Research Proposal: Social Networks Impact on Business Performance

This research proposal investigates the influence of social networks on business performance, examining both the advantages and disadvantages. The report begins with an introduction to social networks in business, emphasizing their role in bridging gaps and enhancing brand promotion. The objectives include assessing social networks' impact, identifying advantages and disadvantages, and suggesting effective strategies. The literature review covers the concept of social networks in business, empirical evidence from Australia, and the influence on consumer buying patterns. Advantages discussed include enhancing brand image, gaining insights into customer preferences, increasing website traffic, and improving customer service. Disadvantages such as negative feedback, time investment, and legal risks are also addressed. The proposal concludes with a discussion on the proper usage of social networks, highlighting the importance of strategic implementation for business success. The report draws on various sources to support its findings and provide a comprehensive analysis.

Running head: BUSINESS RESEARCH METHOD RESEARCH PROPOSAL
Advantages and Disadvantages of Using Social Networks in Business
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
1.0 Introduction................................................................................................................................2
2.0 Project Objective.......................................................................................................................2
3.0 Project Scope.............................................................................................................................2
4.0 Literature Review......................................................................................................................3
4.1 Concept of Social Networks in Business...............................................................................3
4.2 Empirical Evidences in Relation to Social Networks in Business........................................4
4.3 Influence of Social Networks on Consumer Buying Pattern.................................................5
4.4 Advantage of Social Networks on performance level of Business........................................6
4.4.1 Enhancing Brand Image.................................................................................................6
4.4.2 Insights about Customer Preferences..............................................................................7
4.4.3 Increasing Search Ranking and Traffic Website............................................................7
4.4.4 New Business Opportunities...........................................................................................7
4.4.5 Increasing Competitive Advantage.................................................................................8
4.4.6 Improved Customer Service...........................................................................................8
4.5 Disadvantage of Social Networks on performance level of Business...................................8
4.5.1 Negative Feedback..........................................................................................................8
4.5.2 Time Investment and Hidden Cost.................................................................................9
4.5.3 Legal Risk.......................................................................................................................9
4.6 Proper Usage of Social Network Sites...................................................................................9

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4.6 Gap of the Literature............................................................................................................10
5.0 Conclusion...............................................................................................................................10
Reference List................................................................................................................................12

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1.0 Introduction
Social networks are gaining huge popularity among the contemporary business. In
today’s contemporary and globalized business environment, the social networking sites are
playing crucial role in bridging the gaps across their countries, which is helping the organization
in managing close relationship with the customers (Aral, Dellarocas and Godes 2013). Marketers
can get perfect opportunities towards promoting their brands through social networks, as it
enhances the word of mouth regarding any particular brand. Customers are more likely to
recommend their favorite brand to their close friends through these networking sites. It actually
enhances the advertisement effectiveness of an organization. This literature review will identify
both the advantages and disadvantages social networking sites on the performance level of
business.
2.0 Project Objective
 To assess the influence of social network sites on the performance level of business
 To identify the advantages as well as disadvantages of social network sites on the
performance level of business
 To suggest proper strategies for effective utilization of social network sites on business
3.0 Project Scope
The literature review can provide huge information regarding the advantages and
disadvantages of social networks on the performance level of business. The literature review can
also act as effective secondary research project for the future research project relevant to same
types of research topic.

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4.0 Literature Review
4.1 Concept of Social Networks in Business
Social network sites define the web-based services, which allow people to share their
common interests with others on the same social network platform. As per Ellison et al. (2014),
most of the people use social network sites towards being connected with their friends, families,
clients, classmates and clients. Moreover, people can share similar personal interest, career
interest, activities, real life connection and other backgrounds. Therefore, it can be seen that
social network sites serve both for social purpose and business purpose. The mostly used social
network sites are Facebook, Instagram, Google+, Pinterest, Twitter, YouTube and others.
According to Hajli (2014), marketers mostly use social network sites for promoting their
brand indentify and enhance the loyalty level of the customers. In this way, these networking
sites assist marketers towards making their brand more recognizable to the new and potential
customers and more familiar to the existing customers. On the other hand, Ellison, Gibbs and
Weber (2015) opined that social networking sites assist the marketers towards communicating
the brand voice and content from one customer to others. In this way, it can help in enhancing
the values of the brand to the customers. Furthermore, See-To and Ho (2014) opined that
organizations can better communicate the offerings and discounts of their products and services,
which can encourage the customers towards purchasing them. The major applications and
benefits of social networks can be seen in the success of global businesses. Marketers can better
communicate with the cross border customers across the globe for better promotion and sales of
their products and services. The networking sites can also be applied for creating competitive
advantage for organizations though conveying positive feedback of the customers.

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4.2 Empirical Evidences in Relation to Social Networks in Business
According to Luo and Zhong (2015), there is an increasing popularity of social media
sites among the consumers of Australia. Moreover, social media has become an integrated part of
the consumers of Australia in their everyday life. Therefore, there is an increasing popularity and
usage of social network sites among Australian organizations towards influencing the customers.
However, there is sizeable gap between the social networking strategies of Australia business
and behavior of the customers. Moreover, 27% small scale businesses use social network sites,
whereas 34% medium scale businesses use social network sites for promoting their brand value.
Furthermore, Verbeke, Martens and Baesens (2014) stated that there is an increasing spending of
Australian businesses on social network sites. Small scale businesses have spent on average of
$3,410 as compared to $16,920 and $100,000 spending of medium scale and large scale
businesses. Among all the social network sites, Facebook is continuing to dominate in all three
business sizes. Moreover, 97% businesses use Facebook as their social network site for business
promotion. Apart from that, there is growing usage of Instagram, Google+ and others.
Furthermore, YouTube and twitter have always maintained its popularity in Australian
businesses.

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Figure 1: Social Network Usage in Australian Businesses
(Source: Wu 2016)
While considering the example of Coca Cola Amatil, it can be seen that the organization
always use social media networks towards conveying their offerings to the customers. It has
actually improved the business communication for the organization (Pinho and Prange 2016). On
the other hand, while taking the evidence from Dick Smith Foods, it can be seen that the
organization always use social network sites towards getting the feedback over their brands. It
has enhanced the customer interaction level of the customers, which ultimately has contributed in
customer satisfaction (Schivinski and Dabrowski 2016).
4.3 Influence of Social Networks on Consumer Buying Pattern
Over the past few decades, the shopping pattern of the customers has been changed and
improved completely. They are now highly inclined towards searching for information regarding
their required products and services online. According to Yu, Duan and Cao (2013), social
network sites have huge scope in providing huge information to the customers regarding their

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required products. Moreover, the marketers place all the required information regarding their
brands on the social network sites. Therefore, the consumers can get huge authentic information
about their required products from these network sites. On the other hand, Ho and Vogel (2014)
opined that social network sites also assist the consumers in evaluating the alternative brands
towards choosing one brand over others.
Marketers are more likely post attractive videos and images of their products and services
on these network sites. Apart from that, organizations also posts recent offerings and discounts of
their products and services on social network sites. Therefore, the customers can compare the
offerings of different brands and choose one particular brand towards taking purchasing decision.
Furthermore, Trainor et al. (2014) opined that social network sites can also serve to the post-
purchase evaluation of the consumer purchasing decision. Such network sites allow the
customers to provide their feedback regarding any particular brand. Moreover, customers get
scope to share their experiences regarding the products they have used. Consideration of
customer feedback actually enhances the values of customers, which in turn enhances customer
loyalty. In this way, customers become highly prone towards repeated purchasing of their
favorite products. On the other hand, positive feedback shared the customers on social network
sites encourage other customers toward purchasing a particular product or service.
4.4 Advantage of Social Networks on performance level of Business
4.4.1 Enhancing Brand Image
Pinho and Prange (2016) pointed out that social network sites increasing brand exposure
to the new and potential customers and enhances the familiarity of the brands to the existing
customers. Such networking sites also enhance the effectiveness of the word-of-mouth of any

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particular brand. In this way, the social networking sites enhance the presence of any particular
brand to wide customer groups.
4.4.2 Insights about Customer Preferences
According to Park and Kim (2014), social networking sites can access ample amount of
data about the customers in real time. Moreover, such networking sites can gather huge
information about the customers in regards to brand preferences, objections, suggestion and
dislikes. In this way, social listening and active engagement of through these networks facilitate
the customers in gathering deep insights about the customers. Therefore, organizations can frame
smarter organizational decisions based on deep customer insights.
4.4.3 Increasing Search Ranking and Traffic Website
As per Shriver, Nair and Hofstetter (2013), organizations post advertisements on social
network sites, which mostly contain high quality contents. Therefore, such high quality contents
increase the targeted keywords for the organizations. Therefore, it increases the traffic website in
online platform, which enhances brand presence. On the other hand, Schivinski and Dabrowski
(2016) opined that social network sites also enhance the search ranking of a particular brand.
Moreover, such network sites direct the customers towards main website of the brand, which
enhances the search raking of the brand.
4.4.4 New Business Opportunities
According to Hennig-Thurau, Hofacker and Bloching (2013), social network sites
provide ample of new business opportunities to the organizations. Using such sites, organizations
can ask for feedbacks from the customers regarding their brands. In this way, the organizations
can better suggestion over their brand improvement. Moreover, the organizations can add unique

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values to their brands as per core business preferences. Therefore, the organizations can find new
and improved business opportunities for gaining high level of business performance.
4.4.5 Increasing Competitive Advantage
According to Jin and Phua (2014), social network sites enhance the advertisement
effectiveness of the organizations. Moreover, customers are more likely to refer their preferred
brand to their close relatives and friends. In this way, these networking sites enhance
effectiveness of word-of-mouth of the brand. Moreover, social network sites enhance the
advertisement effectiveness of the organization, which also reduces the advertisement cost of the
organization and overall organizational cost. In this way, reduced organizational cost facilitates
the organizations towards achieving cost leadership and gaining competitive advantage. On the
other hand, Park and Kim (2014) opined that social networks facilitate the organizations in
beating the competitors through adding unique value to the brands from deep customer insights.
4.4.6 Improved Customer Service
The feedback received from the customers through social network sites helps the
organizations in gaining deep customer insights. Moreover, the organization can better know
about the customer preferences, dislikes and suggestion regarding any particular product or
service. Ho and Vogel (2014) pointed out that such customer feedbacks facilitate the
organizations aligning their business model with specific preferences of the customers. In this
way, the organizations can provide customer business solution to the customers towards
improved customer service.

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4.5 Disadvantage of Social Networks on performance level of Business
4.5.1 Negative Feedback
Positive feedbacks shared by the customers encourage the other customers towards
purchasing any particular brand. However, negative feedbacks shared by the customers on social
network sites discourage the customers from purchasing any specific products. Negative
feedbacks on such network sites actually damage the reputation of the organizations in the
market (Pfeffer, Zorbach and Carley 2014).
4.5.2 Time Investment and Hidden Cost
Creating a social network profile requires just about 30 minutes. However, Wu (2016)
opined that the organizations may need to invest huge time in posting attractive product
information, interacting with customers and receiving feedbacks from the customers. All these
activities may need adequate amount of valuable time of the organizations. On the other hand,
Hajli (2014) opined that writing high quality advertisement content and posting those in the
networks requires adequate money investment. It actually enhance overall organizational cost.
4.5.3 Legal Risk
Social network sites can also lead the organizations towards facing legal risks. Moreover,
Luo and Zhong (2015) opined that any false advertisement in the social network site may lead to
legal obligation of the organizations. Apart from that, any intentional or even unintentional leak
out of information regarding customer can also cause legal issue for the organizations.
4.6 Proper Usage of Social Network Sites
The organizations should crucially choose social network platform for promoting their
brand value. Moreover, the organizations should select most popular social network site, which

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can actually add to the business growth of the organizations. On the other hand, the organizations
should post highly attractive advertisement content for gaining increased customer attraction.
Apart from that, business organizations should crucially handle the negative feedback as soon as
possible of the customers on social network sites (Ellison et al. 2014). Moreover, the
organizations should positively answer to the negative feedbacks of the customers before it
becomes the reason for customer dissatisfaction. It can protect the organizations from damaging
their corporate image in the market.
4.6 Gap of the Literature
Every literature research can have some possibilities towards facing some limitation,
which can reduce the quality of ultimate research outcome. Likewise, this literature review has
also some limitations. Moreover, this literature review can face time limitation, which can limit
the access of the adequate secondary sources towards collecting authentic information about the
research topic. On the other hand, the literature review has also face budget limitations, which
has also led to limited access for secondary sources. Therefore, all such limitations have led to
lack of critical analysis and penetration in the literature review.
5.0 Conclusion
While concluding the study, it can be said that social network sites can have both benefits
and limitation on the performance level of the customers. Such network sites increases the brand
exposure of the organizations to the customers. It can also enhance the advertising effectiveness
of the organizations though increased word-of-mouth of the brands. Furthermore, the feedbacks
gained from the social network sites facilitate the organizations towards providing customized
business solution. However, negative feedback posted on social network sites can discourage the