Strategic Management in Social Networking Industry

This assignment discusses the emergent and deliberate approach to strategy formulation in Twitter. It also highlights the importance of strategic management development for major players in the social networking industry. The competitive environment of Twitter is critically evaluated using the Porter's Five Forces model, and its strategic capabilities are identified using the VRIO model.

STRATEGIC MANAGEMENT
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Table of Contents
INTRODUCTION...........................................................................................................................2
PART 1............................................................................................................................................2
A) What makes company strategy formulation approach emergent and deliberate...............2
B) Development of strategic management importance for major players in social and micro
blogging networking industry.................................................................................................4
PART 2............................................................................................................................................5
A) Critical evaluation of competitive environment of Twitter...............................................5
B) VRIO model to identify strategic capability of Twitter....................................................7
PART 3............................................................................................................................................9
A) Critical analysis of Twitter’s current tactics and develop range of practical alternative
further strategies.....................................................................................................................9
B) SAF strategic model and right strategy for company which they can use in the future..11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................14
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INTRODUCTION
Strategic management is the tactic utilize of an organizational resources to reach
business’s aims and objectives. It requires reflection of procedures and processes within an
company as well as external elements that may affect how a firm functions within specific
market or industry. It is also consider as ongoing planning, monitoring, examine and assessment
of all essentials an organization needs to meet their set goals. The current study will base on
Twitter, which falls under category of the biggest social media platforms in the whole world. It is
a global platform for people self expression and communication in real time, it caters a network
that connects millions users to other, information, opinions, ideas and news. This assignment will
explain things that make organization strategy formulation approach both emergent and
deliberate and also explain importance of strategic management development for companies in
social networking and micro blogging industry.
Furthermore, this study will critically analyse competitive environment facing firm in
social networking sector, examine strategic ability of company using VRIO concept and also will
critically analyse organization current strategies. It will define range of practical alternative
further tactics for possible adopting by firm. Moreover, this report will explain SAF strategic
model and justify strategy that is appropriate for Twitter in further.
PART 1
A) What makes company strategy formulation approach emergent and deliberate
Twitter is one of the most popular social media platforms; Twitter, Inc serves its services
to their users include live commentary, live conversation and live connections. With clear aim
firm work and develop their strategies in effective manner. The goal of its business is to connect
people and permit them to share their thoughts with a large population. In order to enhance
performance and productivity level even better organization follow the process of strategy
formulation in systematic manner. It can be said that management and leadership within firm
makes strategy formulation approach both deliberate and emergent, they use these things because
it permit company to systematically and effectively manage several different business strategies,
plans and techniques that it makes utilise of.
High administration and leadership of company is needed to develop and implement their
business tactics utilise deliberate method. It allows Twitter to create other operational strategies
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in effective manner. By using emergent and deliberate tactics organization enhance their
operational efficiency rather than before.
Deliberate approach-
This strategy includes management group specifying effective actions that Twitter should
be taking to achieve specific aims (Kopmann and et.al., 2017). It top down method usually
included certain form of planning and choices that are made based on some estimation of what
may happen in further. It is vision towards tactic formation in strategic management in
companies that emphasizes benefits of acting purposely. This approach is highly useful and
valuable towards efficient strategic management operations of firm within social networking
sector. It requires organization to effectively plan, budget and implement their business tactics
over span of an era, refining and managing venture tactics at key annual points. This strategic
formulation needs firm to invest their valuable resources towards creating a strategy that is
especially made for its company.
It helps to increase decision making process of Twitter and allow them to take effective,
productive and competent judgement in context of development of organization strategies which
can permit management to continue to successfully manage their business in social networking
industry for longer period of time.
Emergent approach-
This approach is the view that tactic emerges over time as intentions collide with
changing reality and accommodate. Emergent approach is more grass roots, front oriented
method where solving current business issues leads to new tactics (Zieba, Bolisani and Scarso,
2016). Along with above approach of strategy formulation, this is also quite beneficial and
helpful in regard to Twitter. It permits management to effectively analyse current market needs,
requirements and demands as well as preferences of consumers. With the help of this approach
manager and leader can examine customer’s demands of target users in external markets, it can
aid management and leadership of firm to create and design effective strategies that can help
these things for increased productivity, performance and profit margin as well as consumer’s
satisfaction of organization. Through this method, Twitter can include specific attributes and
characteristics to its social media platform so that it can efficiently satisfy demands, requirement
and needs of customers. It also allow firm to retain new customers or users for their channel in
an easy, systematic and effective manner.
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There are few initiatives adopted by Twitter over the past few eras in order to enhance
their business operational efficiency rather than before. They adopt and implement varies
approaches to improve services. They support initiatives that respect and defend all voices by
defending civil liberties and marketing free expression.
Limitations of both approaches to strategy formulation-
Deliberate approach-
The main limitation of this approach is that it is expensive for Twitter and other firms
within social networking industry who seeks to use it. It requires a lot of time and useful assets
of company in context of effective strategy formulation (Maldonato, Dell’Orco and Sperandeo,
2018).
Emergent approach-
It analyzed that this approach has few limitations like it is highly unpredictable in nature
and needs wide consumer and current market analysis (Asikainen, 2017). This method to
strategy has their drawbacks; being fixated on particular result may increase Twitter rigidity and
decrease their speed of responsiveness in situation of changes in their operating environment
from pursuit of specific strategy.
Differences between approaches-
It can be said that emergent approach focus on unforeseen situation whereas deliberate
tactic is completely binds towards unexpected conditions. It attempts to decrease outside impact
act on company operations. Emergent tactics infuse innovation and creation to planning
procedure, while deliberate tactic can obtain obsolete with time. Deliberate approach work on
particular aims and objective, it is inflexible and rigid. On the other, emergent approach are
flexible, it work in absence of objectives and goals and aid to create a new chance in the further.
B) Development of strategic management importance for major players in social and micro
blogging networking industry
Strategic management caters overall directions by creating policies and plans designed to
achieve objectives and then allocating business resources to implement plans (Zhou and et.al.,
2019). Ultimately, it is for companies to gain competitive advantages over their competitors.
Development of strategic management is immensely significant and essential for all major
organizations, operating in micro blogging and social networking industry, such as Snap chat,
Facebook, Google+, LinkedIn Corporation, Interest, Twitter and Instagram, because it permit
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these organizations to effectively and systematically design their business strategies that allow
them to sustain competitive benefits within industry. Strategic management development permit
major firm such as Twitter to be capable to efficiently enhance and maximize their current
consumers base, profitability, revenue, efficiency of operations and productivity towards
enhanced metrics in further business growth. It also essential for company because it creates a
higher degree of awareness and caters better focus on activities that will make business more
productive and successful.
Development of strategic management is important for long term success and growth of
Twitter. It can be said that major players are carrying out strategic management which means
that it is SM which defines a tactic for their business activities with clear and well defined aims.
It generally thought to have non-financial and financial benefits and aid Twitter and other
companies and their leadership to think about & plan for their further existence and growth as
well as fulfilling a main accountability of board of directions (Stamevska, Dimitrieska and
Stankovska, 2019). Development of strategic management sets a clear direction for all firms and
their workers as well which make them able to drive towards achieving set aims and objectives
of company. It can be said that good and effective strategic management development goes
beyond improving company bottom line. As whole industry is highly competitive landscape,
with different major players all seeking for obtaining similar goal and that is to reach at global
level, development of strategic management permit for leaders and senior manager of these
above companies including Twitter to effective develop dedicated and efficient business tactics
in order to efficiently make able to compete with their rivals running in same sector and continue
to manage business operational and functional functions successfully within social networking
and micro blogging industry.
The above concept gives major players of sector valid and appropriate social licence for
operations. In recent time, strategic management creation and development is become the most
important and beneficial aspect for each company, because organizations have multiple external
and internal stakeholders.
PART 2
A) Critical evaluation of competitive environment of Twitter
Twitter is firm that operates its business in social networking industry with significant
market share and profit margin that attract maximum number of customers to select specific
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firm. Porter five forces is model that includes five major elements such as existing rivalry, power
of consumer, power of buyers, threat of new entrance and substitute products in environment that
can help in identifying market position and formulation of better strategies for growth and
sustainability of enterprise (Leiblein and Reuer, 2019). Therefore, Porter five force model has
been used to analysis available opportunities and threat in competitive environment of Twitter.
Such as:
Existing rivalry: It can be stated that there are large number of enterprise that exist in
social networking industry with prominent market share such as facebook, Snapchat and
instragram that have contributed towards increasing competition level. Each firm is operating
with main objectives to render best services to end user so that more and more individual are
motivated to be part of organisation. Large numbers of individual or entrepreneur are planning to
start their business in such industry because digitalisation has contributed in speedy growth.
Therefore Twitter have threat of increase competition level within industry so it needs to find
ways through which it can easily differentiate its services to retained its market share.
Power of supplier: The industry in which Twitter perform its function have limited or
less amount of suppliers thereby they have more power to charge high prices form company. At
the same time these limited supplier deals in unique and qualitative products or services such as
technology solution and data security so it difficult for Twitter company to bargain with them
(Fitri and et.al., 2019). Thus, company in order to make optimum utilisation of available
opportunities that is increasing number of user have planned to build and maintained strong
relationship with supplier for getting timely supply and satisfaction of customer’s requirements.
Power of consumers: Another factor that helps in evaluation of competitive environment
of Twitter is power of consumers that are most essential for any organisation. Company
manufactured products or services so that they can be used or consumed by individual or
customers. In recent world, large number of individual or younger generation are making use of
internal connection and smart phones to use various application like Twitter, facebook and
instragram. So, there is high demand of services in social networking market but at the same time
there are various companies that offer such services at lower rates to earned more sales volume
and profitability. People can easily switch from one company products or service to another due
to availability of various alternative options in social networking industry (Sugahara, Daidj and
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Ushio, 2017). Therefore, Twitter in order to sustain business for longer period of time have to
innovative its services and accept external changes in demand of customers.
Threat of new entrances: It can be illustrated that there is low threat of new entrance
faced by twitters as it have used several strategies to gain retained or maintained its market
position. Such as company have made use of patent, copyright and other intellectual property so
that no other competitors in social networking firm can offer similar services to customers
(Wunder, 2016). Strong brand image and customers satisfaction are two other factors that have
created barrier for new enterprise to enter into market for earning profitability. Therefore,
Twitter by creating barrier for new firms has opportunity to expand its business across
worldwide and earned high profitability.
Threat of substitute products: It is last factors of porter five forces that can be used to
analysis impact of competitive environment on strategy and operation of Twitter in social
networking industry (Ethiraj, Gambardella and Helfat, 2018). There are several firms that offer
similar services to customers so that they can connect with each other, exchange their view at the
same time like, share or comment on image for their fun and entertainment like Snapchat or
Facebook. So, threat of substitute products is medium as there are enterprise that can imitate
service of twitter to gained customer satisfaction thus company in order to cope up with these
threat have to planned better strategy.
Despite of various factors that are illustrated above there are some other factors which
have adverse impact on strategy such as legal laws, policies made by government as Twitter
operates in various countries so it need to adapted to specific country regulation for growth and
sustainability of business. Technology also keeps on changing so Twitter has to innovative its
technology and services to delivered best services to customers (Pasch, 2019). Therefore it can
be illustrated that manager of Twitter need to have appropriate knowledge regarding external
changes in order to formulate strategies for growth and success of business.
B) VRIO model to identify strategic capability of Twitter
VRIO tool uncovers sustained competitive benefit; it is an acronym for a four different
question framework of value, rarity, Imitability and organization (Fisher, Wisneski and Bakker,
2020). It is one of the best internal analysis methods, utilized by major companies of social
networking and micro blogging industry to categorize their key resources based on whether they
hold some traits outlined in concept. This categorization then permits firms to determine
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organizational resources that are competitive benefits. All above dimensions make up this model,
which create acronym VRIO.
Valuable-
When a resource of a company is valuable, it provide business with some sort of
advantages. However, an asset that is valuable and useful and does not fit into any of other
elements of framework, is not a competitive benefit (Laursen and et.al., 2019). An firm can only
obtain desire outcomes and achieve business objectives with a resource that is valuable and
neither rare nor tough to imitate. There are various resources of Twitter are valuable that include
skilled, experience, knowledgeable and talented workers. Organization is able to fulfil needs of
current market and provide better services to them with skilled applicants, who are capable to
effectively revolutionize and innovate their business functions and operations towards better
success and much productive.
Figure 1VRIO Analysis
(Source: VRIO Analysis Framework for Strategic Planning, 2020)
Rare-
A asset that is uncommon and not possessed by companies operating in social networking
industry is rare. When resources is rare and valuable, management have this that gives them a
competitive benefit, which can be achieve from a resource that is rare and precious is usually
short lived though. It can be said that company posses their resources that can be deemed as rare.
In list of Twitter resources financial resource and important reserves of revenues can be include,
which is quite beneficial for company in term of operating its business within industry and take
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risks in hopes for gaining higher profitability. Another rare asset possessed by organization
includes patents as well as copyrights as intellectual property protection tools.
Inimitable-
Organizations resources are very hard to imitate when they are highly expensive for
another company to acquire them. An asset may also be hard for a company to imitate when it is
protected by legal means, such as trademarks or patents. Organization possesses varied rare and
valuable resources which permit management for successfully and effectively operate within
industry. Immensely talented and experienced workers possessed by organization can be imitated
by their business rivals through effective selection and recruitment, important financial resources
possessed by firm can also be imitated by competitors. It identified that networking infrastructure
of firm can also be included in this dimension through significant investment by social
networking and micro blogging major players.
Organization-
Twitter effectively organized their resources in order to make resourceful and optimum
utilise of these, which make them capable to obtain desire outcomes. It include financial
resources and skilled workers which have been well managed by leaders and managers in
organization to gain optimum market value and can be efficiently utilised to strategically invest
into available chances that permit firm to expand and grow its ventures operations.
From above analysis, it has been identified that Twitter company posses different
organizational assets which are immensely significant and helpful for their successful operations
either operational or functional within micro blogging and social networking industry. Above
resources for example applicants permit and strengthen organization to effectively and ethically
gain sustained competitive benefits.
PART 3
A) Critical analysis of Twitter’s current tactics and develop range of practical alternative further
strategies
Porter’s generic strategies-
Cost leadership-
This porter’s generic strategy permit Twitter to enhance their current market share and
revenue rather than before through procedure of providing their services to target consumers at
decreased prices as compare to standard costs of industry. It is very effective and beneficial
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alternative for company in context of future strategy that is accessible for firm. It provides
benefits to business because it focuses on pricing of services provided by companies within
social networking sector, which is the most influential attribute that influence behaviour of
service users.
Differentiation-
Above model also show another alternative option or further tactic for Twitter which they
can use to gain competitive advantages and business goals. With this generic strategy
organization can concentrate on their several operations of differentiating services that increase
its consumer’s base even better. Concentrate on differentiation tactic permit firm to reach at
global level by differentiating their services as compare to other companies in same industry.
Focus strategy-
It lay out by above framework chosen to concentrate on differentiation and leadership
approaches at actual time. Focus strategy is designed especially for use of small size companies
who do not posses needed large level operations and important financial resource which is
mandatory for effective adoption of past strategies of model. When Twitter can use focus
strategy for specific small segment of their operation they can get success of their utilized
strategy.
Bases on analysing above alternative further tactics lay out by specific concept such as
Porter’s generic strategies framework, it is suggested that Twitter make utilize of differentiation
strategy instead of other one which makes them able to effectively differentiate and categorize
business services and operations from other services offered by competitors.
TOWS matrix-
Threat-
Intense competitive level in social networking and micro blogging industry posse’s
threaten for Twitter. Competitors like Google+, Facebook and Tumble put impact on chosen
company in term of gaining attention of more users than it. They adopt different strategies which
in return create competitive environment in sector. Due to this external factor twitter can drive
towards adopting new and innovative ideas that are quite beneficial for them.
Opportunity-
There are several chances available for Twitter, which they can use and implement within
operational functions in effective manner. It can be said that kind of information and data firm
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already open up a chance for its management entering into search engine business at certain
point of time. By entering into above venture they can generate more brand awareness in market.
Weakness-
Each organization has some weak point which makes impact on their business growth
and success in negative manner. Low retention rate is one of the Twitter weaknesses that
influence on its operations and services efficiency. Retention rate of consumers on Twitter
application is only 40% which reflects inability of organization to keep consumers interested in
social media platform.
Strength-
Twitter has good brand image in all over the world, it has been fairly and effectively
successful in organizing authenticity of celebrity and TV actress accounts which makes it one of
the most favourite social media channels of the globe. Due to this strength firm gain attention of
more users.
B) SAF strategic model and right strategy for company which they can use in the future
Acceptability aspect of SAF strategy framework is all about measuring risk, stakeholders
and risk reactions resulting from a specific strategy.
Suitability-
It is probably the most essential element in SAF tactic model, as an alternative option’s
suitability is key to whether or not business strategy can do what firms such as Twitter wants it to
do and achieve. This metric of model assure that tactic that has been developed by business
companies such as Twitter is really suitable for business operations or not. It is assured by
thoroughly examining internal factors of organization, suitability attributes of concept also takes
into consideration other organizational elements such as environmental suitability, expectation
and capability suitability towards formulation of effective strategy that is capable to achieve
Twitter objectives and goals. Specific further alternative strategy such as differentiation is totally
suitable and appropriate for company as they already possess talented workers within their micro
environment which can effectively permit firm to differentiate services within industry as
compare to competitor’s offers. Company must assure that their human resource are able to
provide desire outcome with this strategy.
Acceptability-
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This aspect of SAF model is all about measuring and analysing risks and other things
such as reactions of stakeholder’s outcome from particular strategy such as differentiation.
Acceptability influencing attribute of suitability, feasibility and acceptability (SAF) model
examine whether developed strategy by Twitter is acceptable or not by efficiently examining two
parameters pertaining to stakeholder aspect and financial aspects of tactic. In context of
stakeholders aspects, company determines whether members of firm comply and help strategy or
not & for financial resource, risk of tactic are assess along with desire outcomes. It can be said
that differentiation strategy is acceptable and useable for company as although it’s possess risks,
benefits that it offers through successful and effective implementation are also important for
organization. In term of risks, productivity of a strategy’s failure and any financial losses,
corporate or brand affect should also be weighted up.
Feasibility-
This portion of chosen model is really make or break of select strategy of an company.
Whether or not ventures has aptitude, capabilities and key resources to actually implement tactic
is to their success, therefore financial feasibility require to be assessed by analysing and
forecasting cash flow, working break even examine and a range of other financial tests. The last
attribute of framework is feasibility of tactic formulate by business company within social
networking industry. Through this element internal weakness and strength of Twitter are
effectively analysed and examined with intention of assess whether developed strategy is feasible
for company or not. Chosen strategy such as differentiation is also feasible for company as
strengths of business include their highly talented, skilled and knowledgeable, which permit
organization to innovate something new in their services.
CONCLUSION
By summing up above discussion, it has been concluded that Twitter is developing the
best and most effective business strategies in order to achieve market competitive advantages
and increase their profitability more than other major players operating in micro blogging &
social networking industry. It has been identified that strategic management operations are
immensely essential and necessary towards sustained long term successful functions of major
players such as Twitter. This study examines elements that makes strategy formulation approach
of organization both deliberate and emergent and indentified limitation of both methods.
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Furthermore, it has been summarized that by using appropriate and suitable porter’s
generic strategy firm obtain different benefits and achieve their aims and objectives in effective
manner. It evaluate competitive atmosphere of chosen company by making utilize of effective
tool such as porter’s five force concept and makes use of VRIO model towards indentifying
value, inimitability, rareness and organized resource of business.
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