Twitter: Environmental, Internal, and Business-Level Analysis

1.0 Introduction

Twitter, Inc. is a social media organization headquartered in San Francisco, California. The corporation operates the Twitter social networking service, the Vine short video app and the Periscope live-streaming service (Stone & Williams, 2023). Kleinman (2023) claims that the organization has gone through great transformation and turmoil lately. This research thoroughly examines Twitter’s current environmental, internal, and business-level plans, commissioned by billionaire entrepreneur Elon Musk, who has recently bought the business. To accurately assess the position of Twitter and come to informed conclusions, an analysis has been carried out of the three main external threats and opportunities it faces, its existing and new resources and capabilities, and its ability to gain sustained competitive advantage in this social media market. Finally, advice is offered for developing and implementing a new business-level strategy adapted to fit the changing market context it is operating within. The focus of this report is to provide Elon Musk with an informed insight into Twitter’s current status and offer recommendations for implementing an effective business-level strategy tailored to its current dynamics. Through the thoughtful planning of environmental, internal, and business-level strategies, this report will ultimately provide an increased understanding of Twitter’s current situation and allow for successful navigation in the ever-evolving social media market.

2.0 Threats Twitter is Facing in The External Environment

2.1 Political Threats

The political threats confronting Twitter are numerous. Perhaps the biggest threat comes from the U.S. and European governments, which are increasingly hostile toward social media companies and their perceived lack of regulation (Momin, 2023). This has been a particularly tense issue since the U.S. Presidential Election in 2020. According to Xaif (2022), governments are placing pressure on companies such as Twitter to crack down on accounts spreading hate speech and misinformation and to address the potential for related platforms to be used to influence elections.

In addition, there are fears regarding censorship from governments or social media companies disregarding freedom of speech. For example, in 2020, Twitter and Facebook suspended Donald Trump’s accounts in the wake of several posts deemed to be inciting violence (Blog-Trends Team, 2023). There are concerns that the actions of the companies could have a slippery-slope effect and eventually threaten others’ right to freedom of speech. This issue is particularly prominent when related to the political process, leading to fears of critics of certain regimes being silenced (Momin, 2023).

Furthermore, governments are introducing a range of new regulations that threaten the major tech companies. In the E.U., the General Data Protection Regulation (GDPR) has introduced far stricter regulations on user data, for example (Blog-Trends Team, 2023). GDPR is a major potential threat to the data-focused business model of Twitter, as it introduces stringent requirements which could add to the company’s costs from implementing these new regulations or impact its data-analysis system.

2.2 Economic Threats

One economic threat to Twitter is increased competition from other social media platforms. According to Statista (2023), as of 2023, the top three social media platforms globally are Facebook, YouTube, and WhatsApp (see Figure 1). These have more monthly active users than Twitter, 2.96 billion, 2 billion, and 2.24 billion, respectively, significantly increasing their market share (Blog-Trends Team, 2023). Additionally, according to Parker (2023), competing platforms make it more difficult for Twitter to gain new users and compete for advertising investments. This has caused the company to experience slow revenue growth globally.

Figure 1: Most popular social networks worldwide as of January 2023, ranked by number of monthly active users (in millions); source: (Statista, 2023)

Another economic threat facing Twitter is the changing trends in digital advertising. According to Xaif (2022), digital advertising is a major source of revenue for Twitter, accounting for 0.9 percent of the global digital advertising revenue (see Figure 2). However, the company revenue has been impacted more so after the takeover by Elon Musk. According to Cohen (2022), Musk’s controversial tweets and erratic behavior have caused some advertisers to pull their campaigns from the platform. For example, 50 of the platform’s top 100 advertisers, who have spent around $2 billion since 2020, have either announced or seemingly stopped advertising” in recent weeks. In 2022, these firms spent more than $750 million on advertising. Chevrolet, Chipotle Mexican Grill, Ford, and Jeep are among the brands that have either published a comment or have lately stopped advertising on the site. Branded “quiet quitters” by Media Matters, others appear to have ceased advertising (Cohen, 2022). According to Cohen (2022), they include AMC Networks, AT&T, BlackRock, Chanel, and Kellogg, among others. Additionally, the rise of ad-blocking software and users’ preference for ad-free experiences also affects Twitter’s revenue generation through advertising.

Figure 2: Share of Twitter in digital advertising revenue worldwide from 2020 to 2024; source: (Statista, 2023)

2.3 Social Threats

According to Blog-Trends Team (2023), one of Twitter’s significant social threats is the spread of misinformation and hate speech on its platform. While Twitter has policies to address these issues, the sheer volume of content makes it challenging to enforce them effectively. The spread of misinformation and hate speech can damage Twitter’s reputation and lead to a loss of users concerned about the platform’s safety and trustworthiness. Furthermore, the platform’s lack of diversity and inclusion has posed a societal risk. Twitter has been chastised for its lack of diversity in its personnel and for neglecting to address concerns of hate speech and discrimination.

3.0 Opportunities

The external world provides Twitter with several opportunities. The first is the rising internet adoption rate (Parker, 2023). DataReportal (2023) shows that the world’s connected population increased by over 147 million people between April 2023 and April 2024 (see Figures 3 and 4). This trend attracts more prospective consumers from all over the world to the platform, helping Twitter to increase its market share. Furthermore, because people spend more time on the internet, Twitter may easily captivate people’s attention for longer periods (Momin, 2023). As a result, it may generate more engaging and engaged experiences with platform users, resulting in a better customer experience.

Figure 3: Internet user Over time; source: (DataReportal,2023)

Figure 4: Overview of Internet use; source: (DataReportal,2023)

Second, Twitter can capitalize on the popularity of video content. According to Statista, the global Video Streaming (SVoD) industry is expected to increase by 9.48% (2023-2027), resulting in a market volume of US$137.00 billion in 2027 (Statista, 2023). Twitter can capitalize on this trend by improving its video capabilities and providing more video-related products and services to its users and advertisers. Twitter’s recent acquisition of Revue, a newsletter platform with a built-in video hosting service, demonstrates the company’s dedication to expanding its video capabilities (Twitter, 2021). By doing this, Twitter will be able to draw in more users and increase its income from video advertising.

Lastly, one of the most promising opportunities for Twitter is the establishment of an online store or marketplace from which businesses can directly sell their products to their customers (Blog-Trends Team, 2023). This opportunity comes with the shifting trend in online advertising and the increasing value of e-commerce. Digital advertising is steadily becoming more popular among businesses, and leveraging Twitter would provide a platform for brands to engage with their customers (Parker, 2023). In addition, e-commerce is advancing quickly; this growth is evident in the projected global growth rate of 8.9% for 2023, which is expected to bring worldwide e-commerce sales to $5.9 trillion. This growth rate represents a 1.8 percentage point increase from 2022, which followed a significant decline from 2021 (Gaubys,2023) (see Figure 6). According to Gaubys (2023), this has been fuelled by the ease and convenience of digital shopping, and businesses are looking for more ways to take advantage of this new industry. An online store integrated with Twitter’s platform would allow businesses to directly target customers with products they might be interested in and encourage them to purchase.

Figure 6: Global Ecommerce Growth Rate (2021 to 2026); source: (Gaubys, 2023)

A major factor that makes this opportunity viable for Twitter implementation is the high trust and recognition users have with the brand. Research has found that customers trust the content shared via Twitter, often surrounding news, politics, and public events (Parker, 2023). This level of trust has been established through years of successful content dissemination and live streaming. People tend to believe what is stated on the site, which promotes consumer engagement. Due to their confidence in the platform, shoppers using a virtual store may be confident that the goods they purchase are high quality (Momin, 2023). As a result, firms would be able to strengthen client connections and boost client loyalty.

4.0 Analysis of the Existing Twitter Resources and Capabilities Using VRIO Framework

The VRIO framework is an internal analytical tool that assists firms in identifying the advantages and resources that provide them with a competitive advantage. The VRIO framework is an acronym for the many success metrics that apply to your company. It consists of value, rarity, imitability, and organization. (Bílková et al., 2018). This report section analyzes existing Twitter resources and capabilities using the VRIO framework. The analysis is divided into four categories based on the VRIO framework:

4.1 Valuable

The value of a resource or capacity is determined by how it adds to the organization’s competitive advantage. Twitter’s most significant resource is its well-known brand. The classic blue “Twitter” logo (see figure ) is well-known and has strong brand value. This enables Twitter to reap client loyalty benefits while foregoing costly marketing activities to promote awareness and draw purchases. Furthermore, because they are responsible for the platform’s success, its technology and innovation are highly valuable. The technology, which includes microblogging, live-streamed videos, and content updates, provides a powerful tool of analytics and metrics such as impressions, engagement, and most popular posts, allowing Twitter to better evaluate its content and respond to consumer requests more swiftly. The user base of the site is also incredibly significant. Twitter has over 186 million active users as of June 2020, according to Backlinko (Salcedosays et al., 2023).

Figure 7: Twitter Logo; source: (Twitter, 2023)

4.2 Rare

Rarity is when a company possesses a valuable resource or capability that is one-of-a-kind (Ariyani &Daryanto, 2018). Twitter, for example, has created a user interface centered on “tweets,” or brief communications of 140 characters or less that can be delivered immediately and readily shared. This has allowed Twitter to grow its user base and provide a platform for authentic public participation (Casemarathon, 2023). Additionally, Twitter uses algorithms to support digitized trends. This gives the platform more accurate and real-time data for understanding the public’s reactions (Harvey, 2020). Additionally, according to Harvey (2020), another unique resource Twitter has is its real-time search engine. The real-time search engine allows users to search for tweets as they are being posted, providing real-time information on any topic.

4.3 Inimitable

The inimitability of a resource or capability is linked to competitors’ difficulty of its replication. Twitter has a vast user base (see Figure 8) that has taken years to build, and replicating this would be a daunting task for any competitor. Additionally, Twitter has tremendous amounts of data stored in its databases. This data includes user profiles, interests, activities, and real-time analytics. This data is a valuable source of information and greatly assists businesses in their decision-making process (Harvey, 2020). Furthermore, according to Edwards (2018), Twitter has invested in a complex computer hardware and software network. This network supports the company’s operations and cannot be easily replicated by competitors.

Figure 8: Twitter User growth; source: (Salcedosays & Deansays, 2023)

4.4 Organized

According to Ariyani and Daryanto (2018), the organization refers to a company’s resources and capabilities that are essential to its operations and allow it to establish a sustained competitive edge. Twitter’s resources and capabilities are well-organized. Twitter is outfitted with cutting-edge technology and software to ensure flawless system functioning. The organization also has a skilled team monitoring and servicing the hardware and software. Furthermore, Twitter has a marketing staff whose sole purpose is to increase the visibility of the company’s products and services. Furthermore, Twitter has invested in specialist technologies, such as artificial intelligenceIntelligence, to ensure the security of its users’ data and properly operate its services (Fern Fort University, 2023). Finally, according to Fern Fort University (2023), Twitter has a well-thought-out real-time analytics system that allows the firm to acquire insight into the interests and behaviors of its users.

Summary in VRIO Table

Table 1. Twitter VRIO Summary; source:(Author, 2023)

5.0 Analysis of Potential Resources and Capabilities That Could Help Twitter Win the Social Media Market

This section will use the VRIO paradigm to assess the prospective resources and capabilities that may help Twitter win the social media industry.

5.1 Valuable

Augmented reality (A.R.) is one resource that might help Twitter obtain a competitive advantage in social media. A.R. technology, according to Jayawardena et al. (2023), allows users to engage with the virtual world in a more immersive manner by superimposing digital information on the actual surroundings. This technology might be used to improve the Twitter user experience by allowing users to see messages and hashtags more interestingly. Users might, for example, view tweets as 3D objects with which they can interact in real-time. This would provide users with a more immersive experience and help Twitter stand out from its competitors. Furthermore, AR technology has the potential to open up new advertising options on Twitter by allowing firms to develop interactive A.R. ads that users can interact with.

Blockchain technology is another possible resource that might help Twitter dominate the social media business. Blockchain, according to Rajasekaran et al. (2022), is a decentralized, secure database that may be used to store and validate data. Twitter might leverage blockchain technology to improve the platform’s security and privacy. It might, for example, employ blockchain to authenticate user identities and prohibit the establishment of bogus accounts. This would build a more trustworthy platform and attract more users that respect privacy and security. Furthermore, Twitter might leverage blockchain to establish a decentralized social media network in which users have more control over their data and can participate in platform governance.

5.2 Rare

Advanced sentiment analysis is a unique capacity that might help Twitter dominate the social media business. Wankhadhe (2022) defines sentiment analysis as the technique of evaluating social media data to discover the mood or emotion underlying a post. Advanced sentiment analysis goes beyond simple keyword analysis by analyzing the context and tone of a post using machine learning techniques. Based on their interests and emotions, this might be utilized to provide more accurate and relevant content recommendations for consumers. Furthermore, by targeting people based on their emotional state and interests, enhanced sentiment analysis might be utilized to generate more effective advertising campaigns.

5.3 Inimitable

Twitter has the potential to use its data resources to generate unrivaled capabilities, such as predictive analytics. Predictive analytics, according to Lee et al. (2022), is the act of analyzing past data to build models and forecasts that may drive decision-making. Twitter’s data resources might be used to create models that anticipate user behavior and interests. This would allow the corporation to give more relevant and tailored content recommendations to users. Predictive analytics might potentially be used to improve advertising efforts by allowing organizations to target people more precisely.

5.4 Organized

Finally, Twitter might take a systematic approach to developing the aforementioned resources and competencies. This might entail organizing teams, projects, and resources to enable the development of A.R., blockchain, sentiment analysis, and predictive analytics capabilities. Twitter could also use an organized way to handle its data resources. This might entail developing protocols and procedures for collecting, managing, and analyzing data. Finally, Twitter might employ a systematic way to analyze the outcomes of its investments in the development of these resources and competencies and alter its strategy accordingly.

6.0 Creating an Effective Business-Level Strategy for Twitter

Positioning is the initial stage in developing a business-level strategy (Hambrick, 1980). Twitter’s market position is as a social media network that uses micro-blogging. This is a tough position to distinguish; it is quite similar to Facebook’s stance, which is their biggest rival. Twitter can try to establish a ‘unique selling point’ to boost its market position (Grünig, Kühn, and Grünig, 2015). This may be accomplished by delving deeply into statistics to see what particular areas Twitter can focus on to get a significant competitive edge.

The second stage is to determine the target segments (Grünig et al., 2022). Twitter needs to determine its target segments based on demographic, psychographic, and behavioral criteria. Twitter’s major target demographic is millennials and Generation Z, who utilize social media for news, entertainment, and sociability (Twitter, 2022). Twitter may also target companies and organizations that utilize the network for marketing and customer service. Twitter may adjust its content and advertising to match the needs and tastes of its users by establishing target categories. Twitter may design a customized user experience that suits the demands of those selected categories by segmenting their audience.

The third step in the process is to create a business model (Beard & Dess, 1981). Twitter’s current business strategy is ad-based, in which it makes income by presenting advertisements to its users. Twitter, on the other hand, has the opportunity to diversify its revenue streams by providing additional services like paid memberships, e-commerce, and virtual events. Paid memberships might provide premium services like ad-free surfing, analytics, and advanced search. E-commerce allows users to buy and sell things directly from the platform, whilst virtual events allow businesses and organizations to hold webinars, seminars, and workshops.

The third stage is to develop an acceptable response if some techniques fail (Grünig et al., 2015). To remain competitive, Twitter must establish contingency plans. This includes an assessment of the risks involved as well as mitigations that may be implemented to reduce future vulnerabilities. Twitter should also perform frequent evaluations of its strategy to verify that it is still suitable for its purpose and that additional refining is carried out as needed.

7. 0 Conclusion

In conclusion, Twitter faces both external challenges and possibilities, which necessitates a continuous evaluation of its resources and capabilities, especially those with the potential to win the social media industry. According to the VRIO framework evaluation, Twitter possesses important, unusual, unique, and organized resources and skills that contribute to its success. In addition to these resources and capabilities, Twitter should investigate possible resources and capabilities such as augmented reality, blockchain technology, enhanced sentiment analysis, and predictive analytics that might aid in its social media market dominance. Twitter should build an effective business-level strategy in order to fully leverage these resources and capabilities and obtain a competitive edge in the market. In order to establish a specialized, competitive service, this strategy should include positioning, segmenting, designing a business model, and formulating contingencies. To remain competitive in the social media business, Twitter should continue to review and grow its resources and skills.

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