Impact of Social Networks: Advantages & Disadvantages in Business

This report examines the role of social networks in business development, exploring both the advantages and disadvantages of their use. It highlights the potential for increased revenue, customer engagement, and brand awareness through platforms like Facebook, Twitter, and LinkedIn. The report...Read More

Running Head: Social Network in Business 1
Business Research
Advantages and Disadvantages of Using Social Networks in Business

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Contents
Introduction......................................................................................................................................3
Project Objective.............................................................................................................................4
Project scope....................................................................................................................................5
Literature Review............................................................................................................................6
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
Appendix........................................................................................................................................13

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Introduction
Social Network has become essential for the business growth as it facilitates to increase the
revenues of the companies. It provides facilities to million people all over the world to interact
with each other which increase the opportunity of growth in the business. Social network in
business brings huge opportunities for the potential customers. The impact of advantages and
disadvantages are dependent on the point of view of the customers and the followed techniques
by companies. In the context of social media marketing, it focuses on people instead of products
because the products of the company can be showed by adopting various qualitative features
along with promotional tools. The really matters for the company is the comments and
appreciations which are provided by the customers. The content is provided by people which
being the cause of scary social network marketing and challenging for marketers. The benefits of
social network in business will be elaborated in this research to provide the better understanding
about the role of it in the growth of business. However, there are some negative factors of social
networks that may influence the growth of the business significantly but it can be resolved by
implementing various strategies to prevent them.

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Project Objective
The objective of this research is to analyze the various factors of social network that influence
the growth of the business. The key objective is defined below:
 To explore the impact of various factors of social networks that influences the growth of
the business.
 To evaluate the benefits and drawbacks of social media in the businesses.
 To improve the better understanding of business benefits of social network.

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Project scope
The scope of this research topic is wide as it entails various factors that affect on businesses’
growth adversely or favourably. The better understanding will be made due to effectiveness of
literature review. The social media has potential to increase the growth and success of business
in an adequate manner. This section will comprise number of benefits and drawbacks of using
social networks in business.

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Literature Review
As per Kietzmann, Hermkens, McCarthy and Silvestre, (2011), the social network can be
explained in the term of platforms as it promotes the social interactions between various
individuals. The business has changed rapidly due to amendments in the technology that is why
it is required for the business to adopt social networking strategy in improving the selling
proportion of the business in a significant way. There are many organizations in the world that
using social networking for different purposes such as attract to customers, increase the sales,
make them aware about the products and many more. Social networking is being taken in use in
the business for making better relationship with the customers for a long period. As per
Kietzmann, Hermkens, McCarthy and Silvestre, (2011), it has acted like drivers that enforce
business to expand its operation all over the world.
Benefits of social marketing in businesses
According to Aral, Dellarocas and Godes, (2013), the role of social networking is huge in the
growth of business by providing growth and success. Along with that social networking
facilitated in decreasing the efforts included for communicating with the various individuals of
the society. There are number of social networking platforms such as YouTube, Skype, Twitter,
LinkedIn, Facebook and many more that used by various businesses for enhancing their
performance. There are number of opportunities have been provided by social network to
enhance the growth of the business. Social networking platforms have increased the level of
information within the organization that facilitates business to communicate in an effective
manner with others.

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It has been found that the businesses are become capable to present themselves in the front of the
community or society in sophisticated manner. The functions of promotional activities are
carried out over social networking platforms due to its potential of decreasing the costs, efforts
and time. There are many organizations that use social networking to attract number of
customers for example Oreo that promote its product by adopting latest and interesting stories on
social sites that attract customers towards purchasing the product. The hash tag is being used by
this company for fun activity and motivating the involvement of consumers as well as potential
customers (Vahl, 2014). It has been argued by Oyza & Edwin (2015), that social media has some
negative impact over the business due to its open platform where people are free to comment and
give feedback. For instance, Dell is well known company of manufacturing laptops and
computers but due to ineffective quality in products, customer of the company posted bad
comment on the website of Dell in which number of customers commented with their stories.
Dell’s performance was quite good and calm and that situation company preferred to stay neutral
and the company offered a repayment and a new computer to the customers.
It has been found from the research of Sarker, Ahuja,Sarker and Kirkeby, (2011), that more than
90 percent of market experts claimed that social media enlarges revelation of an organization.
Social networking can decrease the time as well as resource spent by from multinational to small
companies on marketing. There are various advantages of marketing like expansion of brand
awareness, cost effective and customer satisfaction.
The business visibility and be increased by using a social networking marketing. The
organization has become capable to define its strategy by using various promotional tolls over
social networking. The online selling of the products can increase the ratio of potential customers
(Kumar and Bansal, 2008). The customer satisfaction is being improved with the help of social

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networking because today’s customers are free to post the query regarding the products on social
networking where they get instant solution from the company, this strategy maintain the god
relationship between customer and company. The most advantageous factor of social networking
is reduction of unnecessary cost because due to social networking a company does not have to
pay mediator which save the mediator cost and customers get products at reasonable price.
Manthiou (2012), mentioned that there are number of companies that have used the social
networking for attaining the goals of the company. These organizations are entailed Old Spice,
Netflix, Staples, Pampers and many more that used these strategies to promote its product online.
The specific promotion strategy is being used by these companies to attract number of
customers. There is another example of fast food chain of Wendy’s, that used social media to
make the well known image of the brand in the mind of the customers so that whenever they go
anywhere, they prefer to have fast food of this restaurant.
Another advantages of social networking according to Stephen and Galak, 2012), is
communications as it is able to increase the effectiveness of it between suppliers, clients and
employees. The business contacts are increased with the help of social networking as it helps in
linking various businesses to other businesses. Along with that there are some applications that
help in improving the communication. These applications involve Socialists, Slack and Yammer
that are being used by many organizations to enhance the security of internal communication.
According to Lanubile, Ebert, Prikladnicki& Vizcaino 2010), the software of communication
presents the amenities such as, easy life allocation and many more to increase the efficiency of
employees. Apart from these advantages, it has been evaluated that companies can increase their
sales by adopting the social networking strategy. E-commerce enables many businesses to import
or export products from any country. The online shopping business is become the trend of

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today’s era in which number of people are engaged to do so. According to Robischon (2017)
Amazon is largest electronic commerce all over the world that provides products and services of
every sector at one platform. These facilities attract number of customers towards it as it
provides gifs voucher as well which can be given by one relative to other on special occasion. To
make the world digital, online shopping has huge role. It has been found that the revenue of
Amazon was US$135.98 billion in 2016 and numbers of products are being sold by this company
on peak season.
Disadvantages of social media in businesses
Every coin has two aspects in which one show the positive part and another is negative part and
same condition is applied with the social networking. There are several drawbacks of social
networking that become the hurdles for the growth of the business in which cyber crimes,
hacktivitism, daily monitoring, false advertising and security issues are included. It has been
found from the study that hacking process has attained the unauthorised access to information in
system. There are number of cyber attackers who hack the system and gather the sensitive data
for their benefits. In the paper of Collins, (2008) described hacking can be increased due to
ineffective use of social networking in the business that can hamper the personal data of the
employees in the organization. The organizations have to invest high amount in firewalls or
security to avoid hacking. There are so many companies all over the world that are facing issues
and become the victim of hacking such as HBO, Ashley Madison, Sony, JP Morgon and many
more. The hit popular series of episodes of Game of Thrones of HBO was leaked for which
company had to face huge loss. The cyber hackers leak the information of the company such as
bank information and passwords (Culnan, McHugh, and Zubillaga, 2010).

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It has been apparent that almost every companies of all over the world using social network for
enhancing its growth appropriately, it is required for the businesses to check the social media
accounts of the business as well as individual many times in a day because customer satisfaction
is vital for the company and bad comments can be posted by competitors on the wall of the social
media to decrease the image of the company in the view of customers. As per Rosenblatt, (2015),
there can be insider risk which developed by inside person. There is an example of Morgon
Stanley which shows the inside attack on the company, there was employee in the company who
leaked the information and it has been found that these kinds of attacks could not be stopped by
companies. It is required for the company to make the clear strategy for social networking. The
role of social networking is huge in making reputation and spoil image of the company. It has
been found that giant player such as Coca-Cola adopted wrong social strategy and promote the
products of its company by covering the Russian Map with snow, in such situation, Russians get
angry and started to pour the soft drink of this company. This advertisement has become the
reason of not buying the products of this company in Russian market (Ciprian, 2015). Investment
in huge amount on security software and firewalls should be done in an efficient manner to
secure the social media accounts. The cost of company on this software is not limited up to
installation but it has to be maintained by updating time to time. An average company invest on
cyber security around $15 million which is quite expensive. It has been stated by Gartner, the
investment of the companies on cyber security software has reached around $90 billion in 2017.
It will be expected that it will reach around $113 billion by 2020. (Muresan, 2017).
However, there is various negative influences of social networking on the growth of business due
to not following proper strategy but it can be seen that social networking are helpful to make
aware people about the latest information about the business. It covers the huge area of

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marketing in fewer periods and provides the opportunity to those who are not enough educated
and want to do business without going anywhere. According to Qualman, (2010), this platform
is being the reason of increasing employment as women are doing online business at home with
the help of social networking. Along with that it provides the freedom to many customers to
reveal their opinions about the products and services used by them which help company to get
know about the view of customers. This platform can be used by the businesses to encourage
customers for buying the services and products. There are various issues of social networking but
it can be resolved in an adequate manner by considering the various factors such as regular
update about the comments of the customers and take care of the social and emotional value of
the people before uploading the products and quotation on the wall of the business. These things
help business to enhance the trust of customers on the services of the businesses which increase
the growth of it significantly.
Research gap
In the context of gap analysis, it has been found that this research can cover information about
several social networking sites. The discussion can be made on the opportunities of this platform
for the growth of the business. However, advantages of social networking sites have been
discussed in concise manner. It has been stated by Tat (2014), that traditional methods of
shopping are being used by many customers that still have the same potential towards the growth
of the business. It becomes the reason of distraction of customers towards the social networking
platforms which outcome in wastage of endeavour of the business. There is an example of
British Gatastrophe who asked about the analysis of the customers on the platform of social mdia
after increasing teh price. This wrong stratgye of his brought the adverse situation for it and it
had to face criticism from the customeers on the platforms of social networking (Kelley, 2013).

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It has been analyzed by consdering the various examples of difefrent companies on social
networking that the use of social netwokring should be done in an effecint manner as it provides
huge growth in the business and incorrect use of it may bring the adverse situation for the
company.

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Conclusion
It can be concluded that the role of social networking is essential in the enlargement of the
business as it has the potential to bright future of the business. The discussion has been made
regarding benefits and drawbacks of the social networking in the growth of the business. The
business performance of the company can be increased with the help of using effective strategy
of social networking but inappropriate strategy of it can distract the attention of the customers
towards the products and services of the company. It is necessary for the company to make clear
strategy regarding the usage of social networks. It has been elaborated under this research paper
that the world is getting closed day by day and everyone around the world want to connect with
more people. The role of social media in that strategy is huge as it helps in connecting people
which increase the opportunities for the business in a proper way. With the help of this research
topic, “the connection between cyber bullying and social media” and “the impact of social media
policies in the workplace” can be highlighted for further research proposal assignment.

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References
Aral, S., Dellarocas, C. and Godes, D., 2013. Introduction to the special issue—social media and
business transformation: a framework for research. Information Systems Research, 24(1), pp.3-
13.
Ciprian, P., 2015. The Growing Importance of Social Media in Business Marketing. Quaestus,
(7), p.94.
Collins, B. (2008). Privacy and Security issues in Social Networking.Fast Company. Available
at: https://www.fastcompany.com/1030397/privacy-and-security-issues-social-networking.
Accessed on 28th April, 2018.
Culnan, M.J., McHugh, P.J. and Zubillaga, J.I., 2010. How large US companies can use Twitter
and other social media to gain business value. MIS Quarterly Executive, 9(4).
Kelley, M., 2013. The Top 10 Corporate Social Media Disasters”, Business Insider India.
Kietzmann, J.H., Hermkens, K., McCarthy, I.P. and Silvestre, B.S., 2011. Social media? Get
serious! Understanding the functional building blocks of social media. Business horizons, 54(3),
pp.241-251.
Kietzmann, J.H., Hermkens, K., McCarthy, I.P. and Silvestre, B.S., 2011. Social media? Get
serious! Understanding the functional building blocks of social media. Business horizons, 54(3),
pp.241-251.
Kumar, S. and Bansal, L.K., 2008. The impact of mergers and acquisitions on corporate
performance in India. Management Decision, 46(10), pp.1531-1543.

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Lanubile, F., Ebert, C., Prikladnicki, R., &Vizcaíno, A., 2010. Collaboration tools for global
software engineering. IEEE software, 27(2).
Manthiou, A., 2012. Reason and reaction: The dual route of decision making process on social
media usage: The case of hospitality brand fan pages. Iowa State University.
Muresan, R., 2017. Cyber security spending to reach $90 billion in 2017, Gartner
says. Businessinsights. Available at: https://businessinsights.bitdefender.com/cyber-security-
spending-2017. Accessed on 28th April, 2018.
Oyza, I. & Edwin, A. M., 2015. Effectiveness of Social Media Networks as a Strategic Tool for
Organizational Marketing Management”, Journal of Internet Banking and Commerce.
Qualman, E., 2010. Socialnomics: How social media transforms the way we live and do
business. John Wiley & Sons.
Rosenblatt, S., 2015. The biggest cyberthreat to companies could come from the inside. CNET.
Available at: < https://www.cnet.com/news/the-biggest-cyber-threat-to-companies-could-come-
from-the-inside/. Accessed on 28th April, 2018.
Sarker, S., Ahuja, M., Sarker, S., &Kirkeby, S. (2011). The role of communication and trust in
global virtual teams: A social network perspective. Journal of Management Information
Systems, 28(1), 273-310.
Stephen, A. T., &Galak, J. (2012). The effects of traditional and social earned media on sales: A
study of a microlending marketplace. Journal of Marketing Research, 49(5), 624-639.
Tat, U., 2014. Social Media and Its Effects on Individuals And Social Systems”, Management,
Knowledge and Learning International Conference.

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Vahl, A., 2014. 10 Successful Facebook Marketing Examples”, Social Media Examiner.

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Appendix
Figure 1: Australian Businesses with social media presence
Figure 2: Social networking

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