In June 2008, the online professional networking service LinkedIn became a $1 billion company. But CEO Dan Nye understood that LinkedIn faced several strategic dilemmas. Founded in 2002, LinkedIn by 2008 had become the world's leading professional networking service (PNS), with more than 23 million members. Aiming to "dominate the business of business networking," in Nye's words, LinkedIn allowed individual members to post a profile on the LinkedIn site and then to use the site's tools to search for job opportunities; to recruit job candidates; to find suppliers, partners, and customers; and to seek out expert advice. The company was also expanding into corporate services that would enable companies to build and manage their own online networks. With revenue sources that included advertising, premium subscriptions, job posting services, and business solutions, LinkedIn was on track to bring in revenues in 2008 of up to $100 million. A new funding round in mid-2008 yielded a $1 billion valuation for the company. Three key dilemmas confronted LinkedIn, however. First, at a time when the "walled garden" model of online community building was under siege, it had to decide how far it should open its platform to users. Second, in light of competition from highly popular social network services such as Facebook and MySpace, LinkedIn had to decide whether to incorporate social networking into its value proposition. Third, in an increasingly global business environment, it had to weigh the option of merging with its leading international competitor, XING.com.
Authors :: David B. Yoffie, Michael Slind, Nitzan Achsaf
Swot Analysis of "LinkedIn Corp., 2008" written by David B. Yoffie, Michael Slind, Nitzan Achsaf includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Linkedin Networking facing as an external strategic factors. Some of the topics covered in LinkedIn Corp., 2008 case study are - Strategic Management Strategies, Competitive strategy, Internet, IT, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the LinkedIn Corp., 2008 casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , geopolitical disruptions,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, etc
Introduction to SWOT Analysis of LinkedIn Corp., 2008
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in LinkedIn Corp., 2008 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Linkedin Networking, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Linkedin Networking operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of LinkedIn Corp., 2008 can be done for the following purposes –
1. Strategic planning using facts provided in LinkedIn Corp., 2008 case study
2. Improving business portfolio management of Linkedin Networking
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Linkedin Networking
Strengths LinkedIn Corp., 2008 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Linkedin Networking in LinkedIn Corp., 2008 Harvard Business Review case study are -
Highly skilled collaborators
– Linkedin Networking has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in LinkedIn Corp., 2008 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Linkedin Networking has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in LinkedIn Corp., 2008 Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Linkedin Networking has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study LinkedIn Corp., 2008 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Linkedin Networking digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Linkedin Networking has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Linkedin Networking is one of the most innovative firm in sector. Manager in LinkedIn Corp., 2008 Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Linkedin Networking has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Low bargaining power of suppliers
– Suppliers of Linkedin Networking in the sector have low bargaining power. LinkedIn Corp., 2008 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Linkedin Networking to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the LinkedIn Corp., 2008 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Analytics focus
– Linkedin Networking is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David B. Yoffie, Michael Slind, Nitzan Achsaf can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Strategy & Execution industry
– LinkedIn Corp., 2008 firm has clearly differentiated products in the market place. This has enabled Linkedin Networking to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Linkedin Networking to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Linkedin Networking has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Linkedin Networking has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Organizational Resilience of Linkedin Networking
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Linkedin Networking does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses LinkedIn Corp., 2008 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of LinkedIn Corp., 2008 are -
Interest costs
– Compare to the competition, Linkedin Networking has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Capital Spending Reduction
– Even during the low interest decade, Linkedin Networking has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Linkedin Networking is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study LinkedIn Corp., 2008 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Linkedin Networking has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Linkedin Networking has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Linkedin Networking even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Linkedin Networking, firm in the HBR case study LinkedIn Corp., 2008 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As LinkedIn Corp., 2008 HBR case study mentions - Linkedin Networking takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High bargaining power of channel partners
– Because of the regulatory requirements, David B. Yoffie, Michael Slind, Nitzan Achsaf suggests that, Linkedin Networking is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study LinkedIn Corp., 2008, in the dynamic environment Linkedin Networking has struggled to respond to the nimble upstart competition. Linkedin Networking has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Linkedin Networking products
– To increase the profitability and margins on the products, Linkedin Networking needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Linkedin Networking supply chain. Even after few cautionary changes mentioned in the HBR case study - LinkedIn Corp., 2008, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Linkedin Networking vulnerable to further global disruptions in South East Asia.
Opportunities LinkedIn Corp., 2008 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study LinkedIn Corp., 2008 are -
Using analytics as competitive advantage
– Linkedin Networking has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study LinkedIn Corp., 2008 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Linkedin Networking to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Linkedin Networking in the consumer business. Now Linkedin Networking can target international markets with far fewer capital restrictions requirements than the existing system.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Linkedin Networking to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Linkedin Networking can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Linkedin Networking to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Linkedin Networking to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Linkedin Networking can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Linkedin Networking to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Linkedin Networking in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Linkedin Networking can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Linkedin Networking can use these opportunities to build new business models that can help the communities that Linkedin Networking operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Linkedin Networking can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Linkedin Networking can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Linkedin Networking to increase its market reach. Linkedin Networking will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Threats LinkedIn Corp., 2008 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study LinkedIn Corp., 2008 are -
Technology acceleration in Forth Industrial Revolution
– Linkedin Networking has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Linkedin Networking needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Linkedin Networking can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study LinkedIn Corp., 2008 .
Environmental challenges
– Linkedin Networking needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Linkedin Networking can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Linkedin Networking can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Linkedin Networking will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Linkedin Networking can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Linkedin Networking demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Linkedin Networking is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Linkedin Networking high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Linkedin Networking business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Linkedin Networking in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Linkedin Networking.
Weighted SWOT Analysis of LinkedIn Corp., 2008 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study LinkedIn Corp., 2008 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study LinkedIn Corp., 2008 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study LinkedIn Corp., 2008 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of LinkedIn Corp., 2008 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Linkedin Networking needs to make to build a sustainable competitive advantage.
