook has seen great profit and stability in its financial statements. (Tsukayama)

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Annual Income Statement (va lues in 000's )Get Quarterly Data

Period Ending: Trend 12/31/2013 12/31/2012 12/31/2011 12/31/2010

Total Revenue

$7,872,000 $5,089,000 $3,711,000 $1,974,000

Cost of Revenue

$1,875,000 $1,364,000 $860,000 $493,000

Gross Profit

$5,997,000 $3,725,000 $2,851,000 $1,481,000

Operating Expenses

Research and Development

$1,415,000 $1,399,000 $388,000 $144,000

Sales, General and Admin.

$1,778,000 $1,788,000 $707,000 $305,000

Non-Recurring Items

$0 $0 $0 $0

Other Operating Items

$0 $0 $0 $0

Operating Income

$2,804,000 $538,000 $1,756,000 $1,032,000

Add'l income/expense items

$6,000 $7,000 ($19,000) ($2,000)

Earnings Before Interest and Tax

$2,810,000 $545,000 $1,737,000 $1,030,000

Interest Expense

$56,000 $51,000 $42,000 $22,000

Earnings Before Tax

$2,754,000 $494,000 $1,695,000 $1,008,000

Income Tax

$1,254,000 $441,000 $695,000 $402,000

Minority Interest

($9,000) ($21,000) ($332,000) ($234,000)

Equity Earnings/Loss Unconsolidated Subsidiary

$0 $0 $0 $0

Net Income-Cont. Operations

$1,491,000 $32,000 $668,000 $372,000

Net Income

$1,491,000 $32,000 $668,000 $372,000

Net Income Applicable to Common Shareholders

$1,491,000 $32,000 $668,000 $372,000

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Balance Sheet (values in 000's)Get Quarterly Data

Period Ending: Trend 12/31/2013 12/31/2012 12/31/2011 12/31/2010

Current Assets

Cash and Cash Equivalents

$3,323,000 $2,384,000 $1,512,000 $1,785,000

Short-Term Investments

$8,126,000 $7,242,000 $2,396,000 $0

Net Receivables

$1,160,000 $1,170,000 $547,000 $373,000

Inventory

$0 $0 $0 $0

Other Current Assets

$461,000 $471,000 $149,000 $88,000

Total Current Assets

$13,070,000 $11,267,000 $4,604,000 $2,246,000

Long-Term Assets

Long-Term Investments

$0 $0 $0 $0

Fixed Assets

$2,882,000 $2,391,000 $1,475,000 $574,000

Goodwill

$0 $0 $0 $0

Intangible Assets

$1,722,000 $1,388,000 $162,000 $96,000

Other Assets

$221,000 $57,000 $90,000 $74,000

Deferred Asset Charges

$0 $0 $0 $0

Total Assets

$17,895,000 $15,103,000 $6,331,000 $2,990,000

Current Liabilities

Accounts Payable

$642,000 $488,000 $359,000 $166,000

Short-Term Debt / Current Portion of

Long-Term Debt

$420,000 $534,000 $450,000 $181,000

Other Current Liabilities

$38,000 $30,000 $90,000 $42,000

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Total Current Liabilities

$1,100,000 $1,052,000 $899,000 $389,000

Long-Term Debt

$237,000 $1,991,000 $398,000 $367,000

Other Liabilities

$1,088,000 $305,000 $135,000 $72,000

Deferred Liability Charges

$0 $0 $0 $0

Misc. Stocks

$0 $0 $0 $0

Minority Interest

$0 $0 $0 $0

Total Liabilities

$2,425,000 $3,348,000 $1,432,000 $828,000

Stock Holders Equity

Common Stocks

$0 $0 $0 $0

Capital Surplus

$12,297,000 $10,094,000 $2,684,000 $947,000

Retained Earnings

$3,159,000 $1,659,000 $1,606,000 $606,000

Treasury Stock

$0 $0 $0 $0

Other Equity

$14,000 $2,000 ($6,000) ($6,000)

Total Equity

$15,470,000 $11,755,000 $4,899,000 $2,162,000

Total Liabilities & Equity

$17,895,000 $15,103,000 $6,331,000 $2,990,000

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Statement of Cash Flows (va lues in 000's )Get Quarterly Data

Period Ending: Trend 12/31/2013 12/31/2012 12/31/2011 12/31/2010

Net Income

$1,491,000 $32,000 $668,000 $372,000

Cash Flows-Operating Activities

Depreciation

$1,011,000 $649,000 $323,000 $139,000

Net Income Adjustments

$1,035,000 $1,409,000 $191,000 $46,000

Changes in Operating Activities

Accounts Receivable

($378,000) ($170,000) ($174,000) ($209,000)

Changes in Inventories

$0 $0 $0 $0

Other Operating Activities

$213,000 ($463,000) ($29,000) ($44,000)

Liabilities

$841,000 $134,000 $238,000 $160,000

Net Cash Flow-Operating

$4,222,000 $1,612,000 $1,549,000 $698,000

Cash Flows-Investing Activities

Capital Expenditures

($1,362,000) ($1,235,000) ($606,000) ($293,000)

Investments

($883,000) ($4,876,000) ($2,399,000) $0

Other Investing Activities

($379,000) ($913,000) ($18,000) ($31,000)

Net Cash Flows-Investing

($2,624,000) ($7,024,000) ($3,023,000) ($324,000)

Cash Flows-Financing Activities

Sale and Purchase of Stock

$1,504,000 $6,777,000 $1,026,000 $506,000

Net Borrowings

($1,891,000) $1,335,000 ($261,000) $160,000

Other Financing Activities

($889,000) ($2,862,000) $0 $0

Net Cash Flows-Financing

($667,000) $6,283,000 $1,198,000 $781,000

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Effect of Exchange Rate

$8,000 $1,000 $3,000 ($3,000)

Net Cash Flow

$939,000 $872,000 ($273,000) $1,152,000

("Facebook Inc.)

Financial Ratios (values in 000's)

Period Ending: Trend 12/31/2013 12/31/2012 12/31/2011 12/31/2010

Liquidity Ratios

Current Ratio

11.88% 10.71% 5.12% 5.77%

Quick Ratio

11.88% 10.71% 5.12% 5.77%

Cash Ratio

10.41% 9.15% 4.35% 4.59%

Profitability Ratios

Gross Margin

76% 73% 77% 75%

Operating Margin

36% 11% 47% 52%

Pre-Tax Margin

35% 10% 46% 51%

Profit Margin

19% 1% 18% 19%

Pre-Tax ROE

18% 4% 35% 47%

After Tax ROE

10% 0% 14% 17%

("Facebook Inc.")

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Income Statement

The Income statement shows revenues trending positively with the most recent period

increasing 55%. This success endorses its business model of profit through advertisements as it

is considered strength of the company. Another strength represented within this income

statement is the company’s ability to re-invest and grow. In 2012 R&D expenditures increased

over 300% while Sales, General, and Administration expenses increased over 200%. These

actions decreased net income from the previous year by 95%. What would be considered a

risky move increased the following years net income by nearly 500%, while also increasing total

revenues and in turn market share. No giant weaknesses are apparent in this income

statement. Facebook total revenues for example are over ten times greater than that of rival

competitor Twitter’s which lists in at $664 million in 2013.

Balance Sheet

Facebook’s balance sheet tells a similar story to that in the income statement. Signs of the

company’s ability to grow are prevalent throughout this financial statement. I would like to first

bring attention towards the substantial growth in current assets over the four year period.

Supporting an average growth of $3.6B Facebook shows the competency to grow at a healthy

pace. Big increases in net receivables and short term investments between 2011 and 2012

coincide with the organizations concentrated efforts in sales and R&D during the same period.

This once again provides the effectiveness of Facebook’s strategies. Another relevant financial

strength of Facebook is its ability to pay off debt, proving its creditworthiness. Note the sharp

decline of long term debt in 2013 from years prior. The current balance is at a four year low

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after decreasing 88% from the previous year. The company’s drastic increases in fixed assets in

the first two periods could be seen as a weakness, but after an average increase of 109% after

the first two years the flow has ebbed to a much more comfortable increase of only 20%. With

matching growth in revenues this should not be of any concern as the company is purely

expanding capacity at a rate that it can support. The future concerns of privacy rights affecting

Facebook’s sources of capturing revenue could pose as a concern as they would then be harder

pressed to maintain their increased fixed costs.

Statement of Cash Flows

The periods encompassed in these financial statements represent a strategy of concentrated

growth built off a cycle of debt and re-investment. The trend of net borrowing through-out the

comparative periods follow a cycle of indebtedness and re-payment. The net cash flows from

investing steadily increase showing a dedication to self-improvement and growth. Cash flows

from operations also grow at an acceptable pace although not quite enough to totally support

the company’s growth initiatives. This is where a red flag arises. It seems the key to supporting

their growth is through their sales of stock. Even though that is not a terrible method of

generating capital, it masks their inability to cover all costs on their own. Without the sale of

this amount of stock gains through either dividends or increased value of stock price for

shareholders would be impossible as they would not have enough money to either grow as fast

as they would like or to pay dividends.

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Financial Ratios

Compared to industry competitors Facebook’s liquidity ratios are a bit on the high side. In the

most recent period current quick and cash ratios for twitter and linked in (two major industry

competitors) are (11.42%, 11.42%, 9.91%), and (4.29%, 4.29%, 3.63%) respectively. Facebook

however generates quite more revenues than these companies and therefor naturally may

incur more liabilities. Also note that on average the respective profit and operating margins are

15+ and 25+ percentage points higher than that of these two competitors.

SUMMARY OF ALL STRATEGIC FACTORS (SWOT TABLE)

Strengths Weaknesses

1. Integration with websites and applications

2. More than a billion active monthly users

3. Excellent users experience

4. Understanding of user’s needs and behavior

1. Weak CTR of advertisements

2. Social network lacks of some features

3. One source of revenues – advertisements on

Facebook

4. Attitude towards users’ privacy

5. Lack of website customization

6. Weak protection of users’ information

Opportunities Threats

1. Increasing number of people using Facebook

through mobile devices

2. Expansion to China

3. Diversify sources of revenue

4. Open Facebook marketplace

1. Increasing number of mobile internet users

2. Users using ad-block extensions

3. Slow growth rate of online advertising

4. Identity thefts

5. Weak business model

(“Strategic Management Insight”)

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Now that we understand Facebook’s (SWOT) position we can now discuss the country of

focus in more detail. The official languages are majority Spanish with a large amount of the

population speaking English as well. Spain is a country in south-eastern Europe and is the

world’s 13th largest developed economy. Spain is a democracy organized in the form of a

parliamentary government under a constitutional monarchy. As of 2014, Spain ranks 24th on the

worldwide quality of life index rating. It is a member of the United Nations, NATO, OECD, and

WTO. The capital is Madrid and the country has a population of 46.7 million along with a land

area of 195,000 miles. ("Spain Demographics Profile 2013")

The Spanish Constitution of 1978 is the culmination of the Spanish transition to

democracy. As a result, Spain is now composed of 17 autonomous communities and two

autonomous cities with varying degrees of autonomy thanks to its Constitution. The

constitution also specifies that Spain has no state religion and that all are free to practice and

believe as they wish. As of November 2009, the government of Spain keeps a balanced gender

equality ratio. Nine out of the 18 members of the government are women. Spain is a

constitutional monarchy, with a hereditary monarch and a bicameral parliament, as well as the

Cortes Generales which are the General Courts. The legislative branch is made up of the

Congress of Deputies with 350 members, elected by popular vote on block lists by proportional

representation to serve four-year terms, and a Senate with 259 seats of which 208 are directly

elected by popular vote and the other 51 appointed by the regional legislatures to also serve

four-year terms. ("Spain Government")

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The literacy and schooling rates for people in Spain is very well suited for Facebook to

thrive. The total population that can read and write is at 98% with schooling taking about 17

years, which is a mirror image average in the United States as well. This is important is because

for Facebook to work in Spain the people using it must be able to fully read and operate the site

to get the full benefits of it. Also the urban population is around 80% which is a great thing for

Facebook. This is because the more people living close together and to a high quantity of

businesses the more people will be able to see the people, places, and advertisements that

Facebook is known for. ("Spain Demographics Profile 2013")

The main religion in Spain is Roman Catholic making up 85% of the total population. This

is a good thing for Facebook, because with Catholicism there is no extreme opposition to

Facebook like with some religions in Asia. The whole point of Facebook is for people to express

their thoughts, feelings, ideas, and view others; as well and if there are religious ideas or morals

that would hold them back from doing these things there would be no point to Facebook even

trying to seriously enter the country. ("Pray For Spain")

The Spanish people have a very different daily schedule than most Western Europe

countries and the United States. Lunch is the main meal of the day instead of dinner and is

around 2 pm followed by a nap called a siesta. Now due to modern times instead of actually

take the siesta this time is used commuting, shopping, or hopefully after Facebook enters the

culture will be used for logging on to social media. At night Spaniards have a lighter meal at

dinner taken around 9 pm and then spend time with the family or going out with friends.

Facebook can also utilize this by giving them a way to post about spending time with their

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family, and finding new things to do and places to visit in their local area through Facebook

advertising and other users post. (“Spain”)

To further understand the Spanish culture a true Hofstede cultural report should be

done. A Hofstede cultural report includes six aspects of a country. The six Cultural contrasts are

power distance, individualism, masculinity, uncertainty avoidance, pragmatism, and indulgence.

Each one of these six characteristics will be fully addressed to understand how well Facebook

will tie into these cultural segments. ("What about Spain Hofstede")

HOFSTEDE ANAYLSIS

Power distance is defined as the extent to which the less powerful members of

institutions and organizations within a country expect and accept that power is distributed

unequally. Spain’s score on this dimension (57) is a high score, which means that Spain has a

hierarchical society. This means that people accept a hierarchical order in which everybody has

a place and which needs no further justification. Hierarchy in an organization is seen as

reflecting inherent inequalities, centralization is popular, subordinates expect to be told what

to do and the ideal boss is a benevolent autocrat. This is good because if the top hierarchy,

political leaders, and other important people are using Facebook then the lower levels of

Spanish society will follow the tread. ("What about Spain Hofstede")

Next is the characteristic of individualism. Individualism can be defined as the degree of

interdependence a society maintains among its members. Spain, in comparison with the rest of

the European countries is a collectivist society hence the score of 51. However, compared with

other countries around the world it is seen as clearly individualist. This has proven to help make

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the Spanish people relate to and adopt certain cultures -mainly non-European- whereas other

cultures can sometimes be closed minded and not open to new things. In Spain teamwork is

taught from a very young age and very natural, employees tend to work in this way with no

need for strong motivation from Management. This is great for Facebook, because since

everyone is so open to trying new things and follow the crowd once the trend of having a

profile starts it will catch on very fast and generate quite a bit of usage. ("What about Spain

Hofstede")

Masculinity is the defined as the higher scoring cultures on this dimension and indicates

that the society will be driven by competition, achievement and success. If the score is low the

culture is defined as feminine and is described as having dominant values in society that are

strong is the aspect of caring for others and quality of life. Spain scores 42 on this dimension

and is a country where the key word is consensus. So polarization is not well considered or

excessive competitiveness appreciated, this means togetherness and getting along with your

fellow man takes precedence. Spanish children are educated in search of harmony, refusing to

take sides or standing out. There is a concern for weak or needy people that generates a natural

current of sympathy. So with this said it is relatively accurate to say that Spain is a feminine

society. This is also great for Facebook, because we want the Spanish people to be concerned

with one another and care what is going on in the lives of others. This will generate more

people logging on to check in on their friends and see what is happening in their lives as well as

write messages, status updates, and communicate with one another online generating more

usage and data. ("What about Spain Hofstede")

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The fourth characteristic of Hofstede’s cultural dimensions is uncertainty avoidance.

This is defined as the extent to which the members of a culture feel threatened by ambiguous

or unknown situations and have created beliefs and institutions that try to avoid these. Spain

has a score of 86 in this category. People like to have rules for everything, changes cause stress,

but, at the same time, they are obliged to avoid rules and laws that, in fact, make life more

complex. Confrontation is avoided as it causes great stress and scales up to the personal level

very quickly. There is great concern for changing, ambiguous and undefined situations. This

characteristic can be a negative for Facebook’s transition to Spain, because like stated, above

the Spanish people do not take change well and transitioning to a whole new type of way to

have and enjoy friendships, gather news, and run businesses can be quite frightening to them.

("What about Spain Hofstede")

Pragmatism is the next characteristic to be address. It is defined as how people in the

past as well as today relate to the fact that so much that happens around us cannot be

explained. Spain is a normative country and scored a 48 in this category. Spanish people like to

live in the moment, without much concern about what will happen tomorrow. In fact, Spain is

the country that has given the meaning of ‘fiesta’ to the world. In Spain, people look for quick

results without delays. They like to enjoy life and live it to the fullest while they can. Facebook

can use this attitude to its advantage, because through Facebook Spaniards gain more out of

their lives. This can be accomplished by using Facebook to follow and learn more about not only

their friends, but also places to see and visit as well and the news and current events, because

it’s a minute by minute up data and Spaniards like quick and instant seeable results. ("What

about Spain Hofstede")

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The final characteristic discussed by Hofstede is indulgence which, is defined as the

extent to which people try to control their desires and impulses . Spain comes into this category

with a low score of 44, Spain is by no means an indulgent society. This indicates that Spaniards

have a tendency toward cynicism and pessimism. This is not a great characteristic for Facebook

to have to face while entering Spain. Since there is a strong chance that the people of Spain will

be pessimistic of Facebook from the start it will have to be very appealing from the start. This

means Facebook will have to spend more money on advertising, quality controls, and research

to make sure it has no problems from the start. However based off of the other characteristics

once it has been accepted it will be a fast growing trend and have no problem becoming a norm

of the culture. ("What about Spain Hofstede")

Through these six characteristics I have found that four out of the six play in favor of Facebook

entering into Spain’s culture. To concur the two characteristics that don’t play in favor of Facebook’s

entry, the company must use not only the four characteristics playing in their favor, but use successful

research, marketing, and quality assurance to get that initial foot in the door. Once Facebook has made

its initial positive mark on the Spanish society it will have no problem gaining an abundance of users and

data to create the reputation it needs to thrive and become a permanent cultural aspect.

The age group Facebook is targeting in Spain are people between the ages of 18-30,

because in the countries Facebook has the most success in these are the ages that post, travel,

and look most into the advertisements. The people in this age group in Spain enjoy going to

clubs, out with friends, soccer, and following the news/ current events. All these things are

ideal because it Facebook gives them a way to utilize all these to get the most out of them.

Another important factor about this age group that differs from the older Spaniards is that this

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age group is much more outgoing and very opinionated and wants others to hear what they

have to say. Facebook gives these people a way to get more out of what drives them every day

and should be a key factor in the success of it in Spain. (“Spain”)

Facebook can work well in Spain for many reasons. It hits on aspects that apply to things

found in all cultures friendship, news, businesses etc. Through Facebook the people of Spain

can find a new way to interact and enjoy their friendships. Also in Spain the news it a very big

issue because not all homes have television and reading the newspaper is becoming more and

more of a hassle while on the go, so through the mobile Facebook app. the Spanish people can

not only keep up with their Facebook news feed, but global news as well through adding news

stations as friends. Another key factor that will help Facebook thrive in Spain is the fact that a

majority of companies and businesses in Spanish are family or locally owned and can use it to

get more advertising and business through page views and like.

Friendships in Spain are not short lived things like they are sometimes here in the

United States. Once a true friendship is made it is almost like a family bond and keeping contact

is something of a must, but due to jobs, families, the price of phone calls, and moving it is

becoming harder and harder for friends all over the world to see each other and keep in touch.

Facebook can provide a new and ideal way for friends to not only keep in touch, but also keep

track of each other’s life and events. Through Facebook friends post statuses, pictures, and

check in at locations allowing others to read, keep track, like, and comment on them giving the

Spaniards a completely new way to experience their friendship. Another reason Facebook will

work is because going out with friends to sporting events, bars, dinner, etc. are very regular

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events in the weekly lives of friendships between Spaniards so through Facebook these groups

of friends can find the best places to go, message in group messages , and plan the event out

even if they aren’t able to see each other before hand, and tag themselves at the event as well

as upload photos with friends to remember the event for years to come.

Keeping up with the daily news to Spaniards is must, because Spaniards love to gossip

and talk about current events. Currently the main form of attaining news about current events

is the newspapers, but the younger generation isn’t as interested in reading newspapers as the

older generation and thanks to TV many journal companies are going under anyways. Another

catch is the fact that many Spanish homes do not have televisions or cable so this gives

Facebook a great opportunity to solve this problem with the “newsfeed”. The “newsfeed” is a

constantly updating list of stories from people and pages that you follow on Facebook. News

Feed stories include status updates, photos, videos, links, app activity and likes. So with the

newsfeed feature not only is “news” being brought to the hand of the user instantly, but is a

second by second update of what your friends are doing. With smart phones being highly used

in North America, Asia, and Europe Spaniards can simply click on their mobile Facebook app.

and scroll through their news feed and see what not only what is going on news wise with their

friends, but also see what current events everyone is talking about and whatever popular new

related organizations they are friends with. Also through Facebook news it allows the Spaniards

to now give their direct thoughts and inputs on each status and story through the likes and

comments section of each post. ("Facebook")

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Businesses in Spain are mainly locally or family owned. So with this comes the fact that

there is no brand name, no massive advertising, and no branches for people to experience in

other places. Facebook can give these small businesses the way to advertise and gain

customers they would otherwise not be able to reach. They can capitalize on this by making a

Facebook page and posting information such as a phone number as well as an address , and

updates about their business and acknowledge the likes and comments they receive to better

the experience of the customer. Also through this profile it will give customers a way to tell and

show their friends about the business making it exponentially easier for new customers to find

out about the business with the alternative being the traditional word of mouth or passing by.

The final pro of Spanish businesses utilizing their Facebook profile is offering incentives for

customers to come. These incentives can range anywhere from discounts, coupons, ladies

nights, dance night, anything that would increase the number of people walking through the

door to exchange cash for service. Through all these aspect Facebook is certain to drastically

increase the amount of business these small businesses see. ("Create a hub for business on

Facebook")

While Facebook can work very well in Spain there are also concerns with how it might

change the Spanish culture and could have problems. Facebook is great at keeping in touch

with friends and allows Spaniards learn more about them each day as well as the surrounding

area and businesses. However what is the cost of implementing this new form of

communication to such a personal and family oriented culture?

The first concern is addressing the fact that Spaniards are hesitate to accept new

concepts and ideas. Facebook is nothing like they have seen before and can be s cary or not

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appealing at first. To fix this problem the company should invest in getting businesses to invest

into the idea first so they advertisements for “like us on Facebook” start to show up

everywhere. This will gain the interest of the Spaniards because by nature they want to know

what’s going on and what it means. Once they have started to grasp the concept and see the

benefits of the website they will invest more and more time into it as well as tell their friends

and then the same thing that happened with Facebook in the mid 2000’s will occur again and it

will catch on like a wild fire and become a part of the daily life.

With it becoming a part of the daily life of the Spaniards what will be the cost? Yes

Facebook will be linking friends across not only the country, but the globe and allow constant

updates and communication, but it might be taking away a big piece of the culture. Since the

formation of the culture and country of Spain the people have always been very close knit and

thrive on in person interaction and conversation. For example when a Spanish wedding takes

place the invite list isn’t limited to your friends and close relatives; the invitation is extended to

your friend’s friends and very distant relatives as well. Facebook has changed the way we

communicate with each other across many cultures and could take away from the in person

experience between friends. For example if two friends were to meet in person to get coffee

and wanted to engage in conversation about each other’s life’s, but realized they had already

talked constantly for days on Facebook back and forth and find they had nothing to really talk

about. This stands a chance ruin the personal connection aspect of the Spanish culture by

turning true friendships into virtual message conversations, profile pictures, and weekend

clubbing trips.

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Another aspect of the culture is spending valuable time with family whether it is at

dinner, watching television, going to a sporting event, or a trip to the store. In the United States

you see many people walking around or sitting right beside each other with their nose in their

phone scrolling through looking for the next status or update to peek their interest. This trend

could catch on in Spain and take away from the valuable time spent engaging in conversation

with family and eventually push families apart or to the point where they don’t know as much

about each other as they should if it’s not put on Facebook.

In conclusion I believe Facebook will be an overall good asset and change for the

Spanish people. It might be a slow entry at first because of the pessimistic traditions to new

ideas and cause the Spaniards to look at how they few aspects of their personal life in a

different way. However, if successfully adopted and understood it will provide them with a

whole new way to enjoy their friendships, explore the local area as well as the world, and help

businesses generate more appeal and revenue through creative and new advertising. It has

proven to provide more meaningful and knowledgeable relationships with the aspects of life

each user finds most interesting and important by forming to what you search, type, and like.

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