The Use of Social Media in Multinational Corporations: Methods, Advantages and Disadvantages - Term Paper Example

? The use of Social Media in Multinational Corporations: Methods, Advantages and Disadvantages Word Count: 2,003 Introduction A multinational corporation is any business that spans multiple countries. In today’s modern age, businesses of this type are becoming increasingly important. Many businesses start of in a single country, and as their success increases they expand to multiple countries, often flourishing. Entering any new market has risks, and this is particularly true of entering a market in a different country. While the business strategy may be extremely effective in the original location, shifting to a new location and culture can often provide unexpected complications, such as clashes with local customs and expectations. Because of the competition between businesses, there is a need for corporations to take advantage of every opportunity that is available to them. One such opportunity is the use of the internet. The internet has been rising in popularity in the recent years as well as the range of uses that it provides. Electronic business and online stores are common, but one form of internet facility that has not been fully taken advantage of is social media. This constitutes websites such as Facebook, Twitter and Linked In, which are based on the interaction between the users and content generated by them. Social media can be used for a wide amount of uses within a company, including the sharing of knowledge, building social capital, the support of innovation as well as aiding problem solving. However, like any resource, there are both risks and benefits to its use. Social Media The internet has become an increasingly prevalent part of everyday processes for both businesses and individuals alike. It has provided the unique ability to share information instantaneously with people almost anywhere in the world, ways for people that are distant to remain in contact with one another, as well as having a large role in business and in entertainment. Many multinational businesses use the advantages of the internet to reach their consumers, whether it is to advertise products, to sell products directly or to communicate directly with consumers and potential consumers1. Social media is also known as consumer-generated media, and is a form in internet-based media and communication that focuses on networking and interactions between individuals. In a recent survey Facebook, had more than 175 million active users and 75% of internet users accessed social media in the second quarter of 20082. There are a wide range of different types of social media, such as blogs where individuals share their opinions of any topic that they desire3, message boards by companies, profile based social networking sites such as Facebook and MySpace which involve images4, applications and Twitter, which is a form of blogging but instead of large chunks of text, short messages are posted, designed to be posted ‘on the fly’, as events are occurring. Another type of social media is Linked In, which has a more serious approach than most other social media, and takes a more professional perspective, offering a way of exchanging ideas, opportunities and information between users. Knowledge Sharing Knowledge management is an important part of the way that businesses run, and can provide an advantage in the competitive market5. One aspect of this is how knowledge is shared, whether it is from business to business, business to consumer or even consumer to consumer, such as consumers talking to each other about the products of the corporation. The most general method of sharing knowledge online is through email or through websites. Social media offers a slightly different approach to this. Not only does it provide the ability for businesses to provide information, but it provides the ability for consumers to discuss the benefits and disadvantages of the products, share information with other people quickly through a variety of media6. For example, an individual may purchase a product and write strongly positive reviews, sharing them on a social media source such as Facebook. Seeing that opinion from a trusted friend, plus perhaps several others on the same social site is often enough to entice a consumer into purchasing the same product based on just this information without reading reviews or reports on the product7 The biggest difference between social media and more traditional forms of media, whether online or offline is the change in the party that individuals play. Rather than content being generated by site creators and companies it is generated, changed and shared by individuals. Information goes from being one-to-many to being share from many individuals to many others8 Corporations are able to take advantage of the knowledge sharing aspect of social networking in a number of ways. Creating a Facebook page, blog or discussion forum are ways to encourage communication between consumers making the product or company more widely noticed. Building Social Capital Social capital is marketing and a sociological term that is related to the involvement of people of local in social life, such as networks and communications9. However, since its original definition the term risks coming diluted and useless10. In terms of businesses, social capital can be used to refer to the links and the interactions between links that occur between the business, other businesses and consumers11. The more links that are present, the better that corporation can operate, giving it an advantage in the competitive market12. Social media can substantially help with increasing the social capital for a corporation as there are already many links present between individuals and the links continue to grow with time13. Support Innovation Social media can play a large role in the development of innovation. An example of this is the use of consumer idea and opinion in the development of products. Innovation here is a key concept and significant inspiration can be gained from communicating directly with the consumer and finding their desires and opinions. The company Wild Planet uses the opinions of consumers in the development of their products14; as a consequence their products appeal directly to their target audience and sell well. Social media provides an easy and effective way to get in contact with a large amount of consumers and potential consumers, making gathering information and seeing opinions simpler than through traditional media. As well as social media sites such as Facebook, another site that is effective for gathering consumer opinion is Yahoo Answers. This is a large forum that focuses on question and answers, providing a good way of seeking advice, answers to technical questions and finding opinions15 Aid problem Solving The internet can be an effective method of finding solutions for problems, and this is especially true for social media. This is because social media gives the individual or corporation the ability to ask questions of many individuals. Particularly useful social media sites for this purpose are Yahoo Answers and Linked In. Both have different advantages. Yahoo answers accesses a more generalized audience, so many of those who answer questions do not know the correct answers, or are choosing to answer incorrectly. In contrast, Linked In is less well known and is accessed by a more selective audience predominately professionals in their field. A final site is Google Answers; this operates in a similar manner to Yahoo answers, and has the same range of users16. Risks One of the problems with Social Media is that it is based around user generated content, and this can vary significantly in quality. While much of the content can be of high quality, there is also a high prevalence of spam and abuse17 . Spam can be anything from repeating the same comment multiple times to advertising products or services in an inappropriate context. Abuse comes from the fact that the content is user driven, as a consequence conversations or debates about opinions or fact can quickly turn into being about differences between the users. An additional risk is the viral nature of social media, while this can work in the favor of the company it can also be to its detriment. This viral nature means that an idea can quickly develop and spread18, passed from one individual to the next and thus a negative opinion or rumor about a company or product can quickly be passed through the networks regardless of whether it is true or not19. Benefits The large number of people that use social media and the rapid spread of information can be of significant use to a business. It provides a way of sharing information with a large number of people, as well as establishing opinions that is not offered through traditional media. Promotional strategies can be developed that take advantage of the many links in social media, such as giving consumers coupons or entry into a competition if they share information or a review with a certain number of friends20. This is often known as viral marketing, word-of-mouth marketing or social media marketing Conclusion Social media presents businesses, especially multinational corporations with a large number of advantages, although it also contains some risk. It presents the ability to share information amount a wide number of people quickly and efficiently, with the chance that the message will go ‘viral and be shared quickly through thousands of networking links, which in turn share the message on. However, an important risk to be aware of is that a negative opinion can spread in the same manner, if this occurs, damage control becomes important. Social media can be used not only to share information, but to brainstorm and discuss with consumers and other businesses promoting both innovation and problem solving, particularly through the use of discussion boards and question and answer forums. References Adamic, L. A., Zhang, J., Bakshy, E. and Ackerman, M. S. (2008). Knowledge Sharing and Yahoo Answers: Everyone Knows Something, ACM. Agichtein, E., Castillo, C., Donato, D., Gionis, A. and Mishne, G. (2008). "Finding High-Quality Content in Social Media." Chen, Y., Ho, T. H. and Kim, Y. M. (2010). "Knowledge Market Design: A Field Experiment at Google Answers." Journal of Public Economic Theory 12(4): 641-64. Ellison, N. B., Steinfield, C. and Lampe, C. (2007). "The Benefits of Facebook “Friends:” Social Capital and College Students’ Use of Online Social Network Sites." 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