Effects of Social Media on Business Growth


Akademische Arbeit, 2019
69 Seiten, Note: 1.0

Leseprobe

TABLE OF CONTENTS

DEDICATION

ACKNOWLEDGEMENTS

TABLE OF CONTENTS

LIST OF TABLES

FIGURE

ABSTRACT

GENERAL INTRODUCTION
1.0 Introduction
1.1 Background of the study
1.2 Problem statement
1.3. Objectives of the Study
1.3.1. General objectives
1.3.2 Specific objectives
1.4. Research Question
1.5. Scope of the study
1.5.1 Domain scope
1.5.2. Geographical scope
1.5.3. Time scope
1.6. Significance of the study
1.6.1. To researcher
1.6.2. Academicians and future researchers
1.6.3. To CIMERWA ltd
1.7. Conceptual framework
1.8 Operational definition of key terms
1.8.1 Social media
1.8.2 Business development

CHAPTER TWO: LITERATURE REVIEW 8
2.1. Introduction
2.1. Theoretical Review
2.1.1 Social media
2.1.2 Social media in a business context
2.1.3 Benefits of Social Media for Businesses
2.1.4 Types of Social Media
2.2 Business Development
2.2.1 Audience
2.2.2 New customers’ engagement
2.2.3 Innovation and quality
2.2.4 Theory on profitability
2.2.5. Measurements of Profitability
2.2.6 Impact of Social Media on Business Growth and Performance
2.3 Empirical review
2.4 Gap Analysis

CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Research design
3.2. Area of the study
3.3. Sampling design
3.3.1 Study population
3.3.2. Sampling techniques
3.3.3 Sample size
3.4 Sources of data
3.4.1 Primary data
3.4.2 Secondary data
3.5. Data collection instruments
3.5.1. Questionnaire
3.5.2. Interview
3.5.3 Documentary review
3.6. Data validity and reliability
3.7.Data processing and analysis
3.7.1. Data processing
3.7.2. Data analysis
3.8. Ethical considerations
3.9. Limitations of the study

CHAPTER FOUR
CHAPTER FOUR: RESULTS ANALYSIS AND DISCUSSION
4.0 Introduction
4.1 Respondents’ profile
4.2 Appreciation of respondents on the types of social media used in CIMERWA Ltd
4.3 Appreciation of respondents on social media effect in CIMERWA ltd
4.4. Appreciation of respondents on the Impact of Social Media in enhancing the company performance
4.5. The relationship between social media and business development within CIMERWA Ltd

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION
AND SUGGESTIONS
5.1. Summary of major findings
5.2 Conclusion
5.3 Suggestion to CIMERWA Ltd
5.4 Areas for further researchers

Reference

APPENDICES

DEDICATION

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ACKNOWLEDGEMENTS

I would like to convey my gratitude to all those who, through their guidance, enthusiasm, encouragement, and patience during the research, enabled me to complete this thesis. I am strongly indebted to TURIHO Jean Claude, my supervisor for his tireless support through my work. I would like to express my gratitude to University of Lay Adventists of Kigali (UNILAK), the faculty of Economic Sciences and Management, department of marketing for their superb efforts to provide highly valued education.

I am deeply indebted to the management and staff of CIMERWA industries ltd for their cooperation and facilitation during my research work.

I wish to record my gratitude thanks to my family especially my mother NYIRAHABIMANA Fortunee, my lovely wife NYIRAMBONIGABA Anitha, my deeply friend NAMAHORO Theoneste, my classmates and friends for their unstilted encouragement, sacrifice and material support in the preparation of this research work, I am extremely grateful for numerous suggestions and complimentary opinions received on this report. I therefore thank you all and may the almighty God reward you accordingly.

Finally, I thank the Government of Rwanda through the Ministry of Education for its efforts to promote education to all Rwandans.

To all of you, mentioned and not mentioned but sincerely contributed to the fulfilment of this study, may our Almighty GOD bless your plans!

LIST OF TABLES

Table 4.1: Respondents age group

Table 4.2: Gender of respondents

Table 4. 3: Distribution of respondent’s level of education

Table 4.4: Respondents position in the organization

Table 4.5: Distribution of respondents by working experience

Table 4.6: perception of respondents on whether there are the users of any social networking sites

Table 4.7: respondents who have personal profile in each social media platform

Table 4.8: The period been using social networks

Table 4.9: The views of respondents on using Social Media and its effects on their social life

Table 4.10: Perception of respondents on whether social networks are important

Table 4.11: Appreciation of respondents on social media effect in CIMERWA ltd

Table 4.12: Influence of Social Media in business development

Table 4.13: Impact of Social Media in enhancing the company performance

Table 4.14: CIMERWA Ltd Profit margin

Table 4.15: Return on Asset

Table 4.16: Return on equity

Table 17: Respondents views on customer loyalty

Table 4.18: The relationship between social media and business development of CIMERWA Ltd

FIGURE

Figure 1: Conceptual framework

LIST OF ABBREVIATIONS, ACRONYMS AND SIGNS

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ABSTRACT

Social media is among the communication channels that companies have adopted and started using in order to improve their performance. Some studies claim that the use of social network sites makes employees happier and therefore, more productive but different studies consider it as a reason for reduced productivity since it can waste time and be addictive. (Accountemps, 2010) these studies argue that using social networking sites reduces productivity in the workplace looked only on at the time wasted as a result of social networking and ignored the possible indirect benefits such as enhanced job satisfaction, higher organizational commitment, lower absenteeism, higher retention rates, higher innovative behaviour and increased productivity. Therefore, this study aimed at analyzing the effect of social media to the business development in the company especially in CIMERWA industries ltd. The specific objectives were to examine the types of social media used in CIMERWA Ltd, to assess the level of development in CIMERWA Ltd from 2016 to 2018, to find out the relationship between social media and business development within CIMERWA Ltd. To achieve the above objectives, a combination of questionnaires and analyzing financial statement and other reports were used. Questionnaires were distributed to a group of 81 respondents selected among the staffs. Convenience sampling technique were applied to staff of CIMERWA. According to the first objective, apparently all the respondents had the unanimous opinion of being a member of one of the social networking sites where 95.1% confirmed this and only 4.9% argued. This indicated the popularity and acceptance social media has among the employees and also show their familiarity with the subject matter. Regarding to the second objective, As pointed out by the respondents its all discussed in table 11 word of mouth publicity on the social media have better impact on the organization in terms of business development through social media with 90.1% strongly agreeing and another 9.9% agreeing with this concept, The findings also show the results for the Return on Equity (ROE) indicates that there is a remarkable an increase in net income at 3,261 and 7,924 and increase in equity for the period of 2016 and 2018. In respect to the objective three, there is a significant relationship between social media and business development especially in CIMERWA ltd. platforms like Facebook, whatsapp, twitter, Instagram, linkedIn strongly influence the development of CIMERWA ltd with a coefficient of Spearman’srho equal to 0. 867.

Keywords: Social media, Business development

GENERAL INTRODUCTION

1.0 Introduction

This chapter provides the general background of the study, problem statement of the study, objectives of the study, research questions, and scope of the study, significance of the study, concept framework and operational definition of key terms.

1.1 Background of the study

The Internet provides a new paradigm for communication and has empowered millions of people to network socially beyond the confines of geographical proximity. Online social networking has moved from a niche phenomenon to mass adoption (Wang, 2009). Social media includes various methods such as social networking, user-sponsored blogs, multimedia sites, company-sponsored websites, collaborative websites, podcasts, etc. From the business perspective for any business, effective networking is an essential component to success (Krush, 2010). Today’s social media tools are bringing rapid change to organizational communication and public relations. Social media networks are enabling businesses to become more socially engaged, exploiting new business model innovation based on firms‟ ability to monetize and extract value from crowd generated data and content. Social media has enabled organizations to establish a stronger relationship with the community of reference, in order to exploit the network effect and harness collective intelligence.

Organizations are now building and maintaining social media public pages to improve their social network salience, enhance interest in their organizations, and build relationships with the online public (Parveen et al., 2015). In this context, social media has turned into the primary drive behind Jordanians connecting to the Internet. The average age of Facebook users in Jordan with over one million users is from 18-24, followed by 25-34 years old, which clears the importance of adopting and utilising the right marketing strategy on social media for organizations in Jordan to cover this vast audience (Stelzner, 2016).

Accordingly, it seems like that the most effective social media platform for over the world organizations is on Facebook, whatsapp, twitter, Instagram, … , which has a varied range of audience with over billions of users. Also, smartphone users are growing every day by using social media platforms for online shopping, socialising, share knowledge and information about products or brands (Al Tawara and Gide, 2017). Accordingly, Agnihotri (2014) argued that social media is a vital marketing tool that will raise marketing efficiency in any organization, for that reason it is an essential need to study how various industries and sectors use social media and the purpose of adopting it. Therefore, many countries must adopt strategies to attain a new, high-quality Internet infrastructure and increase national awareness of the Internet and social media to the organizations by increasing investment in the ICT infrastructure (Berthon., 2011).

These technologies have shifted the emphasis of internet services from being consumption based towards becoming interactive and collaborative, creating new opportunities for interaction between organizations and publics (Henderson &Bowley 2010). Social media has revived more ancient types of decision-making prevalent before the emergence of mass media, when the exchange of opinions between one‟s families, relatives, friends, and neighbours was the basis for product purchase (Dellarocas, 2003). Different from the one-way model of communication in most mass media, social media represents two-way communication between consumers and the materialization of the communication content. As the digital version of word-of-mouth, social media represents the solidification, storage, and retrieval of the word-of-mouth content online (Guesalaga et al., 2009).

1.2 Problem statement

Today, due to the spread of globalization and suppression of trade barriers that used to limit foreign competitors, all companies either those offering services or those offering products are in continuous competitions. One strategy used to make sure that a company beats its competitors through the use of social media in their advertisement (Chive et al, 2008).

Social media is among the communication channels that companies have adopted and started using in order to improve their performance. Despite widespread diffusion and use of ICT and social media in the society, it is not yet reported how and to what extent the social media have contributed to improvement of organizational performance. Some studies claim that the use of social network sites makes employees happier and therefore, more productive (Hudson et al., 2010). while other studies consider it as a reason for reduced productivity since it can waste time and be addictive. (Accountemps, 2010) these studies argue that using social networking sites reduces productivity in the workplace looked only on at the time wasted as a result of social networking and ignored the possible indirect benefits such as enhanced job satisfaction, higher organizational commitment, lower absenteeism, higher retention rates, higher innovative behaviour and increased productivity.

Therefore, with the aim to fill up the above gaps, the researcher sought to investigates the factors that influence the business development through usage of social media and never have there a study that explicitly tackled the problem and this necessitates conducting of the study. A case study carried out in CIMERWA Ltd period 2016-2018.

1.3. Objectives of the Study

The present study is divided into two categories of objectives: General and Specific objectives.

1.3.1. General objectives

The general objective of this study is to assess the effect of social media to the business development in the company.

1.3.2 Specific objectives

(i) To examine the types of social media used in CIMERWA Ltd
(ii) To assess the level of development in CIMERWA Ltd from 2016 to 2018
(iii)To find out the relationship between social media and business development within CIMERWA Ltd.

1.4. Research Question

(i) What are the types of social media is used in CIMERWA Ltd?
(ii) At which extend level of development of CIMERWA Ltd from 2016 to 2018?
(iii)Is there any significant relationship between social media and business development within CIMERWA Ltd?

1.5. Scope of the study

The scope of this research is divided into domain, geographical and time frame.

1.5.1 Domain scope

In regard to the domain, this study assesses the effect of social media to the business development in the company

1.5.2. Geographical scope

In terms of space, CIMERWA ltd is located in Western province, Rusizi District here chosen as case study for this study

1.5.3. Time scope

As for the time, the focus of this research is relatively to 3 years (2016–2018).

1.6. Significance of the study

This study has the benefits not only to the researcher but also to the management of CIMERWA, and all academics.

1.6.1. To researcher

This study helps in gaining an insight into effect of social media on the business development. It is within the expectation of the researcher that information gathered and compiled in this study and served as an eye opener to social media. Now this research is important to me in order to be awarded with a Bachelor degree in marketing.

1.6.2. Academicians and future researchers

The study serves as source of reference for future researchers in advanced studies and to the community by taking into account the findings, results and recommendations. The copy of this research will be available in library of UNILAK and it will be used by other researchers who are interested in this area of research.

1.6.3. To CIMERWA ltd

The study is intended to give recommendations of how CIMERWA-Rwanda can create a better environment needed by using social media. The findings of the study, conclusions and recommendations, are great of importance in improving CIMERWA’s development in particular.

The study finding on social media usage embodies an added knowledge to Rwandan’s institution in general.

1.7. Conceptual framework

According to Colander (2003), a conceptual framework is an analytical tool with several variations and contexts. It is used to make conceptual distinctions and organize ideas. Likewise, conceptual frameworks are abstract representations, connected to the research project’s goal that directs the collection and analysis of data (Shields &Rangarjan, 2013). A concept framework interlinks the two variables dependent and independent.

Figure 1: Conceptual framework

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Source: Researcher compilation 2019

1.8 Operational definition of key terms

The terms in this study are scientifically operationalized to come up with the meaning of each concept under study.

1.8.1 Social media

Social media is a sociological not technological concept. Emerging in the late 1800’s social network analysis flourished as a field of study during the 20th Century and is based on the study of, and interactions within, communities of people. According to social scientists, Social networks are groups or organizations made up of individuals connected by some form of interdependency, such as kinship, friendship, membership status, common interests, beliefs, orientation, profession, political action, knowledge, and location (Livingston, 2016). The individual agents within social networks are known as nodes and the interdependency among nodes forms what is referred to as ties (also known as links or connections). Social capital plays a crucial role in the success of social networks and refers to the strength of the trust, norms, ties, resources, and relationships within a social network with the idea that networks with high social capital have a greater ability to achieve positive outcomes (Bordieu, 2015). In recent decades, the introduction of the World Wide Web has taken social networking to larger, richer, and more complex levels. According to Brian Solis some prominent examples of Social Media are:

- F acebook

Facebook is a popular free social networking website that • allows registered users to create profiles, upload photos and video, send messages and keep in touch with friends, family and colleagues. According to statistics from the Nielsen Group, Internet users within the United States spend more time on Facebook than any other website.

- LinkedIn

LinkedIn is a social networking site designed specifically • for the business community. The goal of the site is to allow registered members to establish and document networks of people they know and trust professionally.

- Twitter

Twitter is a free microblogging service that allows registered • members to broadcast short posts called tweets. Twitter members can broadcast tweets and follow other users’ tweets by using multiple platforms and devices.

- WhatsApp

WhatsApp Messenger is a cross-platform instant messaging application for smart phones. In addition to text messaging, users can send each other images, video and audio media messages. The client software is available for iOS, BlackBerry OS, Android, Series 40, and Windows

Phone. WhatsApp handles two billion messages per day as of April 2012, growing from one billion in October 2011. According to the Financial Times, “WhatsApp has done to SMS on mobile phones what Skype did to international calling on landlines (Cavus, & Ibrahim. 2008)

1.8.2 Business development

Business development entails tasks and processes to develop and implement growth opportunities within and between organizations. It is a subset of the fields of business, commerce and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships (Sørensen, H. E, 2014). Business development can be taken to mean any activity by either a small or large organization, non-profit or for-profit enterprise which serves the purpose of ‘developing’ the business in some way (Davis. C, 2006). In addition, business development activities can be done internally or externally by a business development consultant. External business development can be facilitated through planning systems, which are put in place by governments to help small businesses. In addition, reputation building has also proven to help facilitate business development.

CHAPTER TWO: LITERATURE REVIEW

2.1. Introduction

This chapter concentrates on the overview of existing literature review and the explanation of key words. It focuses on available literature in the field of study by different authors. The classical theory of concepts, also referred to as the empiricist theory of concepts, the classical theory of concepts says that concepts have a definitional structure. Adequate definitions of the kind required by this theory usually take the form of a list of features. Features entailed by the definition of a concept must be both necessary and sufficient for membership in the class of things covered by a particular concept. Then this chapter presents the critical review and research gap identification of the study.

2.1. Theoretical Review

This section discusses the theories related to social media and business development as drawn from several written related materials.

2.1.1 Social media

Social media consisted of a collection of internet-based tools work on web technology and ideological basis which help users to create content and share it with other users (Kaplan and Haenlein, 2010). Social media have several forms and types like; blogs, microblogs, social networks, media-sharing sites, social bookmarking and voting sites, evaluation sites, forums, and virtual worlds (Zarella, 2010). Social media are characterized by user generated content, which has been found to be more effective than traditional marketing communications in influencing the attitudes and behaviours of other users (Thackeray et al., 2008). The use of social media in businesses was considered a failure, but this changed quickly as the rapid increase trend of social media. For instance, over 4 billion internet users exist today of which more than 3 billion users are active in social media (Chaffey, 2018). Therefore, organizations must know how to make use of social media sites to force traffic to their business sites (Weinberg, 2009). Social media first started with LinkedIn in (2003), taken after by MySpace and Facebook in (2004), YouTube in (2005), and Twitter in (2006). In less than ten years, it has achieved billions of users around the world (Barker et al., 2016). People used tools like Facebook and blogs long before organizations became aware of social media and grasped the potential they held (Gonzalez et al., 2015).

Accordingly, using online networking widely spread to organizations and firms as a feature of their systems. For example, Facebook’s vice president of small business stated that paid advertisement of Facebook has become effective and companies should put their efforts to their Facebook page for growing their business and boost the marketing (Loten et al., 2014). Also, 86% of 100 biggest organizations on the Fortune 500 rundown use at least one of the online networking platforms, and 28% of them utilize every online networking platform available (Tsitsi et al., 2013). Accordingly, companies are using social media to promote their products in a new way, and each social media has its distinct purpose that the other media may not have.

2.1.2 Social media in a business context

According to Tallon et al., (2000) IT can contribute toward business growth in regards to process level as IT also assists the communication and coordination, which results in the improvement of process planning and support. In addition, IT can also raise production and operation processes thereby contributing to the growing of economic scale. Besides, markets can become expanded with the help of IT since it establishes, maintains and strengthens customer relationships (Tallon et al., 2000). Social media is a type of new IT technology; the adoption of social media in business will result in driving business growing as it improves the customer relationships (Blanchard, 2013). Cook (2008) has defined social media as “the way in which content (particularly news and opinions) has become democratized by the Internet and the role people now play not only in consuming information and conveying it to others, but also creating and sharing content with them” (Cook, 2008, p. 7). Edosomwan et al., 2011) further added that social media is an development of traditional media, it employs a more advanced digital technologies which enable the user of virtual community to connect, interact, building relationships and work together.

Kaplan and Haenlin (2010) argue that social media is more compelling than other media, the quick and low-cost communication of social media assists in the reduction of uncertainty and create close relationship. Companies use different social media (social networks, blogs, podcasts, wikis, RSS feeds, forums, media sharing and social bookmarking) to promote their services, technologies and applications (Safko, 2010; Kaplan and Haenlein, 2010; Cook, 2008). Kaplan and Haenlein, (2010) further classified social media to different form: social networking sites (e.g. Facebook, LinkedIn); Content communities (e.g. YouTube); Blogs(Twitter); Virtual social worlds (e.g. Second Life); Collaborative projects (e.g. Wikipedia); Virtual game worlds (e.g. World of Warcraft)( Kinyua, C., 2013). Regarding to those social media tools, Jagongo, A.O. and Kinyua, C (2013) point out that half of users using social networking, micro blogging has 29% user, while 20% users utilize other different social media tools and the percentage of Wiki is 1%. Facebook, Instagram, LinkedIn, Snapchat, Youtube and Twitter have attained their popularity in business area (Landström, 2017) as social media gained huge popularity annually, for example, in 2015, Facebook had nearly 901 million users who are activating every month, LinkedIn obtained approximately 161 million members and Twitter had almost 140 million users (McCann, M. & Barlow, A., 2012). The statistics show that a company can take advantage of social media to obtain business worthiness and increase business profit since it is easy for company to use social media to access their target customers anytime and anywhere with a low cost (Kaplan and Haenlein, 2010). Company can incorporate social media for different operational purposes, McCann, M. & Barlow, A., (2015) illustrate that companies communication with customer, build close relationships with older or previous customers, attract new customers, and maintain customer relationships. In addition, social media is used by organizations to promote the product or service of the company, improve brand awareness and grow traffic volume on a website (Reuber, 2015). The significant impact of social media in business has increased the popularity of social media platforms, which contributes to how a company can implement social media to enhance the competitiveness of a company which has been widely discussed. Several studies confirm that firms can boost business growth by adopting social media, both in external and internal collaboration (Smith & Lewis, 2014). Social media is accessible for both skilled and inexperienced people since it is perceived as easy to use and provides simplicity to direction of those various applications (Lacho & Marinello 2013).

2.1.3 Benefits of Social Media for Businesses

Companies can benefit from social media in diverse ways, which can include the following: an increase in its ROI,

a. Productivity Benefits:

When businesses begin to use social media as a marketing tool by building a strong visible digital/online presence, these businesses tends to gain in terms of productivity because they are able to reach to a wider market on the Internet. This in the long run brings about an increase in the business‟ ROI.

b. Increase in Customers/Clientele:

Businesses are able to increase their number of potential customers when they use social media. For example, when one client or customer hits the like button of your company’s page on say Facebook, it is seen on her wall and in all her friends feeds which can intrigue another friend who might probably be not a customer to click on the link to your page to see why his/her friend liked your page and this will not just bring you followers but potential customers as well.

c . Wider Knowledge Pool:

According to KPMG (2009) International publication on Going Social: How Businesses are making the most out of social media, 88.8% of experienced managers believed that social media increased their companies’ knowledge pool.

d. Cost Savings & Insights:

The use of social media can eliminate months of slow and expensive production by getting real- time data and feedback and being able to adjust quickly multiple campaigns to make the highest impact where possible. Also the social media platform will provide the insight you need to know about buyers‟ dynamics and motivations, which can be used to refine and tailor your content to launch rich campaigns.

e. Establishing Brand Awareness

Through social media it is possible to increase the brand awareness among customers as businesses can create awareness by building company image.

f. Cost efficient

When a business in running on a fixed marketing budget, social media is the most cost-efficient way to market and promote the business. Websites like facebook, twitter, pintrest, etc, allow any business to share their content for no cost at all. Hence Social media is an affordable advertising platform.

g. Connectivity

The business will always be connecting to the customers in terms of changing preferences, lifestyles and resources and adapt to the changing interest of the consumers. Companies will also be able to cater to the dynamic interests and innovate on their marketing campaign accordingly

2.1.4 Types of Social Media

According to the Outthink Group [10], there are six (6) types of Social Media, which are as follows:

1. Social Networks:

These are services that allow one to connect with other people who share similar interests and background. Facebook, and LinkedIn are the most popular in this category.

2. Media Sharing:

Media Sharing Services are this category is the type that allows the user to upload and share various forms of media such as videos. YouTube can be said to be one of the most popular form of media sharing in this group.

3. Bookmarking Sites:

Bookmarking sites are sites that allow you to save, organize and manage links to various websites around the Internet. The most popular are Stumble Upon and Delicious.

4. Micro blogging:

These services focus on short updates that are pushed out to anyone subscribed to receive updates. Example is Twitter.

5. Blog Comments and Forums:

We can say that online forums have allowed its members to hold conversations by posting messages. Blog comments are attached to blogs and usually the discussion centres on the topic of the blog post.

6. Social News:

These are services that permit people to post various news items to outside articles and then allow its users to vote on the items. The voting is the core feature of this service as the community decides which news items get seen by more people. An example of such service is Reddit.

2.2 Business Development

Organizations have been spending considerable amount of money, time and other resources to garner the positive effects of social media to further their business opportunities both locally and internationally. Kaplan (2012) finds that sustainable growth of social media has been possible due to the wide spread awareness and availability of high speed internet and the reach and popularity of hand held mobile devices among the consumers. Internet and social media has provided enormous opportunities for people around the world to create, share and disseminate contents, search for information on a wide range of subjects and to keep up to date with the latest development in the business world (Öztamura & Karakadılarb, 2014).

Many organizations have recognized importance social media plays in business development and have started exploring the unique qualities of the web and have promptly shifted their marketing strategies to ecommerce. Today the web and social media has become a place of prominence for products and services promotion and also to attract their target audience (Öztamura & Karakadılarb, 2014). The ever increasing popularity of social media has seen many organizations increasing their visibility and presence on multiple platforms of social media (Michaelidou et al., 2011). Around 26% of consumers from the US suggest that they are willing to accept social networking advertisements that are based on their profile information provided in their personal profiles on the net (Tiago, 2014).

2.2.1 Audience

Social media can communicate information about your product, your service, your business philosophy, your way of doing business, or our unique approach to solving the customer’s problems through mass audience. Advertising would highlight this key difference, explain why it was chosen and how it works, and stress the benefits of this type of network (better performance, higher reliability, greater effectiveness, lower operating costs, etc.) other audience. Service businesses are often successful within communication in audience, (Trainor, 2014).

2.2.2 New customers’ engagement

Customer retention refers to the ability of a company or product to retain its customers over some specified period. High customer retention means customers of the product or business tend to return to, continue to buy or in some other way not defect to another product or business, or to non-use entirely. Selling organizations generally attempt to reduce customer defections (Yanga, 2000).

Increase in customer starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship and successful retention efforts take this entire lifecycle into account. A company's ability to attract and retain new customers is related not only to its product or services, but also to the way it services its existing customers, the value the customers actually generate as a result of utilizing the solutions, and the reputation it creates within and across the marketplace (Yangwei, 2000).

2.2.3 Innovation and quality

One other commonality between quality improvement and innovation processes noted in the literature is that both are often difficult to implement leading to significant lags in the realisation of any related benefits. Pekovic and Galia (2009) comment, for example, that ‘implementation of the ISO 9000 standard … concerns the whole organisation and involves changes in the fundamental behaviour and applied routine of employees’ (Pekovic and Galia, 2009, p. 831). Likewise, innovation may result in short-term disruption before any longer-term performance benefits are accrued by the firm (Roper et al., 2008). Understanding the performance benefits of innovation and quality improvement, and their interactions, is therefore likely to require longitudinal data covering a period of years in which causal mechanisms are clearly identifiable.

2.2.4 Theory on profitability

Positive profitability in companies can be achieved by eradicating waste in benefits services processes and systems. The “critical success factor” for a industry is the degree to which it fulfills its set objectives and mission in terms of being efficient, effective and economical. The information obtained from a sound social media as reflected from financial statements provided a report on profitability and position that is useful to a wide range of users for assessing the stewardship and making economic decisions (Glen dinnig, 1998).

2.2.5. Measurements of Profitability

Profitability of an organization is measured by the profitability and liquidity as discussed below:

Profitability

Profitability is considered as one of a measurement of performance, which is a way to measure institutions profitability. It is simply the capacity to make a profit, and a profit is what is left over from income earned after you have deducted all costs and expenses related to earning the income. Lincoln (1987)

The components of profitability ratio are: Net profit margin, Return on Assets (ROA), Return on equity.

Net profit margin

Often referred to simply as a company's profit margin, so-called bottom line is the most mentioned when discussing a company's profitability. While undeniably an important number, investors can easily see from a complete profit margin analysis that there are several income and expense operating elements in an income statement that determine a net profit margin. It behooves investors to take a comprehensive look at a company's profit margins on a systematic basis.

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Return on Assets

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this referred to as "return on investment"

The formula for return on assets is:

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Return on Equity (ROE).

It is the Second type of ROI. It is similar to the ROA except in one respect. Mere the profit is related to the total capital employed. The term capital employed refers to the long-term funds. The formula for Return on equity is as follows:

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Current ratio

The Current ratio measures a company's ability to repay short-term liabilities such as accounts payable and current debt using short-term assets such as cash, inventory and receivables. Another way to look at it would be the value of a company's current assets that converted to cash over the next twelve months compared to the value of liabilities that mature over the same period. The Current ratio is useful as it shows whether a company has adequate resources to repay short-term debt or if it will experience cash flow problems in the near term.

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Net interest margin

Another commonly watched measure of profitability is called the net interest margin (NIM), the difference between interest income and interest expenses as a percentage of total assets:

Abbildung in dieser Leseprobe nicht enthalten

As we have seen earlier in the chapter one of a primary intermediation functions is to issue liabilities and use the proceeds to purchase income-earning assets. If a manager has done a good job of asset and liability management such that the company earns substantial income on its assets and has low costs on its liabilities, profits will be high.

[...]

Ende der Leseprobe aus 69 Seiten

Details

Titel
Effects of Social Media on Business Growth
Note
1.0
Autor
Jahr
2019
Seiten
69
Katalognummer
V505404
ISBN (eBook)
9783346048011
Sprache
Deutsch
Schlagworte
effects, social, media, business, growth
Arbeit zitieren
Munyandinda Theogene (Autor), 2019, Effects of Social Media on Business Growth, München, GRIN Verlag, https://www.grin.com/document/505404

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