Impacts of Social Media on Today's Businesses

Impacts of Social Media on Today's Businesses

Edward T. Chen (University of Massachusetts Lowell, USA)
DOI: 10.4018/978-1-4666-9787-4.ch144
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Introduction

The proliferation of social media has significantly changed the way customers and enterprises communicate. Websites such as Facebook, Twitter, and LinkedIn provide businesses with powerful marketing tools that help increase brand exposure and enhance communication both within and outside of an organization. The purpose of this chapter is to explore the impacts of social media on today’s businesses and how the use of social media can help a business, its employees, and customers. Organizational impacts, implications, and future directions of social media will also be discussed.

This chapter is developed by researching literature of social media, especially, the use of social media in businesses. Research indicates that the widespread adoption of social media in businesses will continue to grow because of their tremendous benefits. Organizations will need to integrate social media into their business strategy in order to remain competitive and create policies specific to their own IS structure to be most prepared for the potential risks and benefits.

Social media have the potential to greatly affect many facets of today’s businesses. From upper management decision-making down to the delivery of the service or product, social media have the ability to greatly affect organizational structure. Furthermore, customers have the ability to interact with multiple functional units of the organization and its members in real time. Companies want to find a way to differentiate themselves and connect with customers. Through social media, businesses can deliver a better, more specific product tailored to the needs of their customers (Armstrong & Gao, 2010; Blanchard, 2011; Mayfield, 2008; Pentina, Prybutok, & Zhang, 2008).

Social media can assist an organization to achieve sales goals through expanded marketing and expanding their brand presence to potential customers. Social media applications allow businesses to achieve organizational objectives through a higher level of information sharing (Bateman, Valentine, & Rittenburg, 2013; Capitello, Agnoli, Begalli & Codurri, 2014; Harridge-March & Quinton, 2009; Subramani & Rajagopalan, 2003). Companies seeking to expand their presence can turn to social media applications. These tools allow customers to easily interact with companies from devise running on multiple platforms. Social media technology provides today’s consumers with an easy way to voice their opinions and experiences, positive or negative, online for the entire world to see. Other consumers can reply and react to these posts leaving businesses with an enhanced or tarnished image (Atwood & Morosan, 2015; McAfee, 2009; Pentina, et al., 2008; Taylor, Lewin, & Strutton, 2011; Zadeh & Sharda, 2014).

Businesses are becoming more competitive and efficient within their markets. Businesses need to ensure that company policies are prepared to handle the security and privacy concerns that could arise from the use of these technologies. Organizations must work to overcome potential issues when they open themselves up to social media tools. Businesses integrating social media applications within their organization need to be prepared to properly train employees to ensure that these technologies are best utilized within their organization. If implemented correctly, social media can improve collaboration among employees. Furthermore, social media have helped to facilitate a new way consumers interact with brands, and the way that businesses respond to these interactions (Bhattacharjee, Gopal, & Sanders, 2003; Chou, 2014; Mayfield, 2008; Harridge-March & Quinton, 2009).

Key Terms in this Chapter

Collaboration: Use social media applications to extend the contact of stakeholders, employees, suppliers, and customers. Through social media, individuals are able to find and connect with one another to share ideas, information, and knowledge.

Blogs: Online journals that link together into a very large network of information sharing and exchange.

Business-to-Business: A type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler, or a wholesaler and a retailer. Business to business refers to business that is conducted between companies, rather than between a company and individual consumers. This is in contrast to business to consumer (B2C) and business to government (B2G).

Web 2.0: Applications support collaboration, social networking, social media, RSS, mashups, and information sharing tools.

Business Strategy: A plan articulating where a business looks to reach its goals and how to achieve them.

Customer Relationship Management (CRM): An approach to managing a company's interactions with current and future customers. It often involves using technology to organize, automate, and synchronize sales, marketing, customer service, and technical support.

Social media: A marketing and sales applications to interact with customers and to manage brand reputation.

Virtual World: A computer-based simulated environment intended for its users to inhibit and interact via avatars.

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