The Main Capabilities That Motivate LinkedIn - Case Study Example

 The Main Capabilities That Motivate LinkedIn Internal Analysis This section involves a detailed overview of LinkedIn Corporation and the industry. To achieve this, specific business models will explore the internal factors and forces influencing LinkedIn 2012. Industry Definition LinkedIn Corporation specializes in offering professional services (Yoffie and Kind 2012, p. 1).Indeed, LinkedIn Corporation offers a professional platform for potential employees, potential employers, government agencies, and current employees to interact freely (Fawley 2013, p. 31-32). Company’s Definition LinkedIn Corporation started its operations in May 2003 and has since grown to become the default professional social network that focuses on maintaining business contacts (MAD Perspectives LLC 2012, p. 1).Other customers of LinkedIn include brands and recruiters. Most of the LinkedIn members come for outside U.S.A where it operates in more than 200 countries and links more than 300 million people by Feb 2012 (MAD Perspectives LLC 2012, p. 2). In 2011, the company’s revenues stood at $522.2 million making it the world’s largest professional network by 2012 (Yoffie and Kind 2012, p. 1). The company’s revenues and profits come from marketing solutions, premium subscriptions, and hiring solutions. LinkedIn became the first U.S social networking firm to participate in an IPO where it raised $270.2 million(Yoffie and Kind 2012, p. 1). LinkedIn Mission LinkedIn has a mission to connect the world’s professionals to make them more productive and successful (Yoffie and Kind 2012, p. 3). Indeed, the company helps the members to access people, jobs, news, updates, and insights that help them to become good entrepreneurs (LinkedIn 2014). The company seeks to link about 640 million knowledge workers across the globe (Yoffie and Kind 2012, p. 4). LinkedIn Vision LinkedIn has a vision to connect 640 million knowledge workers across the world (Yoffie and Kind 2012, p. 4). With such a promising mission and vision, the company attracts more than 5,400 full-time employees, 5.7 billion professionally oriented searches in 2012, and 186 million unique visitors in the first quarter of 2014 (LinkedIn Corporation 2014). The company enjoys about 36% of the online advertising market (Fawley 2013, p. 31-32). Resources and Capabilities The table below defines LinkedIn’s current financial, physical and human resources and capabilities. Resources Capabilities Huge customer base (300 million) The company can sell its products to diverse population thus increasing sales revenue. International presence in 200 countries and territories The company can derive more sales and explore the global market in an effective manner. LinkedIn is currently available in twenty three languages (LinkedIn Corporation 2014) LinkedIn can communicate its business idea and connect people from different backgrounds at ease. A popular and strong brand name (Slutsky 2010, p. 2) LinkedIn can advertise, market, and sell its products to various customers in an easier way. (R&D) Innovative product development The company can develop new products that will address market changes and customer needs. Huge financial strength ($522.2 million revenues) (Yoffie and Kind 2012, p. 1) LinkedIn can support its strategies and implement R&D processes. Flexible financing ($270.2 million IPO) The company can generate revenues from premium subscriptions, marketing solutions, and hiring solutions (Yoffie and Kind 2012, p. 1). Big sales team With more than 5,400 full-time employees, the company can expand its presence and products to corporations and generate more revenue. Good senior management LinkedIn has the capacity to offer good leadership for the design, implementation, and effectiveness of its strategies. VRIN Framework Capability Rarity Non- substitutability Value Inimitability Financial capacity for R&D and expansion Yes/No No yes No Popular and marketable brand yes No yes Yes Large customer network yes No yes No Effective human resources management yes Yes Yes Yes Language diversity Yes/No No Yes No (R&D) Developing products that are sustainably needed yes No Yes Yes/No Three different streams of finance yes No Yes Yes/No Selling service products to corporations No No yes No The Main Capabilities That Motivate LinkedIn to Sustainable Competitive Advantage according to VRIN Analysis Flexible Source of Finance The company generated revenues from premium subscriptions (20%), marketing solutions (30%), and hiring solutions (50%) in 2011 (Yoffie and Kind 2012, p. 7-8).Most of its competitors could not match these revenues. Development of Sustainable Products LinkedIn adopts (R&D) Innovative product development to produce new products that will address market changes and customer needs.This defines a competitive advantage since other firms like Google + and Facebook are only applicable in specific occasions (Yoffie and Kind 2012, p. 1). Popular Brand in a Huge Global Presence LinkedIn has experienced numerous developments and innovations that have helped more members to connect with one another across the globe thus generating public trust on its products (Yoffie and Kind 2012, p. 1). The company’s objectivity, financial stability, innovativeness, security and privacy settings, have generated goodwill for the company (Slutsky 2010, p. 2). Its popular brand and a huge global presence allows the company to advertise, market, and sell its products to various customers in an easier way, which defines a huge competitive advantage. Effective Human Resources Management LinkedIn adopts a good senior management that runs the huge human resource in an effective and responsible manner. The executive management prioritizes the company’s interests and guides the human resource towards achieving LinkedIn’s mission and vision. This enhances performance to the satisfaction of the public and stakeholders. Strengths and Weaknesses Internal Factors Strengths Weaknesses Popular and strong brand name Stable financial capacity with three financial streams Skilled and experienced executive management Diversified operations that combine social and professional services Effective R&D innovation Minimal motivation to third-part developers High prices External Analysis This section involves a detailed analysis of LinkedIn Corporation’s external environment that will use business models like SWOT analysis,Porter’s five forces, and PESTLE. PESTLE Political factors Just like YouTube and Twitter, LinkedIn is likely to suffer from the banning of American websites l by countries that are in political conflict with U.S (Smith 2014). Economic factors The 2010economic crisis that affected Europe and the political conflicts in Arabian countries led to increased unemploymentthat led to high number of job seekers in developed nations using LinkedIn. -Firms in the industry recorded reduced revenues since recruiters in poor nations would not afford the expensive recruiting service products. Social factors Most users are now considering their profiles on the professional recruiting networks as professional profiles that need constant updates, which present a great business opportunity for the firms in the industry as members, visit such sites more frequently (Fawley 2013, p. 49-50). Technological factors The adoption of technological innovations fosters growth in the industry as more people subscribe to professional social networks. Moreover, modern technological devices access professional social networking websites. Legal factors Licensing, patenting, operating, and ownership requirements imposed by relevant governments hinder the acquisition and expansion of firms in the industry. Environmental factors Notably, professional social networking websites like LinkedIn increase the presence of paperless companies leading to environmental conservation as the world reduces the use of trees. Porter’s Five Forces Force Degree Inference Bargaining power of Buyers Low LinkedIn stands out as a professional network of choice among many firms in the industry due to its differentiated layout and capacity to provide both social and professional services (Lardinois 2013). Bargaining power of Suppliers Low LinkedIn has acquired many IT companies that develop the innovative features and solutions to LinkedIn network and products portfolio (Geron 2011). Threat of new entries High Firms require few amounts of capital and human resource to enter the industry, which makes it easy for new firms to join LinkedIn in the industry. Nevertheless, new entrants require long time to gain public trust and benefits to attract a significant customer base. Threat of substitutes Low Either job seeker can only substitute firms in the industry with direct applications to recruiters manually or electronically that is time consuming, tiresome, and outdated. Industry rivalry High LinkedIn immense competition in the professional network services industry fromXING, Viado, and Monistor.com (IKO System 2011, p. 1) since they offer the same services at a reduced cost though they lack the social aspect possessed by LinkedIn. Threats and Opportunities External Factors Threats Opportunities Many established and prominent competitors Lack of financial capacity to buy the company’s services and subscriptions Strict government regulations that protect domestic companies and hinder foreign investments Economic hardships that lead to unemployment and force recruiters and potential employees to use the company recruiting services and solutions Most job seekers prefer technological solutions to apply for jobs and recruit individuals. Key (critical) Success Factors 1. Trustworthy brand name 2. Diversified portfolio of recruiting solutions and products 3. Global presence to connect diverse people 4. Skilled and experienced executive management to foster productivity 5. Innovative online tools that add value to the company products 6. Stable financial capacity to support product development and innovation 7. Dedicated sales team to reach corporations and individuals and promote the service products. Competitors’ Benchmarking Capability/Company LinkedIn XING Viadeo Monster.com Number of users 1st 3rd 2nd 1st Company’s age 2nd 3rd 4th 1st Geographical Presence 1st 4th 3rd 2nd Revenues 2nd 3rd 4th 1st SWOT Analysis Internal Factors Strengths Popular and strong brand name Strong financial capabilities with diversified fund streams Effective R&D and innovation Objective and experienced executive management A diverse network platform that supports social and professional aspects Weaknesses High prices compared to industry charges Little attraction for third party applications developers External Factors Threats Many competitors in both social and professional networking domains Competitors charging reduced prices for the same services and subscriptions offered by LinkedIn Big reputation and size of social networks like Facebook Government and trade regulations limit LinkedIn from acquiring IT companies Opportunities Poor economic conditions will lead to rising unemployment that will force jobseeker and recruiters to use LinkedIn Modern technology that enhances compatibility of computers and smartphones with LinkedIn Strategic Challenges for the Firm Many competitors in both social and professional networking domains Users in poor economic nations cannot afford the expensive prices charged on LinkedIn services and subscriptions Big reputation and size of social networks like Facebook Government and trade regulations limit LinkedIn from acquiring IT companies Little attraction for third party applications developers Industry rivalry Threat of new entries Political conflict that force some countries to ban American social media websites like LinkedIn Strategic Options Based on ANSOFF analysis andSAFe criteria, this section will establish and recommend the best strategic options for LinkedIn to tackle all future challenges. ANSOFF Matric Existing Products New Products Existing markets Market Penetration Start a promotional marketing campaign that will discount premium subscriptions and marketing solutions for a specified time with an aim of increasing revenue from such products Introduce an offer to hiring solutions for the most frequent and new recruiters with an aim of improving the magnitude of revenues from hiring solutions Product Development Develop an interface that includesonline games, links to social sites, and popular sites that relate to Human Resources with an aim of increasing the time spent on the Linked website and exploit the third part applications developers Develop cheaper products that are only accessible in poor nations Develop products that offer hiring solutions for informal jobs New markets Market Development Target the countries with stable economy to boost salesrevenue Target politically stable nations with minimal government restrictions Establish mergers with established companies and acquire IT companies with huge potential Entry to New Markets /Diversification Reinforce the company’s social network to support interactions between professionals using the professional network According to the ANSOFF analysis, LinkedIn can apply three strategic options that include: Strategic option 1: Starting a promotional marketing campaign by giving discounts for premium subscriptions and offers to hiring solutions Strategic option 2: Developing new products that will include online games, enhance the company’s social network, and support informal jobs SAFe criteria To establish the best strategic option, I will use the SAFe criteria. SAFe criteria for Strategic option 1. Suitability: This option is suitable since it will motivate many members to obtain the premium subscription and more recruiters to buy the recruiting solutions. Acceptability: Stakeholders will recommend this option because it is seasonal and the returns are significant. Feasibility: The strong financial position of LinkedIn will allow the distribution of offers for hiring solutions SAFe criteria for Strategic option 2 Suitability: This option will enhance the company’s competitive advantage by encouraging members to spend more time on the website by offering online games and products that will enhance the company’s social network, and support informal jobs. This improves the diversity and competitiveness of the company and hence its high suitability. Acceptability: Stakeholders will gladly accept this option because it derives great value, goodwill, diversity, strength, competitiveness, and expand the products’ portfolio. Feasibility: The Company has the financial capacity to adopt this option and by relying on third-part applications developers, LinkedIn will only incur minimal costs. The SAFe criteria present Strategic option 2 at the best applicable option. Implementation It will take utmost 18 months to launch the new products. The company will require specialized technological knowhow to develop online games, enhance the social network, and support informal jobs. Specifically, a federated search engine will be necessary for developing a product that will support recruitment for informal jobs. It will be necessary to test the preliminary design and prototypes in the first nine months and launch successful products in the next nine months. Contingency plan LinkedIn should only announce the development and launch of successful new products to the public. The company should consider outsourcing technology experts especially web designers to design and develop the new products. Conclusion This detailed strategic management analysis of LinkedIn Corporation addressed the internal and external environment of the company and identified the strategic challenges for the firm. Consequently, it proposed a set of rational options and derived the best applicable option that the company must adopt to survive in the competitive market. Works Cited Fawley, N. 2013, "LinkedIn as an Information Source for Human Resources, Competitive Intelligence," Online Searcher, vol. 37, no. 2, pp. 31-32, 49-50. Geron, T 2011, LinkedIn Acquires Social CRM Company Connected, Forbes, retrieved 30 July 2014, < http://www.forbes.com/sites/tomiogeron/2011/10/05/linkedin-acquires-social-crm-company-connected/> IKO System 2011, LinkedIn against its European competitors, retrieved 30 July 2014, < http://www.iko-system.com/wp-content/uploads/2014/02/LinkedIn-vs-competitors.pdf> Lardinois, F 2013, LinkedIn Acquires Pulse For $90M In Stock And Cash, AOL Inc., retrieved 30 July 2014, < http://techcrunch.com/2013/04/11/linkedin-acquires-pulse-for-90m-in-stock-and-cash/> LinkedIn 2014, About Us, retrieved 30 July 2014, < http://www.linkedin.com/about-us> LinkedIn Corporation 2014, About LinkedIn, retrieved 30 July 2014, MAD Perspectives LLC 2012, LinkedIn for Competitive Analysis, retrieved 30 July 2014, < file:///C:/Users/Acer/Downloads/Case+Study_Linkedin+for+Competitive+Analsysis.pdf> Slutsky, I. 2010, "Why LinkedIn is the social network that will never die," Advertising Age, vol. 81, no. 43, pp. 2. Smith, E 2014, Now Turkey blocks YouTube: Days after Twitter ban, video site is barred after leaked audio recording of Turkish officials discussing Syria appeared online, Daily Mail, retrieved 30 July 2014, < http://www.dailymail.co.uk/news/article-2590855/Now-Turkey-blocks-YouTube-Days-Twitter-ban-video-site-barred-leaked-audio-recording-Turkish-officials-discussing-Syria-appeared-online.html> Yoffie, D &Kind, L 2012, "LinkedIn Corporation, 2012," Harvard Business School Case 713-420. Read More