A Social Network and Business Challenges in the Global World - Essay Example

Instagram Business strategy Contents Executive summary 2 Strategic Management in Instagram 4 Strategic change 5 Technological change 5 Porter’s Five Forces Model 6 Rivalry (High) 6 Barriers to entry (Medium) 6 Bargaining Power of Suppliers (Low) 6 Bargaining power of customers (Medium) 7 Threat of substitute products (High) 7 Porter’s “Generic Strategies” of competitive advantage 7 Cost Leadership 8 Differentiation 8 Focus 9 Conclusion 9 Recommendation 10 References 11 Executive summary The core purpose of this study is evaluation of the how effectively Instagram has been able to utilize Information systems in its business operations and how the core business operations of this company which include photo and video sharing been a revolutionary mode of social networking. The study evaluates the company’s strategy using various theoretical models and frameworks such as Porter’s generic study and five forces model and provides a theoretical perspective on how the company has used technology to create a sustainable and competitive advantage. In the end, the study outlines a conclusive summary and few recommendations for further development of the company’s business strategy by taking into consideration of the crucial role of ICT and information system in its future business operations. Introduction In the modern era, social media websites and applications have been one of the most easiest and convenient modes of networking. Facebook, twitter and Viber have been one of the most successful and well known of all those applications. An addition to those successful applications is Instagram. Instagram has proved to be an easy and very useful application for sharing photos and engaging with each other. Instagram is a social media application and its features include online photo and video sharing service which enables users to take different pictures and videos and in applying various digital to those applications and in sharing them various social networking services (McNely, 2012). One of the distinctive features of Instagram can be stated that its photos are confined to a square shape and can be used in various devices. The application was initially crafted by Kevin Systrom and Mike Krieger and was launched in 2010. Since its inception, Instagram has gained huge popularity and has become one of the most widely acclaimed applications in the world specifically for its video and photo sharing features. The tool which has been presented by Instagram can be utilized as a successful customer service resource which can help to directly address customers and resolve their problems and it can go through Instagram or even through an offline channel. A massive advantage which Instagram has offered its customers is that the conversation on each photo is discrete. Strategic Management in Instagram Strategic management has certainly benefitted Instagram to a huge extent. The management of Instagram has tried its level best to implement the concept of diversification to its business portfolio and innovative business management along with shrewd implementation of relevant information systems has helped Instagram achieve its strategic objectives in a relevant manner. Just like its fellow social media giants Facebook, Twitter, Viber etc, Instagram could be on the verge of becoming a tech powerhouse. Hochman and Schwartz (2012) have emphasized that the management of Instagram has been trying its level best to diversify itself away from photo and video sharing applications and concentrate on other technological practices to make it more effective. However, before implementing such changes the company has to consider two very important modes of changes in business and technological management, which are: Strategic change According to Zadek, (2001) a strategic change on a large scale could be, for example, when a company wants to involve itself into a novel line of business. In addition, in case of a strategic change on a small scale could be, for example, when a company wants to diminish its cost and enhance its quality and value of its products or services so as to add to its efficiency and for that it makes developments regarding its output. Instagram has certainly developed its business and has made massive strides in the social networking network but to improvise itself it has to implement a strategic change which can be beneficial in the long run and a critical evaluation of the company needs to be made before such change can occur. Technological change Technological changes are needed by an organization when it needs to make strategic as well as tactical changes (Wernerfelt, 2006). In the case of Instagram, it has been able to shrewdly determine how the company interests can have an impact by such a change. Due to constant modifications in technology, technological change has been a mandatory requirement for Instagram and it will certainly been fruitful for the company if and only if it is applied on the overall structure of the company and to achieve that motive, an appropriate administration arrangement must be made. Porter’s Five Forces Model Porter’s five-force model is a very effective tool for evaluating a company’s strategic position and its business potential (Grundy, 2006). A further evaluation of Instagram strategic position could be evaluated with the implementation of Porter’s five forces model and it can help to shed light on some of the most critical business issues. They are as follows: Rivalry (High) Over the past few years, social media has proven to be an immensely lucrative but an equally competitive technological sector. The sector in which Instagram operates has been filled with Social media giants (Facebook and Twitter in particular) and they possess an enormous market share. Due to this, Instagram has been under constant pressure to outperform its rivals on a consistent basis and the company has certainly has been able to do that by introducing new features to its applications and has simultaneously performed well in each and every business sector in which it operates. Barriers to entry (Medium) It is a fact that industries and sectors, which are able to generate high profits, are deemed to be the chosen targets of new entrants. Though Instagram has made a strong reputation for itself in the technological sector but it does face tough competition from new entrants which are able to capture developing markets due to their innovative and shrewd tactics in the future. Bargaining Power of Suppliers (Low) Instagram does rely on its suppliers but the extent is very low. Over the past few years, Instagram has turned into a very valuable brand and has turned into an million dollar company and none of its current suppliers will even imagine losing this gigantic client. Due to this reason, the bargaining power of suppliers is low or even negligible. Bargaining power of customers (Medium) Over the past few years, Instagram has certainly been very successful in devising some shrewd marketing and advertising strategies, which have made the position of Instagram strong not only in the social media, circuit but in the global market. Instagram is not merely a social media service but also a status symbol, which has distinguished itself away from other social media rivals. This also makes the strategic position of Instagram even stronger. Threat of substitute products (High) Though Instagram has made a strong reputation and goodwill for itself but it does face stiff competition due to constant breakthroughs in the science and technology, which has been common since the last few years. The applications and features of Instagram are quite innovative and unique and they do differentiate themselves from other social media applications but there is a possibility of an application being built up which can easily replace Instagram (Silva & Loureiro, 2013). Replacement of Orkut by Facebook in 2006-07 is a common example. Therefore, the possibility of becoming a second fiddle in the photo and video sharing sector is a huge threat to Instagram. Porter’s “Generic Strategies” of competitive advantage According to Allen & Helms (2006), porter’s theory of competitive advantage focuses on generic competitive strategies, which evaluate and analyze whether a company’s performance is below or above industry average. The generic strategies comprise of three broad strategies that create a framework for a company to compete with or even outperform its rivals. They are as follows: Cost Leadership Cost leadership means having lowest production cost within a particular sector. It means having the lowest possible cost for producing the particular product or service among rivals in a highly competitive industry in which profits may be low but are higher than business rivals are. From Instagram’s business perspective, cost leadership is a very productive strategy because it allows the company to compete against social media moguls such as Facebook and Twitter (Weilenmann, & Hillman, 2013). In addition, it creates an important fact that does lead to cost leadership and provides certain barriers to entry due to market capitalization. It makes potential rivals entering the industry very difficult to enter and it also means that cost of entry could well be prohibitive to various potential competitors. Differentiation Differentiating a product or a brand offered by a firm does mean to create something that can be perceived as being unique. (Chakravorti, 2004) From a business point of view, it means developing market share to a certain extent. Differentiation consists of different approaches, which include having a unique design, brand image, variety of features and equipping the latest technology. By evaluating Instagram’s strategic position, the tech-firm creates differentiation by creating brand loyalty. By doing that, it also creates certain barriers and reduces substitutes for its users. This strategy does leads to higher profitability and provides a source for competitive advantage. Focus This strategy evaluates the extent to which a company must compete which is interlinked with cost leadership and differentiation (Cook, 1998). Focus or leadership allows a firm to choose and compete in the market with a wider scope and focused market segmentation with slender scope. A focus strategy focuses on achieving either a low cost advantage or achieving differentiation within a contracted division of the market. The focus strategy seems to be an ideal strategy for Instagram as it focuses on a specific aspect of social media, i.e. photo and video sharing. Conclusion Instagram is part of a social network that has to constantly deal with certain business challenges in the global world due to the nature of its business. Though Instagram has done well to maintain a stronghold in the technological sector in which the company operates but there are major concerns which have to be constantly kept in mind by the company in the near future. The development of cloud computing and the popularity of smart phones and tablet devices has allowed several businesses to adapt to constant changes in Information Communication Technology (ICT). From Instagram’s point of view, the company needs to evaluate how it operates, how it has implemented the crucial features of ICT and how it can sustain its competitive advantage against the fellow social media companies. The impact of ICT has certainly been substantial and it has allowed businesses to lower their operating costs, enhanced service quality and a standardization of business processes. However, for a social media company like Instagram, the mere adoption of ICT practices may not always be enough and several other factors, which could result from business changes, have to be considered. Recommendation The management and application developers of Instagram must work in coalition and need to work along with other technological companies to construct a relevant mapping plan that focuses on creating a revolution in ICT and developing Instagram from a photo and video sharing service to an advanced social networking service by expanding its horizons. An upgrade in service models is required which can only be possible by increasing effectiveness and efficiency of processing by developing its applications and enhancing its features and enabling new features such as video recording and image capture through its applications. References Allen, R. & Helms, M. 2006. “Linking strategic practices and organizational performance to Porters generic strategies”. 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