Executive Summary
Twitter is one of the most popular, as well as powerful social media in the world today. It is an online microblogging and social networking service. It allows users to send up to 140 messages. When social media emerged as one of the new trends in the communication sector, many did not expect it to influence businesses. Tweeter, just like Facebook, was considered a communication channel for lazy youths who had time to spend. Therefore, youths could afford to visit the site due to laziness. However, as time went by, it realized many stakeholders that Twitter was more than just a communication channel for the lazy youths. Large companies, such as Coca-Cola, realized that many youths spend most of their time on social media either tweeting or chatting on Facebook. In fact, Wright and Hinson (2009, p. 19) say that youths today spend more time on the social media than they do on mass media. The youths make a considerably large market and for such a company as Coca-Cola, youths form a majority of its target market. As such, the company realized that the best way to reach its target market would be through social media other than mass media. This has seen a massive growth of Twitter, as well as other social media.
Introduction
Background
In July 2006, Twitter was launched at Jack Dorsey. The private firm came into the market that was not well conversant with social media. It was marketed as social media for the youths. It was taken up as a youth affair, and 80 percent of the market was the youths. However, as society embraced the new technology, the customer base for social media started expanding beyond the targeted market. Proulx (2011, p. 19) observed that the middle-aged population and even the elderly started appreciating the importance of the social media, as a means of communication. Corporate bodies also embraced the new technology, as an appropriate means of reaching out to their customers (McGriff 2012, p. 65).
Objective and Scope
Twitter is one of the leading social media in todayâs communication sector. It has managed to register attractive profits in the near past and the future seems bright, as more individuals continue embracing the new technology. The entrepreneurial brain in the company is keen to ensure that the firm reaches the limits that would enable it to topple Facebook, which is the market leader in the social media industry. One question though, that comes out over this firm is its development path taken by the management. The question to ask is whether the firm is building a brand, a social tool, or a Tech powerhouse. This article seeks to analyze this company in order to determine the path taken by the management in building up this company (Roxana & Valentin 2011, p. 56).
Companyâs Competitiveness in the Market
PESTEL Analysis
Research shows that several aspects could perhaps affect the performance of a company. Such aspects could result from the external environment. The external factors are analyzed using PESTEL.
Political Factors
These factors come about because of governmental regulations and laws. They may also include laws meant to protect the customer from unwanted competition. The agencies in charge of consumer protection would always invoke governmental laws to dictate what should be done in the market. In the social media industry, the laws are also known to affect companies, including Twitter. The laws tend to affect the position of companies in the market. Twitter is supposed to abide by the set rules and regulations, which are aimed at safeguarding small firms and ensuring that the firm does not bully its opponents. Tweeter faces many challenges as regards governmental regulations since some countries do not allow their citizens to use the service, such as Iraq, Egypt, and Tunisia. A country stands to benefit from an educated workforce if its citizens are allowed to use social media. The Middle East states are yet to come to terms with this idea (Werner & DeSimone 2008, p. 6).
Economic Factors
Some of the economic forces are known to affect the performance of a firm in the market. These forces include inflation, financial meltdown and the performance of the domestic currency. For instance, Tweeter is one of the firms that was affected by the recent economic crises witnessed in various parts of the world. Analysts say that economic crisis can affect any firm, irrespective of its performance in the market. Economic crisis and inflation affect the performance of Tweeter because they raise the cost of operation. The income of the firm is always affected whenever an economic crisis is reported. The management of the firm needs to understand the economic forces to be in a better position to make effective decisions regarding the market (Werner & DeSimone 2008, p. 7).
Social Factors
Social forces are critical to the performance of Twitter in the market since the firm operates in a social market. Social aspects entail factors such as the ways of life of certain groups, social changes and the preferences of customers. Twitter is projected to do well since many people are changing their lifestyles to suit those of the western world. This would mean that people would be using social media frequently to transact business and to link up with their loved ones. The differentiation strategy adopted by Twitter gives it leverage in the market since customers can use the service without facing any technical problems. The strategy has attracted people from all quarters of social statuses meaning that the firm can generate adequate revenue (Werner & DeSimone 2008, p. 8).
Technological Factors
Twitter is one of the firms that embrace new technology whenever the need arises. Due to this fact, the company has been able to excel where others have failed. Tweeting was a technology that needed computers. However, customers are able to use their phones to access Tweeter accounts meaning that the firm is keen on meeting the technological needs of its customers. However, the firm has failed in terms of handling the World Wide Web because customers report that they experience a number of problems opening their accounts through the phone. In this regard, Facebook has been able to penetrate the market at an expense of Tweeter. Twitter is not capable of ensuring security to its users because fraudsters can blackmail customers through opening fake accounts (Werner & DeSimone 2008, p. 8).
Environmental Factors
In the business world, the understanding of the market environment is critical to the success of any firm. Many organizations have been licensed to check on the effect of companies on the environment. Each company, including Tweeter, should be aware of the environmental conservation strategies. Through Twitter, environmental conservation tactics could be spread to various individuals and organizations across the world. Through Twitter, companies such as Mobil could educate the public on the best strategies to be employed in conserving the environment (Wright & Hinson 2009, p. 20).
Legal Factors
Legal aspects are related to laws that govern firms in a particular setting. For instance, Twitter is a social site that is governed by laws such as age limits. It is illegal to engage a young person under the age of sixteen in a chat that is reserved for adults. Due to this, Tweeter has a private account that is supposed to be used to report any form of abuse (Sharma 2008, p. 44).
Porter Five Forces
Competition has been on the rise as more companies come to the realization that social media is a potential business. In order to bring out the competitive nature of the social media industry, Porterâs five forces would be of great help.
Intensity of Rivalry among Competitors
According to Sharma (2008, p. 45), the social media industry is increasingly becoming competitive. Many firms are coming into the market with similar products. There has been a massive influx of small firms specializing in specific services, making competition very stiff. These small firms, with specific target markets, tend to offer specialized products as opposed to large firms. This makes it difficult for the large firms to manage competition in specific sectors in the social media industry (Sharma 2008, p. 45).
Small firms are therefore a real threat to big firms and therefore, big firms are always keen on ensuring that they maintain their lead in the market, irrespective of competition. This has led to massive rivalry in the social media industry. The small firms take away customers of industry leaders and form their own small firms, which are meant to compete with big firms (Werner & DeSimone 2008, p. 4). This creates an environment where firms are not only competitors but also bitter rivals, leading to a scenario where firms could do anything to outsmart competitors. This makes the business environment very unattractive, as many firms spend valuable time and resources figuring out how to bring down other firms rather than strategizing on how to expand to other new regions. This has led to the formation of competitive strategies aimed at bringing down rivals but not ensuring the success of the company.
Threats of new entry
Porter observed that an additional threat that a firm would face in the industry is the entry of a new player. The social media industry may not portray the features of a perfect competition market but it is very competitive. The industry has no barriers for new entrants, a fact that makes it very competitive. New firms can easily come up and offer serious competition to the existing firms (Sharma 2008, p. 48). In this industry, differentiation is very important to companies. There are different sectors, each with its special requirements. For a firm to manage competition, it would require it to have a deep understanding of all sectors and offer specialized products. Hence, differentiation would be very important.
The Threat of Substitutes
Porter clearly stated that one of the main threats is the availability of close substitutes. In the social media industry, the threat is present. The social media industry has several firms. The threat posed by a substitute is not very strong for Twitter. The substitute, in this case, is the mass media, which is very expensive.
Bargaining Power of buyer
One of the most important factors in the industry, which would always affect companies, is the power of buyers. In this case, buyers are individuals and corporate bodies. The power to bargain would have a huge impact on the performance of Tweeter. The bargaining powers always depend on the number of buyers in the market. A good number of corporate bodies exist, which are potential markets services offered in the social media industry (Sharma 2008, p. 48). This makes the Tweeter one of the profitable firms, as the customers may not influence the prices of products.
Bargaining Power of Supplier
The supplier power would also affect the profitability of a firm. In cases where suppliers are few, they would tend to dictate the prices of products and services. This would reduce the profit margin of firms in the industry. For Tweeter, suppliers are many, as different firms would wish to deliver their products to individuals through the social sites (Sharma 2008, p. 48).
Summary Analysis
From the two analyses, the forces suggested by Porter affect competition in the social media industry. The power of the buyer and the threats posed by new entrants serves to encourage competition (Proulx, T 2011, p. 87).
Sustainability of Twitterâs Business Model and Competitive Advantage
SWOT Analysis
Competitive Advantage
A business model for any firm is very important in shaping its competitiveness in the market. The process of creating value, delivering, or capturing this value is very important to any organization that aims at remaining competitive in the market. This process is part of a business strategy that helps ensure a firm reaches out to the customers with the desired products and in the most appropriate manner (Roxana & Valentin 2011, p. 56).
According to Shelley and Maria (2011, p. 339), the term business model in theory and practice is used to refer to a wide range of formal and informal representations of core concepts of a firm. It includes various activities, such as trading practices, the purpose of the organization, its infrastructure, the strategies used in the market, its offerings, operational policies, and processes. The management unit of Tweeter has appreciated the fact that the market is very competitive. The competition is so stiff that this firm has to develop a business model that would help it remain relevant in the market. Roxana and Valentin (2011, p. 56) say that social media is very attractive and the market is not fully exploited and as such, firms still have space for growth. However, this scholar cautions that this industry requires a high level of creativity in order to gain new markets, as well as to retain its current market share. Individual customers would not hesitate to move from one firm to another that seems to offer better services.
Corporate bodies and professionals need social media that would be more official and effective to their official needs. Tweeter turned out to be the firm to offer this service. It has managed to hold this market and although LinkedIn has also focused strongly on this market, it has maintained the lead. The management has been keen to ensure that it is not toppled from this position. Proulx (2011, p. 32) says that sustainability is one of the most important factors that a firm should consider in its operation. If a firm were not sustainable, then it would mean that in a near future it would be forced out of the market or entirely out of business. Tweeter has been keen to ensure sustainability. This firm has ensured that it develops competitive advantages in the market, which would ensure its sustainability. The fact that it has managed to appeal to the corporate bodies and professionals is a competitive advantage, which would ensure its survival. In order to maintain ethics in its site and encourage professionalism, the firm has also developed mechanisms through which an individual could report abusive messages being circulated. Such messages would be eliminated instantly. This has won the trust of many customers who feel that at Tweeter, there is decorum and everyone has a duty to respect other users, irrespective of demographic differences. This move was very timely as the world wakes up to the fact that we are one society regardless of the differences in culture, social status, geography and any other aspect that was originally thought to separate us (Shelley & Maria 2011, p. 341).
Sustainable Competitive Advantage
Anderson (2011, p. 61), cautions that in the current competitive world, there is nothing as a permanent competitive advantage. What a firm considers a competitive advantage today can be its main undoing tomorrow. Kodak strongly believed that the film technology would be irreplaceable and therefore it went ahead to develop its systems to help in mass manufacture and distribution of items (Daft 2009, p. 11). However, when the digital camera emerged, Fuji Films toppled the film structures at Kodak, which were the main sources of strength that made Kodak the market leader. Consequently, Tweeter must realize that what has always remained permanent in the market is change (Sharma 2008, p. 47). It has to be very dynamic in its activities and ensure that it moves ahead in order to counter market competition. This would be guaranteed through coming up with technologically creative products and delivery systems.
Twitterâs Strategic Leadership Approach
The strategic leadership approach of this firm has been so effective to an extent that the firm was ranked one of the best-managed firms in America. When it was incepted formed, Jack Dorsey became the chief executive officer, with Evan Williams being one of the directors. Williams took over as the chief executive of the firm on the sixteenth of October 2008, when Dorsey moved to the newly created position of the chair. However, Williams later stepped down for Mr. Constolo as the chief executive on fourth of October 2010, but Dorsey remained as the chief executive. Williams moved to the position of director in the same year. Other individuals at the senior managerial unit of the firm include Biz Stone, who is the creative director and Noah Glass.
These leaders have been keen on formulating strategic policies, which would help the firm remain relevant in the market. Moreover, the strategies would help the firm to sustain market competition (Swanson & Holton 1997, p. 49). The management has been keen on employing young and creative employees who are able to come up with ideas on how to manage the market and satisfy the customers. This is ensured through developing new products and marketing strategies. The management, just as Sharma (2008, p. 48) would say, has ensured that it has a perfect understanding of the market. This has helped the firm in developing policies that would enable customers to obtain products in the best way possible.
Conclusion
As was stated above, in a business setup, change is the most permanent factor that a business unit must understand. Managing change has been considered one of the strategic duties of firms in the current business world. Firms have come up with measures that would help them manage change. Many firms are struggling to cope with change, as most of them tend to be too large and engrossed in certain aspects of operational management. This makes poses a big challenge as regards to the implementation of change. For Tweeter to be in a position to manage change, it should observe the following:
- It should have a comprehensive understanding of the emerging trends of technology
- It should understand how these technological changes may affect the customer behavior in the target market
- It should be in a position to develop avenues through which these changing technologies could be turned from being potential threats to the firm to being competitive advantages through which the firm can outshine its competitors
When implemented properly, Twitter stands to gain a lot in the market, as well as protect its current market share. Moreover, the firm would expand its market to an extent of toppling the current market leader in the industry
List of References
Anderson, M 2011, Bottom-Line Organization Development: Implementing and Evaluating Strategic Change for Lasting Value, Elsevier, Burlington.
Daft, R 2009, Organization Theory and Design, Cengage Learning, New York.
McGriff, J 2012, âA Conceptual Topic in Marketing Management: The Emerging Need for Protecting and Managing Brand Equity: The Case of Online Consumer Brand Boycottsâ, International Management Review, Vol. 8 no. 1, pp. 49-54.
Proulx, T 2011, Modal Analysis Topics, Volume 3: Proceedings of the 29th IMac, a Conference, Springer, New York.
Roxana, O & Valentin, IT 2011, Managing Crises in the Online Environment: Social Media and Their Impact, Dominoâs Pizza and United Airlines Case Studies, New York.
Sharma, R 2008, Change Management, Tata McGraw-Hill Education, New Delhi.
Shelley, W & Maria, F 2011, âThe Giffords shootings in Tucson: Exploring citizen-generated versus news media content in crisis managementâ, Public Relations Review, Vol. 37 no.4, pp. 337-344.
Swanson, RA & Holton, E 1997, Human Resource Developement Research Handbook: Linking Research and practice, Berrett- Kohler Publishers, San Fransisco.
Werner, JM & DeSimone, RL 2008, Human Resource Development, Cengage Learning, Mason OH.
Wright, K, & Hinson, D 2009, âHow blogs and social media are changing public relations and the way it is practicedâ, Public Relations Journal, vol. 2 no. 1, pp. 1-21.