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Facebook’s professional network

Facebook, in an attempt to attract additional users and page views, is expanding to offer a professional social network. This new product aims to capture a segmet of the market currently dominated by LinkedIn. Facebook hopes that it’s existing social network will give it the upper hand in conquering the professional space.

One of the primary reasons Facebook continues to dominate the social space is the network effect. The more people using a social network, the greater the benfit there is for those users. This creates a huge barrier to entry for any challenging company. In order for a company to maintain a long-term equilibrium user base, they must cross over the tipping point in usage. Once above this point, the network effect will apply an upward pressure on the usage of their product. However, due to Facebooks popularity, this tipping point is fairly high and most other products fail to cross it. This eventually results in a decreased market share for these products.

While Facebook does not currently have a large presence in the professional space, they hope that they can leverage their social network effect to cross over the tipping point in the professional realm. If they successfully cross the tipping point, their market share as a professional network will continue to grow until it reaches an upper equilibrium. If they are able to achieve this, they will unseat LinkedIn and be a market leader in the professional space.

Source: http://www.dailyfinance.com/2014/11/17/facebook-takes-on-linkedin-professional-network/

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