This assignment discussing about the impact of social media on the way businesses are conducted today in terms of technological, economical, political and cultural exchanges brought about by these form of modern communication. As we know this modern communication platform giving impact to businesses today. We don’t have any control to social media because this platform giving users freedom to express their opinions, experiences or anything that they wants. Social media providing big opportunity to organization to build better relation with clients and providing real one to one communication. Customers are now become more particular about with whom and from where they are buying products or services. One of the main reason why businesses must use social media is because their competition using this platform daily as marketing strategy. Customers and future customers also using that.
Case study on giant restaurant McDonalds showing that even big companies also unable to control the power of social media.
Wildfire ROI Survey 2011 survey shows that, marketers admits social media helping them to increase brand awareness and increasing customer relation. Businesses that directly interacting with customers should use social media to increase their revenue and increase the brand awareness.
Many organizations now start using internal social network which connects their employees all around the world. For example, Red Robin Gourmet Burgers Restaurants have more then 460 outlets in America using internal social network to make sure daily operation getting much better and they become one of the famous restaurant in America. The number one world retailer who have more then 2.2 million employees in 2012, Wal-Mart using social media platform to streamline supply chains and manage the stocks and inventories more efficiently to reduce the product price.
Any products related to social media also helping boost the world economy. Products like laptops, iPads, iPhones, headphone, headset and so on which used by customers to access social media received very high demand.
Thousands of companies worldwide involved in offering social media services offers thousands of jobs opportunity.
Some Fail Stories of Businesses when Using Social Media is Netflix where they are one of the top internet subscription service for watching movies and TV programs from any countries lost 800,000 customers because avoid listening to customers feedback form social media.
Example of Success Companies because of Social Media is KLM Royal Dutch Airlines where successfully enjoy with “meet and seat” campaign which let the passengers choose the seatmate before board the plane.
As a conclusion, Social media promising a lot of opportunities and challenges, so organization must prepare themselves to facing this.
What is Social Media?
Andreas Kaplan and Michael Haenlein describe social media as “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0 and that allow the creation and exchange of user-generated content”.
Social Media contains two words. The first one is “Social” which means interaction, sharing and so on. Another word is “Media” where to say that social media is a medium for publication.
Social media contains a lot of tools and applications which let the users express their opinion, publish articles, sharing videos and so on easily.
Social Media Landscape
The chart below shows the social media network landscape. There have a lot of different tools and services which allow users to do almost anything that they want.
For publishing articles, opinions, news and so on there have blogs, wikis and citizen journalism portals. Twitter is for Micro publication. There have thousands of website that allow users to share videos, pictures, links, music, slideshows and product reviews. Websites like YouTube.com, FlickR and so on are some of the popular sites.
To make discussion and sharing ideas or even making complaint about any companies, there have forums, video forums, instant messaging and VoIP. Social Media also allow us to watch world live tv programs or even live football from anywhere in the world. There also have platforms for virtual words, social gaming and MMO.
The most popular network on internet is Social Networks like Facebook, MySpace, LinkedIn and so on that connecting anybody from anywhere. According to Edison Research Survey in 2012 (the only providers of exit polling information for ABC, CNN, CBS, Fox, NBC, The AP and most of newspapers worldwide) says that, more then half American has created profile in any Social Networking websites.
Edison Research Survey in 2012 also shows that nearly two thirds of social networkers are using social sites daily.
Social Media History
Social Media history began in 1969 when CompuServe Company offers internet services for public using dial-up technology in United States. Then in 1979 Usenet become first bulletin board which connects Duke University and University of North Carolina. The development process continuously moving until Tripod introduced online community for college students and young adults in 1992. In 1997 there have more then one million sites on the internet including social media sites like AOL Instant Messenger. Frindster become biggest social networking site in 2002 with more then 3 million users. In 2003 Myspace, Frindster clone site launched and LinkedIn also launched their business-oriented social networking site for professionals. In 2004 Facebook started their operation which offers networking opportunity for Harvard College. YouTube come to the world in 2005 and give excitements to the world with video sharing features. In 2011 social media can be accessed from anywhere in the world and become one of the important thing in our life. Thousands of sites offers social media services in 2012 and all this sites very flexible and can be accessed through many different devices. Companies are now forced to use social media to make sure their brand always in customers mind.
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Social Media Influence
According to Sir Andrew Likierman, London Business School Dean, “social media has completely disrupted the way businesses assess their performance”. This statement is completely true because social media not longer an option but is a must especially companies that dealing straightly with customers. Some business can completely avoid thinking about social media like wholesalers because they just dealing with another business. Since social media become more power, organization facing difficulties to measure their performance. They must have specific strategy for social media or even companies could have one special unit that handle feedbacks and responses from user. Any negative feedbacks should grab attention and they have to discuss on how to react with any negative comments. Any negative response from customers will be there on net forever. No way to remove that and because of that, companies that avoid think about social media will lose some customers.
Customers are now become more particular about with whom and from where they are buying products or services. They willing to make online search before making any purchase decision especially for expensive items. Since internet is now more conveniently searchable through smart phones, customer can make search in just a minutes. That’s why companies must have social media presence and put some attention to manage customer response and try to convincing them that the business is reputable and trusted. Social media providing big opportunity to organization to build better relation with clients and providing real one to one communication. There have no better advertising then “word of mouth”. Satisfied customers surely will share to their friends in their social network about their experiences with a particular company. If one person shares their experience to his 400 Facebook friends, and that friends spread that news to their friends, the information moves extremely fast. If a video uploaded in YouTube with attracting title like “Think Twice before you eat XXX”, this video surely will grab thousands or even millions of social medial users. With “Share” function available almost in any site, in just a second we can share anything to social media community.
One of the main reason that we must use social media is because our competition using that daily as marketing strategy. If we not use mean we loosing customers. Emarketer says in 2011, the Facebook advertising revenue estimated at 3.8 billion dollar and can increase to 5.2 billion dollar in 2012. What does it mean?, this numbers shows that a lot of businesses using social media to make advertising. A lot of businesses have social media networks account. As a result, competitors are forced to make online presence. They have no option, make appearance in social media or you will lose customers.
Another big reason why a business should using social media because their customers and future customers using it. A lot of people have at lease one social media account like Facebook, YouTube and so on. A business should present their brand where customers are. Traditionally we can see people open shops at crowd places like in shopping mall and so on. The same case here where a business should present in crowd place like social media. Million of people using that every day. You didn’t show mean, the competitor getting stronger.
According to McKinsey, organization that using social media able to increase 50 percent customer’s satisfaction. They also able to catch 48 percent in business lead and the most important is, their profit increase 24 percent.
Case Study (McDonalds)
I would like to discuss about, what are the impacts of Social Media to one of the world’s popular fast food giant company McDonalds. If we search the word “McDonalds” on YouTube.com (one of the top video sharing site), there have 124,000 results. Among this results we can found that, thousand of results that showing bad thing about McDonalds. Some of the video titles are:
Video with title “McDonalds horror” got more then 4.2 million views with 8,859 likes. Hundred of the viewers commented on this video and one of the comment is “I think I »¿don’t want to eat french fries from McD again” which got more then one thousand likes. This video showing about McDonald’s foods and why some of their food takes long time to spoil.
This is how now days people using social media to express their opinions and sharing bad thing about any brands. They are now having power which can influence other people behaviors’. People who watching this video then surely with spread this to their friends, relations and so on. This is real challenge to McDonalds and most of companies.
Some competitor also may misuse social media to spreading bad thing about their competitors company. Any people can upload videos showing bad thing about their competitors company and they also may set specific campaign to putting them down. Nobody can stop this kind of behaviors and activities.
As response, I see McDonalds showing some effort to explain questions that asked by viewers. McDonalds uploaded some response video. One of the video titles is “Behind the scenes at a McDonald’s photo shoot” (with 7 million views and more then 17,000 likes) which explains answers to questions asked by viewers. McDonalds realized the impact of videos uploaded by their customers to their business. If McDonalds didn’t do anything as response to videos that showing bad things about them, surely this will impact their business performance and lost huge amount of customers. I found that McDonalds still didn’t answer many more questions asked by customer through social media. They only answer some of them and huge amount of videos still haven’t have any answer.
In January 2012, McDonalds launched Twitter campaign with hashtag #McDStories which let the customers to post nostalgic stories and their experiences with Happy Meals (one of the famous meal sold by McDonalds). As response, customers start to share bad stories about Happy Meals like customer service, food quality. One of their post is “just got a terrible burger that’s been there four hours”. This is one of the fail campaign by McDonalds. As a lesson we must understand that social media offering big opportunity and big risk. People’s perception and feedbacks is uncontrollable. Companies should have some contingency plan which can be used if any problem happens. Even world’s big giant restaurant also unable to control the social media.
Measuring the Business Impact of Social Media (Wildfire ROI Survey 2011)
Social media is a long term strategy which falls under advertising and public relation investment. When social media combined with other marketing strategies, a particular brand will always at peoples mind.
In November 2011, Wildfire (a division of Google) who is world’s largest social media marketing software providers, involved in ROI survey. This survey conducted to over 700 marketers from number of countries. This survey shows that, marketers admit social media helping them to increase brand awareness and increasing customer relations. Over 97% of marketers believes that social media marketing campaign increasing their business performance. As a long time strategy they also want to increase social media spending.
This survey also shows that (see figure 3), social media have power to growing brand awareness and able to increasing sales and partnerships. 41% marketers agreed that this media able to reducing cost that will result in revenue increase.
94% respondents ranked Facebook as one of their biggest social marketing platform which giving more value to their campaign. Facebook giving more new customers, have high conversion rate and increased customer’s loyalty.
As a summary of this survey we can see that social media changing how we doing business today. Businesses that directly interacting with customers should use social media to increase their revenue and increase the brand awareness. Day to day, social media getting more complex and businesses should start a set long term social media strategy. Big companies can use this media to improve their customer service because they can keep on eye on customer’s behaviors and react fast.
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The Impact of Social Media on the Way Businesses are Conducted Today
Technological Impact
Many organizations now start using internal social network which connects their employees all around the world. For example, Red Robin Gourmet Burgers Restaurants have more then 460 outlets in America. They are using internal social network which look similar like Facebook to teach their employees and managers about the recipes and how to make them fast. They are no more using traditional ways like send out bunch of books to each outlet. They are also no more waiting for feedback when store visit by headquarters and so on. Any problems that occur in any outlet get fast response from headquarters in just in few minutes. Everything becomes more easy and fast with internal social networks. Managers communicate with other managers in other outlet through chat or video conversation function. More exiting news is, they are creating burgers according to customer’s feedback in social media. As a result, Red Robin Gourmet Burgers becomes one of the famous restaurants in America.
More and more companies are now using social media technology to speed up the business process and make sure every job done effectively. The number one world retailer who have more then 2.2 million employees in 2012, Wal-Mart using social media platform to streamline supply chains and manage the stocks and inventories more efficiently to reduce the product price. Many banks in America using social media to reduce cost for processing mortgages.
SupeValu is one of the company who have number of supermarket chains in America using Yammer (enterprise social network software) to connect all 11,000 executives and store managers. They created 1000 groups in that network to discuss about challenges and discussing new ideas. All store managers are in one group where discussing problems and ideas. Another group of supervisors discussing problem related to their controls. This method is more cost effective rather then holding meeting where participated by all managers.
According to McKinsey & Co. Survey, they found that two-third of big companies in United States are now using web 2.0 application like internal social networks or blogs, 50% increase from year 2008. 90% of this companies admit that, this new communication way improved their operation and the process getting much faster.
Eric Lesser, one of the Director at IBM’s Institute for Business Value, said that social media make the communication between the world’s professionals with various skills to sharing ideas and solving problems easily.
Social media technology moving extremely fast. This forcing company to have dynamic team which can learn new thing much faster. The software related to social media updated more regularly. The team must always ready anytime to facing new challenges. They must understand the most effective way to use social media which can bring good result for the company. All this pushing companies to spend more and have specific budget.
Social media increased the number of internet users worldwide. From 2008 to 2012 the world internet users increased by 30% according to BBC. This forced internet service providers to finding new ways to speedup the internet connection. This to make sure all business activities can be done much faster, cheaper and in more effective way. Now we can use 4G and Fiber Optic network to send out emails or any services just in second. Conversation thought Skype becomes more comfort without any interruption. More and more companies using latest technology for communicate with other people. This is another good impact of social media.
Economical Impact
Social media helped businesses to create product which have high demand and according to customers needs. Customer giving feedbacks which helped many companies to develop their products and services. Companies like Dell using ideas from customers to creating and improving their products. One of the example is created backlit keyboards which is more suitable when working on airplanes. Companies who creating products according to customers needs surely will help boost the economy because high demand to that products.
Any products related to social media also helping boost the world economy. Products like laptops, iPads, iPhones, headphone, headset and so on which used by customers to access social media received very high demand. Meg Whitman who is CEO of HP, says that in the past 2 years the sales for their laptops increased to more then 60%. The dramatic increase mainly because of impact of social media. More and more people using social media now and devices such as laptops receive high demand. Apple, Inc also admits that the sales for their hot product iPad received high demand as a result of social media.
Social media also created job opportunities which can help the economy. Social media created thousands of jobs opportunities. Facebook has more then 2,000 employees, Twitter has 300 employees and Groupon employed more then 4,500 workers. This only some figures, there have thousands of companies worldwide involved in offering social media services which offer thousands of jobs opportunity. World economy increased and unemployment rate decreased. Business associated with facebook created 232,000 new job opportunity in Europe in 2012 according to the news published by CNN.
Social media also created new industry where many people able to make income online. Many people are now enjoying income from home and helped house wife’s to generate income to helping their husband while take care of their children at home.
Social media contributed many benefits to the economy but there also have some negative impact. Entertainment industry especially film industry affected by social media. Film makers invest million of dollars to make movies. Thought social media sites like You Tube or any file sharing sites, any people can enjoy new movies at no cost. Even though industry players took some actions to reduce the impact, but they unable to stop this activity totally.
Political Impact
Many country leaders are now encouraging people to use social media. One of the greatest example is Malaysian Prime Ministers, Najib Tun Razak. He has more then one million Facebook fans as well as Tweeter. He sharing a lot of information though his network about his daily activity and so on. As a result, many companies start using social media especially Facebook on their daily operation. Most of businesses in Malaysia have Facebook ID.
If we go deeper about the impact of social media in Malaysia, we can see Lynas Corporation project. Lynas project is from Australian company Lynas Corporation. This company supplies rare earths for many businesses. Many opposition political parties in Malaysia shows protects against this project because they believe this project provide danger for local environments. Malaysian citizen shows protect against this project thought social media. Facebook and many other social networks filled with feedback about this project. As a result government took some action to explain to citizen about this project and promise to evaluate back the existence of this project in Malaysia. This in one of the example showing clearly how social media impact governments’ decision and businesses.
Cultural Exchanges Impact
Social media highly impact most of business aspect. Now many businesses especially who have big number of employees’ start using internal social networking utilities which makes communication among them made simple. According to research made by Garner, in 2014 it assumed that more then 20 percent of businesses will use internal social networking utilities which will replace email communication now. With internal communication social network, any latest activities by company and so on will known by their employees much faster.
Social media impact on human resource process from recruitment, development, career management, mentoring and so on. For example, LinkedIn is a social networking site for peoples in professional occupations. This site has more then 140 million members. Many organizations using this site to search for real talent peoples. Many HR departments using LinkedIn nowadays for recruitment where this site offer many tools that can be used to view full profile and so on. Companies also posting jobs at this site. This site opens new way to search for talented professionals. Professionals enjoy sharing their experiences on this site.
Social media sites also used by companies to evaluate their employees and future employees. For example, after Human Resource department conducted interview for job openings, they will search candidate details through social network sites such as Facebook to examine whether that candidate suitable or not or has any bad things about them. This is one of the way how human resource department are now evaluate their candidate.
Social networks like Facebook extremely giving big impact to world culture. We could have friends from many countries and communication with them able us to understand about their culture. Businesses now try to explore new markets. Companies like KFC and McDonalds try to localize some of their foods. Using customer’s feedback from social network, these companies try to add some local foods from that particular country together with their main menus. “Nasi Ayam” which is one of the Malaysia local foods available at KFC. They also try to add foods from other countries to local market.
Social media useful to trading companies. If they found Iranian drink getting popular in Malaysia, they start importing these drinks to be sold at Malaysia. The ideas are come from customer’s feedback from social media. Now we can enjoy foods and dresses which belongs to other culture available at local market.
Some disadvantages of social media to companies is, social media will give negative impact to workers productivity. Employee’s may wasting time to engage with their friends rather then doing the work that they should do. Now days we can see many employees using social network in office hours especially when their bosses are not around.
Some Fail Stories of Businesses When Using Social Media
Netflix is one of the top internet subscription service for watching movies and TV programs from any country. They have more then 27 million subscribers in America, Canada, United Kingdom and Ireland. When they increased their monthly subscription price, customers showed their protection through social media with more then 82,000 negative comments. Next month they lost 800,000 customers. As we can see companies can use social media as one of the platform to evaluate whether any decision that they made which is relating to customers. Any negative response must get fast attention from organization.
In 2012, giant car maker Toyota launched Camry Effect Campaign on Twitter to promote Camry. They has created number of Twitter account. This campaign is designed for directly communicate with users but what happen is, big number of users start to accuse Toyota because bombarding and spamming then with many unsolicited messages. As response Toyota suspended their accounts. Until now this campaign well known as fails campaign. The main problem with this campaign is, not because Toyota Spamming then but the content of the messages that they send out is not attracting. They also are sending same messages content over and over. They are only sending promotional messages which not help to build relationship with users.
Example of Success Companies because of Social Media
KLM Royal Dutch Airlines in well known as one of the largest airlines in the world. They able to attract future customers in unique ways and convert them as paying customers. They really clear about what customer wants and they believe customers paying for journey. They started social media in 2009, after some failure they come out with very controversial successful idea. They made join venture with social networking sites like Facebook, Twitter and so on and created tool which can help passengers to choose seatmate before board the plane. This campaign named “meet and seat”. After passengers choose the seat mate, they can communicate with them using social networks like Facebook before they meet at flight. This one of the great idea KLM where utilizing social media and give ultimate experience to their passenger.
Disadvantage of Social Media for Business
A successful online presence especially in social media, a company needs an experienced team which can improve companies’ reputation. Social media becomes unique and able to drive a lot of sales when they engage with their customers. This mean they have to reply messages, comments and so on. Pushing sales without engaging with customers or not respond to negative feedback will damage the companies’ reputation. We also must produce new contents and always find out ways to overcome to any negative feedback.
There have thousands of sites in social media which can be used to our business benefit. Is not easy for evaluate which site we should pay attention more and which site gives real value for investments. Return on Investment evaluation process is not an easy with social media.
Wrong online presence strategy will damage the companies’ reputation and put them at a viral social disadvantages. Any mistake they make in front of thousand of fans or social media members will result in big reputation impact. So we must careful when perform social media campaign.
Using social media marketing and advertising campaign could be more time consuming because we have to watch out every activity that we should do and engaging with people.
Advantage of Social Media for Business
The advertising cost is much more cheaper then traditional advertising and promotional activities. Social media also gives full value for every penny we spend. Traditional advertising only show the brand to the customer but with social media we can build long term relationship through “Like” function and can get their email address for send future emails.
Future customer able to find our brand through many channels like sharing activities, news, search engine search result and so on which give us free advertising. Social media can bring huge amount of traffic to our content especially when that content grabbing their attention. This what we can call free traffic or free customers.
Social media allows customers to express their experiences to others. A satisfies customers surely can bring another new customer though sharing experience activity. This also able to motivates companies to do the best as they can because consumers are now have freedom to express their views and feedback without any blocks. Companies will improve their products and services to customers.
Conclusion
Social media gives deep impact to the business world today from small companies to big giant companies. Social media landscape is big and the system and technology continuously growing and changing everyday. Companies who using and presented in social media enjoying big benefits. Some companies received negative impact. Social media not longer an option but is a must especially companies that dealing straightly with customers. Social media promising a lot of opportunities and challenges, so organization must prepare themselves to facing this.
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