LinkedIn Corp., 2008
Network effect is seen as a phenomenon where a network service (SNS or PNS) becomes more valuable as the number of users increase. This phenomenon encourages continually increasing membership within the network. This can happen when a user adopts a network service initially to connect with current users, or later, when “everyone” is using the network service. Network effect exists in both social and professional networking (Majon International, 2010). Both exhibit 1 & 9 (Yoffie et al., 2009, pp. 14 & 18) indicate the existence of the network effect, a continual increase in membership over a long period. Although there may be a larger increase in new membership for SNS’s, it is stated throughout the LinkedIn case that new membership for PNS’s is likely to be more valuable to users because of the nature of the connection. Many people will not want to change PNS’s because they will lose their multiple connections already created (Yoffie et al., 2009). The case examines the likelihood of SNS’s overlapping and taking over PNS’s. This outcome seems unlikely. By examining Exhibit 6 (Yoffie et al., 2009, p. 16), the correlation among factors such as age, income, college education, and position within an organization sets LinkedIn squarely within its target market. Also, Yoffie et al. indicates the distinct uses of professional and social apps on Facebook. The multitude of users who use social apps vs. lower use of professional apps shows that Facebook users are less likely to make their profiles into professional networking tools, leaving PNS’s like LinkedIn for leveraging their professional careers (Author, p. 14). Question #2
Emerging companies need to generate new dynamics that are modernized, innovative, and easily adaptive to survive in this world. The new dynamics should be economically viable for the industry because they affect issues of whether to pursue a build or a buy approach to expand globally. LinkedIn Corporation, a PNS, is used by professionals globally to interact professionally. Uses include recruiting, getting expert advice, group collaboration, and more. Differentiating strategies were adopted by LinkedIn in order to separate itself from competition and answer the question of whether to utilize a build or buy approach. A build approach involves both monetary and other resource investments from the company. For LinkedIn, Investments in certain professional apps such as conference calendar, a tool used to indicate when certain conferences will be coming up, and which of a user’s connections will be attending, are examples of utilizing the build approach. The buying approach is where the company buys/merges with an existing SNS/PNS and integrates it within the existing systems. Although this expands a company, it constrains the ability of a company to customize the existing network with its own. Therefore, a company & its procedures need to adapt to the technology it buys. If they use a build approach, the company can build to their own specifications differentiating itself from existing networks (No Quote, Does not answer question). Question #3
LinkedIn’s strategy is straight to the point, be the best in the market of professional networking services (PNS). By focusing on providing a “virtual platform for professional interaction” (Yoffie et al., 2009, p.2), LinkedIn would provide various productive services to its users. Services provided include professional search, reference checking, recruiting, advice search, job searching & posting, and workgroup collaboration, which were successful because they allowed their users to become more effective in their professional careers. Also, its success was accounted for being involved with countless industries, rather than focusing on a specific industry like other PNS providers. Within its strategy, LinkedIn encompassed three premises which attributed to LinkedIn being the best in PNS, “remain...
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