Porter’s Generic Business Strategies

Snap Inc. is a camera company that lets its users communicate with each other over images and videos. Their hardware Spectacle are sunglasses that record videos and their most popular social media application is Snapchat that gave the company immense popularity. Snapchat allows its users to share images and videos with captions with friends and family, which then disappear after some time, which creates privacy for the users (Heider, Simões and Gram 2017). The company offers tools that allow its users to express themselves through snaps, lenses, bitmojis and geofilters. The company’s chat service offer text chat, voice and video calling, stickers group chat and bitmojis.

1. Snap Inc. Company invents and maintain picture messaging and multimedia mobile app Snapchat. It also develops wearable camera called Spectacles that links the user’s Snapchat account and record and circulate videos. It operates in the hardware and social media industry. Snap Inc. founded on September 16, 2011 by Bobby Murphy and Evan Spiegel is an American technology and social media company. The company was initially named Snapchat Inc. and was rebranded as Snap Inc. on September 24, 2016 to include a vaster range of products under its brand. Presently it has four products, which are Snapchat, Bitmoji, Spectacles and Zenly (Piwek and Joinson 2016). In May 2015 they moved their headquarters to Venice which is known as the silicone beach due to the presence of prominent companies like tinder and whisper. In March 2016, the company acquired bitstrips for $100 million. Google reportedly offered snap $30 million in 2016 for acquisition, which snap turned down. It has its headquarters in Venice, California. On January 2017, the company declared their international headquarters in Soho, London. Snap owns a joint studio at NBC Universal. In 2017, it earned revenue of $824.95 million. The number of employees working under snap inc. is 3,069 as of 2017.Snapchat reportedly revealed that it has 158 million daily users.
2. The CEO of the company is Evan Spiegel. Bobby Murphy is the CTO and co founder. Imran khan is chief strategy officer and Emily White is the chief operating officer. Snap Inc’s internal culture is based on kindness. They encourage group therapy among its staff. In 2017, they started their charity snap foundation. The office setup of the company is considerable unusual, which is considered as a weakness for the company in the future. They do not have headquarters like other companies (Schoja 2016).They use dispersed private houses as their office and the CEO drives around the various offices. The company admits that this might adversely affect the morale of the employees. It is difficult to unite a company when its employees are separated like this into small groups. Spiegel and Murphy plans to retain their full control on the company no stocks are offered for votes. The company seems to acknowledge the difficulty of usage of its product.

1. Contingency approach also known as situational approach is a management concept that was developed by Kieser and Kubicek in the 1960s. It says there is no universally applicable set of management principles to rule a company. The theory suggests that adoption a single rigid style will be inefficient in the end. The contingency approach believes that there is no system that would be best in planning, organizing or leading every organization and that it needs to be customized as per the situations faced by an organization (Shirokova et al. 2016). Research conducted in that period focused on situational factors that influenced structure of organizations and the leadership styles. This theory is beneficial to the organizations because the organizations can learn from the situations and use these learning to influence the future management of similar situations. This theory develops leaders who are able to develop their skills in various areas (Otley 2016). Contingency theory has widened the scope and importance of the leadership theory by emphasizing on the importance of the leadership style. One drawback of the approach is the inadequate availability of literature. It is not adequately recorded the various types of action plans for various situations. Further, the approach is a complex one. However, it simply states that the managers should do as per the situation demands. In practice, it is complex (Shirokova et al. 2016). The situation involves a large number of variables. Therefore, it is a possibility that the manager who is on hectic schedule can overlook a thorough analysis of the variable and resort to easier means which can be harmful to the organization in the long run.
2. Johnson and Scholes (1988) developed a cultural web framework in which they identified the elements that are used to influence and organizations. By analyzing, the factors can explain the environment of the culture. The six elements are:

Symbols- the visual representation of the company like logos, parking space, dress codes, washrooms and so on.

Power structures define the real power holders in the company. These persons hold the great influence on the operations, decision making of the company.

Rituals and routines- this explains what is expected in the company in a certain situation and what are valued. Meetings, board reports and soon can become more habitual then necessary.

Michael porter introduced this concept in 1980. Porter’s generic business strategies are adopted to gain competitive advantage (Wicker et al. 2015). 

Cost leadership strategy- The chief objective of this strategy is to become the lowest cost producer in the industry. This strategy targets the price sensitive customers. This is done by offering the lowest price in the market (Cacciattolo 2014). To succeed in this strategy of offering lowest price yet earning profit the firm must reduce its overall cost. This usually targets a broad market.

Differentiation strategy- this strategy is appropriate where the target clients are not price sensitive (Anderson 2015). These customers prefer products of higher value because they think them to be of superior quality (Bayer et al.  2016). This includes technical expertise, patent property, and talented personnel and so on.  In this the business aims to differentiate with one or small number of target market. This method is suitable for big companies and not small ones (Stelzner 2014). The firm tries to cover the extra costs of the production by offering higher prices to customers who cannot find substitutes of these products easily.

Focus strategy- this focuses on narrow part of the market and attempts to achieve the target either by differentiation or by cost advantage (Moon et al. 2014). The primary motive behind this is that when a small group is targeted specifically, their needs are better fulfilled. The firms using this technique enjoy higher customer loyalty. These firms have a high chance of passing the extra costs to the customers since they have fewer substitutes. Risks that come under this strategy include imitation and changes in the target market.

Strengths

• Snap inc. has built a high brand portfolio, which is very important if the company wants to expand.
• The highly skilled workforce goes through successful training, which makes them, not only skilled but highly motivated as well.
• The various stickers and streaks of snap inc. make it extremely addictive. The visual stimulus of snap inc. is stronger and extremely engaging.
• Snap enjoys some advantage and features over their competition. Their app, Snapchat was the first to feature self-deletion photos and videos.

Weaknesses

• The company has failed to meet the challenges that it faced with the entry of competitors in the market due to which it has lost a share of its target market.
• The financial planning of the company is not efficient. The study of the current liquid asset ratio and asset ratio shows that it can use the cash more efficiently.
• Diversification turned into a loss- snap inc. tried to diversify itself into various areas most of which did not earn profit.  One example of the failure is the snap inc. spectacles.
• Due to the high cost of revenue, the company is facing difficulties in earning profit.
• Most companies in the industry earn profit by advertising however snap’s privacy policy for its customers prohibit them from relying them on advertising.

• The advancing technological advancements can increase the opportunity for snap inc to improve and expand its base
• Expanding Snap Inc’s market to introduce different variety of products would add further opportunities to the company.
• Snap has proven their position in the market by developing innovative technologies like Snapchat and spectacle. They have the potential to become a top leading company by creating many such innovative ideas.

• Snap inc. operates in numerous countries which leaves it open to currency fluctuations
• Users can soon get bored of the app, as there is plenty of competition in the market. Many other mobile apps are following the Snapchat trend of disappearing photos. In this way, snap is constantly facing competition from other companies.

Conclusion

Snap comes across as an innovative company, which might provide users with more innovative and unique technological advancements to its users. It is expected that the company will continue to make revenues in the coming years (Utz, Muscanell and Khalid 2015). With the introduction of Snapchat, the company has earned immense expectation and it will need a lot of effort to keep up that expectation and keep innovating themselves. At the same time, the huge popularity of Snapchat might add to the pressure of matching up to the expectation. The future of snap depends on how well they are able to continue creating innovative products.

References 

Anderson, K.E., 2015. Getting acquainted with social networks and apps: Snapchat and the rise of ephemeral communication. Library Hi Tech News, 32(10), pp.6-10.

Bayer, J.B., Ellison, N.B., Schoenebeck, S.Y. and Falk, E.B., 2016. Sharing the small moments: ephemeral social interaction on Snapchat. Information, Communication & Society, 19(7), pp.956-977.

Cacciattolo, K., 2014. Understanding organisational cultures. European Scientific Journal, ESJ, 10(10).

Moon, H.C., Hur, Y.K., Yin, W. and Helm, C., 2014. Extending Porter’s generic strategies: from three to eight. European Journal of International Management, 8(2), pp.205-225.

Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, pp.45-62.

Patel, S., Bewley, S. and Hodson, N., 2016. Snapchat is not for sharing. BMJ, 352, p.i1543.

Piwek, L. and Joinson, A., 2016. “What do they Snapchat about?” Patterns of use in time-limited instant messaging service. Computers in Human Behavior, 54, pp.358-367.

Schoja, V., 2016. Snapchat: Case Study with Teaching Notes. Anchor Academic Publishing.

Shirokova, G., Bogatyreva, K., Beliaeva, T. and Puffer, S., 2016. Entrepreneurial orientation and firm performance in different environmental settings: contingency and configurational approaches. Journal of Small Business and Enterprise Development, 23(3), pp.703-727.

Stelzner, M., 2014. 2014 Social Media Marketing Industry Report. Social media examiner, pp.1-52.

Utz, S., Muscanell, N. and Khalid, C., 2015. Snapchat elicits more jealousy than Facebook: A comparison of Snapchat and Facebook use. Cyberpsychology, Behavior, and Social Networking, 18(3), pp.141-146.

Wicker, P., Soebbing, B.P., Feiler, S. and Breuer, C., 2015. The effect of Porter’s generic strategies on organisational problems of non-profit sports clubs. European Journal for Sport and Society, 12(3), pp.281-307.