Strategic Role of Technology in Instagram - Case Study Example

Strategic Role of Technology in Instagram Table Contents Table Contents Executive Summary 2 0 Introduction 3 2.0 Theoretical perspectives 3 2 Porter’s model 3 2.11 Intensity of existing rivalry 3 2.12 Threat of substitutes 4 2.13 Bargaining power of suppliers 4 2.14 Bargaining power of customers 4 2.15 Threat of new competitors 5 3.0 SWOT Analysis 5 3.1 Strengths of Instagram 5 3.2 Weaknesses 6 3.3 Opportunities 6 3.4 Threats 6 4.0 Findings and analysis 7 4.1 How the use of Information system support Instagram business strategy 7 4.11 Office automation 7 4.12 Transaction processing systems 7 4.13 Management information system 8 4.14 Executive support systems 8 4.15 Decision support systems 8 5.0 Recommendations 9 6.0 Conclusion 9 7.0 References 11 Executive Summary Instagram is an online service that enables customers to share photos, videos and to socialize on different networks such as Twitter, Facebook, Tumblr, and Whatssap. Instagram shares the same application characteristics with Facebook and Twitter, which is a challenge considering individuals are attracted to the service that offers the best applications at cheaper prices. The Porter’s model and SWOT analysis are used in the study to explain the strengths and strategies used by Instagram to sustain its competitive advantage. It is recommended that Instagram should find ways to make it possible for individuals using all kinds of phones to be able to access Instagram since it is restricted to individuals with Smart phones only. Strategic role of technology in Instagram 1.0 Introduction Pattarada (2013) defined Instagram as an online video and photo sharing service that makes it possible for users to enjoy the pleasure of taking videos and pictures and then sharing them on the various social network services such as Twitter, Flickr, Whatssap, Tumblr, and Facebook. The cloud based video and photo-sharing services for Instagram are delivered via mobile and desktop devices, and the whole process relies on technology. Mike Krieger and Kevin Systrom founded Instagram and on October 2010, their services were launched. This paper is going to analyze how Instagram is using information systems to support its business strategy and how the company is using technology to build a sustainable competitive advantage. 2.0 Theoretical perspectives 2.1 Porter’s model This model was named after Michael Porter and it provides five forces competitive forces that determine how the organizations can use them to shape their industries and provides guidelines on how to find out the strengths and weaknesses of the business (Cohan, 2012). These forces affect the ability of an organization to provide service to their customers and to make profits. The five competitive forces include: 2.11 Intensity of existing rivalry Instagram has competition from existing companies such as Facebook, Twitter, and Whatssap among others. These competitors make it difficult for Instagram to develop successfully since they all offer almost the same services. Instagram therefore have to devise powerful competitive strategies to be the best in the market and sustain competitive advantages through innovation (Pattarada, 2013). The growth rate for industries related to Instagram is high and different new products are introduced in the market at a high level. 2.12 Threat of substitutes The existence of other applications such as Facebook, Twitter, and Whatssap that can share photos and videos increase the probability of customers of Instagram to switch to the other alternatives. This makes it challenging for Instagram to make profits since the substitute firms may be offering their services at low costs hence attracting more customers. Scott (2008) stated that, the potential factors that may make customers to switch to the substitutes include the number of products available in the market from the substitutes, low costs, the buyers’ propensity to the substitutes and quality depreciation of Instagram services. 2.13 Bargaining power of suppliers The suppliers of internet services and technological techniques for Instagram could be sources of powers over the business in a situation where there are few substitutes (Scott, 2008). The suppliers become a challenge when they refuse to work with Instagram and when they charge extremely high prices for their exclusive resources. The supplier concentration to organization concentration ratio is a challenge when there are many substitutes in the market since the suppliers switch to the organization that pays them well and that has many customers. 2.14 Bargaining power of customers Gelinas et al (2012) defined the bargaining power of customers as the capability of the buyers to exert pressure on the firm hence making them to reduce prices or improve their services. The customers for Instagram are price sensitive to the services they receive and compare with the other substitutes like Twitter, Facebook, and Whatssap applications. This is a challenge to Instagram, as they have to make sure they satisfy their customers to ensure customer loyalty. 2.15 Threat of new competitors Gelinas et al (2012) stated that profitable markets always attract development of new firms in the market. With the developing technologies globally, Instagram has attracted other firms in the market such as Facebook, Twitter, and Whatssap that have led to the decrease in profits accrued from the business. The entry of new firms offering the same service as Instagram is a challenge since the customers especially the young are easily attracted to the new applications. 3.0 SWOT Analysis Osorio et al (2005) defined the SWOT analysis as a theoretical perspective that is used to assess the strengths, weaknesses, opportunities, and threats that are involved in the operations of a business venture. SWOT analysis is important as it helps in business planning and competitor evaluation. 3.1 Strengths of Instagram Instagram is among the first firms to innovate a social network for specifically photos. Instagram has enabled individuals to share their photos and videos online through social networking sites such as Twitter, Facebook, Tumblr, and Tuenti. Instagram has a high number of individuals who provide quality work hence attracting many users to enjoy the online Global application. 3.2 Weaknesses Instagram can only be used by individuals who own Android and Apple iOS hence other individuals cannot access the application. The application sometime fails to load the photos and videos and the users cannot customize the photos to their preferred tastes, which is a big drawback to the firm. The users of Instagram are restricted such that they can only view photos and videos of the people they follow, other new users cannot view other people’s profiles, which is possible in other applications such as Facebook. 3.3 Opportunities Interaction in Instagram enables the individuals increase the demands for Smart phones that support the application hence creating opportunities for businesses. Instagram has facilitated the integration of individuals in social networks and various platforms. Instagram can be made available for citizens in multiple languages such as English, French, Spanish, Japanese, and Italian German among others. The use of cameras can be upgraded because Instagram has the ability to for applying photo effects as frames, filters, vintage retro, and colors. 3.4 Threats Instagram has high competition from other applications such as Facebook, Twitter, Tuenti, and Whatssap since they all have similar characteristics. The new firms that enter the market for such applications cause a big threat to Instagram since they come with better technologies. It gets boring for people to use the same application every day hence causing a threat to the industry. 4.0 Findings and analysis 4.1 How the use of Information system support Instagram business strategy The use of technology has enabled Instagram to build a sustainable competitive advantage since information technology creates a platform for the business to connect with the global world through the internet. Osorio et al (2005) stated that the internet is a source of a wide range of service providers, customers, buyers and technical staff among others who are capable of running the business successfully hence getting ahead of the competitors. Technology and information system saves the time and cost for Instagram as it provides various communication channels such as instant messages, mail and SMS servers to employees of Instagram at the same time in any part of the world. Gelinas et al (2012) stated that there are five business information systems; office automation, management, executive, decision, and transaction support systems that can be used by Instagram to build a sustainable competitive advantage. 4.11 Office automation Instagram can use the office automation systems, which comprise of facsimile, electronic mail, internet, and image processing to facilitate the communication from one end to the other hence ensuring effective flow of information. Effective flow of information will enable the company to be a step ahead of their competitors. 4.12 Transaction processing systems Scott (2008) stated that transaction-processing systems (TPS) monitors, process, gather, and distribute all the information concerning the firm’s basics transactions. Instagram use these systems in the payroll systems for their employees and sale orders. Managing basic business transactions enables Instagram to produce data that is fundamental for the other information systems hence facilitating the process of monitoring of internal operations and external relationships. 4.13 Management information system Scott (2008) stated that the management information system utilize the data from TPS in the preparation of detailed reports on all the operations of the business. Instagram uses this technology to sustain a competitive advantage as senior and middle managers use reports from their detailed operations to efficiently manage and assist in the tactical decision making processes. 4.14 Executive support systems The senior managers for Instagram are able to use the executive support systems to monitor the operations and strategic decisions by assessing both internal and external information hence getting ahead of the competitors using technology. Pattarada (2013) stated that the executive support systems are highly interactive, graphic and offer important information on time that is effective for Instagram. 4.15 Decision support systems Decision support systems support Instagram business strategy to their competitive advantage as they are end user driven and interactive systems that are able to be modified for specific needs for example, problem solving through data and mathematical models. This technology ensures effective decision-making progression in the organisation hence building a sustainable competitive advantage. In summary, the transaction processing and office automation systems are the crucial systems that provide the other systems with the data to use. According to Gelinas et al (2012), the transaction processing is the most essential of the systems as it is through it that the general performance of the business can be assessed and monitored at any given moment and the other systems are able to use information from the TPS to undertake the corrective measures needed. 5.0 Recommendations Instagram should strive to build a sustainable competitive advantage in the continuously developing world by considering strategies such as: Finding ways to enable other phone models to access the application and not only restrict Instagram to Apple iOS and Android. This will enable many people to use the application since not everybody can afford Smartphones. Instagram should make it possible for individuals to customize their profiles according to their preferences and tastes like other applications like Facebook. This will enable the users to enjoy Instagram since they will be able to edit and crop their photos displaying only what is important. 6.0 Conclusion Instagram is an application used to share photos and videos online enabling individuals to interact globally. The application enables the users to share their photos and videos on other social network sites such as Twitter, Facebook, Tumblr, Tuenti, and Whatssap, which is one of the strengths of Instagram. The Porters model and SWOT analysis have been used to explain the threats the organization faces and the strategies they have used to sustain a competitive advantage over the existing and new businesses that use similar applications. For Instagram to succeed, they need to develop ways to make their application accessible to many people and make their settings flexible. 7.0 References Cohan, S. (2012). Hungry start-up strategy: creating new ventures with limited resources and unlimited vision. San Francisco, Berrett-Koehler Publishers. Gelinas, J., Dull, B., and Wheeler, R. (2012). Accounting information systems. Mason, OH, South-Western/Cengage Learning. Osorio, J., Tatnall, A., and Visscher, A. (2005). Information technology and educational management in the knowledge society: IFIP TC3 WG3.7, 6th International Working Conference on Information Technology in Educational Management (ITEM), July 11-15, 2004, Las Palmas de Gran Canaria, Spain. New York, NY, Springer Pattarada Kittimangkarakul. (2013). Marketing strategy on Instagram. [Pathum Thani, Thailand], The Faculty of Journalism and Mass Communication, Thammasat University. Scott, D. M. (2008). The new rules of marketing and PR: how to use news releases, blogs, podcasting, viral marketing and online media to reach buyers directly. Hoboken, N.J., Wiley. . Read More