April 6th, 2011

FIRST-MOVERS OR FOLLOWERS

Enrollment No. 01-111091-117 | Saniya Raza Tiwana

ABSTRACT Since the dot-com arena has come up, people are more responsive towards the e-commerce sites. A few say first movers have higher market share. On contrary to that, others believe first movers are only like a firework, all the toilsome by the first movers is eroded with imitation by the followers. Now which out of the two has proven to be a nirvana must be oppugned (called into question).

Facebook vs Orkut: One thing that has definitely changed over the past five to ten years is our way of socializing. Verbal greetings about ones health and family has all became virtual in most cases. Social networking has now become the most common way of keeping in touch. My research report would favor the followers like Facebook as compared to orkut (first-mover). Orkut launched itself on January 24, 2004 as a social networking site. Its immediate competitor Facebook launched itself in February 2004. The time difference hardly seems to exist but meant a lot to the users of social networking sites. More and more orkuteers switched over facebook due to its differentiated features like increased privacy and the like. The business models and The Revenue models in context to facebook Value proposition: Facebook helps Games and quizzes Posit their statuses Multi-line comment text box People keep in touch To locate lost friends easily Provide increased privacy Clear profile details Revert friend requests And that is how they create their value proposition as compared to orkut that does not has a multi-line comment text box. Revenue models: The most of the revenue for the follower (facebook) comes through Advertisements on the right side of the page Application performance like Farmville by Zynga and Anita the Psychic reader. Facebook gifts like sending online birthday cakes. Search Partnerships Orkut completely lagged behind to increase their revenue through these means, due to which facebook became a leading social networking site. o Advertising: Facebook is normally tight-lipped about their revenue numbers, just like any other company, since that typical of private firms.

Bloomberg News reported that facebook has earned revenue of nearly $2 Billion in year 2010 as compared to 2009 which was $800 Million. Financial Analysts have said that this massive revenue is due to spread of their Advertising policies, facebook credit cards. While for Orkut it is high time now to establish an advertising presence to attract all the die-hard fans who just adopt whims and fancies in the name of Google. o Subscription: news regarding facebook charging a subscription fee to users was just a rumor. Charging the users would more likely deviate users to other social networking sites. Facebook does not charge you for using Mobile Texts. However, your mobile provider's standard rates for sending and receiving text messages still apply. o Transaction fee: facebooks majority of the revenue comes through advertisement. Other than that, facebook has now a growing source of revenue: transaction fee. For instance, facebook earns on games by Zynga; the makers of Farmville. According to Mashable.com, there are 11million facebook users that flock towards virtual farming daily. That gives us an idea, what proportion of revenue would facebook be earning merely by one of its application; Farmville. Zyngas revenues will be about $1 billion this year, and Facebook shaves a cool 30% transaction fee off of that. If Zynga continues to grow, Facebook is golden. [Source Google] o Sales: digital gifts are one source of adding to the sales revenue for facebook. Digital goods constitute a meaningful secondary revenue stream for the company.

o Affiliate: affiliate links can work as an income generator for facebook users, due to which they will spend more time using facebook, which in turn is beneficial for facebook itself. An affiliate sample is visible below

Market opportunity: Facebook markets itself worldwide. Penetration of population in Pakistan is nearly 2.19%. Facebook is now nearly twice the size of orkut (first-mover) worldwide.

Users of orkut in pakistan for the last 6 months.

Users of orkut in pakistan for the last 6 months.

Competitive environment: When talking about competitors, facebook has a long list, Orkut being on the top. LinkedIn, Myspace, Friendster and hi5 also have a market share more or less equivalent to orkut.

Competitive advantage: Most of the orkuteers became Facebook users since their privacy and personal control was in jeopardy. Orkut allowed visiting and seeing everyones profile as an open platform. Facebook took notice and gained a competitive advantage over orkut by introducing improved efficient privacy settings. Also nude images at orkut were the bigger wave that led people use facebook.

Market strategy: Facebook was founded by college roommates of Harvard University but later was expanded to other colleges. It gradually added support for students at various other universities before opening to high school students, and, finally, to anyone aged 13 and over while the main intention behind orkut was to create a social networking service.

Management team: Facebook employed people who could communicate what facebook stands for and how the company is going to act. Currently the company is working towards expanding their management team. Organizational development: The organizational structure of facebook is as below;

Mark Zuckerberg CEO

Tom Arrix SVP Sales & strategic marketing

Melanie Deitch Director of marketing

Ethan Beard business developmen t director

Christopher Cox Director of Product

Sheryl Sandberg COO

Mike Schroepfe rDirector of

Engineering

Ted Ullyot General Counsel

Matt Cohler VP strategy & Bus OP's

Elliot schrage VP of communication s & public policy

Dustin Moskovitz Co-Founder & Vice Presidebt of engineering

Vince thompson VP Sales

Mike Murphy VP of Sales

Kevin Colleran Sales Executive

The Second supportive example: PetSmart.com PetSmart turned out to be a fast follower of Pets.com and petstore.com. It exploited the opportunities and got catch of the weaknesses of pets.com at a chop-chop. PetSmart (follower) at a glance PetSmart is a business to customer E-tailer. It was founded in 1986 It sales specialty pet services such as grooming and dog training. It does business in USA & Canada.

Value proposition: The main value proposition of PetSmart is that it offers the broadest collection of pet supplies at the lowest prices. Revenue models: The most of the revenue for the follower (PetSmart) comes through Sale revenue Market opportunity: Petsmart operates in a niche retail market space and focuses on the pet supplies specialty products and services, for instance dog training, cat boarding etc o Subscriptions: PetSmart can get people to subscribe to their news alert for

 pet adoptions pet embellishments etc o Advertising: PetSmart does not really advertise about other related sites. However, it does promote its own charities, grain free food and photo contest etc. o Sales: PetSmart generates revenue be selling Pet related buying guides to their customers. For instance clothing sizing guide, dog toys buying guide etc. Pet food, treats and litter Collars, leashes, health care supplies, beauty aids, toys, apparel, pet beds and carrier Space in stores for adoption and welfare organizations Pet services, on-call veterinarian and day camps for dogs.

Competitive environment: PetSmart has a flock of talented competitors that are similar to an elephant in the room. Major competitors are Pets.com and Petstore.com

Competitive advantage: PetSmarts competitive advantage is its brand name. Market strategy: PetSmart uses the market strategy of Low prices commonly termed as low pricing strategy. Providing interesting content and community customized for its target market Email marketing through free email newsletters Affiliate marketing Organizational development: The organizational structure within PetSmart is as under

Philip L. Francis Executive chairman

Management Te

Robert F. Moran President and chief executive

Donald Beaver Senior Vice President

Emily Dickinson General Counsel & Secretary

The management team of PetSmart strongly believes that their employees make the difference in their success. They have made creative advertisement that grabs the attention, desire, action and interest of candidates.

Guidance and support is provided to the new employees to enhance their interaction with all breeds. PetSmart only requires their employees to have the passion and excitement to work with pets. Employees have the autonomy to influence the improvements of their work stations.