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Social Media Strategies for Gaining Competitive Advantage

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In the past IT developments and infrastructures have enabled and facilitated growth and globalisation of organisations (Van der Weel, 2009). Henderson and Venkatraman (1999) argue that aligning the business and IT strategies in organisations helps realise more effective investments. The explosive growth of Social Media has provided millions of people the opportunity to create and share content on a scale barely imaginable a few years ago. Massive participation in these Social networks has now raised much interest in business. Ideas, opinions, and products compete with all other content for the scarce attention of the user community (Romero, Galuba, Asur and Huberman, 2010).

Companies have started to realise the potential of Social Media by viewing the Social Web as an outlet to push products and services, build buzz and engage consumers (, 2010). Though many companies have started participating in Social Media platforms, most of them are doing it without a clear, well-planned Social Media strategy (, 2010). While close to 80 percent of organisations globally are using Social Media, less than 30 percent have a coordinated, enterprise-wide Social Media strategy (PRWeb, 2010).

There is no agreed business models to implement Social Media strategies and for evaluating the impact of Social Media on organisational competitiveness (Carlsson, 2010; Schafer, 2004). This implies that firms find it difficult to select Social Media strategies to implement or Social Media business models to benchmark against. As such this paper seeks to explore ways that organisations can effectively gain competitive advantages from Social Media strategies. Hence, it will relate how strategic management concepts can be employed for harnessing Social Media technologies to gain sustainable competitive advantage.

What is Web 2.0?

Web 2.0 is a platform of the Web that makes reference to a group of technologies which have become deeply associated with the term: Blogs, Wikis, Podcasts, RSS feeds etc., which facilitate a more socially connected Web where everyone is able to add to and edit the information space words (Anderson, 2007). Hoegg, Martignoni, Meckel, and Stanoevska-Slabeva (2006) argue that Web 2.0 is not just a collection of technologies, but is a broader concept where technologies, services and platforms come together. In summary, Web 2.0 is a concept that shapes the online landscape into a platform for Social connection, sharing, dialogue, and multimedia enhanced interaction (Kaminski, 2009).

Social Media

Bruns and Bahnisch (2009) define Social Media as websites which build on Web 2.0 technologies to provide space for in-depth Social interaction, community formation, and the tackling of collaborative projects. Asur and Huberman (2010) argue that Social Media is a category of Online discourse where people create content, share it, bookmark it and network at a prodigious rate. In summary, Social Media is a communication channel focused on people, and aims to deliver success-based outcomes that result from meaningful participation within a network or community (Cosme, 2008). Blogs, Twitter, Wikipedia, Flickr and YouTube are just a few examples of Social Media systems that are drastically changing the Internet landscape today (Anderson, 2007). These platforms allow users to produce and annotate content and more importantly, empower them to share information with their Social network. Java, Kolari, Finin, Joshi and Oates (2007) further argues that the embedded Social network in most applications today allows users to freely edit articles and give provisions to post comments, and this is what has led to the Social Web phenomena.

The Business Value of Social Media

The ability to connect to other users via shared resources like tags and user ratings has made it possible to find new information and like-minded individuals on the Web (Java, 2008). Most Social Media sites today also have underlying recommendation systems that aid Social connections and increase the 'findability' of new information. Recent estimates suggest that Social Media systems are responsible for as much as one third of new Web content (Finin, Java and Kolari, 2007).

The online competitive intelligence service, (2010), report about the continual skyrocketing growth of Social Media. The top three Social networks--Facebook, Twitter, and LinkedIn--collectively received more than 2.5 billion visits in the month of September 2009 alone (, 2010). Twitter grew by more than 600% in 2009, while Facebook grew by 210% and LinkedIn by 85% (, 2010). The most recent count of Blogs being indexed by Technorati currently stands at 133 million (Cosme, 2008). The same report also revealed that, on average, 900,000 blog posts are created within a single 24-hour period. The important factor contributing to the growth of these technologies is the ability to easily produce "user-generated content" (Java, 2008).

Gaining Competitive Advantage through Social Media

Porter (2001) accepts the notion that the Internet is overturning the old roles of competition and strategy. Since then, corporations, traditional media companies, governments and NGOs are working to understand how to adapt to the usage of Social Media and how to use it effectively to generate competitiveness (Comscore, 2007). Eid and Trueman (2002) argue that even though the Internet makes it harder for companies to sustain operational advantages, it opens new opportunities for achieving or strengthening a distinctive strategic positioning. Their research shows that improving operational effectiveness does not provide a competitive advantage. The reason being that once a company establishes a new best practice; its competitors tend to imitate it quickly. They further argue that best practice competition eventually leads to competitive convergence, with many companies strategising in the same ways. Customers end up making decisions based on price, undermining industry profitability. Competitive advantage tends to be short-lived on the Internet since it is easy for competitors to monitor each other (Chaffey, Mayer, Johnston, and Ellis-Chadwick, 2000:134).

ICASA (2010) contends that enterprises have seen not just a Return on Investment (ROI), but also revenue increases from the use of Social Media. Lynn, Lin, Anal and Brynjolfsson (2009) argues that relating Social Media use to the organisation's performance measures can identify practical benefits to the organisation through using Social



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