Mutual_Fund_Manager’S_Role_in_an_Investment_Firm

A Mutual Fund Manager’s Role in an Investment Firm A Mutual Fund Manager’s Role in an Investment Firm. As a fund manager, I make decisions directly related in the returns of the fund and this decision could easily be tracked as performance based. I also need to make optimal decision since my salary and incentives are directly related to the outcomes of my decision. In addition, the performance of my mutual fund portfolio could easily be tracked by investors and the investment firm. With this information, they can make a comparison with other mutual funds in the industry. The investment firm could also track my progress by evaluating my performance with my counterpart in different management firms (Bar, Kempf, & Ruenzi, Chapter 15, 2011). The first step in my selection process is to conduct a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. I will use it as a tool for auditing an organization and their environment and identifying key issues. Based on those information, I will make a decision on whether or not to invest in a company stock. Facebook is the perspective company whom I find as a good addition to the fund I am managing. Facebook with its recent initial public opening (IPO) is a prime candidate for my portfolio. As a fund manager, I need to ensure that this company is a sound investment for my stakeholders. SWOT Anaylsis In the planning stage of a business decision, the SWOT analysis is an appropriate tool to use by a mutual fund manager. This would help address key issues prior to committing a huge investment into a company. In addition, we will investigate the current situation of the company and look into its success in their industry. We will review its financial data and compare it with their competitors in the market. We will also look into their products that make the most profit and customer demographics that utilizes their service. Lastly, we will look for opportunities for our stakeholders to make dividends. We will perform our due diligence on all of these factors prior to making a commitment into Facebook. Facebook SWOT Facebook began in 2004 as a brainchild of a first year student of Harvard. Mark Zukerberg is an entrepreneur whose biography and story on how he started the company was featured in a Hollywood movie, “The Social Network”. Since then, Facebook immediately became a well-known social networking service with 900 million subscribers currently and still growing. It is a site wherein businesses and individuals can sign-up and create a free profile. They can also upload pictures contact and personal information. (Marketing Teacher Ltd, 2000-2012). Strengths Facebook has 900 million active regular users and has opportunities to expand and grow. The company’s name is synonymous with social networking especially after the blockbuster Hollywood movie was made. The movie created hype and also in a way gave credibility to the founders. Similarly, tech giants such as Apple and Google started out as pioneers in their own industry. Another plus factor is at this time there is no real competitor to Facebook as far as social networking is concerned. Facebook made $2 billion in revenue in 2010. Facebook is conquering the display ad market. Facebook compared to Google and Yahoo is growing the fastest. Current internet users spend most of their time online on Facebook. There are new growing sources of revenue such as transaction fees on games by Zynga (makers of Farmville). Zynga annual revenue is estimated at $1billion and they pay Facebook a 30 percent transaction fee (LearnVest, 2012). Weaknesses Some critics argue that Facebook is becoming mature with its membership even though the site has astronomical amount of regular traffic. They also stated that Facebook with almost 1 billion subscribers has acquired most of its potential customer base. Others also say that Facebook’s management is fairly young compared to standard global business management/corporations whose top management is in their forties. In addition, the latest debacle in investment news is Facebook’s IPO at $38 per share. However, in less than a week the stock lost 25 percent and now is roughly worth $28 per share. Opportunities Facebook currently makes their money through advertising. There is definitely an opportunity to expand as the business grows. If they start charging fees for subscription even at a dollar monthly rate, it would generate a whopping $1 billion monthly income. A part of this income could go into Facebook’s research and development arena. The company will produce newer products at a faster rate thus generate more earnings from its loyal consumers. Facebook’s potential in networking is astronomical. A business owner and potential consumer can pay a small fee to reach every Facebook members masses of friends’ lists. Lastly, with the technological age where everyone now has a home pc or some form of mobile device (networking tools), it gives FB the opportunity to extend its number of users and possible business partners. Threats The potential threats for Facebook are the many other advertising programs and alternative social networking sites that exist online. Some potential consumer or business partner might consider using Google, or another alternative such as newspaper advertising. Facebook must make it clear to their potential business partners on how they could assist their business. Remember Friendster and MySpace' Both sites used to dominate the social networking cyberspace. Then suddenly those sites became old-fashioned primarily due to the emergence of Facebook as the primary social networking site. However, there is still an element of uncertainty for Facebook. Can it continue its dominance in the market or another site appears out of nowhere and becomes just like Facebook' Can it continue its phenomenal growth and not suffer the same fate as the other social networking sites that became out of style' Facebook’s Stakeholders According to the experts in The Wall Street Journal and The Guardian, here’s a chart of what the experts speculate on Facebook’s ownership break down (LearnVest, 2012). Facebook’s commitment to their investors Describe if Facebook fulfill the needs of their stakeholders of if not then explain why not being met and what the company needs to do to ensure they are. Conclusion Would I purchase Facebook stocks' Yes I would. Why' Would the stakeholders in the investment firm agree to the same conclusion' References Bar, M., Kempf, A., & Ruenzi, S. (2011). Review of Finance. Retrieved from http://ehis.ebscohost.com/eds/pdfviewer/pdfviewer'sid=a9f194c4-cca2-4aef-8d2d-e77aaba2d910%40sessionmgr11&vid=2&hid=3. Nickels, W. G., McHugh, J. M., & McHugh, S. M. (2010). Understanding Business (9th ed.). Retrieved from https://ecampus.phoenix.edu/content/eBookLibrary2/content/ eReader.aspx. Marketing Teacher Ltd. (2000-2012). Retrieved from http://www.marketingteacher.com/lesson-store/#swot LearnVest - The Easiest Way to Understand Your Finances. (2012). Retrieved from http://www.learnvest.com/2011/01/a-money-lesson-from-facebooks-50-billion-valuation-287/