An e-Business Analysis of LinkedIn
Executive
summary
Reid
Hoffman, “Realized that the
world was transforming every individual into a small business” (Lacter, 2009,
p. 84). Hoffman realized that the internet was transforming business processes
and careers and recognized a need for an online platform where people could
build a brand identity, influence their brand, and connect with other
professionals. In turn, Hoffman and
associates began LinkedIn
in 2002 (Lacter, 2009). Basic membership is free, but in 2005 LinkedIn
introduced a “Premium” membership which offered additional features for a fee.
By 2006, LinkedIn reported a profit, and by 2011 the company was added to the
New York Stock Exchange. In 2016, Microsoft purchased LinkedIn for $196 per
share.
As of 2019, LinkedIn earned Microsoft over 38.1 billion dollars in revenue
(Iqbal, 2019).
LinkedIn is a business-to-consumer
(B2C) and business-to-business (B2B) social networking site that connects business professionals and companies. As of 2017, LinkedIn had over 500
million users from over 200 countries (Darrow, 2017). In 2018, LinkedIn was
ranked the tenth largest website in the United States. In 2019, LinkedIn users
rose to 660 million including thirty million company profiles. Currently, over
one-quarter of the United States population is on LinkedIn. Over the last
decade LinkedIn’s membership consistently increased fifteen million or more
users each year (Iqbal, 2019). As new potential users
continue age into the workforce, there is continual growth potential. One LinkedIn user study indicates that, “There
are strong incentives for soon-to-be graduates, just getting ready to enter the
job market, to set up and maintain a professional online presence
(Constantinov, Popescu, & Mocanu, 2019, p. 1). Therefore, LinkedIn in
remains in the growth stage of its business life cycle.
Unique
Positioning and Community
Before the internet, job searches were an arduous task.
It could take a professional several weeks to locate a job opening which were
listed in newspaper ads, displayed in store windows, or through an employment
agency. It could take several more to complete the application and obtain and
interview for the position. The internet and social networks allow individuals
to quickly and efficiently share personal professional information with other
in their networks. Due to these technological advancements, LinkedIn has
changed the recruitment and hiring process for businesses and consumers
(Aguado, Andres, Garcia-Izquierdo, & Rodriguz, 2019). LinkedIn is a unique
place on the web where professionals can connect and engage with other
business-minded users.
LinkedIn is open to any user that wants to join the
network, which partially explains the site’s large membership count (Constantinov, Popescu, & Mocanu, 2019).
Once a professional signs up with LinkedIn, she has access to millions of job
opportunities, companies, and professionals. LinkedIn users can use the site to
increase one’s credibility and exposure. A member’s profile is like a personal
resume where one can list skills, education, work history, and volunteer
work. Members can showcase their
personal branding or company logos. There are many ways users can use the site
to increase their online visibility and brand image. Like other social media sites,
members have the option to create and share written or video posts on their
wall that engage the targeted audience or industry. This
is an enormous time-saver for both job-seekers and companies.
Internet
Strategy
Knowledge management (KM) is, “The process of capturing
or creating knowledge, storing and protecting it, updating it constantly,
disseminating it, and using it whenever necessary” (Turban, King, & Lang,
2011, p. 234-235). Businesses can create a competitive edge by updating and
sharing internal and external knowledge (Turban, King, & Lang, 2011).
Knowledge management relates to e-commerce because knowledge can either create
a competitive edge in the market or sink a less knowledgeable company. One
major example is knowing and understanding analytics and consumers’ web
behaviors. Another critical area is market and product trend. If a company knows
the competition then better decisions can be made about consumer needs, market
availably, and product development.
Professional networks are constantly changing, adding new
functions, and lessening the communication gap between professionals (Constantinov, Popescu, & Mocanu,
2019). LinkedIn
is a knowledge management site for professionals. The website has many ways to
find, engage, and communicate with other users. According to Patrick Crane,
vice-president of marketing, LinkedIn, “Relies on blogging, public relations,
partnerships and product innovation to build awareness, knowledge, engagement
and, ultimately, participation for LinkedIn” (Krauss, 2009, p.44). As of 2009,
Blog.LinkedIn,com was in the top ten most-read internet blogs (Krauss, 2009).
The company posts relevant and
engaging content. This year LinkedIn blogs addressed relevant Human Resource
(HR) topics such as pay equity, diversity, workplace harassment, reinventing
the HR name, and McDonald’s new voice-activated job applications (Anderson, 2019).
LinkedIn’s success is due to its marketing strategy.
LinkedIn appeals to marketers, advertisers, and consumers using product
promotions. In the past LinkedIn partnered with Banana Republic to advertise
both brands. LinkedIn members that
updated their LinkedIn profiles received a twenty-five percent discount off at
Banana Republic and a chance to win a one-thousand-dollar gift card from the
retailer. LinkedIn’s expansion into the Spanish markets included a video with
Spanish-speaking executives, bloopers, and outtakes which quickly received over
15,000 views (Krauss, 2009).
Other
websites try to appeal to the professional segment, but many are unable to
achieve the popularity of LinkedIn. Facebook, which has more daily users than
LinkedIn, is unable to match LinkedIn’s efforts. The company’s business model
separates it from other social media sites (Friedman, 2014). The purpose of
other social media sites like Facebook, Instagram, and Twitter is entertainment
and companionship, but Hoffman and his associates created LinkedIn to connect
job seekers with job openings during a time period with high unemployment
rates. LinkedIn delivered a necessary and valuable service at the epicenter of
e-commerce (Friedman, 2014). While social media sites appeal to a mass
audience, LinkedIn’s specialization targets a specific demographic and serves a
clear purpose. People will likely always need jobs, personal branding and
networking opportunities, so as younger generations enter the job market, and
the website can maintain its relevance. With LinkedIn, members can connect with
old and current colleagues and classmates. If members list skills or submit
resumes, job recruiters can locate qualifying users with employment
opportunities (Turban, King, & Lang, 2011).
EC
Metrics
Various tangible and intangible metrics measure different
aspects of e-commerce. For example, sellers like LinkedIn may want to know how
much profit that the company earns from each member, how many website visitors
convert to members, and how active the users are and how frequently they access
the site. Customers will want to know metrics like product costs or member ship
fees, how many alternative suppliers are available online. Some intangible
metrics are customer satisfaction, loyalty, security measures, and reliability
(Turban, King, & Lang, 2011).
EC Security Strategy
EC security strategy is defined as “The process of
preventing and detecting unauthorized use of the organization’s brand,
identity, Web site, e-mail, information, or other asset and attempts to defraud
the organization, its customers, and employees.” (Turban, E., King, D, Lang, J.
2011). Security problems are the result of the internet’s general
vulnerability, increased profit-induced crimes, underground demand, and the
nature of EC systems (Turban, King, & Lang, 2011). If a business wants to
allow its partners and users to access certain data, while other information is
available to the public, then the business needs to establish an effective EC
security strategy that deters, prevents, and detects security threats. The
company should also have a plan for containing an incident and how to recover
from a cyber-attack (Turban, King, & Lang, 2011).The business must choose allow or
limit certain access specific information to each group. A firewall will help
the business keep certain information private from the public. A firewall can
protect a company’s data from remote log-ins, hacking, and malware (Turban,
King, & Lang, 2011).
LinkedIn fell victim to a large data
breach in 2012, when a hacker stole user data like emails addresses, passwords,
and member IDs, and posted the data publically. LinkedIn immediately
inactivated the at-risk users’ passwords, so the user would reset their log-in
info and the hacker would not have access to the accounts (LinkedIn, 2016).
LinkedIn now uses encrypted “salted” passwords instead of hashed passwords,
which is more secure for password storage. The site suggests its members to use
two-factor authentication and strong passwords that are changed routinely
(LinkedIn, 2016).
Limitations and Considerations with
an e-Business
The internet
user base consists of people with varying beliefs, values, traditions,
religions, and standards (Turban, King, & Lang, 2011). LinkedIn has users
in over 200 countries so the company must consider these cultural differences
and global limitations. One example is the United States use of the imperial
system of measurement, while many countries use the metric system (Turban,
King, & Lang, 2011). Other cultural
differences may be social norms, such as countries where women traditionally do
not work, or what one considers a normal work week. The site must accommodate
for different languages which the company may hire an individual which is
time-consuming or quicker programs that may be costly (Turban, King, &
Lang, 2011). Because there is no standard for international e-commerce, legal
issues may arise. Some countries tariff and tax products and even disallow the
entry of certain products within the country (Turban, King, & Lang, 2011).
LinkedIn
must review the material that its advertisers portray on its websites to ensure
the images comply with any states, federal, or international laws as prohibited
material may vary from fines, loss of credibility, and bans. For example,
Sweden and several other countries ban advertising to children (Lembke,
2018). This could apply to some
LinkedIn members since the age limit is16 years of age to join. The United
Kingdom prohibits companies from marketing junk food to children (Donnelly,
2019).
LinkedIn is
a successful online business with a product specification that few social media
websites match. The company is successful at e-commerce because it fulfills a
need for the large segment of business professionals. LinkedIn is available to
any user online at no cost which increases membership. The company makes a
profit from advertising on its site and pay-memberships. There is a large
potential for growth with new segments aging in and increasing member
engagement. Many young professional members do not use LinkedIn to its full
potential (Constantinov, Popescu, & Mocanu, 2019). Since the company is still
in the growth life cycle, it will be interesting to see how LinkedIn responds
to meet various consumer needs.
References
Anderson, B. (2019, December 23). The top moments for HR in 2019. LinkedIn Talent Blog. Retrieved from https://business.linkedin.com/talent-solutions/blog/hr/2019/top-moments-for-hr-in-2019
Aguado,
D., Andres, J., Garcia-Izquierdo, A., & Rodriguz, J. (2019). LinkedIn “big
four”: Jon performance validation in the ICT sector. Journal of Work and Organizational Psychology, 35(2), 53-64. https://journals.copmadrid.org/jwop
Constantinov,
C., Popescu, P., & Mocanu, M. (2019). Identifying LinkedIn usage patterns
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Darrow, B. (2017, April 24). LinkedIn claim half a billion users. Fortune. Retrieved from https://fortune.com/2017/04/24/linkedin-users/
Donnelly, L. (2019, March 14). Junk food giants must stop marketing to
children – or see their ads banned entirely says health chief. The telegraph.
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