The role of technology is continuously growing in modern corporations; enterprises implement technologies into their organisational structure to fulfil the activities of hiring employees, producing products, conducting research, and marketing products and services. The popularity of social networks is growing among people, and it provides a platform to corporations which assist them in interacting and communicating with their audience. The firms use social networking for marketing their products, increasing business contacts, and recruit employees; many large corporations have successfully gained a competitive advantage by implementing social networking into their business. The popularity of social media sites is growing among people; these websites provide a low-cost marketing platform to companies which they can use to connect with a global audience.
Many organisations such as Nike, Starbucks, Dominos, and Oreo have successfully implemented social media strategy into their operations to improve their marketing and customer engagement. Along with benefits, the corporations which use social media strategy face various issues as well, such as cybersecurity threat, data breaches, cyber harassment, and insider threats. This report will focus on analysing various drawbacks and benefits of using social networks in business from the perspective of ‘Starbucks Corporation’. Further, the report will discuss theories provided by market experts and analyse examples of different companies to understand the impact of social networks in business.
The main goal of the report is to analyse the strategies of social networks implemented by ‘Starbucks Corporation’ to understand its disadvantages and rewards and the impact of the strategy on the firm. The report will examine modern firms to understand the impact of social networks on businesses; the example of real companies will be discussed to understand the influence.
The report will focus on ‘Starbucks Corporation’, and it's social network strategy to understand its influence on the business through various advantages and shortcomings. The report will also evaluate examples of various other companies which effectively implement social network strategy into their business operations to gain competitive advantage. The theories of professionals on the topic of social networks will be examined in the report.
Kumar, Novak, and Tomkins (2010) provided that social networks can be defined as online platforms which can be used by individuals to share, communicate and interect with others. People throughout the world can connect to the social network through internet connect, and they can interact and share with anyone. In past decade, social media sites become huge between people as the number of active users grows to billions; these websites provide new platforms to corporations that they can utilise to perform various business practices. Kemp (2017) provided that there are more than 3.8 billion internet users worldwide, from which more than 3 billion are active on social media sites (Figure 1). Modern organisations use social media websites for increasing their social networking because it provides a low-cost global platform to its users. As per Cheung, Chiu, and Lee (2011), Facebook has won the title of most popular social media site with more than 2 billion active monthly users. Modern corporations understand the value of social networking, and they implement strategic policies to ensure they take full advantage of the opportunity (Figure 2).
Sterne (2010) stated that the investment made by corporations on social media sites for marketing surpasses television in which Facebook takes the more revenue, i.e., 67.9 percent. The investment in social media marketing doubled between 2015 and 2016 from $16 billion to $31 billion respectively (Roberts, 2017). The increase in a number of smartphone devices contributes to the increase in social media users; globally there are more than 2.7 billion smartphone users, and the number is increasing rapidly with the popularity of internet-based services. People use their smartphones to perform various tasks such as consuming media, performing banking activities, communicating, and many others. According to Kaplan and Haenlein (2010), organisations also provide various application to their employees for social networking which improves their productivity; mobile application such as Slack, Evernote, Trello, and Jira are popular between companies, and they use them to improve the communication between employees and the firm.
The market of mobile application developers is continuously growing; Apple Incorporation paid more than $70 billion to the developers of App Store (Apple, 2017). Naaman (2012) mentioned that use of social networking in business operations also allow corporations to create new opportunities by making new business contacts. Modern corporations connect with each other through social networks which enable them to collaborate and create new business projects that are beneficial for their growth. Many organisations have successfully implemented social network strategy into their business model to ensure that they gain a competitive advantage such as Oreo, Staples, Pampers, Uber, and Starbucks.
Starbucks Corporation was established in 1971 as a coffee house; the company operates in more than 62 countries, and it has more than 26 thousand stores worldwide. Chua and Banerjee (2013) provided that the firm is known for its effective social media strategy which allows them to gain a competitive advantage. The company has more than 64 million followers on various social media sites such as Facebook, Instagram, and Twitter. According to Gallaugher and Ransbotham (2010), the corporation understands the importance of social media sites in marketing strategy and significance of customers’ engagement on social networks. Most firms avoid customer engagement on social sites, but Starbucks embrace this strategy and continuously engage with their customers through social media sites.
Modern corporations implement social networks into their business due to its numerous benefits; the companies are able to gain a competitive advantage by implementing an effective social network strategy. Following are examples of benefits that companies have for using social networks into their business.
Source of Communication
Using social networks in business provide new communication channels between the corporation, employees, and customers; the company can improve the efficiency of their communication by using social networks. As per Veil, Buehner, and Palenchar (2011), a corporation can use social networks to improve its communication with employees and customers. International corporations use social media sites to interact with their global audience and which assist in improving their brand image. Modern corporations are requiring having an effective communication channel with their customers to understand their requirements and ensure that they fulfill their demands. Starbucks is known for its effective consumer engagement program in which company uses its social media account to interact with its customers. The corporation provides information about their products and offers to its consumers through social media sites and resolve their quarries which improve their brand image (Belicove, 2010). In case of employees, the firms use various social network applications to increase the effectiveness of for work.
Many applications have launched in the market which assist workers in collaborating with each other on various projects and instantly communicate with each other, for example, Hangouts, Slack and Jira. In multinational corporations, the operations are divided into multiple departments, and it is difficult for managers to track the employees and performance of different departments. These corporations can use social networks to ensure that they are able to track the performance of different department and effectively communicate with them. Wang, Yu, and Wei (2012) stated that the firms can improve their performance and efficiency of operations by establishing a strong organisational culture in which people are able to communicate with each other. Similarly, Starbucks uses social networks to communicate with other corporations which can assist in creating new business opportunities.
Expansion of Business
Social networks clear the boundaries between different countries and enable companies to expand their business in foreign nations. Safko (2010) provided that the customers get new opportunities to find new businesses and companies which manufacture products as per their requirements. People find new companies and their products by searching on their smartphones; social media sites also recommend brands and products to individuals based on their preference and interests.
Social networks also increase the opportunity for local businesses to offer their products to a worldwide audience through online shopping which create new business opportunities; the corporation can use social networks to expand their business in other countries by communicating with other local businesses and collaborating with them. For example, Starbucks decided to establish their operations in India, but they did not want to invest heavily because it was a new market; the company contacted Tata Groups which is an Indian conglomerate and entered into a joint venture with them to offer their services in India (Menon, 2016). Similarly, local businesses can contract other foreign organisations through social networks to expand their business in other countries.
A Tool for Marketing
Social networks are a beneficial marketing tool for modern organisations since they provide a global audience to the company; the increasing number of social media users make them a potential target for firm’s marketing strategy. Castronovo and Huang (2012) provided that the social media sites provide a wider audience to corporations; international corporations can target global audience by using social media websites for marketing. The social media marketing strategy is a low-cost option for corporations, but in order to achieve effective results, corporations have to manage it as a two-way communications vehicle. The corporation can post their advertisement on social media sites, but unlike traditional sources of marketing, the users have the ability to give their response and feedback to the company’s advertisement.
Hays, Page and Buhalis (2013) stated that effective management of customers’ engagement is necessary on social media sites because it allows companies to improve their brand image and sustain future development. Starbucks faces difficulties in terms of customers’ loyalty because they have to compete with similar offerings of its competitors. The social media team at Starbucks is great at providing effective customers service over its social media channels; even after being one of the biggest coffee chains in the world, the company gives attention to its customers that attract them to come back at the store and increase their brand loyalty.
Social networks allow corporations to conduct market research and collect necessary information about its customers’ preferences which assist in the development of new product and services. The companies can improve the quality of their existing products and services by conducting market research. Aral, Dellarocas, and Godes (2013) provided that social media sites provide a great platform to organisations through which they can conduct market research and collect information about their customers’ requirements. Starbucks posts survey or polls on their social media accounts and interested followers can vote their preference; it saves both time and resources of the company. The customers can also post their feedbacks and quarries about Starbuck’s product on its social media or online website, and such information assist in product development process. Starbucks also collects their customers’ feedback through social media sites and conduct market research to develop their new product or service.
Hiring of Employees
Social networks connect people from all around the world with each other and corporations take advantage of this opportunity to hire talented employees from across the globe. As per Doherty (2010), the companies can post the advertisement of recruitment on social media platforms or directly contact the potential candidate through emails. Many companies use application such as Skype to interview international candidates to reduce cost and time of recruitment and selection procedure. Google successfully use social networks to hire talented employees from throughout the world; the company receives more than 2 million job application on their online platforms, and they select the best candidate from them (Phelps, 2014). Starbucks allow potential candidates to upload their solution by through its online website which save their recruitment cost and makes the selection process easier.
Along with numerous advantages, there are several drawbacks of using social networks in business as well. Following are few examples of disadvantages face by organisation whiling using social networks for performing various business operations.
Peole take advantage of Internet freedom to post negaitve comments and content online against other individuals and corporations; many people use these platforms to bully or harass other people. The rate of cyberbullying and harassment is continuously increasing as the number of online users increases. According to Sengupta and Chaudhuri (2011), many corporations also face this difficulty while using social media for interacting with their customers; many people might use abusive, racist or negative words while talking with the company to defame their services or products. Similarly, Starbuck’s employees might use social networks to bully, harass or abuse other workers that create a negative organisational environment that decreases the productivity and performances of workers and the company.
Challenges of Cyber Security
Shin (2010) stated that the enterprises which use social networks face the threat of cyber security attacks. Cybercriminals collect personal and sensitive data through online portals of enterprises and individuals. The corporations are required to have an internet connection and online servers to perform their activities through social networks. The cybercriminals attack the servers of a company since it includes the sensitive data of the company. In previous years, many companies losses their data due to cybercrimes such as Wal-Mart, Home Depot, Target and Apple.
Thomas, Grier, and Nicol (2010) mentioned that the risk of cyber-attacks on corporations is continuously growing because the number of firms’ which uses social networks is rising as well. It is easier for cybercriminals to attack of data of companies which uses social networks since they store and process their data through online channels. For example, Ashley Madison was attacked by cybercriminals, and they leaked more than 25 gigabytes of company’s data on the internet which include their email address, names, account information, and names. The attack on database of search engine Yahoo negatively affected more than 3 billion individuals (Perltoh, 2017). Starbucks is also vulnerable towards cyber-attacks; therefore, the firm invest heavily on antiviruses and firewalls which protect themselves.
The companies which use social media for marketing their products and services are required having a clear strategy to ensure that they take full advantage of the platform. Kietzmann et al. (2011) stated that a corporation cannot achieve successful result if it did not implement an effective strategy. The corporation has to ensure that their online advertisements are not against the public policy since it can have a detrimental effect on the firm. For example, a recent advertisement posted by Pepsi resulted in creating a controversy on social media sites; the advertisement depicted that people can solve police violence by giving each other Pepsi (Grady, 2017). Similarly, it is difficult for Starbucks to select a marketing campaign or advertisement which did not offend anyone; therefore, the corporations hire market experts to effectively use social media for their marketing.
As per IBM’s study, the insider threat is the primary reason due to which cybercriminals are able to attack and hack the data of users. (Kim, 2016) (Figure 3). Stavrou et al. (2014) provided that the employees of the company intentionally or unintentionally leak their credential and information which allow cybercriminals to hack into the account of corporations easily. The hack on account of Morgan Stanley is a good example, in which the hackers attack data of the company with the help of its ex-employee; the company was fined for $1 million for not maintaining proper security guidelines.
Conclusively, it can be stated that the impact and role of social networks have grown in modern corporations; the firms implement policies of social networks into their business strategy in order to gain competitive advantage. The popularity of smartphones, social media sites, and internet usage allow corporations to implement social networks into their business to perform various activities such as interacting with customers, market research, global marketing, and organisational communication. ‘Starbucks Corporation’ implements social network strategy due to its various benefits such as reduction in expenses, improvement in organisation communication, improve engagement with customers, effective marketing campaigns, reachability to a broader audience and successful market research. The risks of social networks include threat of cyber-attack, online harassment, and requirement of straightforward policies. However, the effectiveness of an enterprise can be improved by implementing social network policies. Modern corporations should assess their organisational structure to ensure that they effectively implement a successful social network strategy like Starbucks, and sustain their future growth.
Apple., 2017. Developer earnings from the App store top $70 billion. [Online] Apple. Available at: https://www.apple.com/in/newsroom/2017/06/developer-earnings-from-the-app-store-top-70-billion/ [Accessed on 15/12/2017]
Aral, S., Dellarocas, C. and Godes, D., 2013. Introduction to the special issue—social media and business transformation: a framework for research. Information Systems Research, 24(1), pp.3-13.
Belicove, M., 2010. How Starbucks builds meaningful customer engagement via social media. [Online] American Express. Available at: https://www.americanexpress.com/us/small-business/openforum/articles/how-starbucks-builds-meaningful-customer-engagement-via-social-media-1/ [Accessed on 15/12/2017]
Castronovo, C. and Huang, L., 2012. Social media in an alternative marketing communication model. Journal of Marketing Development and Competitiveness, 6(1), p.117.
Cheung, C.M., Chiu, P.Y. and Lee, M.K., 2011. Online social networks: Why do students use facebook?. Computers in Human Behavior, 27(4), pp.1337-1343.
Chua, A.Y. and Banerjee, S., 2013. Customer knowledge management via social media: the case of Starbucks. Journal of Knowledge Management, 17(2), pp.237-249.
Constine, J., 2017. Facebook now has 2 billion monthly users… and responsibility. [Online] Tech Crunch. Available at: https://techcrunch.com/2017/06/27/facebook-2-billion-users/ [Accessed on 15/12/2017]
Doherty, R., 2010. Getting social with recruitment. Strategic HR review, 9(6), pp.11-15.
Gallaugher, J. and Ransbotham, S., 2010. Social media and customer dialog management at Starbucks. MIS Quarterly Executive, 9(4).
Grady, C., 2017. Pepsi has pulled its controversial ad suggesting you can solve police brutality with soda. [Online] Vox. Available at: https://www.vox.com/culture/2017/4/5/15186216/pepsi-ad-kendall-jenner-black-lives-matter-controversy [Accessed on 15/12/2017]
Hays, S., Page, S.J. and Buhalis, D., 2013. Social media as a destination marketing tool: its use by national tourism organisations. Current issues in Tourism, 16(3), pp.211-239.
Kaplan, A.M. and Haenlein, M., 2010. Users of the world, unite! The challenges and opportunities of Social Media. Business horizons, 53(1), pp.59-68.
Kemp, S., 2017. Number of social media users passes 3 billion with no signs of slowing. [Online] The Next Web. Available at: https://thenextweb.com/contributors/2017/08/07/number-social-media-users-passes-3-billion-no-signs-slowing/ [Accessed on 15/12/2017]
Kietzmann, J.H., Hermkens, K., McCarthy, I.P. and Silvestre, B.S., 2011. Social media? Get serious! Understanding the functional building blocks of social media. Business horizons, 54(3), pp.241-251.
Kim, E., 2016. The people you trust most could be planning the next big cyber attack on your company. [Online] Business Insider. Available at: https://www.businessinsider.in/The-people-you-trust-most-could-be-planning-the-next-big-cyber-attack-on-your-company/articleshow/52661993.cms [Accessed on 15/12/2017]
Kumar, R., Novak, J. and Tomkins, A., 2010. Structure and evolution of online social networks. In Link mining: models, algorithms, and applications (pp. 337-357). Springer New York.
Menon, S., 2016. 'Starbucks would not be in India if it wasn't for Tata'. [Online] Tata. Available at: https://www.tata.com/article/inside/sumitro-ghosh-starbucks-india-experience [Accessed on 15/12/2017]
Naaman, M., 2012. Social multimedia: highlighting opportunities for search and mining of multimedia data in social media applications. Multimedia Tools and Applications, 56(1), pp.9-34.
Patchin, J. W., 2016. Summary of Our Cyberbullying Research (2004-2016). [Online] Cuber Bullying. Available at: https://cyberbullying.org/summary-of-our-cyberbullying-research [Accessed on 15/12/2017]
Perlroth, N., 2017. All 3 Billion Yahoo Accounts Were Affected by 2013 Attack. [Online] The New York Times. Available at: https://www.nytimes.com/2017/10/03/technology/yahoo-hack-3-billion-users.html [Accessed on 15/12/2017]
Phelps, S., 2014. Cracking Into Google: 15 Reasons Why More Than 2 Million People Apply Each Year. [Online] Forbes. Available at: https://www.forbes.com/sites/stanphelps/2014/08/05/cracking-into-google-the-15-reasons-why-over-2-million-people-apply-each-year/#6e46e5ff2038 [Accessed on 15/12/2017]
Roberts, P., 2017. 8 social media statistics for 2017. [Online] Our Social Times. Available at: https://oursocialtimes.com/7-social-media-statistics-for-2017/ [Accessed on 15/12/2017]
Safko, L., 2010. The social media bible: tactics, tools, and strategies for business success. John Wiley & Sons.
Sengupta, A. and Chaudhuri, A., 2011. Are social networking sites a source of online harassment for teens? Evidence from survey data. Children and Youth Services Review, 33(2), pp.284-290.
Shin, D.H., 2010. The effects of trust, security and privacy in social networking: A security-based approach to understand the pattern of adoption. Interacting with computers, 22(5), pp.428-438.
Stavrou, V., Kandias, M., Karoulas, G. and Gritzalis, D., 2014, September. Business Process Modeling for Insider threat monitoring and handling. In International Conference on Trust, Privacy and Security in Digital Business (pp. 119-131). Springer, Cham.
Sterne, J., 2010. Social media metrics: How to measure and optimize your marketing investment. John Wiley & Sons.
Thomas, K., Grier, C. and Nicol, D., 2010. unfriendly: Multi-party privacy risks in social networks. In Privacy Enhancing Technologies (pp. 236-252). Springer Berlin/Heidelberg.
Veil, S.R., Buehner, T. and Palenchar, M.J., 2011. A work?in?process literature review: Incorporating social media in risk and crisis communication. Journal of contingencies and crisis management, 19(2), pp.110-122.
Wang, X., Yu, C. and Wei, Y., 2012. Social media peer communication and impacts on purchase intentions: A consumer socialization framework. Journal of Interactive Marketing, 26(4), pp.198-208.