Twitter is a social media company with the strategic goal to grow its user base, revenue base, and profits. The study aims to provide a strategic analysis and a set of strategic growth recommendations for the company to use to achieve its strategic growth and profitability objectives based on the case study. The core areas of study include a comprehensive understanding of the social media industry, the growth, and the competitive prospects that can be used to leverage the growth of the company.
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Internal and external analysis
The social media industry
The social media industry consists of enterprise social media platforms that are used to create internal and external platforms for users to interact and collaborate with others by sharing information and other content. The social media industry has been experiencing exponential growth from 2004 to the present day. Investigations show that the growth of social media achieved a 1 million users’ mark by the end of 2004. By 2011 the industry had achieved a phenomenal growth of billions users and Facebook was the leading company with one billion users (Huberman, Romero & Wu, 2008).
Currently, the industry’s major players include Facebook, LinkedIn, and Twitter and other smaller and merging companies. The latest statistical reports show that 72% of the people who use the internet are linked to one of the social media platforms and 89% of the users are between 18-29 years. Of the users between 30-49 years, 72% have internet usage, and 60% of the users that are 60 years and above are active users of social media. It has been established that 71% of people who use social media get access through the mobile phone.
Different social sites have different ratings on the market with Facebook taking the largest share of 24.0% and twitter 10.8% of the total market of the global shares it the media industry. Other social media networking sites with their respective sites are shown in the chart below.
A study of Twitter’s economic performance and strategic growth for the first six months of 2009 showed that it was a niche social network in many countries of the world. However,
Twitter’s strategic analysis show that the company’s the strengths could be employed to create the opportunities for growth to overcome the problem of the financial performance the company has been experiencing recently. In addition, different opportunities are available for the company to use to overcome the problems of decline in the financial performance and customer base. It is important also for the managers to determine the weaknesses inherent in the company structure to identify the best course of action to take to solve the problems, and the threats that can hinder the growth of the company. By conducting the SWOT analysis, it is possible to define the best strategic recommendation for the company to adopt and continue with its growth path to success (Leetaru, Wang, Cao, Padmanabhan & Shook, 2013).
Twitter is a micro blogging company that allows users to share information consisting of short text messages with 140 characters. After the company was started in 2006, it has experienced an exponential growth of the customer and revenue base and by March 2012, the company had registered 450 million users and new registrations by new customers were increasing in each month to tweet and exchange messages. It has been estimated that more than 175 million tweets are exchanged on the platform each day and the number keeps rising.
The significant rise in the number of tweets per day makes the Twitter company one of the best platforms for social connections on the internet. Estimates show that 21% of the global internet population use Twitter as a platform for exchanging information and ideas. Studies show that “active users on the social network rose 23 percent to 284 million, the San Francisco-based company said in a statement today. That compared with 24 percent growth in the prior period. Sales more than doubled to $361.3 million, topping the $351 million average analyst projection compiled by Bloomberg” (Kwak, Lee, Park & Moon, 2010).
However, after the release of the initial IPOs in last November, 2013, there were serious concerns about the company’s growth as it was not growing as fast as expected. Investigations show that Twitter’s shares dropped by 12% making the stock to decline by 2.8 percent on 26 December the same year. The loss incurred in the third quarter widened by $175.5 million, or 29 cents a share against a projected loss of 29 cents.
To address the strategic need for the growth of the company, the study will use a SWOT analysis to comprehensively identify the strengths, weaknesses, opportunities, and threats that Twitters is exposed to determine and recommend the best direction to take to address the decline in its revenue base and profitability.
One of the tools used to conduct strategic analysis is the SWOT (strength, weaknesses, opportunities, and threats). An investigation of the initial years of the performance of the company shows that it followed a strong growth path based on the evidence from the case study. The successful growth of the company was because of the role of Evans Williams and other entrepreneurs who made the company to become one of the largest social networking sites in the social media industry in the world. The key strengths that made Twitter to grow exponentially since it was founded in 2006 were the unique characteristics of the firm that were defined by its technology platform that allows users to send and receive message instantly, provide easy to use features, and provide services for micro-blogging activities.
In addition to that, the platform allows users to send messages with 140 characters from cell phones and other third party website platforms (Rosenthal, Nakov, Ritter & Stoyanov, 2014). The platform allows users to access the website and to use open source software that allows other programs to be integrated into the application. Twitter allows different users to develop their sites using data from Twitter and studies show that the company has invested extensively in the development of databases, search stacks, and message handling technologies for use by people from different backgrounds (Bollen, Mao & Zeng, 2011).
A typical example is that Twitter handles 24 billion search queries per month, less than Google’s 88 billion searches per month and more than Yahoo’s 9.4 billion searches per month. It has also been established that Twitter, with over 500 million users, Twitter is one the most frequently visited sites with about 200 million registered users making over 500 million tweets per day with 75% of the users accessing the site from mobile phones or hand held devices.
Another unique feature that distinguishes Twitter from other platforms such as Facebook is that Twitter account holders are able to view comments that are in the public domain without the consent of those who posted the comments unlike Facebook that allows users to view comments when the owners have granted consent. Research shows that the company registered a strong increase in revenue for the six months of 2013 that doubled from the initial value to $253 million with 71% of the revenue coming from hand held devices.
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Several opportunities exist for the company to use to address the many problems that have been experienced at the company to address the need for increasing the revenue base and for growth and profitability. One of them is to use the strategy that is based on the identification of existing and future growth opportunities for the company (Rosenthal, Nakov, Ritter & Stoyanov, 2014). One opportunity is to use the role model such as Skype. Despite the large audience and customer base that enjoy the services that are offered by the company, many of the features that are integrated into Twitter include internet phone services that are offered by other internet based companies including Skype (Bollen et al., 2011).
The critical nature of the internet’s free phone calling services can make the company to increase the customers’ base that use the Twitter platform for other communication services. In addition, it is possible for the company to lock-in a significant percentage of customers who use the services without shifting to other internet based companies to seek for similar services. The strategy can be tailored to offer free internet based phone services while charging for other services to increase the revenue base and profitability. It has been shown that businesses like to advertise on social media because of the real time delivery of messages to the intended audience and the possibilities of receiving real time responses from customers and other interested parties.
The company has a great potential of reaching a wide audience that are technologically savvy and the services are available for small, medium, and large companies that are looking for recognition in the market place. The case study shows that it is possible for the company to use the small firms to reach out to different audiences and update them on emerging trends. In addition, it is possible for the management of companies that use Twitter to communicate ideas and update and their work force using Twitter as a platform to coordinate employees within the organisations (Cha, Haddadi, Benevenuto & Gummadi, 2010).
The platform provides real time communication for managers to execute their managerial roles because they are able to share exchange ideas and yet remain autonomous and not to be exposed to the public. An example of one area where Twitter demonstrated its usage and popularity was during the presidential campaign of 2008. It is evident from similar case studies that a large audience can be reached within minutes of posting an article on the Twitter. The effectiveness of the application has been demonstrated to be a crucial competitive element because it made the company to increase venture bases and capital that culminated in the success of 2013 financial performance.
A typical example was the investment was the 300 million dollars invested by the Saudi Prince that made the company achieve a value of 8.4 billion dollars of worth. From the technology point of view, Twitter has been enhanced on mobile phones and that enables anybody to tweet from the mobile phone without the need for a computer. In addition to that, the company has acquired several companies that are product based and that provide a wide range of products for customers to select from (Jansen, Zhang, Sobel & Chowdury, 2009).
One of Twitter’s weaknesses is based on the business model that was adopted by the company. It has been established that Twitter’s business model makes it vulnerable to hacker’s activities for compromising user accounts. In addition, the company was not able to achieve its business model to create a million active account users as projected in its business model by 2013. In addition, another weakness is the business model of not being able to achieve its growth target because the model does not identify growth opportunities. In addition, the company uses a technology platform that allows users to generation a large volume of tweets without enabling them to re-send the tweets.
The current trends in the social media platforms is that many status are coming up with new and innovative features that provide better services delivery when compared with twitter. In addition, it has been established that the company provides duplicate or spam accounts and it has been adversely been mentioned in the market. In addition, the company suffered hacking where many accounts were comprised. A critical analysis of the company is that it has been involved in ever changing the management of the company that has made it worse in rankling on the retention of the management and skilled personnel (Bollen et al., 2011).
The company’s current and future growth strategy was founded on the entrepreneurial abilities of Williams and a group of other co-founders who created a platform that could provide users with an instantaneous communication platform to share information and other messages in real time. Real time communication is a critical tool that could provide a strategic advantage over competing firms such as Facebook.
The tool is a plus for the company as there were no companies offering such unique services on the internet (Bollen et al., 2011). Even Facebook was not offering unique real time messaging services suitable for real time sharing of information on different events that occurred anywhere in the world. However, the strategic growth did not focus on the reliability of the services that was a detriment on the trust people had on the platform because of regular server crashes (Russell, 2013).
Growth and Competitive prospects
To address the need for growth of the company and to formulate a competitive strategy, it is critical for the management to factor the competitive prospects of the company based on the need for effective restructuring of the company from the management perspective, the business model, and the technology platform to make the company able to compete with emerging and existing social media companies. Most of the social media companies today are leveraging on the weaknesses of the company to gain more customers and that is having adverse effects on growth and retention of the customer and the revenue bases of the company.
To address the issues for growth, it is crucial for the management to follow recommendations based on the strategic factor analysis that includes identification of strategic issues that the company should consider to leverage success based on the results of the SWOT analysis discussed earlier to increase the customer and revenue bases. One of the most crucial issues is for the company to create objectives that are consisted with the current and future needs of the growth of the company and that factor its products and services on offer that position it on where it is to determine its growth potential.
One of the advantages is that twitter provides a micro-blogging platform that enables users to post content, images, and comments quickly and that makes the technology platform to be a strong base for the company to consider for competitive advantage because most social media sites have not integrated the technology that enables real time communication into their technology infrastructure. In addition, micro-blogging platform could be used to attract smaller companies to sing up for users to receive updates that originate from Twitter. In addition, the company should consider the ability to provide the re-tweeting capabilities for the customers to increase the frequency of using other web sites to increase the popularity of Twitter as the source of the tweets.
Another competitive strategy that is based on the factor framework analysis is to integrate new functional features that are available and provided by other companies including Friendfeed that enables friends to send, receive, and import blogs into their accounts. Here, that could provide the features customers seek on other social media platforms to ‘lock-in’ the customers not to go elsewhere. That is consistent with the launch of the twitter access program two years ago to enhance micro blogging by tying twitter with other companies. In addition, the company should consider providing subsided services for the emerging markets that could spur high customer growth and increase in revenue. In addition, there is need to increase indirect user base estimated to be over 500 million.
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Cha, M., Haddadi, H., Benevenuto, F., & Gummadi, P. K. (2010). Measuring User Influence in Twitter: The Million Follower Fallacy. ICWSM, 10 (1), 10-17.
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