The company being used for this financial analysis is Twitter Incorporation. It is a social networking website within the media and entertainment industry. The purpose of the company is to “give everyone the power to create and share ideas and information instantly, without barriers” (Twitter Incorporated, 2014). This allows for greater widespread use globally. This is significant since the company promotes usage of over 35 languages on its site (Twitter Incorporated, 2014). The financial analysis begins with the SWOT analysis.
The SWOT analysis considers internal and external factors relating to the company’s strengths, weaknesses, opportunities, and threats. To begin with, Twitter was one of the first social media sites available for use. This has allowed it to establish credibility. With this credibility, the brand has been strengthened as a preferred networking site for publicity purposes for well-known celebrities and organizations. However, Twitter does not have the advantage of being able to offer newer features due to its limited business model expansion possibilities. Unequal distribution of Tweets and wide-spread spam is another problem for the continued sustainability of Twitter. However, Twitter has the potential to be the primary communication method for major brands and their consumers. This could send new business towards Twitter, increasing revenue. Twitter needs to be aware of other social media sites and their offerings. This is a tremendous threat to the company, especially as new sites are developed.
The SWOT analysis is designed to determine the strengths, weaknesses, opportunities, and threats in relation to a company. For this report, each factor has its own subsection.
When discussing the strengths of the company, it is important to consider different aspects. For example, strengths may discuss what the company does well, resources the company has, and available competitive advantages. Twitter has several strengths over other social media sites. For instance, incorporated in 2007, it was one of the first social media sites (Twitter Incorporated, 2014). This early establishment has allowed the company to build a strong brand. In return, Twitter is preferred for publicity purposes by celebrities and businesses, establishing and/or increasing credibility for both Twitter and the user. Credibility has also been established through the platform, found by many users to be easy to use. This allows for updates to be completed quickly and concisely. This is important when using the real-time search function, allowing information to be found regarding specific events. This relates to publicity, due to Twitter having over 500 million users, causing it to be one of the most popular websites on the Internet today, especially with 500 million Tweets posted daily (Twitter Incorporated, 2014). Thus, marketing can be done through these Tweets, which may encourage new users to utilize Twitter. With these increases in users, revenue also increases. For example, in 2012, Twitter reported $316,933 thousand in revenue, whereas, in 2013, Twitter reported $664,890 thousand in revenue (Twitter Incorporated, 2013). This marked an increase of $347,957 thousand, showing strong financial growth.
When discussing the weaknesses of the company, it is important to consider those factors that prohibit the company from maintaining their competitive advantage. This also is shown when considering what areas of the company need improvement. For instance, Twitter is not able to offer newer features due to the current business model. The business model has limited expansion possibilities. Furthermore, with older features in the platform, Tweets are distributed unequally. In fact, the top 10% of Twitter users are responsible for 90% of total Tweets (Twitter Incorporated, 2013). Thus, spam is widespread on Twitter. Although this can be blocked on private feeds, spam cannot be blocked when using the search function. The company has taken measures to protect against spam by developing detection techniques to prohibit spam. This largely depends on user reports. Furthermore, Tweets are not always useful. For instance, after eating at a popular fast food place, consumers may Tweet that they ate there. This does not necessarily mean that they need to reach the company. As such, it may be more difficult for brands to continue credibility on Twitter if it is unable to tell Tweets that require responses from those that do not.
When discussing the opportunities of the company, it is important to consider what external factors exist that can lead to company prosperity. Since Twitter has become so popular, it is possible for those that use the platform for publicity purposes to utilize Twitter as the primary mode of communication between the company (brand owner) and consumer (Twitter Incorporated, 2013). This is important when establishing effective consumer/business relationships. This is because, as is noted in the subsection discussing strengths, Twitter gains credibility, which prompts the company to have the opportunity to encourage well-known celebrities and companies (such as Nike) to create accounts that will garner an increase in business. Thus, it is possible for Twitter and other companies to develop new relationships, allowing for integration of services. This can increase revenue for all parties involved. Twitter is useful in different ways. For instance, data can be obtained from Twitter for interested parties for research purposes. For example, an organization may wish to know how many people are knowledgeable about a specific event and utilize data from Twitter to conduct the necessary analyses. This can also be useful when considering stock performances. Oftentimes, since Twitter is real-time, problems within the stock market may be found on Twitter before it shows on Wall Street (Twitter Incorporated, 2014). As a result, information obtained from Twitter may be useful for different research and security purposes.
When discussing the threats of the company, it is important to consider what external factors are beyond the company’s control, such as the threat of new competition. Although it was one of the first social media sites available, Twitter still needs to be aware of the competition provided by other social media sites, such as Facebook or the Chinese version of Twitter, known as Weibo (Twitter Incorporated, 2013). Furthermore, Twitter may find reduced usage outlets as other companies, such as YouTube and Instagram, prohibit sharing on Twitter in order to promote their own individual sites. Twitter will want to be aware of new social media sites that may offer comparable services. Finally, Twitter will need to be aware of its vulnerability to hacking and phishing. This is due to the vast number of users on the site.
- Twitter Incorporated. (2013). Annual Report 2013. Twitter Incorporated.
- Twitter Incorporated. (2014). About Twitter. Retrieved from Twitter: https://about.twitter.com/company