Social Media in Business Environment

Social Media in Business Environment

The use of social media has gained momentum as the numbers of those using social media increases by day. Businesses are as well following this trend with many of them incorporating social media in their marketing and other activities to exploit the benefits of social media.

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Indeed, with increased competition, shrinking markets and rocky financial times, businesses seek to use social media to gain some form of competitive advantages. However, as noted by Stockdale, Ahmed & Scheepers, (2011) trend chasing and unplanned adoption of social media will not improve the profitability of an organisation, what is required is strategic social media implementation, whereby the social media activities are aligned to the organisation’s business objectives and the targeted demographics.

This present research has used literature review and a case study of Zappos.com. It has established that companies can use social media in various ways to create competitive advantage. This can be through customer service by engaging and involving customers, sales competitiveness by finding new ways, connecting with their customers and understanding their needs and through communication both internal and external.

Zappos.com has shown that indeed, using social media can create competitive advantage.

Background
Just within a period of about ten years, social media, in a lot of ways, appears to have “taken over the world by storm.” certainly, this not an overstatement, when Facebook alone boosts of more than 800 million active subscribers (Stockdale, Ahmed & Scheepers, 2011, p1).

This number of subscribers is expected to increase and will soon reach 900 million (or has already reached) (Stockdale, Ahmed, & Scheepers, 2011). Even with this phenomenal growth of social media, the majority of businesses delayed joining the social media revolution. Rather, they took some time watching the proceedings from the sidelines.

However, when the first group of companies finally joined, they did so in the anticipation of the important business gains of this “new way of networking”, that allows personal, professional and businesses to combine smoothly instantly (Stockdale, Ahmed, & Scheepers, 2011).

Still, other companies were unconvinced of these business benefits, usually because they lacked information and had no clear knowledge of how this new revolution could create benefits (Palka, et al., 2009).

Social media differs with traditional media, which provide a one-way approach (where media outlets give information to the public), social media provides a two way interactive approach. (Tallon, Kraemer & Gurbaxani, 2000) Consequently, consumers using social media are allowed to send instant and direct message to the information they get, an aspect that consumers of traditional media cannot experience. Similarly, consumer of social media can as well interact with one another. This cross communication and interactions offered by social media is exactly what has made social media to revolutionize communication (Bernoff & Li, 2008).

Social media as Bernoff & Li (2008) notes has put the power of communication back to consumers through the most effective tool of promotion, word of mouth. Bernoff & Li (2008) adds that individuals value and believe what other individuals, particularly the words of those they trust. People have started to search for items or products and read product reviews on social media sites, merely because of the weight they give to the views of their social media. The strong power that social media has is not all the time a positive one. Some companies have been successful in their use of social media while others have suffered by adopting social media. Still, social media can create a competitive advantage when strategically adopted.

Kaplan & Haenlein (2010) affirms that the use of social media tools has gone beyond people to attract the interests companies. In deed, a research carried out by Forrester and reported by Lacho & Marinello (2010) projects that the amounts spend on social media will reach 3billlion dollars by 2014. Getho, Smith and Lewis (2010) note that, in the current fast passed business environment, there is increasing evidence to show that companies can gain competitive advantage by adopting social media for both internal and external use.

This dissertation will contain the following sections, literature review, methodology, case study, discusion and lastly conclusion and recommendations.
1.1 Aim & objectives of the research
The aim and objective of this present study is to examine how companies can gain competitive advantage by using social media.
1. 2 Research question
• What are the ways that companies can implement when using social media to gain competitive advantage?

2.0: Chapter 2: Literature review
2.1 Defining social media in the business environment
As stated by Kaplan & Haenlein (2010) “the word social media is applied interchangeably with the term social networking and Web 2.0” (p 61). they further define social media as “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content (Kaplan & Haenlein (2010, p 61).

Accordingly, there are different social media application, they instant message and social networking site that provide users with ways to connect and communicate with their “friends” on the social network site (Correa, et al. 2010).

The social networking application are meant to create, start and circulate latest and emerging sources of online information concerning the experiences a user has gained about certain products, services, companies or any other issues allowing the user to “post” “twit” “blog” or “tag” that experience online (Xiang & Gretzel, 2010).

The main aim of all types of social media application is engaging and connecting people (Safko, 2010; Kaplan & Haenlein (2010), whereby, for companies, engaging people could result to profit making. to gain such positive results requires companies to have a good understanding of social media, which has challenged the more traditional approaches of management. Kietzmann et al (2011) notes that decision makers at organisational level are facing challenges that come with changes needed to their entrenched management approaches elicited by “listen to customers” and not “talk to customers”. According to Bernoff & Li (2008), managers have to give away some form of control, discover how to accept customer activity and give an innovative respond. However, Safko (2010) claims that decision makers and managers are responding in a traditional well-tested and tried approach that emphasizes risk management as opposed to value creation. Accordingly, Xiang & Gretzel (2010) points out that 30% of big organisation do not gain quantifiable benefits.

In spite of the difficulties that can arise, failure to use social media can as well create problems for organizations since the social media is very interactive and promotes discussion and user contents or views that will occur with or without the consent of organisations.

Possibly negative impacts are given by an example of Kietzamann et al (2010) of the “United Broke My Guitar” video that got more than 11 million hits on YouTube in just few months to the disadvantage of United Airlines.

This example indicates that organisations have to get engaged with social media or suffer negative consequences. Such a situation requires organisations to reexamine how they can identify and gain competitive advantage from using social media.
2.2 Gaining competitive advantage from social media

The application of information technology to create competitive advantage has received considerable debate in recent years (see, Melville et al., 2004; Brynjolfsson, 1993). A comprehensive literature review on this continuing debate is outside the scope of this present research.

However, social media being a recent phenomenon there is scarcity of literature on benefits particularly regarding the use of it to gain competitive advantages and how this can be measured.

Still, establishing how organisations can gain competitive advantage from social media remains an important aspect for all organisations big or small (Prananto, McKay & Marshall, 2003). As observed by Poon & Swatman (1999), organisations want to see tangible returns coming from investment into social media; however, they demand to see these returns in a short time period.

Nonetheless, the top management may be ones to determine if the organisation has made tangible gains since some organisations do not have specific systems for formally access and identifying gains obtained from social media initiatives (Blanchard, 2011). Still, where top managers perceive that the organisation is not deriving any tangible benefits, the management may immediately withdraw their support and stop these initiatives.

Prananto, McKay & Marshall, 2003) see social media and other information technology initiatives contributing to competitive advantage at the process level, based on activities underlined in Porter’s value chain. for instance, it possible to improve process planning and support by improving communication as well as coordination by applying information technology and even social media (Prananto, McKay & Marshall, 2003).

Prananto, McKay & Marshall (2003) adds that this through this improvement an organisation can gain economies of scale that could better production activities and operational processes. In addition, Tallon et al., (2000) observes that, information technology through social media can improve customers’ relations, sustain these relations and improve them through social media, which can result in the organisation increasing its market share.

Indeed, regarding social media, its biggest potential for gaining competitive advantage is through the area of customer relations (Blanchard, 2011). But just like many other new technologies, organisations may have problems establishing the competitive advantage of social media. This aspect led to Blanchard (2011) to address the main problems that may be ignored in the euphoria surrounding the adoption of social media. accordingly, he stressed that competitive advantage can only be gained by realising that social media merely a tool that has to be integrated into current strategies of an organisation and applied to supporting current business objectives (Blanchard, 2011).

His observations concur with Porter’s (2001) assertions concerning the need for organisations to view the internet as an important tool that should be aligned to the strategic goals of the organisation and not the final aspect. These observations echo in the business environment as outlined by Dunn (2010) who points out the advantages of applying social media technologies to complement customer channels in organisations with the objective of contributing to competitive advantage.

In their studies Angel & Sexsmith (2011) established that a lot of organisations are not recognising the competitive benefits from using social media since they fail to identify the value proposition. This implies that organisations fail to establish desired goals and objective leading to underperformance in their application of social media. These arguments are in agreement with past literature on how organisations can gain competitive benefits from information technology and how to identify the benefits they gain. Regarding social medi………………………….