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Independent University,
Bangladesh

MBA 550
Section 1
Assignment 1

Submitted by:
Name ID
Marzan Islam 2031324

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 Q1. Why is Twitter struggling? What role do industry and firm effects play here?

Answer: Upon becoming public in 2013, Twitter soared up the scale but could not sustain its
initial growth due to being unable to attract more users, especially when compared to
facebook. Among the biggest reason being the lack of interest in advertisers for using it due to
its small user base. The reasons for which, Twitter has struggled and industry and firm effects
are discussed below:

i. Lack of interaction: Twitter has hugely been about gaining followers, rather than
engagement and interaction. Other than celebrities or people well known, it is very
useful to others. For example, everyone would like their favorite actor, sportsman etc
and their tweets are highly awaited. But someone without much followers would
rather use social media to be updated and also interact and engage with general
people, which is not so well possible with twitter. Unlike, other apps like WeChat
etc offer personal touch and privacy in a more entertaining and engaging way.

ii. Lack of expression: Twitter only allows 140 characters in a tweet, which is
insufficient for expressing or sharing views and information. Very limited and
specific information can be shared through twitter and this closes the opportunity for
messaging among general people. The character limit may be enough for celebrities
to share their views and news, but not for normal people for. As a result, twitter
experienced a huge sum of inactive users.

iii. Lack of interest of advertisers: Among the biggest income generators on social
media and internet is advertising. As user specific advertisements are placed on their
wall and feed according to their interests and due to lack of mass users, advertisers
show a lot less interest in Twitter. As brands cannot promote their product to the
target like They can on Facebook and Youtube. This is among the industry affects,
as the industry twitter serves in has been dependent on advertisers to a good extent.

iv. Lack of visual content: Instagram , facebook and other social media apps allow
users to post both photos and videos, which are the cornerstones of social media.

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 while it is little tough on twitter and this keeps its appeal to a low extent. In contrast,
other apps has had a sharp rise in this context.

v. Research: Twitter expensed 44 % of its total investment in research and

development. No other company including Google used this much of their
investment. This led to issues in further development, which may well could have
made this application more interactive and user oriented without something to
which, users had to adjust to. Industry plays a key role in establishing its share value
and costs. Share prices and share transactions are influenced by category of industry.

Firm effects
Firm effects play 55% of role in determining success of a firm. It accounts for the actions and
decisions by managers and internal people.
i. Foreseeing future: Twitters founders and managing directors had failed to foresee
the future of social media though it can be listed among the first entrants in the
industry.

ii. Unique Selling Point: Every app has its own USP, with which it attracts users and
gets it installed in their devices. Twitter never quite aimed for being in every phone
and its unique feature never attracted anyone. Its app is like a news channel, where
the communication is exact and limited.

Industry effects
Industry effects play up to 25% in determining a firm’s success. It accounts for the structure of
the industry, in which the firm competes. In this aspect, twitter had been brought down by its
competitors who developed their own unique features to attract users and this industry’s
biggest customer being the advertisers had not simply been attracted to twitter as there is not
much point in promoting something to celebrities compared to mass public.

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 Q2. What grade would you give Dick Costolo, Twitter’s CEO from 2010 to 2015? Support
your decision with specifics. Also, list some of his leadership strengths and weaknesses.
What recommendations would you have for the new Twitter CEO to be a more effective
strategic leader?

Answer: Dick Costolo deserves a moderately lower grade on the least in this context as he
failed to maintain the value of his company in the capital market. Though, he launched the
company in public, but within a year had experienced a drastic drop in price of share. This
led to his resignation from Twitter, which was left with small number of users and very slow
growth of revenue.

Below a list of strengths and weaknesses of Dick Costolo is listed

Strengths
i. Leadership
ii. Innovative
iii. Development (Taking twitter from start up to public)

Weaknesses
i. Decision making
ii. Inconsistent (Changing strategy time and again)
iii. Confusion
iv. Incapability to solve a problem

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 Recommendations
i. Consistency in strategy: This is vital as it can be tough for a team to suddenly
switch to a new strategy decided by the CEO and this had been a problem earlier.
Therefore, the new CEO must be consistent in his/her choice of strategy.

ii. Communicating objectives: Without objective, it is impossible to achieve success

and this should be driven by the company’s values. Therefore, the new CEO must
decide and communicate his/her objectives to the employees. With which, they will
adopt and act accordingly to achieve the comprehensive goal.

iii. Freedom of choice: A CEO in a company like Twitter must be able to influence
others to voluntarily decide on their own and achieve the objectives targeted. This
would ensure long term success. This very well relates to laizess-faire style of
leadership. But when a company is in such state, employees are needed to act on
own and undertake ventures which bring success and develop products.

iv. Adaptive: A CEO must be able to deal with changes and have the team ready to do
so. This calls for him/her to be adaptive and train accordingly as the business
environment in the industry They serve in is very dynamic.

v. Analytical: Given the dynamism of the social media industry, it is important to

always be analyzing and comparing against a measurement tool to see the
company’s relative position in the market and where it is seen to be heading. A
CEO must be very analytical and count on his/her analytical skills to formulate
proper strategies.

vi. Motivate employees: The CEO needs to show the day-to-day work to employees
and have them energized to make the full use of their capacity to ensure success for

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 the business.

Q3. Why is a good strategy so important, especially at high-tech startups like Twitter? Why
is crafting a good strategy at Twitter so difficult? What are some of the pitfalls that a CEO
of a company such as Twitter needs to watch out for when crafting and implementing a
strategy?
Answer: Technological firms compete in a very dynamic environment given that it is an
industry of innovativeness and out of the box thinking, which at first got them the value
They have.

As like other companies in different industries, They face the same issue crafting and
implementing tactics, but They do it at a lot higher frequency due to the environment,
customer expectation, technical capacities, requisite employee skills and expertise, and
competition intensity. Even though quite often, technological firms now product intangible
products, but progress and strategy is vital for survival.

A strategy can be termed good when its directed actions result in comparative superior
performance to competitors. Twitter is challenged in reaching out and increasing users
against brands like SnapChat, Facebook, Messenger, WhatsApp etc.

Being the CEO, he/she needs to craft implement by analyzing the company’s own
performance and take corrective measures where needed in order to achieve the company’s
vision and mission, objectives, strategy with new ideas and create new opportunities. It
creates room for long term success of the firm and therefore meaningful priorities are
needed to be set.

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 Q4. Apply the three-step process for developing a good strategy outlined above (diagnose
the competitive challenge, derive a guiding policy, and implement a set of coherent actions)
to Twitter’s situation today. Which recommendations would you have for Twitter to
outperform its competitors in the future?

Answer: The three-step process involves analysis, formulate and implement and these are
being done in context of twitter and presented below:

Analysis: Firstly, it needs to identify the competitive challenge lying, increase the number
of users be valued higher by online advertisers. Which has been among the biggest sources
of income for firms in this industry like. Facebook that allows advertisers to place their ads
precisely on demographics and this makes it very valuable to advertisers and companies.
Twitter needs to get to that point and it is its biggest competitive challenge.

Formulation: Twitter needs to formulate an effective plan in response to the challenges and
be consistent. They can respond to it by making sign-up process and use of the services
easier. This had been an issue with twitter and secondly to increase the number of characters
that can be put on in a content or post which definitely will help get more users and explain
conventions on Twitter to a broader audience and rooting out the offensive contents present
as it has been broadly used by celebrities and known personalities.

Implementation: A clear guiding policy should be implemented with a set of planned

actions. Twitter has had bitter experiences in the past with changing the goals, as this
confuses employees which results in an unclear mission followed by frustration among
managers and stuff including engineers, who are the backbone of such business and
therefore failures arise which leads to demotions and increases turnover of key personnel. It
can be concluded that twitter needs to be consistent with its newly formulated strategy and
plans and see to the end of it.

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 Recommendations: Twitter needs to be clear with its vision, mission, values and implement
its strategic plan to achieve its goals. It should develop appropriate tactics, which are the steps
for strategies directives and leverage its knowledge of online social media users experience
and come up with innovative ways to improve the value proposition and outperform the
competitors to attract more users and continue to attract advertisers that facilitate targeted
advertising based on targeted audience.

Twitter must look to integrate external capabilities into its network. It may experience slower
growth unless it goes for takeover acquitting newer companies with smaller user-bases and
create larger potential for growth. These acquisitions should Twitter comparative advantages
in terms of the ability to observe users while supporting services on a strong tech
infrastructure. If properly managed, such acquisitions will grow and its image.

Secondly, it must continue its research and development (R&D) investments to increase its
capabilities to defend cybercrime that puts users of social media services in problem. The
business must look forward to negotiating with governments to open up untapped markets for
it.

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