Strategic Management of Twitter Inc.

This report analyzes the strategic management of Twitter Inc. and identifies strategies for competitive advantage in the social media industry. It examines approaches for strategy formulation, the competitive environment, and strategic capability of Twitter. The report concludes that Twitter needs to remodel its revenue structure and establish itself as a leader in the news media industry.

STRATEGIC
MANAGEMENT OF
TWITTER INC.

EXECUTIVE SUMMARY
The purpose of this report is to analyse the strategic management of micro-blogging giant
Twitter. Twitter has established itself as a “pulse of the planet” but its growth is declining in the
present times and it needs to strategically align itself to gain competitive advantage and retain its
top position in the social media industry. The report has identified various formulation
approaches for strategies, analysed its competitive environment and strategic capability through
tools and techniques like VRIO Matrix, Porter's Five forces, TOWS Matrix analysis and SFA
model. The best strategies were evaluated and selected for Twitter based on these findings. It
was concluded that remodelling of the revenue structure of Twitter is necessary in long term
along with few essential marketing tactics and establishing itself as a leader in the news media
industry.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................5
1A: Approaches of strategy formulation .....................................................................................5
1B: Importance of strategic management in micro-blogging and social networking industry....6
2A: Critical Analysis of the competitive environment of Twitter ..............................................7
2B: VRIO Analysis of Twitter Inc. .............................................................................................9
3A: Critical analysis of Twitter’s current strategies and alternatives for future adoption.........11
3B: Using SAF strategic model for selecting appropriate strategy for Twitter.........................14
CONCLUSION..............................................................................................................................16
REFERENCES................................................................................................................................1

INTRODUCTION
This report aims to evaluate the strategy formulation of the company and analyse its
competitive environment, opportunities and threats using the VRIO framework. The report will
also highlight Twitter’s current strategies using TOWS matrix and find alternative future
strategies by applying the SAF strategic model. Strategic management is conducted for the
development of a strategic vision, establishing objectives, formulating and implementing
effective plans and policies and using continual corrective measures in-case of deviations.
Twitter is a USA based microblogging and social networking company headquartered in San
Francisco, California with Jack Dorsey as its Chief Executive Officer. It has established itself as
the pulse of the planet by its instant networking and short message posting tactics. But in recent
times, it is facing slowdown in the growth and there is a dire need for improvement in its
business strategy.

MAIN BODY
1A: Approaches of strategy formulation
Twitter is highly popular social networking site platform that offers it’s networking
services across the world. Organization implements both type strategy such as deliberate and
emergent in it’s business environment. the reason behind is that these are essential to keep
company on right track and precisely manage different business techniques and tactics. To use
deliberate strategy effectively requires an effective strategic plan that is created by top level
management of Twitter (Ahmed, Jaidka and Cho, 2016). This strategic plan supports to
formulate number of business strategies which can lead financial benefits within company.
Deliberate and emergent strategies are described below:
Deliberated Strategy or Approach
It is effective approach for number of companies because it supports organization to
generate number of business strategies and tactics. Recently Twitter Inc. needs strategic
management because it does not get any profitable revenue. while strategic management
approach will give large contribution to allocate number of resources within business effectively.
With this approach Twitter Inc. can redeem it’s current situation in the market and can again
enable to capture large market share. Organization implements this approach to conduct daily
operations effectively because to handle daily operation is not small deal (Garcia-Morales,
Martín-Rojas and Lardón-López, 2018). There are various organizations that requires intellectual
strategic maker to adapt this approach effectively. Basically, deliberated approach performs
effective role in developing effective models of decision-making. Top level management of
Twitter Inc. enables to take some productive decision with this approach in respect of developing
strategies. These strategies bring sustainable competitive advantage within global networking
market. Deliberated strategy posses some drawbacks are described as follows:
Drawbacks
 This approach is quite expensive to the organization.
 It consumes more time as well as essential resources of organization.
Emergent Approach
It is another productive approach in the form of strategic management. As per the view of
business expertise, emergent approach supports in evaluating actual preferences and

requirements of users within market. Top level management of Twitter Inc. can easily
understand neds and expectation of the it’s customers through the emergent approach as result
can influence customers trust on brand and it’s products effectively. With this approach,
organization can improve features, specification and traits of it’s app which attracts users to use
it’s app instead of other social media platform (Itani, Agnihotri and Dingus, 2017). Emergent
strategy will lead several emerging changes in Twitter’s platform and it’s software applications
that makes it more effective as compared others such as Facebook, Flicker and others. From past
few years, Twitter Inc. has provided permission to company to give prime news and headline to
it’s customer through it’s site and apps. There are various users who like to spend more time on
this site and app so that they get more updates about number of companies. So, Twitter Inc. must
follow emergent approach in it’s strategic management process.
Drawbacks
 This approach is properly unpredictable so, Twitter Inc. may be able to plan.
 This approach is not beneficial for the newly start-up business or venture.
1B: Importance of strategic management in micro-blogging and social networking industry
Rapid changes in business environments in the microblogging and social media industry
will require Twitter to constantly assess their strategies for success. (Durmaz and DÜŞÜN, 2016)
It will help Twitter take stock of their present situation, draw out strategies, deploy them and
evaluate their effectiveness.
Planning and Direction: Strategic planning process helps in predicting future trends
which is the key element in planning for social media industry. (Sundstrom and
Levenshus, 2017) Strategic planning tools must be used instead of mere planning
processes which will help Twitter and its leaders plan for its future existence by setting a
direction for the company and its employees.
Forward thinking: By a well-thought-out strategy, Twitter will be able to design clear,
and smart long term goals. These goals are important for the company to have a distinct
idea about how to move forward with the existing problems which is essential for its
overall growth.

Resource allocation: Strategy management helps in ensuring that company’s resources,
in terms of products and services, are used wisely and vested in the most promising
opportunities. The less is more, till it is the best.
Strengths and weaknesses: Strategic planning will bridge the differences between the
capability void and the strengths of Twitter
Continual approach: Unlike one time plans, an effective strategic management
continuously monitors and analyses an organization's activities, resulting in greater
market share, operational efficiency and profitability.
2A: Critical Analysis of the competitive environment of Twitter
Porter’s five force model
Porter’s five force model is considered one of the main strategic management that is
framed to determine intensity of competition in business market. It is mainly prose for the
competitive analysis. It helps to raise strategic options that implements to achieve profitability in
business. This model contains five phases i.e. threats of new entrants, bargaining power of
suppliers, bargaining power of buyers, threats of substitutes and competitive rivalry. The
strategic management tool is implemented on Twitter Inc. to examine intensity of competition in
networking sector. Porter’s five force model is mentioned below:
Bargaining power of suppliers (Higher)
There is limited availability of technical suppliers that influences bargaining power of
them. The reason behind is that there are number of social networking organizations which
purchases raw material from such suppliers and ready to give high cost as per their demands.
Due to high bargaining power has reduced profit margin of social networking sector
organizations such as Twitter Inc. Technical suppliers are on dominating position due to limited
presence in the social networking sector so they use negotiating power to raise price from social
networking providers such as Twitter Inc (Kent and et.al., 2016). This is the main reason that has
impacted on overall profitability of Twitter Inc. if organization does not raise any solution then it
can become threat for the business.

Bargaining power of buyers (High)
Twitter Inc. has targeted audience: businesses, marketers and others who prefer to
advertise their ads on Twitter platform by paying. The reason behind is that Twitter is the such
platform which includes all type users from ordinary person to top level celebrities, PM and
others top guns, so it become easier for the marketers and businesses to aware people about their
products and influences them to buy products. There are other social media platforms and
internet websites who provides advertisement services through funds. Twitter Inc. is social
networking platform like others, so it doesn’t have any defined positioning. Due to this it unable
to raise price of ads and achieve high revenue. High presence of social networking providers has
improved bargaining power of buyers and they select that social networking provider who offers
high discounts. In the case of Twitter Inc. there are various users who are highly loyal for the
company so switching cost of targeted audience is lower but bargaining power is too high (Kontu
and et.al., 2019). To retain loyal customers have to offer services at lower cost which directly
impact on financial scale of company negatively.
Competitive Rivalry (High)
Currently social media business is become one of the high potential emerging business
among others in respects of commercial profit. So, there are various social networking providers
i.e. Twitter, Facebook, Flickr, Snapchat, Instagram and others have increased large competition
in the social networking sector. Basically, there are other players who have failed to build large
fan base like Twitter due to high availability of entry barriers in social networking sector.
However, this sector has undertaken various emerging technical advancement and other new
features in apps that attracts users towards social networking platforms. Such advancement in
technology provides opportunity to the small players to enter in social media networking with the
support of giant networking organizations. So, currently Twitter Inc. faces wide competition in
it’s sector due to competitors.
Threats of new entrants (Low)
Threats of new entrants are very low because there are various potential networking
providers who are financially strong and has already captured large market share on their
platforms such as Facebook, Instagram etc. So, it is quite difficult for the new entrants to execute
it’s business successfully in the social networking market. In a case if new entrant enter in the
sector then requires different innovative technology, new features in application, web

development and others and these are not more costly that indicates entry of new entrants is
actual difficult as compared well-established competitors. If there is debated about existing
competitors like Twitter Inc. who has already established strong fan base and brand positioning
in the networking provider sector due to it’s highly advantaged technology and approaches.
Organization has comprised all channels like news channels, businesses and others on it’s
Twitter account and provides links of all business’s official sites to the user. With these links’
users can direct visit on organization’s official site and communicate with them on Twitter’s
application. Such technology advancement and approach has raised barrier of entry for the new
entrants. So threats of new entrant force is very low that improves opportunity for the Twitter to
build large fan base in it’s sector.
Threats of substitute products (High)
Twitter Inc. has high threat of substitute products because there has high availability of
substitute products such as Dropbox, Instagram, Snapchat, Facebook, Google etc. in the social
networking sector. These all social media platforms have already established string fan base by
offering advanced technology and applications that attracts users to spend more time on such
sites. Twitter Inc. has provided limitation to posted number of characters in a tweet (Lindsey-
Mullikin and Borin, 2017). On the other hand, substitute companies allow users to post on their
application as much as they want. So, users love to invest more time on such substitute platform
instead of Twitter Inc.
2B: VRIO Analysis of Twitter Inc.
It is a strategic management model that helps to identify various type of resources which
assist company to bring competitive advantage in it’s business. This framework is used to
analyse internal environment of business so it is famous as business analysis model. VRIO
analysis model is applied for Twitter Inc. to determine it’s multiple type resources.
Valuable resources
Twitter Inc. is worldwide famous social networking platform that connects multiple
countries population at a single platform by offering different type of services such as post
updating, tweeting, advertisement and others (Patton and et.al., 2016). It provides global access
to the user whereas they can direct communicate with senior authorities to put message in the
form of tweet. The valuable resources of Twitter Inc. are technological innovation, financial

strength, large audience, strong brand image, brand awareness, HRM and strong organization
culture. There has an example to understand significance of valuable resources such as strong
popularity and targeted audience have supported to achieve wide financial benefits in past few
years.
Rare Resources
There are various rare resources such as global presence, customer base, financial
strength, product rage, brand awareness, technological innovation, HRM and organizational
culture etc. are important resources of Twitter Inc. These resource helps organization to achieve
sustainable competitive advantage. HRM and organizational culture are the rare resources of
Twitter Inc. that helps company to formulate number of effective emergent and deliberated
strategy. With these strategies organization enable to gain competitive advantage in it’s sector
and improves customer base. So, Twitter Inc. always focuses on HRM and conducts different
type of management and leadership development program so that human resource managers
improves their existing skills effectively. While HRM department practices non-financial
measures to motivate staff to give high productiveness in their working (Rothaermel, 2016).
Thus, HRM and organizational culture resource helps Twitter Inc. to gain competitive advantage.
Imitable resources
Twitter Inc. has allocated all resources in such manner that cannot imitate by competitors.
For example, brand awareness is a rare and valuable resource of Twitter Inc. that cannot copy by
others because brand awareness is not product it’s non-tangible resource which can observe only
but cannot touch or imitate. Twitter Inc. has strong brand awareness due to its global
accessibility and it mainly focuses on users experience either they are ordinary or potential rather
than influencing awareness. Generally, Twitter Inc. provides number of services like twitting,
posting that have increased engagement of all high-class audience i.e. Bollywood celebrities,
potential business tycoons, marketers and general users which automatically influence brand
image in the social networking sector. To lead sustainability in its business has invested high
funds by Twitter Inc. on CSR activities.
Organization Resources
There are various resources of Twitter Inc. that are well-organized such as product
portfolio, organizational culture, HRM, financial strengths, technological innovation etc. These
resources support company to achieve highly competitive advantage in it’s market. For example,

management of Twitter Inc. manage financial positioning quite effectively that allows to invest
additional funds on research and development department and on marketing as well (Sul, Dennis
and Yuan, 2017). The main goal of the organization is to improve high level of satisfaction in it’s
users which keeps them more busy in it’s sites only rather than others. So, company mainly
focuses on R&D department to keep constant improvement in it’s existing services. Due to
advancement in exiting technology of Twitter become one of the most leading competitive
company among other competitors such as Google, Facebook, Dropbox etc. already has
generated high revenue through mobile applications.
3A: Critical analysis of Twitter’s current strategies and alternatives for future adoption
TOWS Matrix is an audit of external threats and opportunities and the internal strengths
and weaknesses of an organization. (Dandage, Mantha and Rane, 2019) It evaluates intertwining
of internal analysis and external analysis in order to devise long term strategies.
Strengths of Twitter:
 Twitter has established a reliable distribution network to reach its potential market and
has built a culture among dealers and distributors. It is successful in integrating
technology companies to streamline its operations.
 An early entry in the social media industry and use of the best technology available in the
market. It has established a strong brand portfolio and gained popularity as the mascot of
blue bird.
 Its operations and usability allows a common man to connect with celebrities and
politicians. It is now an official platform for sharing instant news with huge customer
base and authenticated by media houses which use it to derive information and real time
updates that people post.
Weaknesses of Twitter:
 There is low retention rate of 40% of Twitter's users and unequal distribution of tweets
with more than 300 million active users which don't participate in tweeting. Most of the
tweets come from 10% of users which is a major concern.

 There is no solid revenue model because of its free subscription and add free policy
which is dangerous in long term and there are no new or innovative features on the
application.
 Its organizational structure is limiting its expansion and the product demand forecasting
is not effective. The company is not able to tackle the new entrants and losing its revenue
to Facebook, Instagram and google.
Opportunities of Twitter:
 Continuous improvement in user experience can help Twitter to redesign and include new
services as per consumer trends. . It can increase the usefulness of twitter moments by
integrating the two platforms seamlessly to attract more user traffic.
 Search engine Business is what Twitter should focus on getting into as search engines can
use its pre-existing data and information . The company can also increase its outreach by
offering marketing communication solutions to businesses which can help in increasing
its revenue.
 New customers from online channels can be gained by investing in popular media
platforms and using data analytics.
Threats faced by Twitter:
 Intense competition from Facebook, Instagram, Tumblr and Google which are innovating
their practices in a way that is making Twitter vulnerable. New and different exciting
platforms are coming up frequently which drives away the attention of users.
 Fake accounts and hacking incidents can reduces the goodwill of the company and can
also lead to lawsuits. It also has to maintain a check on what users are posting and in-case
of any offensive or racist content, suspension of such accounts becomes necessary.
 No-profit model after such a long time in business.

S-O Strategies:
 User experience can be enhanced by using its existing technology to make Interactive and
more user-friendly interface for its application by integration of various platforms and
segments and removing useless things.
 Celebrity endorsements who use may use the application as their primary method of
interaction with consumers.
 Partnering up with other media platforms in areas like fashion, technology, art, music,
cooking to increase new customers via online channels etc. it can also partner up with
brands who will then promote their products on twitter. (Liu, 2020)
W-O strategies:
 Enhancing the user-interface and engagement ideas can be applied to retain the user rate
by increasing add-on services and improve its existing notion of a marketing tool.
 For verified journalists and media houses, Twitter can start a subscription based services
to up its revenue model.
 The organizational structure should focus upon expansion strategies like entering a new
market or getting into the business of search engines.
S-T strategies:
 Its foundational network can be used to tackle intense competition by extensive
marketing strategies of new partnerships. It can even launch a new format and interface
without disturbing its essence of the short message news sharing method.
 Twitter should have strict policy where things like racism and sexism are not tolerated. It
can become a platform to launch campaigns like MeToo and BlackLivesMatter.
W-T strategies:
 Twitter can include marketing strategies like introducing advertisements in innovative
ways without disrupting user experience.
 To avoid threats of possible lawsuits, an advisory on proper marketing, operations and
implementation should be set up which will determine any potential dissatisfaction of
popular twitter users with the company's policies.

TOWS
MATRIX
Strengths
 Strong distribution network
 Strong brand image
 Huge customer base and real-time
updates.
Weaknesses
 Low retention rate
 No solid revenue model
 Organizational structure and
financial planning
Opportunities
 Improvement in user
experience
 Search engine
businesses
 New customer base
S-O Strategies:
 Enhanced user experience by a new
interface.
 Celebrity endorsements
 Partnering up with other social
media platforms
W-O strategies:
 Increasing add on services to
retain users
 Subscription based services
for media houses
Threats
 Intense competition
 Fake accounts, offences
and hacking incidents
 Threat of lawsuits
S-T strategies:
 New marketing strategies to tackle
competition
 Partnerships & social campaigns
 A review board for detection of fake
accounts
W-T strategies:
 Innovate ideas to merge
advertised without disrupting
user-friendliness
 Being aware of lawsuits-
advisory committee
3B: Using SAF strategic model for selecting appropriate strategy for Twitter
The SFA matrix was designed by Gerry Johnson and Kevan Scholes to analyse strategic
possibilities.
Suitability: To test the suitability, areas that have to be considered are opportunities, strengths,
threats and weaknesses and desired effect the option has. Suitability according to Porters Five
Forces describe that- Technical suppliers are on dominating position due to limited presence in
the social networking sector, so they use negotiating power to raise price from Twitter. There are
various users who are highly loyal for the company so switching cost of targeted audience is
lower but bargaining power is too high. there are other players who have failed to build large fan
base like Twitter due to high availability of entry barriers in social networking sector. (Van Osch

and Steinfield, 2018) However, this sector has undertaken various emerging technical
advancement and other new features in apps that attracts users towards social networking
platforms. Therefore the strategies that can be adopted by Twitter which are suitable in the social
media industry are:
User experience can be enhanced by using its existing technology to make
Interactive and more user-friendly interface for its application by integration of
various platforms and segments and removing useless things.
Celebrity endorsements who use may use the application as their primary method of
interaction with consumers.
Partnering up with other media platforms in areas like fashion, technology, art,
music, cooking to increase new customers via online channels etc. it can also partner
up with brands who will then promote their products on twitter.
Feasibility: The Feasibility of the strategies should be according to financing options, required
level in the company and the strategies and conduct of the competitors of twitter. The strategies
should be realistic in nature and analysis of the right resources if available is essential. The
availability of right knowledge and operational resources is also important. Assessment of threats
like legalities is essential. The strategy which complies by these requirements will be considered
feasible for Twitter. Twitter Inc. has high threat of substitute products because there has high
availability of substitute products such as Dropbox, Instagram, Snapchat, Facebook, Google etc.
in the social networking sector. These all social media platforms have already established string
fan base by offering advanced technology and applications that attracts users to spend more time
on such sites.
Twitter Inc. has allocated all resources in such manner that cannot imitate by competitors. For
example, brand awareness is a rare and valuable resource of Twitter Inc. that cannot copy by
others because brand awareness is not product it’s nontangible resource which can observe only
but cannot touch or imitate. Feasible startegies would include-: Enhancing the user-interface and
engagement ideas can be applied to retain the user rate by increasing add-on services and
improve its existing notion of a marketing tool. For verified journalists and media houses,
Twitter can start a subscription based services to up its revenue model.

Acceptability: The strategies are termed as acceptable when they cover the areas of
profitability, financial risks and influence on the environment. The strategies that could
comply by these requirements are enhancing the user interface which would barely have
any financial risk and enhances the user experience, thereby attracting traffic to the
application. Its foundational network can be used to tackle intense competition by
extensive marketing strategies of new partnerships. It can even launch a new format and
interface without disturbing its essence of short message news sharing style. The
environmental impact that has to be overviewed with these strategies. (Na, Hwang and
Lee,2017) Profitability is a major challenge and the best suited strategies for this will be
an up-gradation of the revenue model of the company by introducing marketing strategies
like introducing advertisements in innovative ways without disrupting user experience.
CONCLUSION
From the above discussion it can be summarized that Twitter Inc. has quite effective
resources and each keeps difference from others and supports to gain competitive advantage in
two forms temporary and sustainable. Financial strengths, organizational culture and HRM,
Strong brand image helps company to achieve both short-term and long-term goals. While others
like innovative technology and wide product range leads sustainable competitive advantage.
Thus, all resources of Twitter Inc. support to maintain brand image in it’s competitive market.
The importance of strategic management was discussed to improve present situation of the
company and draw out effective strategies. The best strategies that are recommended for
Twitter's growth are- Remodeling its revenue structure by high focus upon advertisement
inclusion, enhace video-streaming through its subsidary Periscope, adding gamification features
to improve retweeting, overseas expansion model followed in Japan where its performace is on
the top by providing additional services to users and start a subscription based model for verified
jopurnalists and media houses to increase its profitability.

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Online
Trefis team, Here Are Twitter's Best Strategic Options Going Forward, 2017 [Online]. Available
through: <https://www.forbes.com/sites/greatspeculations/2017/07/11/trefis-memo-to-the-
executive-twitter/#5d94412b48f8>
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