An online social network is a venue on the internet designed for interactions among members of a community. Hundreds of millions of people across the world engage in social networking to connect with each other making this relatively new practice a significant part of our lives. This year online social network membership is expected to include 50% of internet using adults and 84% of internet using teenagers. This study compares several factors relating to the two sectors of the online social networking industry, which are niche and generic websites. The analysis of these factors is used to conduct a five forces analysis on the industry. The analysis attempts to determine the competitive environment, the current state of the industry and where it might be heading. It was found that users of niche networks showed much higher levels of loyalty meaning switching costs for niche users were higher than for generic users. Niche users also showed much higher levels of engagement than generic users, which potentially will generate higher levels of profits as social networking grows. The five forces analysis concluded that the industry is an attractive one to enter if the entrant pursues a niche strategy, can cope with strong supplier forces, and can effectively build a large as well as highly engaged member base, thus generating very high traffic and profits.
Bibliography : p. 64-66
Bachelor of Arts