Industry Overview: Social Media is defined as, “forms of electronic through which users create online communities to share information, ideas, personal messages, and other content.” Today, approximately 800 platforms are used by more than 3 billion active users; of which 45% have a social media accounts. In spite of numerous mergers and acquisitions, the numbers of sites are expected to increase in the near future, as new technology and devices present growth opportunities in the domestic and international markets. Growing advertising spending and rising disposable income levels are expected to benefit the industry. Facebook, Twitter and other platforms have generated increased revenue growth due to increases in mobile advertising. …show more content…
Porter’s Five Force Model: Porter’s five-force model is an effective analytic method used to identify the strengths and weakness with business model. The main objective is to find a position in an industry where a company or can compete with or against competitive forces. Porter’s Five Forces analyst chart - Facebook Porter Five Force Intensity Risk of New Entrants High Competitive Industry Rivalry High Bargaining Power Of Buyers High/Low Bargaining Power Of Suppliers Moderate Threat of Substitutes High Power of Compliments Low Risk of New Entrants: The risk of the threat from new entrants is high. Social media platform is constantly evolving into rapid innovations of mobile technology, new sites and applications. The evolving mobile landscape will result in newer entrants to the market. With very little government oversight or regulation, no switching cost and tenuous brand loyalty barrier to entry is low. However, a significant amount of resources is required for startup, thus slightly increasing the barriers to entry. Competitive Industry Rivalry: Google Plus, SnapChat, and Twitter are among to top competitive rivals of Facebook. They not only compete with Facebook for market share, but also advertising dollars from companies through targeted marketing. As the domestic competition intensifies, Facebook also faces pressure from international social networks, such as Ibibo in India, Cyworld in South Korea, Vkontakte in Russia, Mixi in Japan and Renren
In this day and age, social media has become an integral part of our lives. It has created a platform for people to share information instantly and communicate with people all around the world. Facebook is the most outstanding example of successful social media network. According to the first quarter 2015 earnings announcement by Facebook, the site has achieved 1.44 billion active users per month, and 65% of which are daily active users. Other social networking sites such as Twitter, Instagram and LinkedIn are also a powerful means of communication. With such a large audience, social networking sites provide ample opportunities to acquire information, network, and connect with friends.
You know that Michael Porter’s Five Forces Model is a useful tool for analyzing a business. The Model is used to help understand the importance of the five competitive forces and determinea strategy to develop and maintain a competitive advantage. The Five Forces are described and discussed in Chapter 1 of the textbook. They are:
The Five Forces Model (developed by Dr. Michael Porter of Harvard University) is a powerful tool for evaluating the competitiveness of your business environment and for identifying your business‘s potential risks and profitability.
Social media’s beginnings can be traced back to one of the first recognizable social media sites in 1997, a site called Six Degrees (Hendrickson, 2013). A user could upload a photo of themselves to be used as a profile picture and become friends with other users. The site closed a few years later in 2000, but with a rise in the popularity of blogging websites, social media was quickly gaining popularity. After Six Degrees, websites such as MySpace, LinkedIn, and Youtube began to pop up, providing new and dynamic means of communication. MySpace was the number one form of social media until 2006 when Facebook and Twitter came on the scene (Hendrickson, 2013). These websites all have a variety of things in common; they were created to promote communication and friendship, to make a place to connect with others and promote businesses and products. Unfortunately, as true with most things, you must take the sweet with the sour.
Managing the business is difficult in small as well as big businesses. The important key feature in this business world is to evaluate the competitiveness. The managers and the entrepreneurs need to understand the business environment. One can analyze the market by using "Porter’s Five Forces analysis". The Porter’s five-forces Model analysis is related to its inventor Michael E. Porter. It was invented by him in 1979. He was born in 1947. He was professor in Harvard Business School and he has written 18 books and more than 125 Articles. Porter’s contribution in strategic management field is very important.
Porter’s five forces model helps companies develop competitive strategies. By using this tool, they will have an overview of what is happening and what will be happening in a business. This is a helpful tool because this involves different factors contributing to the business such as competitors, substitutes, buyers and suppliers.
Porter's five forces is a model introduced in 1979 by Michael Porter and used by companies for industry analysis and corporate strategy development. The five forces include competition, supplier strength, customer power, the potential for new companies joining the industry, and the threat of substitute products.
As you can see, Porter’s five forces model relies on five aspects, supplier power, buyer power, threat of a substitute, threat of a new entry and competitive rivalry. Under each of those categories there are bullet points. Why do you need this? This diagram does look boring, but it is actually one of the best tools for evaluating the potential business ideas.
Michael Porter’s Five Forces model is a very sophisticated theory for calculating a company 's economical standing. Michael Porter established a structure that shapes a structure that monitors an industry and is often used in strategic planning. Porter 's detailed five forces model is one of the most frequently used business strategy tools and additional ease and effectiveness to havemany situations within in America and within global businesses.across businesses around the world.
Porter’s fives forces model is a strategic analysis model that can help analyse a particular environment of a market/sector. It considers the impact and influence of 5 main forces:
Michael Porter 's Five-Force model, as described and illustrated in “Porter’s Five Forces: A Model for Industry Analysis (Article from QuickMBA.com)”, goes beyond the traditional industry competitive analysis that would just compare Rivals, both current and potential, to include Suppliers and Buyers and also Product or Service Substitutes. I have not yet read Porter’s “Competitive Strategy” (1980), but understand that it is the definitive work on the introduction of the Porter Five-Force model (1979) and describes how the model can be used as a tool to not only
Porter’s Five Force Model is invaluable in analyzing the competitive strengths of an industry. Below is the diagrammatic representation of the model for better understanding.
To understand and analyze an industry’s structure Michael Porter developed a model portraying every industry to be influenced by five different forces (Jobber 2004). According to Porter, these five forces are the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and the competitive rivalry.