LinkedIn is the world’s largest network that helps professionals connects with each other through one platform. Operating for more than 15 years now and with users from every corner of the world, LinkedIn has been made available in various languages to make it convenient for the user. The social network helps you maintain a professional profile, look for jobs, look for people to hire, or just connect with other professionals for sharing of ideas.
Porter’s five forces model was designed by Michael Porter, and the model explains a company’s position in the industry that it is operating in by the five forces that can affect it in any way. The porter’s five forces model for LinkedIn can be explained below:
|
Porter’s Five Forces |
Intensity |
|
Threat of New Entrants |
High |
|
Threat of substitute products and services |
Moderate |
|
Bargaining power of customers |
Low |
|
Bargaining power of suppliers |
Low |
|
Rivalry among existing firms |
Moderate |
Threat of New Entrants
With increasing use of social networks for various purposes, the threat of new entrants for LinkedIn has increased. Especially when existing social networks like Facebook are coming up with new services, there is a huge chance that it might enter the market that LinkedIn is operating in and might start offering job ads in the future. Other job seeking websites like Glassdoor, Monster.com have been operating in the industry, although LinkedIn has its own fair share of the market, there is a probability that similar networks can enter the market and be a threat to LinkedIn. So in order to maintain its position in the market, LinkedIn should keep on improving and adding new features to the service that they are offering so that the cluster of information is not created.
Threat of Substitute Products and Services
Substitutes that already exist in the market include all the job search engines, though LinkedIn enjoys its position and is the most convenient and useful network for it, these search engines still pose a slight threat to LinkedIn’s market. Additionally, other social networks like Facebook and Twitter are extensively used by various companies to market their job opportunities and the users also find it very suitable to follow up with the companies on those networks. Many companies have started using online marketing through Facebook ads to promote their job opportunities. Although they still require the professionals to maintain a profile on LinkedIn, they have found an alternative way to attract professionals towards their companies.
Bargaining Power of Customers/ Buyers
The customers for LinkedIn are mainly professionals who want to market themselves in the job market and to connect to various companies online. The bargaining power of customers in case of LinkedIn is low, since LinkedIn is the leading network in terms of the needs of the customers. However, the switching cost for the customers is very low; they still do not have a lot of substitutes to switch to. With the increasing number of users on the network, it is growing more than all other substitute job search engines. Moreover, LinkedIn has been updating its services, changing with the needs and demands of the people which give no reason for customers to switch so they have low bargaining power in case of LinkedIn.
Bargaining Power of Suppliers
The suppliers for LinkedIn can be certain software providers or suppliers that help them deliver their services to the consumer, or help them connect to the employers and job seekers. With the increasing trend of online service providers, suppliers have very low bargaining power in case of LinkedIn. LinkedIn has the edge of being the best service provider in terms of connecting the professionals, so it has certain power over its suppliers as the suppliers would not want to lose such a client.
Rivalry Among Existing Firms
Even though LinkedIn is leading in terms of its competition with other job searching platforms in the industry, there is a moderate level of rivalry present between LinkedIn and other networks available. Since the dynamics of the online service providers market is changing with each seconds and competition present in the industry is constantly trying to cope with the new changes, it is important for LinkedIn to maintain its position in the market by offering new services according to the needs of the consumers. When it comes to operating worldwide, LinkedIn is the leader, but there is intense competition when it comes to local market from the local service providers.