Introduction
The digital space has key operational advantages unavailable in the traditional physical marketplace. LinkedIn, an internet-based professional networking provider with a strong presence in Europe, North America, Asia, and Africa, has a unique online value proposition driving its multi-pronged strategy. The corporation’s diversified business includes talent solutions, low-cost advertising, and apps that allow users to search for new career openings and connect with others. Its overall business model has two components: monetizing social networking by selling targeted advertising products to firms and professional recruitment and development services. LinkedIn’s revenue streams include paid talent solutions, ad sales, and membership subscriptions. Its B2B promotion helps recruiters source professionals and build company image through videos and photos.
LinkedIn’s internationalization strategy has seen it expand to many locations globally. Its recruiting service is available in multiple native languages, further adding to its global business presence. Strategic alliances, including business agreements with firms such as Etisalat (talent management), mergers, and acquisitions, also drive LinkedIn’s growth. The company creates consumer value through information, targeted ad content, professional networking, and talent hiring and development.
Discussion
Analysis of the Issues
Unlike other social media platforms that are for leisure and entertainment, LinkedIn focuses on professional networking. Individuals create profiles to market their skills, training, and experiences. Users can form a professional network through which they search for jobs and connect to others in another firm (Bauthier et al., 2020). Ordinary membership is open to anyone, but a premium product with full profile viewing by employers is available on a subscription basis.
LinkedIn is arguably a useful networking tool for professionals and firms seeking talent solutions. However, its usage poses significant risks and conflicts of interest – promoting oneself versus marketing the firm. LinkedIn allows users to maintain a list of business contacts and customer details, which raises three issues: confidentiality of client information, ownership of the data posted on employee profile, any post-termination use of the account (Appel et al., 2020).
More importantly, the usage of LinkedIn in hiring practices raises some ethical issues. In this case, social media can be both beneficial and hazardous for candidates. In a positive light, employers can use information about individual skills, awards, past projects, and personality traits posted online to hire a job seeker (Bauthier et al., 2020). However, issues of privacy infringement, subjectivity, and improper access to sensitive company data. Basing hiring decisions on the information posted on the LinkedIn profile also raises concerns of bias, fairness, and authenticity.
Despite the professional networks’ usefulness in the recruitment, marketing, and revenue generation for LinkedIn, corporate and individual users must consider potentially costly unethical practices. Acceptable use policies to restrict the content posted in the profiles are crucial. Deciding to restrict LinkedIn usage to internal networking among colleagues is entirely a strategic consideration (Jacobson et al., 2020). Potential positive opportunities (marketing prospects) must be weighed against negative outcomes, such as unethical information use.
Legal Issues
LinkedIn talent solutions or hiring support raises some legal considerations. Basing hiring decisions on the public profiles of job seekers can lead to discrimination claims. According to Appel et al. (2020), employers relying on an applicant’s online persona to screen candidates for interviewing risk being accused of discrimination based on race, gender, religion, or sexual orientation.
Additionally, because the Internet transcends boundaries, different jurisdictions lack harmonized laws regarding contractual labor, data privacy, and proprietary technology patents. Since LinkedIn is a multinational organization, the firm is affected by diverse domestic and foreign laws that impact its operations. Policies on the legal liability of LinkedIn versus third-party firms using its talent solutions or advertising platform on issues of privacy violation or trademark breaches is a judicial dilemma. Additionally, data protection laws that affect LinkedIn’s business differ between jurisdictions.
Relevant Marketing and Financial Issues
Many internet-based businesses, including LinkedIn, use price as a competitive variable, not strategy. As Porter (2001) argues, dot-coms and established firms with an e-commerce component focus only on maximizing profits and market share. As a result, they seek customers broadly through discounts, promotions, and heavy ads rather than targeted marketing strategies. LinkedIn focuses on broad talent solutions and advertising models for businesses, limiting the real value offered to customers. It exploits indirect revenue sources – ad sales and membership subscriptions – instead of providing HR solutions as other professional consulting firms do.
Most companies operating on the internet use partnerships and outsourcing to expand, which affects their distinctive strategic advantages. LinkedIn’s revenue-generating operations, including advertising, account for its phenomenal growth. However, its competitors, such as the French-based firm, Viadeo, and German-based operator, Xing, use the same business model (Appel et al., 2020). Therefore, LinkedIn’s strategic distinctiveness and market share are eroded in this way. Another marketing issue for this firm is the limited geographical expansion because its products are available in only a few languages.
The company has recorded a steady financial performance since its acquisition by Microsoft in 2016. Its revenue grew to $8.05 billion in 2020, from $6.75 billion in 2019 (Bauthier et al., 2020). However, further growth may be hampered by its limited operational effectiveness due to a weaker strategic positioning on the internet. According to Cool et al. (2007), social video sharing sites, such as YouTube and Google, which depend on ad sales, must introduce new solutions and value propositions that attract marketers to use their platforms. Another growth strategy is acquiring smaller firms to deliver tailored solutions to different market segments. LinkedIn must offer customized talent solutions and targeted marketing for businesses to bolster its financial growth.
Strategic Issue
Competition in the internet marketplace is evolving, and innovative strategies are required to build distinctive capabilities and value. The main strategic issue for LinkedIn is the lack of competitive advantage in the professional networking segment. As Porter (2001) puts it, the digital space has definite advantages related to operational effectiveness. However, gaining competitive advantages on the internet requires a stronger strategic positioning. Firms must incorporate the online tool into their value chain to make their strategy inimitable. The main risk LinkedIn is facing is direct competitors (Xing and Viadeo) providing similar products and established HR consulting firms.
Conclusion
LinkedIn has a high potential for growth in the professional networking segment. However, the lack of competitive advantages and external factors (legal issues) affecting the digital marketplace are significant barriers. LinkedIn needs a product differentiation strategy to provide distinctive customer value. Based on the article, continuous innovation and development of new solutions are recommended to limit imitation and result in durable strategic advantages.
Further, merger and acquisition of smaller firms operating in specific markets are a recommended solution to LinkeIn’s limited competitive potential. To address the legal and ethical concerns discussed above, the company needs to complement its digital presence with physical offices in strategic locations. This approach will help LinkedIn compete effectively with established consulting firms, both online and offline.
References
Appel, G., Grewal, L., & Hadi, R., & Stephen, A. T. (2020). The future of social media marketing. Journal of the Academy of Marketing Science, 48, 79-95. Web.
Bauthier, N., Lew, J., & Twum, A. (2020). Networking via LinkedIn: An examination of usage and career benefits. Journal of Vocational Behavior, 118, 1-15. Web.
Cool, K., Seitz, M., Mestrits, J., Bajaria, S., & Yadati, U. (2007). YouTube, Google, and the rise of internet video. Harvard Business School Press.
Jacobson, J., Gruz, A., & Hernández-GarcĂa, A. (2020). Social media marketing: Who is watching the watchers? Journal of Retailing and Consumer Services, 53, 1-12. Web.
Porter, M. (2001). Strategy and the internet. Harvard Business Review, 79(3), 62-78. Web.