Monster Networking Case Study Analysis

Introduction

Monster Inc. is a global career network, which has been very successful in its core business i.e. to build up a database of professionals and build a revenue model, which allows the companies to pay a subscription fee to get access to the critical data about jobseekers. However, Monster management has been keen on revenue that they have been foregoing in form of subscriptions to the jobseekers. With the growth of the online social networking sites, Monster built Monster Networking, which would help them build a database of jobseekers that would form networks and could find themselves a suitable job. Here the jobseekers were charged a price for the premium services. This revenue model was faulty as the jobseekers registered free for the social networking site, but not many signed up for the premium paid service, which restricted the company’s revenue target. In this case, the analysis we will do an analysis of Monster Network and see what strategy should be adopted by the company.

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Background

Monster Inc. started its Networking business, through its traditional system of acquiring companies in the aspiring segment. In this case, they acquired Classmates.com to enter the social networking arena for jobseekers. Their aim was to get an introduction to the networking arena through this acquisition and then extend the core model to extend to working professionals. However, this was not successful due to 9/11. In 2002, Monster Worldwide hired Michael Schutzler to start their networking business. There was no conceivable problem with the initial startup process of the networking platform: “Schutzler agreed that Monster Networking was given ample resources: “We had plenty of money and great people. Jeff did a terrific job of getting the right talent for me from inside, and he let me hire the right outsiders.” (Eisenmann & Vivero 2006, p. 7)

The business model was based on the sharing of profiles by members and getting career advice from professionals. A person who created a profile with the network included data regarding his/her current and previous employers, and key skills, etc. a free membership included the posting of profile creation, search for networks and save searches. Premium members had to pay a monthly fee to get access to the other members identified during the search. They also have to view complete profiles and access more information regarding the other members.

Given this model, the networking business was expected to revolutionize the way monster operated, and top management intended to integrate it with the core business. This was not completely possible due to fear of cannibalization. However, Monster decided to use it as a part of Monster Worldwide. An analysis of the financials of Monster for 2003 and 2004 showed that the main revenue earner for Monster Worldwide was its Monsters Division i.e. the online recruitment site. It comprised 63 percent of the total revenue and in 2004, it comprised 69 percent of the total business. Therefore, the share of other divisions like Monsters Network was reducing over the two years period. Therefore, the company was facing problems regarding the next step to be taken for Networking as it had failed to meet the revenue targets.

Problems

Monster Worldwide has been facing problems from the Monster Network business segment. The company had developed a new product, which they thought would be very lucrative. However, experience has shown that the business has failed to deliver. The problems faced by Monster are as follows.

The monster must decide the strategy that should be taken for its networking business. As the networking business has received a dismal number of free-users to subscribe for the paid version, it is imperative to decide if the networking business should be: (1) they should continue with the original business plan with the assumption that revenue target for the networking business will soon be fulfilled, (2) remove the subscription fees and increase the strength of the network and then include the whole with its core business, (3) increase their scale of operations by simply acquiring other social networking websites targeted at professionals, like LinkedIn, and (4) close the networking business and redeploy the proceeds in its fast-growing core business.

Apart from the strategy issue, Monster Networking posed a problem of cannibalization. The problems were that if networking was successful; job postings by employers would become redundant, as job seekers would not view job postings. This would induce recruiters to stop paying or pay less for the services of Monster.com. Further recruiters paid a lump sum annually to screen resumes from the monster database, but the networking segment would provide a large database at their disposal at a far less cost. Therefore, the company’s middle management perceived that cannibalization might become a problem for Monster.

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The other problem is attracting an adequate number of members to the Network. The success of a networking business lay in its building a large database of members willing to participate in the network. However, so far, the Networking business had failed to generate the required mass. The options that the company had were to – (1) link the network with the registered monster career users and increase the mass, or (2) link the jobs posted by recruiters to attract more registrations. The problem associated with networking is that there was a problem of data mining for profiles from the database.

Another problem that could be noticed in the case is Monster’s acquisition spree. It went on acquiring companies, which had no relevance with its core business. The acquisition of tickle showed that the company did intend to integrate its operations rather was acquiring anything that was profit-making. However, they failed to build on their existing business.

Further, the networking business faces a leadership problem. Michael Schutzler had been hired on contract o provide leadership and a long-term vision for the networking business. However, once the contract was over and Schutzler had left, there was no one to take up his position from within the company. This indicated a lack of succession planning would drown the boat. Nevertheless, this was not restricted to this, as the boat was expected to take away with it a part of the large ship. It was expected that networking which was supposed to be a revolution for Monster, was about to eat away revenue from the core business and may hamper it too. Therefore, it was perceived that “killing” the business would be a better option than letting it “drift”. So, the problem was – should the networking business be closed?

In the next section, the case analysis will do a proper review of the situation of Monster Networks and how the business is faring about the company’s present position. The case will also show the advantages and disadvantages of the Networking business. The paper will also do a portfolio analysis of Monster Worldwide in order to decide what strategy should be taken for Monster Network. A SWOT analysis will show the advantages and disadvantages of the segment. Then the paper will provide an overall recommendation for Monster Worldwide.

Analysis

In order to understand what strategies Monster should take regarding its Network segment. For this, we will first conduct a SWOT analysis of Monster Worldwide. Secondary research of Monster Worldwide shows that the company continues its social networking site for professionals. Here we will do a SWOT analysis of Monster Network.

Strengths

The main strengths of Monster are its unique offering of an online database of professionals, which is accessible worldwide. They have developed unique and useful products for job seekers as well as recruiters to suit their purpose. The Monster Network had the opportunity to provide the core business with an increased number of resources and an increased database, which would boost their executive search programs.

Monster has a strong brand image in the online recruitment arena and has the possibility of promoting a lot of its core business. The networking site can relate to customers and increase the final recruitment of the candidate, which would increase customer satisfaction. Further recruiters will have the opportunity to reduce a lot of costs by first interacting with the candidate, which helps in shortlisting.

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The company has acquired other social networking sites like Affinity Labs Inc. (Business Wire 2008). The reason for the acquisition has been stated as:

Affinity’s model complements the core Monster business and significantly enhances our presence in key verticals within the online vocational and networking market. Our investment in Affinity provides Monster with an efficient vehicle for developing future revenue streams in vibrant career fields while permitting us to actively invest in product, technology and brand support in our core business. The addition of Affinity Labs to the Monster family will benefit both job seekers and customers in the vertical markets where Affinity operates.” (Business Wire 2008)

Online community building has the possibility of helping the company increase its targeted community base in order to increase its customer base. A social networking site will help Monster Worldwide to provide recruiters to look for a greater number of profiles.

Monster brand name associated with the networking site was an added advantage. Proper promotion and marketing would increase the knowledge of monster networking among job seekers, which will eventually lead to the rise of the database.

The model of networking has great strength in itself. It is believed that if one has d connections, it has the capability of generating d2 connections. This was the networking business model that has the possibility of increasing profiles available in the business. the idea is to generate as many networks as possible by activating close and weak ties of an individual. This is explained in the following words in the case study:

When applied to an individual (i.e., a “node”) in a social network, Barabási’s “k” value

corresponds to the number of people known by that individual (i.e., their number of “links”). Some individuals have many more relationships than others. A well-connected individual with a wealth of relationships is called a “hub.” The presence of just a few “high k” hubs can dramatically speed the transmission of information through a network.” (Eisenmann & Vivero 2006, p. 4)

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Weaknesses

The weakness of the networking site is its positioning. How can it be positioned under the Monster umbrella? Should it be just a community site for professionals or be merged with the career website of Monster to provide greater access to job seekers as well as recruiters? This is the weakness of Monster Network. It was decided that the Network would work under the umbrella of Monster Inc. Nevertheless, this made it indistinguishable from the core Monster offering as both recruiters and job seekers saw this as a mere extension.

Another weakness of the plan was the revenue model. The monster charged members for “VIP” access to profiles and to send messages which could be done free of cost in other professional networking websites like LinkedIn. This naturally restricted the development of registered profiles into paid profiles. Further, these candidates could get access to job postings free of cost from Monster’s own career site. So obviously, they would prefer those more.

Once Schutzler left the company, there was no one to provide the segment with a long-term plan. The networking segment had just become another area of business with no development and integration with the core business. Therefore, without proper leadership and vision, the business was destined for failure. Evidently, the business failed to get revenue targets, which was disappointing for the top management.

Fear of cannibalization was evident among the middle managers who had a lot of power in a decentralized organization like Monster. If networking were successful, job postings by employers would become redundant, as job seekers would not view job postings. This would induce recruiters to stop paying or pay less for the services of Monster.com. Further recruiters paid a lump sum annually to screen resumes from the monster database, but the networking segment would provide a large database at their disposal at a far less cost. Therefore, the company’s middle management perceived that cannibalization might become a problem for Monster.

The low number of registrations and small database was a hindrance to the growth of a networking site. The success of a networking business lay in its building a large database of members willing to participate in the network. However, so far, the Networking business had failed to generate the required mass. The management expected an initial registration of 4 billion, which ultimately can to only 800,000. This setback in acquiring enough profiles was a setback for the business. Therefore, a limited database was a serious weakness of the business.

Opportunities

The main opportunity that faces a networking site is the growth of the use of the internet as an arena for job hunt for job seekers and resume lookout for recruiters (Eisenmann & Vivero 2006). The case study shows that the recruitment business is expected to increase by 22.7 percent by 2006.

A review of other professional network sites like LinkedIn shows that the registration increased for this site by 60 percent from 2003 to 2005. Presently the membership in the site is more than 31 million (Virki 2008). A profile of the company shows that:

Linkedln.com is one of the more popular professional online networking sites currently in use. New users register on the site and supply their name and location, then identify the kind of work they do and disclose whether they’re a full-time employee or a consultant. There is no cost to join, and LinkedIn offers privacy protection, including a pledge never to sell your information to a third party and never to share your contact information with another user, unless both of you choose to contact one another.” (Berkshire 2005, p. 95)

The success rate of the referrals was a success in 85 percent of cases. The social networking model has provided an opportunity for LinkedIn to allow HR professionals to post job requirement sin their networking site, which was a natural extension of the social networking model (Berkshire 2005). The success of a direct competitor of Monster Network shows that this opportunity that professional networking provides could be translated to Monster.

The market estimation shows that the online professional networking market presently is at $170 million in 2009, which is expected to grow further (Virki 2008). With a recession in the job market and more unemployed people in the market, there has been a surge in the number of people registering on social networking sites. According to LinkedIn, their registrations have gone up “more than 31 million from 18 million at the start of the year, growing fastest in the financial services, media, and education and technology fields” (Virki 2008). The professional networking market is growing rapidly. Therefore, proper tapping of the market will bring growth to Monster.

Threats

Monster Inc. operates in a highly competitive market (Monster 2008). The highly competitive environment provides competition, which ultimately results in price cuts; acquisition of new technology or capability, constant innovation of new products, etc. competition is from other employment websites, niche career portals, or portals targeting specific industries or verticals. Other weaknesses include low-cost portals where employers can post their jobs at a lower cost. Therefore, this may prove to be a threat to Monster and its professional networking aspirations. The operating cost of Monster Worldwide has been fluctuating due to the diversification of operations.

The development of the internet poses a threat to Monster. This may pose a threat to the company and its operations. The threats entail rapidly changing technological landscape, evolving industry standards, changing government regulations, etc. may pose a risk to the development of professional Networking sites.

Recommendations

From the SWOT analysis, we see that a professional networking site has immense growth potential. Especially, with the growth of other professional networking sites to have been able to attract a large database of professionals Monster has the advantage of a well-known brand name. However, the problem that can be seen is Monster Network is not being differentiated as a separate product by job seekers. Monster’s initial strategy to develop the database entailed linking the existing Monster’s career database with that of its Networking site. Though it did not receive any high obstacle, it was not seen as a separate offering. Monster has to develop this networking site as a separate offering of Monster – a new product – rather than as an extension of the existing product.

The second recommendation for Monster is to continue doing business in Networking. Professional networking has immense growth opportunities. It has the possibility of tapping a large number of people. Professional networking will help the company boost its revenue largely. What is required to do is to cultivate on the existing site. For this, one possible way would be acquiring already existing professional networking sites.

Recommendations’ Applicability

The first recommendation suggests that networking offerings made by Monster must be branded separately. It must be branded as a different product under the Monster umbrella. If both the career segment and networking are mixed, then it will increase the possibility of cannibalization. Therefore, the strategy must be to brand the networking differently in order to show the customers – both employers and professionals – that they can have a wider range of possibilities through sharing their profiles on a networking site. This can be done by promotional activities through the internet and other direct marketing tools.

The second recommendation is to continue the Networking segment. Though many believe that closing the segment will be better, but given the expected growth in the networking business, it will be unwise to leave the market. Rather a better option would be to acquire other professional networking websites, which would help the company get access to its database and customers. The other option for extending the database in partnership with other social networking sites like Facebook or Twitter to get access to their database for professionals. Therefore, continuing operations in Monster Network is necessary to tap future growth in the market.

Conclusion

Monster Network has immense opportunities for future growth in the networking business. The company can develop a large amount of database by the given recommendations, and increase its business. It must alter its revenue model for Monster Network to increase its revenue target.

The paper provides a case analysis of Monster Network. The citation style followed is Harvard style. The paper has been analyzed using concepts of SWOT analysis learned in the course. The analysis reveals strategies, which have evolved from the analysis as recommendations for the case.

References

Berkshire, JC 2005, ”Social Network’ Recruiting’, HR Magazine, April 2005, pp. 95-98.

Business Wire 2008, Monster Worldwide Expands Reach Through Strategic Acquisition of Online Community Sites. Web.

Eisenmann, TR & Vivero, DA 2006, ‘Monster Networking (Case Study)’, Harvard Business Review, pp. 1-20.

Monster 2008, Annual Report – Monster WorldWide. Web.

Virki, T 2008, Online networks a magnet for job-seekers. Web.

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