Analysis of the Three Markets

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Summary

Due to the high rise in completion, it has become critical for an organization to analyze and monitor their external marketing environment (macro-environment) that may have an impact on their organization. This section will give a critical analysis of three markets including US, India, and China by discussing some of the external marketing environment of LinkedIn including economic trends, technological trends, business environment, legislative actions, and demographic changes. Also, the section will evaluate the SWOT analysis of LinkedIn by taking comparing three markets.

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An Analysis LinkedIn Business Environment

As the world’s largest PNS (Professional Network Service) in the world, LinkedIn operates in more than 200 countries and has over 200 million users in over 15 languages. The organization has managed to employ more than 3700 employees worldwide. According to LinkedIn Inc. (2011), about 128 million memberships of LinkedIn users are from the US and more that 35 million are from India and approximately 20 million users are from China. The rest are distributed in various countries around the world. It is also estimated that in two members join the network in every second (LinkedIn Inc., 2011).

Economic Trends

LinkedIn has been a key economic driver possessing a significant influence on the industry performance. For instance, LinkedIn has played an imperative role in improving the Growth Domestic Product (GDP) of various countries. Fundamentally, there is a close relationship between employment growth in the US, India, and China with the growth of LinkedIn. Due to its credibility, most employers tend to seek professionals from the social network. Out of this social networking, countries have been able to reduce their unemployment rate. In addition, countries have managed to increase their GDP out the remunerations these professionals get by securing employment opportunities.

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Besides, trends and figures from the e-commerce have also played a significant role in improving GDP in China, India, and the US. Although the website is not an actual e-commerce site since it not a site for retailing tangible products, the company collect significant revenues from subscriptions from professionals and organizations who are looking for hiring solutions. Therefore, it is plausible to categorize the business within the e-commerce sphere.

Over the past years, India has experienced a massive increase in real GDP growth because of LinkedIn’s revenues. For instance, the rate of increase that was experienced by India in 2006 was approximately 10% (LinkedIn Inc., 2011). This figure is considerably astounding in comparison with that of UK and US, which were about 4 and 3 percent respectively.

National Trends and Culture That Will Affect the Company

The cultural environment in which LinkedIn has been operating from is of great importance regarding the value and cultural understanding and their effects. Fundamentally, since online social networks and online companies operate across global boundaries, the chance of these markets being characterized by cultural diversity is very high. As a result, the company is required to cautiously design and establish a platform that is satisfying the demands of the individual market (Porter, 2004). In this regard, LinkedIn has improved its platform including developing plug-ins on their sites to make the site culturally adaptable and sustainable. Also, the company has also created awareness and knowledge about various markets to create sustainable growth on a worldwide scale. For example, since cultural dynamics are different in India, China, and the US, the company has designed versatile and vibrant solutions to satisfy respective cultures. Fundamentally, these features have the potential to be modified to ensure that they are culturally relevant in their respective country.

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Demographic Changes

Since LinkedIn is operating within the social networking industry, it has no tangible or physical product. Throughout its operations, the company has found itself reaching the global market with the company being in more than 200 countries and counting. In this regard, the company’s demographic can only be scrutinized on a worldwide basis covering every region and country consolidated.

According to the 2006 demographics, the population of the world was approximately 6.6 billion people, and the growth rate was 1.14 percent. In 2009, the world population had grown to 6.8 billion people the unrelenting growth rate of 1.14 percent. Accordingly, these figures show significant growth in population and significant growth in the potential market. From another angle, the 2012 data from USCB (United States Census Bureau) indicated that the global population stands at 7.03 billion people (United States Census Bureau, n.d). Although the growth rate has slowed to 1.096 percent, one common thing in those as identified in the period within 2006 to 2012 is that a significant population resides in the urban areas. Such an observation l is a critic to LinkedIn as it is presumed that the higher the number in urban areas, the greater the likelihood of people pursuing certified courses.

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One of the most significant demographic determinants that influence LinkedIn is its global education (LinkedIn Inc., 2011). According to UNESCO (United Nations Educational, Scientific, and Cultural Organization), there has been significant growth rate in new entrants from tertiary, secondary and primary school education (UNESCO, n.d). To be precise, from 2003 to 2009, there has been a significant increase in the number of students in tertiary level recording an annual growth rate of 4.6 percent.

Besides its influence on the degree of education, LinkedIn has also proved to have an influence in age structure. It has been noted that people who were born between 1977 and 2000 are more focused on education that their parents. Since this group loves education, it has been an attractive market for  LinkedIn.

Legislative Actions

Because of ambiguity and wideness of the field application, there are various LinkedIn has been faced with a considerable number of issues. Some of the legislatures that are considered by the organization include privacy of data and labor agreement. Besides, the company has been keen to discuss the intellectual property rights especially due to their know-how and the applications and programs that are designed for their websites and how easily their concept and inventions can be replicated on the Internet. LinkedIn has also been keen to sign contractual agreements to be able to access their proprietary technology. Also, the company has been anxious to ensure that every confidentiality agreement with its contractors, employees and any third party are signed. Accordingly, this has helped the company to retain its trade’s secret, which gives the company a competitive advantage. Since the business is run on an online platform, the company is subject to various domestic and foreign regulations and laws that affect organizations that conduct their businesses online. Nevertheless, some of these laws are being tested in some countries including the US as they are still evolving and there is a chance that they can be interpreted in any way that could influence the business.

Technological Changes

From recent trends, it apparent that LinkedIn has heavily invested in its property and machinery. According to the company’s data, the period of 2008 to 2001 helped the company to rise five times in comparison to the base year (LinkedIn Inc., 2011). This growth as viewed in its annual reports is because of its Technological development mostly in the expansion of servers and an upgrade on its computer software. To accommodate the ever-growing population LinkedIn has over 40,000 server machines, which grows at a rate of 5 percent per month. In others words, in every year, the company adds more than a thousand machines. In addition, the company has hired technicians to be setting up production and to be configuring these machines in 15 minutes or even less.

Recently, the company chose CFEngine to automate its lifecycle management and infrastructure configuration by enforcing intended system state for compliance. Unlike other platforms that use Python, Perl, or Ruby, CFEngine has provided the company with a lightweight solution that is based on C. According to the chief technician at LinkedIn, the system is expected to have minimal dependencies, which can easily scale to thousands of these machines.  Another critical element that is seen is CFEngine is that it is capable of controlling virtually everything in the production excluding application deployment such as software updates, the configuration of operating systems, setting up of new servers, management of Java-based lifecycles, among others.

LinkedIn SWOT Analysis

In the past few years, LinkedIn Company has shown a tremendous growth compared to other Internet companies in the world. The SWOT analysis of LinkedIn Company is carried out to in the three countries to determine the future of the company.

Strength

United States

Due to the high growth rates shown in the company, LinkedIn is not a feeble company as it was in the beginning. The company’s biggest success in the country can be attributed to its unique product. Additionally, the company has been organized from what can be termed as intangible and informal process into a user-friendly professional social media platform.  While its competitors in the United States only allow users to post jobs in unanimously accessible lists, LinkedIn allows users to customize the kind of applicants that the posts reach (Wee, 2011).  The recruiters in the LinkedIn have the access to shared connections and contact the prospective candidates directly. In the U.S, the LinkedIn’s user traffic has been increasing rapidly, having more than 200 million members. The total number of people using LinkedIn in the United States makes up to 46 percent of the cumulative users.

China

While LinkedIn might not be one of the most used social media platform in China, it has thirteen million users and this indicates a rapid growth since its introduction in the country.  China being a country with many businesspeople, the company offers a great opportunity for businesspeople in the country. LinkedIn is highly business focused and gives it particular benefits compared to other social media platforms (Benner, 2014). Another strength identified in China LinkedIn is that it highly used in marketing, due to its special marketing application for companies in Chinese. Additionally, a Chinese LinkedIn comprises an online workshop, which has increased its benefit in China as social media site. The company’s global English –language site has managed to attract more than four million Chinese without much restriction from the Chinese government.

India

In India, LinkedIn has introduced an exclusive product for young professionals and students known as LinkedIn Placements used to for developing solutions to young people in the Indian community. The product constitutes of more than forty designers and engineers from India, which provides a platform for graduates to connect with employers. The LinkedIn feature allows students to track their suitable job. Another critical strength of LinkedIn in India is that it has opened up a publishing platform to increase its user engagement. Further, the company has published a technology center in India, which maintains critical infrastructure in the international networking site.

Weaknesses

United States

One of the major weaknesses of LinkedIn is its inability to sustain high growth rates in the country. Despite the fact that LinkedIn is a young company that has shown vast growth rates historically, LinkedIn is facing volatility in its performance, which will make its growth rates hard to maintain in the coming days. Additionally, even though stock prices increased since IPO, the company has proved to be highly volatile, and this makes it more likely to be affected by minor changes in the external and internal environment. Moreover, the company is considered as an online recruitment platform and not as a social media site, which limits people from visiting the site.

China

Although LinkedIn has entered into the Asian market, the company has been unable to capture the immense potential in China. Additionally, the company needs to get a new measure that would enhance its current engagement levels (Benner, 2014). Moreover, the current user engagement level in China is rising, and therefore the company needs to improve their user traffic to allow more and more users to visit their site. While LinkedIn’s mobile application has played a part in increasing the user base in China, the company failed to attain a user base traction.

India

In India, there is an inadequate representation of some crucial industries in LinkedIn.  The LinkedIn site in India covers very few professionals who make it have a low user engagement. For instance, niche professional networks such as Physpro for health professionals and DoctorsHangOut are some of the specialists who might not be helped by the site. Additionally, the company is faced with cultural barriers and a weak representation. In India, the LinkedIn users represent a small proportion of 18 percent of the total users.

Opportunities

United State

The company has an opportunity of growing adoption among marketers and corporate customers. Companies have always relied on their career portal, recruitment agencies and job boards to get applicants. Currently, the recruitment sector is drastically changing since the LinkedIn is giving them an opportunity to connect with potential candidates. LinkedIn through advanced search algorithms and tools can help corporate customers connect with their desirable candidates. The new tools like sales navigator can help marketers reach their clients and promote their brand. Further, LinkedIn has a great opportunity in America in terms of increasing premium subscriptions. Although there are very few people subscribed to LinkedIn’s premium services, the increasing number of people registering with the site will increase the subscriptions. LinkedIn has an opportunity of changing attitude towards urbanization and employment.

China

LinkedIn has a big opportunity of increasing its user base and revenue in China through their improved features and mobile app. The company also has an opportunity to attract their users by developing brand experiences based on online and conventional marketing.

India

In India, LinkedIn has a great opportunity of increasing its user base by increasing special features on the site. The company also has an opportunity of increasing user engagement by allowing more activities on the site.

Threats

United States

The biggest threat for the company is increased competition from other well-known social media sites like Facebook and Twitter. Additionally, the company is likely to face reduced revenues as it tries to expand to other developing nations. In the United States, LinkedIn has a possible threat of unreliability of data since the higher the number of users on the site the higher the chances of irregularity of data.

China

One of the major threats that LinkedIn is facing is the new Chinese law, codifies abusive practices, and in return seeks to turn online companies into de-facto state surveillance agent. In China, not all people are interested in online service and therefore disregard what the company offers. The other threat facing the social media site in China is the stiff competition from the commonly used sites such as Weibo and We-Cha.

India

The high cost of research and development is one of the threats that might face the LinkedIn Company in India. High competition from other social media sites like Facebook and Twitter is also a threat that is facing the company. The company is also likely to face reduced revenue in the country as it tries to increase its user base.

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  1. Benner, K. (2014, October 30). How LinkedIn Cracked the Chinese Market. Bloomberg Retrieved from: https://www.bloomberg.com/view/articles/2014-10-30/how-linkedin-cracked-the-chinese-market
  2. LinkedIn Inc. (2011). Form S‐1 Registration Statement. IPO prospectus.
  3. Porter, M. E. (2004). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.
  4. UNESCO. (n.d). Statistics. UNESCO Retrieved from http://stats.uis.unesco.org/ [
  5. United States Census Bureau. (n.d). Population. United States Census Bureau Retrieved from http://www.census.gov/population/popclockworld.html.
  6. Wee, W. (2011, March 22). LinkedIn in Asia: India 9, Australia 2, China 1. Technasia vRetrieved from: https://www.techinasia.com/linkedin-in-asia-india-9-australia-2-china-1-infographic
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