Executive Summary
Social networking sites changed the way people communicate, interact and conduct business with each other (Shuen, 2008). Social networking media like Facebook, Twitter and LinkedIn, provide a radical way for people to collaborate, generate and apply ideas. Web 1.0 radically altered the way human beings behaved in the 20th century, but there are more surprises when it comes to Web 2.0 (Botha, Strydom, & Brink, 2007).
The advent of Web 2.0 requires a change of mindset in order to fully appreciate its various capabilities both in the private and public sector. Web 2.0 presents a different set of possibilities and a different range of challenges. In a world of Internet, where users are actively participate in what is going on around them, the rules are different from what they are used to be.
Facebook is a form of social networking site that allows people to meet, interact and collaborate in different ways such as sharing photos, information or ideas (Campesato & Nilson, 2011, p.234). The combination of Web 2.0 and other e-business strategy resulted in the creation of a networked economy and radically transformed the way people view globalization.
Introduction
It is best to begin with Facebook because it is the most popular social networking site in the planet and at the same time it is the most successful when it comes to attracting members and generating profit (Ruschmann, 2006). Consider for instance the fact that Facebook surpassed Google in terms of the number of people who visited their respective sites (Kirkpatrick, 2010).
In the present time, Facebook boasted that the company had already one billion users worldwide (Russell, 2011). At the same time the company is eager to announce that the organization generated a great deal of money due to its tie up with private firms eager to utilize the Facebook applications so that the said businesses achieve a higher level of exposure as compared to traditional methods of disseminating information through mass media (Atton, 2004).
One of the best examples when it comes to information dissemination and heightened interaction between an enterprise and their customers could be seen in the way Burberry leveraged the power of social media (Shuen, 2008).
Burberry is a company that was established in the year 1856. It was established in the United Kingdom. In the present time the firm declared that it has sales outlets as far as the United States and Japan. Burberry became an iconic brand in the 20th century due to style, quality, and endorsements of celebrities both local and foreign (Pride, Hughes, & Kapoor, 2010).
These customers were impressed by Burberry’s no nonsense approach. Customers favour the brand because of the Burberry check that has become instantly recognisable all over the world. However, there was a time a few years ago when the company was in a bad shape. The firm experienced hardships especially when it comes to factors like intense competition, negative effect of counterfeits goods and the mismanagement of the organisation (Bell, 2006).
Leaders at Burberry were already aware of the fact that in a global business environment, competition is intense (Boyes & Melvin, 2011). They were also aware that in order to survive, Burberry’s management team must ensure that the company is always one step ahead of its competitors (Carr, 2004). Corporate leaders realised that in order for Burberry to accomplish all those goals, it has to develop a quick and effective decision-making process (Ciampa, 2011).
Social Networking
At the heart of the process was the realization that corporate leaders, managers, and supervisors must have continuous access to all pertinent information regarding sales forecast, market conditions, sales, production data and other information that is required by business leaders most especially the CEO to make crucial decisions (Khosrowpour, 1997).
The leaders quickly appreciated the impact of integrating Information Technology into the old system that was used for a long time within the company (Leondes, 2005). There was no substitute for an information system that will keep leaders well informed (Daft & Marcic, 2011). The leaders were mindful of the fact that it is a major challenge to transform the company from the inside out using new technology as the foundation for change (Pathak, 2005).
Burberry was also quick to realize that the company needed more than just information. However, the firm also realized that, “In the past, companies have struggled to make decisions because of the lack of data.
But in the current environment, more and more organisations are struggling to overcome ‘information paralysis’ – there is so much data available that it is difficult to determine what is relevant” (Nemati & Barko, 2005, p.2). There is a need for something that must compliment the existence of an intelligent data management system (Dale & Lewis, 2010).
Burberry’s leaders decided to use supply chain management software to deal with their information management needs (Deshpande, 2009). The company enhanced the approach by using e-commerce strategies such as the use of Facebook, YouTube, and podcasts (Ennew & Waite, 2007).
They also launched the social networking website called the Artofthetrench.com (Finnegan, 2010). The use of social networking sites provided Burberry customers the capability to share information in an online community that was created by Burberry (Fuchs, 2012).
In the online community established for Burberry, customers are able to share photos of themselves wearing the Burberry’s trademark trench coat (Pavie, 2011). Burberry increased their presence in cyberspace by creating an account in Youtube. At the same time the company developed an iPhone app that allow their customers to buy online (Furnell & Dowland, 2010).
The firm started adopting new IT-related technologies, especially the use of social media and the effects in the short term were already considered significant (Grant, Hackney, & Edgar, 2010). For example, in a relatively short period of time, Burberry grew to as much as 60% growth in areas that utilised e-commerce technologies.
It has to be pointed out that the creation of the website that promoted the use of social networking strategies helped turn around the company from one with a dismal performance to a group that is seen to outpace its rivals in the luxury goods industry (Roussos, Kourouthanasis, & Moussouri, 2003).
There are various reasons why national and local government agencies must leverage the power of Web 2.0 (Hill & Jones, 2012). According to one commentary:
Social media can provide instantaneous feedback form consumers or potential consumers and an unparalleled level of engagement with audiences. Social media is less about selling products and more about helping solve consumers’ problems, whereby the organization’s brand and reputation is enhanced and the organization positions itself as the trusted expert in their particular area (Stewart, 2012, p.213).
Even if much of the studies conducted to understand the impact of Web 2.0 were designed to benefit the private sector, there are significant insights that could be gleaned from the analysis that in turn could be used in a public governance setting (Roberts, 2000). Consider for instance the claim that social media provides instantaneous feedback (Schaffer, 2009). This single feature alone is enough justification to invest in web platforms that provide the same type of service (Shah, 2009).
Local and national governments would benefit greatly from a social networking site because of the need for feedback (Plunkett, 2009).
Private companies would pay a great deal of money in order to acquire information through customer feedback (Shelly & Vermaat, 2010). The same thing can be said about local and national governments (Shinkle, Gooding, & Smith, 2004).
Local and national leaders must know what their constituents are thinking when it comes to government sponsored programs, the laws that were enacted and their opinion with regards to social issues. It does not matter if the site was created from scratch or if signing up with a company like Facebook created the portal.
In the United Kingdom, the Cabinet Office established the Power of Information Task Force in 2008 (Fuchs, 2012, p.3). The goal of the said task force was to figure out how to manage the data collated by the national government (Fuchs, 2012, p.3).
In this particular case, the UK government utilised the applications in a social networking site wordpress.com. In other words, the government opened an account that created a portal for citizens to access several syndication services, blogs, wikis, and a tag cloud (Grant, Hackney, & Edgar, 2010, p.156).
Aside from the initial service of information dissemination and government transparency, the said social media platform was also created to encourage the participation of the users through the development of solutions in order to enhance the use of available data (Tiwari, Buse, & Herstatt, 2008).
Thus, the UK government sponsored competitions so that the best developers are inspired to provide their best effort (Treadaway & Smith, 2012). One of the notable products of this type of collaboration was the creation of the School Guru. It is an application that enables parents to efficiently deal with their child’s enrolment requirements (Fuchs, 2012, p.3).
E-business Technologies
E-commerce is no longer a buzzword in the business world because a new dimension was added to it called social media. In the beginning of the e-commerce revolution, businessmen and consumers had to deal with the fact that certain brick and mortar stores in their neighbourhood would close down.
The emergence of new tools when it comes to creating an advantage led many to appreciate the benefits of an e-commerce site that provides both speed and efficiency due to the added capability of cost-efficient communication and a faster way to deal with customer feedback (Valee, 2003).
E-commerce turned the business world upside down but it was just beginning. In the early part of the 20th century, business leaders had to adapt anew because of the emergence of new technologies like mobile commerce and social media.
The rate of doing business was radically altered with the use of IT related technologies (Waltz, 2005). The speed and convenience factor however must be added to the overall strategy (Weinstein, 2004). It turned out that aside from speed and efficiency, entrepreneurs must also consider mobility.
Web 2.0’s integration into a business enterprise is not just a byproduct of random behaviour but a response to a particular need. In this case, business leaders already understood the need to enhance e-commerce. Even with the addition of mobile commerce, there was something missing.
It did not take long to develop the principles of business-to-consumer marketing. When the need to develop a system that connects the enterprise to the consumers without the need to go through middle-men and intermediaries, the business organisation creates a mutually beneficial system that enables the company to communicate directly to the customer and receive timely feedback.
The necessity of direct communication and feedback between customers and businessmen hasten the development of social media as a tool that could help achieve cost-efficiency as well as good governance. The speed of sharing information as well as the customer’s direct or indirect participation in the creation of pertinent data has clearly established the significance of social networking in the global markets of the 21st century.
The positive impact of social media could be enhanced even further by recognising its different facets and applications such as: word-of-mouth advertising; viral marketing; and direct interaction with clients and stakeholders through mechanisms like blogs and social networking sites like Facebook and Youtube.
Affiliate marketing is one of the practical applications that could be derived from social media. The use of social networking site and other social media tools makes it easier for a high-end luxury brand to parnter with high-end luxury cars like Mercedez Benz for instance. The said company provides advertisement space for the Mercedez Brand through its website.
A clever setup allows sophisticated shoppers purchasing expensive items to see the Mercedez Benz advert while visiting the site of the luxury brand company. When the customer decides to purchase a car or car accessories from Mercedez Benz by using the links embedded in the said store, then the proprietor earns money through affiliate marketing from the car dealership.
Social media or social networking could be utilized to develop a non-conventional way of sending messages towards the target market. In the past, communication was established through advertising agencies but social media could eliminate the need for an expensive advertising campaign.
The smaller budget allotted to viral marketing may surprise critics upon the discovery that viral marketing could communicate to people that are beyond the reach of mass media advertising. Viral marketing is like an infection wherein something is passed on from one person to the next and the end-result is wider coverage even if the information came only from one source.
World-of-mouth advertising could be achieved using different methods but one of the most effective strategies is to create a blog. There are loyal customers and potential customers that require a steady flow of information with regards to the company. The use of mass media strategies is sometimes ineffective because information evolves quickly that there is no time to react except through social networking sites.
In this regard, it would be helpful to analyse a global company based in Hong Kong called the Li & Fung Company (LFI). The organization consolidated both the manufacturing and shipping part of the operation.
The company enjoys margins of over 3.5% of annual turnovers (Shihano, 1998). Their competitors were contented with a thin margin of 1%. The company is profitable because it is able to leverage e-business technologies, different functions are combined into one system.
Aside from Web 2.0 it is also important to take a closer look the impact of the networked economy. Cloud computing opens the door for a more efficient use of third party resources.
According to one commentary, Grid Computing was defined as, “A computational grid is a hardware and software infrastructure that provides dependable, consistent, pervasive, and inexpensive access to high-end computational capabilities (Stanoevska-Slabeva, Wozniak, & Ristol, 2010, p. 20).
When it comes to Grid Computing, the use of resources gets to a whole new level as networks, corporations, and different organisations pools their resources to increase their individual capacities.
One of the best examples of successful Grid Computing was the way Amazon expanded its business model to include web services for access as well as for integration with other retailers like Target and Marks & Spencer.
According to one case study, “Amazon’s customers could be any individual or company that needs to use storage or CPU without provisioning its own computing resources either because of the capital cost or because of dynamically changing demand” (Stanoevska-Slabeva, Wozniak, & Ristol, 2010, p.78).
Another good example is the company called Simple Storage Service or S3. This particular company enables developers to store and retrieve almost any amount of data by accessing the highly scalable and reliable data storage infrastructure that is being offered in a Grid Computing platform (Stanoevska-Slabeva, Wozniak, & Ristol, 2010,p.78). A closer examination of S3’s services would reveal that the company is part of a grid that Amazon uses.
Conclusion
Without a doubt Web 2.0 has a great number of advantages over Web 1.0. Web 2.0 takes everything from its older version and added better features. The collaboration and sharing of the members of a virtual community made Web 2.0 very popular all over the world. But in a networked economy it is best to go beyond Web 2.0 and consider other E-business technologies like Grid Computing.
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