Analysis Of Instagram 's Business Model

1285 Words Feb 3rd, 2016 6 Pages
Situational Analysis:
There are various factors that must be considered when analyzing Instagram’s business model and these must be discussed while outlining viable strategies
External Industry Analysis:
Doing an external analysis on the social media industry can give us some insights about the the level of competition within the industry. Porter’s five forces analysis is a framework that analyzes that focuses on industrial organization economics in order to derive five forces that determine the competitive intensity and therefore, the attractiveness of the industry.

Porter’s Five Forces
Intensity
Supplier Power
Low
Threat of New Entrance
Moderate to High
Threat of Substitutes
High
Current Competitors
High
Buyer Power
Moderate to High

• Supplier Power:
Providers of storage, software, technology, data center and office equipment, servers etc. are suppliers for Instagram. Their bargaining power is evaluated to be low as Instagram is a large scale customer application holding significant buying power. Also, there are large number of companies offering services like storage and servers, thus, Instagram can easily switch from one company to another. However, there are only a few reputed suppliers for a large range of hardware and software supplies, and hence this raises their bargaining power to an extent. Therefore, the supplier power is identified as moderate.

• Threat of New Entrants: The internet business has low barriers to entry as it is relatively…
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