Analyzing Social Networks' Impact on Business: Merits and Demerits

This report delves into the multifaceted impact of social networks on business operations. It begins by defining social networking and highlighting its prevalence among successful enterprises. The report then outlines the advantages of leveraging social media, including promotion, gathering customer insights, building brand awareness, improving business ranking, and facilitating competitor analysis. It also emphasizes the importance of easy information sharing and maintaining customer relationships through these platforms. Furthermore, the report acknowledges the cost-effectiveness of social networks, particularly for market research. However, the report also acknowledges and discusses the potential disadvantages associated with social media usage, such as bad publicity, which can arise from the business, its customers, or the environment. The report uses secondary data from various sources to provide a comprehensive overview of this important topic.

INSTITUTION
COURSE UNIT
STUDENTS NAME
STUDENTS ID NUMBER
TASK
Merits and demerits of utilizing social networks in business
DATE

Introduction
Social networking refers to the action of using social networks for various purposes. Social
networks, on the other hand, are websites and platforms that are used to share ideas and unite
people of the same interest (Edosomwan & Prakasan, 2016). They are also called virtual
community or social media. Examples of these social networks include; Facebook, Twitter,
LinkedIn, My Space, Bebo, Instagram, among many others. Most of the successful businesses in
the world make use of social media. This is because most of the people can be easily reached, via
social networks. When used wisely, businesses accrue more profits. The vice versa is also true.
Social networks are platforms which need good marketing strategies for businesses to thrive
well. According to (Jussila et al., 2014), about 1.3 million businesses in the make use social
networks to market their products. Appended to this report is an analysis of the usage of social
networks in contents and subcontinents of the world. This justifies that social networks are
essential tools to be studied as far as the success of businesses is concerned. There are many
advantages which result from the utilization of these platforms. However, there are also some
disadvantages of using the. The following are the project objectives of this project report.
Project objectives
Objectives set the main focus of any research paper. This report has its base on the following
specific, attainable and measurable, objectives.
i. To identify the advantages of making the use of social networks in business.
ii. To state and explain the disadvantages of utilizing social networks in business.
iii. To give suggestions on what should be done for businesses to effectively use social
networks in business.

Project scope
The project studies the major advantages and disadvantages of using social platforms in
business. It entirely covers a literature review the merits of using social media in the business
organization. The disadvantages of the same are still explained in detail below. The project
report makes use of secondary data, obtained from articles, books, and journals. However, some
sources which seem to be unreliable have been ignored in this report. Only those sources which
have relevant and reliable information have been used. The report is specifically on merits,
demerits, and some relevant suggestions on social media usage in business, and not social
networking in general. A detailed literature review is as portrayed below.
Literature review
Many researchers, scholars, and marketers have researched, analyzed data and published widely
on social networks. Some have even gone further to make an analysis of the advantages and
disadvantages of utilizing social media in business. According to (Stelzner, 2014), there are more
than 1 million books, articles, and journals published about these merits and demerits. Some of
these have been used to compile this report.There are several advantages which result from
utilization of social networks in business.
To start with, social networks serve as very important tools for promotion. Promotion includes
all aspects which aim at making more sales and maximizing profits. Promotion is mainly done
through advertising. Marketers are able to advertise in real time, through the use of today's social
platforms. This enables them to get first hand and reliable data for market analysis (Tiago &
Veríssimo, 2014). Ads are also commonly used in social networks as promotion tools. Ads are
shortly designed adverts which are clear on the information they communicate. Most business

organizations include links on their ads. These links are very useful since they guide a potential
and interested customer, to the business website where more information about the ad is found.
Businesses can, therefore, opt to advertise social networks if they intend to make more profits.
Secondly, social networks help businesses to gather customer insights and experiences (Whiting
& Williams, 2013) (Kaplan & Haenlein, 2013). Customers usually have their own views on a
company's product. Others have already used products of certain companies, and have an
experience of using such products. These kinds of customers, therefore, carry important
information with them, which is very important to manufacturers and business enterprises. For
any business to evaluate its performance, it has to put customer experiences and insights into
consideration. Through social networks, businesses collect information, analyze it and make
relevant suggestions on where improvements should be made. Such networks, therefore, tend to
be very advantageous to businesses.
Thirdly, the utilization of social networks helps to build awareness of a brand and make
customers loyal to that particular brand. For any business organization to become successful in
the entire labor market, it has to have a brand name. This is a name that is fixed on the products
of a certain company and which enables a business organization to market its products. The
brand name may also bear the brand logo. To make more sales, businesses first make their
brands known to the public, for example through advertising. This action of making a brand
name popular and known to the public is referred to as creating ‘brand awareness (Dijkmans et
al., 2015).’ When potential customers become aware of a certain brand, they are more likely to
purchase from that brand, this accrues the target company notable increase in profits. If the
customers feel comfortable and satisfied with the products after experiencing them, they are
likely to purchase even more, from the same brand. Additionally, they may even invite their

friends and relatives to purchase from the same brand. By so doing, they are said to have
developed ‘customer loyalty.’ Nike is a good example of a business organization which has put
this concept into practice. In 2013, Nike made more than 30% of its profits from social networks
(Habibi et al., 2014). This was after it deeply ventured on social networks to create brand
awareness. It massively advertised through Facebook, Google+ and LinkedIn. Within a short
span of time, the brand name ‘Nike’ spread to many parts of the world. Today, almost every
nation has a product from Nike Company. Customers became loyal and Nike made a lot of
profits
Additionally, the usage of social networks helps in the ranking of businesses. The higher a
business is ranked, the more famous it becomes and hence, the more sales it makes. All these
activities at long last, aim at maximizing profits. Businesses are ranked according to two majorly
known criteria, that is, ranking by search, and through web traffic (Hays et al., 2013).When a
business massively utilizes social media, and its name is mentioned almost daily. This helps to
improve search ranking and web traffic. The probability of making more sales is high when a
business is ranked highly. For example, one of the highly ranked telecommunication companies
in Australia is TPG Telkom. According to a research carried out by (Okazaki & Taylor, 2013),
this company makes use of social networks to reach the almost all citizens in that country and
deliver its services to each social class according to their need. Social networks, therefore, are
good platforms to improve the ranking of businesses.
Moreover, social networks help the business organization to carefully study their competitors. As
it is in the market, competition ever exists. Competition mostly arises when companies sell the
same type of product (Culnan et al., 2015). When a company takes the time to study its
competitors, through social networks, it might compete favorably with such competitors. For

example, a business enterprise may choose to change its product line or utilize product variation
to evade stiff competition. On product variation, the business may choose to manufacture
distribute and sell products with colors, sizes, texture and pricing concepts, which are different
from those of its competitors.
Additionally, social networks make it possible business organization to share information, ideas,
guidelines, and updates easily and faster. From the definition of a social network, it is clear that it
involves bringing people together to one platform. It is therefore easy to communicate with
customers through a channel which they can easily be accessible. Large business organizations
communicate with their existing and potential customers via their pages in social media
(Subrahmanyam et al., 2013). Through this social pages and social groups, customers can get
updates, present their complaints and grievances; give positive suggestions and other business
related comments. Through social networks, information moves to targeted customers easily and
in a fast manner.
In addition to the above-discussed advantages, social media also helps business organizations to
create and maintain strong and long lasting relationships with their customers. Businesses
maintain their customers through various ways. One of these ways is through persuasive
communication. Business enterprises utilize social networks to respond to customers complaints
in a polite and persuasive manner. This helps to build good relationships between the two parties.
After persuasive communication, a broken relationship between customers and business can be
brought back to existence. Other departments in business also make use of persuasive
communication to build good relationships with customers. A good example is the tourism
department in the Delta Airline Company. Trained personnel make use of social networks, to
keenly look for potential tourists with determination. Their efforts are successful in most cases.

Delta Airlines transports travelers’ to and fro different destinations as they enjoy their travel in
the comfortably designed plane seats (Hudson et al., 2016). All this comes into being when the
relationship has been created and made strong. It helps to increase customer engagements and
therefore bring more capital to the business.
Still, on the advantages, social networks help businesses to be the world widely connected.
Large businesses not only sell their products in local and regional markets but also international
markets. Through social networks, a business identifies business opportunities in other nations,
which match with its operation. After market research, the business, therefore, does segmentation
on such markets. In international markets where the segments are large, the business may choose
to venture in those segments and by so doing, expand its operations. With time, that particular
business can be connected to many nations in the world wide. For instance, Nike Company has a
branch in almost every country in North and South America, Africa, Saudi Arabia and India
(Tsimonis & Dimitriadis, 2014). All these business segments in these countries have been
identified through social networks. When a business becomes connected to many nations, the
chances of making more profits are very high.
Additionally, social networks are very useful to businesses since they are free of charge to sign
up and use (Aral et al., 2013). Almost all social networks are free. They do not charge anything
that can be termed as registration fee, during the opening of an account in their platforms. They
are absolutely free to create and use. This is a big business opportunity which business
organizations should use to cut down on marketing costs. Since advertising in social media is
free, companies should advertise widely on these platforms, with moderation. Adverts are likely
to reach the targeted customers in a timely manner since these platforms are designed according
to groups of common interests among other characteristics.

Finally, social networks serve as good platforms for market research (Hanna et al., 2013). For
any business to be successful, especially those which would like to enter the market, conducting
a market research is very important. This can only be carried out where the anticipated customers
can be easily accessed. Social platforms, in this case, serve as good places to carry out this
research. Different businesses venturing in different business opportunities can efficiently utilize
social networks to get market research information. It is from this information that decisions are
made on which fields to venture and which ones to ignore.
However, despite all the advantages well elaborated above there still exists some demerits of
making use of social networks in business. These demerits originate from three major sources;
the business, the customers and the environment. Some of these disadvantages are as discussed
below.
To start with, social networks might lead to bad publicity of a business organization. This
challenge mainly arises from the business and its customers. When the business does not provide
services which cater to the timely needs of the customers, such unsatisfied customers and other
aggressive third parties may publicly denounce the company. This is very dangerous to the
business enterprise since chances of losing potential and existing customers become very high.
This signals that a significant drop in sales may be experienced for certain duration of time. For
example, in the recent past, General Motors Company incurred a mass loss in the recent past
years (Heller Baird & Parasnis, 2015). All these began after the company delayed the
manufacture of cars for a long duration. When the vehicles were finally delivered to respective
customers, they had deficiencies since they ignited abnormally. The ignition switches were
faulty. As a result, several cases of death were reported. This went viral on the social networks
and the sales of this company promptly decreased.

Secondly, social networks may expose business an organization to great risks of loss. When a lot
of secret information regarding a business is widely exposed fraud activities like hacking are
likely to happen. Hackers only hack when they have enough information concerning that
particular business. Social networks are one of the platforms through which such secret
information can be exposed. Early this year, the Kenya Revenue Authority was hacked. This was
after the agency displayed too much information on social networks, on how it has been making
profits. Hackers went ahead and hacked over 2 billion Kenyan shillings (Fuchs, 2017).
Lastly, social networks are time-consuming and need close monitoring. Businesses have the
mandate to daily monitor social platforms to ensure that all activities run smoothly. This takes a
lot of time compared to other means through which such companies would market their products.

Conclusion
Conclusively, this report had compiled all the advantages and disadvantages which might accrue
when a business uses social networks. However, to make sure that businesses operate efficiently
in social networks despite the disadvantages of doing so, the business can put into practice, the
following suggestions. First, businesses should have a specific marketing strategy which should
be clearly indicated in their goals. This will help to ensure that they operate according to their set
limits. Issues of time wastage may not be experienced in this case. Additionally, businesses
should take safety measures to ensure that their operations are safe and secure. For example,
businesses can ensure its properties and employees to ensure that they are compensated in case
of loss. A business can also employ experts in Information Technology (IT), to closely monitor
and record any form of fraudulent activities (Whiting & Williams, 2013). This report had one
major limitation, which is the lack of sufficient finance. As a result, most of the data utilized in
this report was from secondary sources since the first-hand information was too expensive.
However, the data used is accurate and reliable to any business organization which intends to use
social networks for its operations.

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Appendix
Total percentages with active accounts on the top social network in each continent.