Sample Case Study Analysis on Strategic Management of Widespace Company

Introduction

Widespace was founded by Patrik Fagerlund and Henric Erhenblad in 2007. The founders of Widespace used their background in mobile technology and business development to create a company that would serve the wireless internet needs in the market. In 2007, Widespace began as a mobile internet advertising company just as the market was starting to embrace the use of smartphones. According to Anderson, Jörgensen, and Olsson (2011), the rapid growth of smartphone users in the market led to the development and increased sales of mobile applications. When Widespace entered the market, it had the opportunity to influence the market since the public and advertisers were not informed about mobile advertising. The company encountered numerous challenges during its initial stages of growth and development since it had to educate the key players in the media industry about the importance of using mobile applications to market their products. Despite having the competitive advantage of being first in the marketplace, Widespace had to engage intensive marketing strategies to reach its targeted consumer base. As technology has advanced in the past decade, Widespace has had the chance to establish itself as a reliable mobile advertising firm making media companies recognize its importance as a medium of marketing. To understand Widespace’s position in the industry, focus will on an industry analysis that will help in assessing the company’s external and internal factors that influence its profitability and business performance.

Strategic Issue Faced by Widespace Company

Widespace faces a significant challenge in expanding its services beyond Sweden. There is increased competition in the mobile advertising industry, which has made it difficult for the company to follow its expansion plans. In addition, the firm’s organizational structure and culture prevent it from growing its market share and gaining a competitive advantage. Most of the company’s employees are located in the headquarter offices in Sweden, which shows that there is an imbalance in its structure. Although the company has an office in Bangladesh, it seems to focus its efforts in Stockholm. The fact that the company’s management is majorly on Stockholm signals a poor marketing strategy (Shankar, Venkatesh, Hofacker, and Naik, 2010). Nonetheless, if Widespace can capitalize on the current opportunities in the market, it can increase its market share, revenue, and competitive advantage.

Analysis of Widespace Company

The mobile advertising industry is expanding alongside the growing smartphone demand. Kim and Lee (2015) assert that the existence of 4G mobile internet networks such as long-term evolution (LTE), high-speed packet access (HSPA), and EV-DO Rev has broadened the existing opportunities for mobile advertising companies. Therefore, Widespace benefits from the increased number of consumers using smart devices since the company acts as a marketing platform that enhances the relationship between consumers and smartphone users. The telecommunication market is evolving into a communication medium supported by the market’s desire to depend on 4G broadband. The widespread use of the mobile web intensifies the competition among key players in the industry. Thus, to understand Widespace’s position in the telecommunication industry, the company’s external environment and strategic resources are evaluated using Porter’s five forces and SWOT analysis.

Porter’s Five Forces

Porter’s five forces model is an analytical tool that helps organizations understand the impact that trends within an industry have on its revenue and business performance. Pervan, Curak, and Pavic Kramaric (2018) explain that Porter’s five forces framework is an important tool applied in the strategic field of the industry by using the economic logic presented. Therefore, the framework contributes to evaluating how the structural features of an industry influence performance (Pervan et al., 2018). Based on Porter’s force model, the competition within an industry is dependent on the five critical elements: the threat of new entrants, the customers’ bargaining power, the suppliers’ bargaining power, the threat of substitute products or services, and the rivalry among competitors (Porter, 1979). The collective strength of these forces defines the degree of competition and profit in an industry.

The threat of new entrants. The telecommunication industry has grown rapidly in the last decade due to the emergence of reliable network technologies. Taylor and Lee (2008) explain that network systems such as Wi-Fi, internet hotspots, and Bluetooth have contributed to the growth and development of the mobile advertising industry. As a result, companies within the mobile advertising ecosystem can map their market base and target consumers within an industry (Andrews et al., 2016). The availability of substantial resources, which support mobile advertisement companies, increases the threat of new entrants. Therefore, Widespace has to implement effective marketing strategies that will enable it to sustain its market share and maintain customer loyalty through the provision of quality services.

The threat of substitute product. The threat of substitute products and services refer to the customers’ ability to identify alternative companies that are willing to offer the same services. In the mobile advertising market, substitute products are the mobile advertising companies that promise their customers to connect with hundreds of mobile users in the market.  The substitute companies that threaten Widespace’s position in the market include GroundTruth, E-novate, Tapjoy, and Kiip. Although Widespace has dominated the marketplace in Europe, the threat of substitutes in the USA, Asia, and South America is quite high, given that GroundTruth, Tapjoy, and Kiip have occupied various countries in these regions, and are among the leading competitors of Widespace.

Competitive rivalry. When Widespace was emerging in 2007, the competitive rivalry was low since mobile advertising had not become popular among media companies. According to Wennberg, Lönnström, and Tersluisen (2016), in 2013, Widespace had recognized mobile advertising as a lucrative business opportunity that would grow in the future due to the increasing media budgets and internet usage. This prediction has come to pass since the current level of competition in media advertising has increased as people spend most of their time on their smart devices. Moreover, the main competitors of Widespace: E-novate, GroundTruth, Tapjoy, and Kiip have intensified the rivalry in the market as they are all marketing tools that allow consumers to advertise their products through mobile apps. Each of these mobile advertising companies addresses specific consumer needs, hence heighten the level of competition. The table below summarizes the competitive rivalry within the industry.

The above table shows a summary of the locations occupied by the competitors and the value of each company in terms of current revenue. The statistics show that the GroundTruth, Tapjoy, and Kiip pose a significant threat to Widespace based on their market occupation in the US and overseas. Even though the mentioned companies specialize in mobile advertising by providing their clients with marketing platforms on user smartphones and tablets, the revenue from each company shows that GroundTruth is leading in market share. Since the industry’s competitive rivalry is intense, Widespace cannot dictate market prices and increase its profits.

Suppliers’ Bargaining Power. Supplier power is determined based on their ability to regulate prices in the market. This refers to the potential that suppliers have and if they are the only ones distributing the raw products and services required within an industry (Grigore, 2014). Grigore (2014) notes that if suppliers have higher bargaining power, they can influence a firm’s income by lowering their profits. The suppliers in the mobile advertising industry are smart device production companies, mobile app developers, and internet network providers. All these suppliers influence Widespace’s capability in providing services to communication media companies. Currently, the suppliers’ bargaining power is low since the industry is saturated by companies that produce smart devices and 4G internet connection. Therefore, Widespace can outsource these resources from a supplier that is reliable and affordable.

Buyer’s Bargaining Power. Buyers can drive Widespace’s prices up or down. The buyer’s bargaining power threatens a firm’s pricing strategy since their numbers and ability to buy from rival companies influence consumer behaviours. Soroa-Koury and Yang (2010) affirm that consumer attitudes and reactions towards media advertisements affect the impact of marketing strategy employed. The growing number of mobile subscribers across the world has led to the increased number of smartphone companies and network providers. The growth has made the mobile advertising industry feasible; since smartphones enhance the exposure of advertisements through the current mobile technologies. Therefore, if consumers have a negative response to the mobile advertising created by Widespace, media communication companies will opt to work with other mobile advertising agencies; hence, reducing Widespace’s revenue.

SWOT Analysis

A SWOT analysis of Widespace evaluates the company’s performance by assessing its strengths and weaknesses concerning how it can connect their customers to potential buyers. The analysis is also used to recognize the current opportunities and threats that may have a positive or negative impact on the company’s future.

Strengths. Widespace has a unique business model that has enabled it to thrive within the telecommunication industry. According to Andersson, Jörgensen, and Olsson (2016), the company has three distinct departments that function concurrently to ensure that the mobile ad network can help clients monetize their sites. The company consists of sales, publisher sales, and technology departments, which are part of its value chain system. These departments are aligned together to facilitate the sales process. Additionally, the technology department is in charge of curating and producing ad campaigns. In contrast, publisher sales are used for creating a lucrative network of mobile apps and sites that are used to sell the inventory. The company’s business model is one of its major strengths that have sustained its performance in the last decade. For instance, the business model has enabled Widespace’s to dedicate itself to use premium technology and produce quality mobile advertising that fulfils the consumer’s value.

Weaknesses. Currently, Widespace mainly operates in Europe with its headquarters in Stockholm, whereas its competitors have diversified their operations globally. Andersson, Jörgensen, and Olsson (2016) assert that the company’s organizational structure is not based on a strategic plan, as most of its staff are located at its headquarters.  Widespace is limited by its inability to employ a global management system that will steer it towards globalization. The existing and emerging competitors in the industry threaten Widespace’s position in the market; thus, the company needs to employ market strategies that will enable it to increase its market base and revenue.

Opportunities. When Widespace first began, it faced numerous challenges emerging from customers’ lack of awareness of mobile advertising. As a result, the company encountered a lot of problems when attempting to educate consumers about mobile advertising and its benefits to a business (Andersson, Jörgensen and Olsson, 2016). However, in recent times the mobile advertising industry has grown due to the advancements in telecommunication. Widespace has the chance to take advantage of the increasing numbers of mobile users and internet providers to expand its mobile advertising services. Currently, the firm specializes in assisting mobile apps and website owners in monetizing their platforms; thus, the company can expand its services by creating a platform that allows brands to engage with their customers directly. This approach will enable the firm to increase its consumer base. Besides, more publishers and developers will be interested in directly interacting with their consumers and finding ways to improve their sales.

Threats. The increasing numbers of mobile users and internet network providers have made the mobile advertising industry a lucrative market for both consumers and businesses. Therefore, the increased competition from emerging firms threatens Widespace’s occupation and consumer loyalty. When customers have a large pool of service providers to select from, Widespace will be forced to reduce its prices to gain competitive advantage and increase its market share. Additionally, consumer attitudes and responses to the advertisement is likely to affect Widespace’s performance in the industry. For instance, if the consumer attitudes and preferences are negative, communication media companies will refrain from working with Widespace; thus, negatively affecting its revenues.

Stakeholder Mapping

Stakeholder analysis is important for Widespace as it will assist the company in identifying ways it can enhance its organizational advantage when engaging with stakeholders. Organizational sustainability depends on the diverse values and input of stakeholders as represented in the actions implements towards the desired objective (Kivits, 2011; Bracken et al., 2015; Cuppen, 2012). Effective stakeholder engagement is important in the success of Widespace as this will ensure that all the relevant parties are involved in achieving the organizational goals and future plans. Each of the stakeholders are important in the decision-making process since their input influences the performance of the firm in the mobile advertisement industry. The chart below shows the specifics of the stakeholder analysis.

Conclusions for Future Direction

Widespace should focus on building its customer base and identify ways it can venture out to global markets other than the US and Stockholm. Grewal et al. (2016) affirm that focusing on the potential customers in the market significantly impacts a mobile advertising firm. Therefore, Widespace ought to recognize that B2C and B2B companies that are outside Sweden have realized the importance of integrating mobile advertising as part of their marketing strategies. According to Maddox (2013), most companies have begun partnering up with mobile applications and websites to facilitate their product and service campaigns. The effectiveness of mobile advertising campaigns and the technological advancements provides Widespace with the opportunity to expand to other countries in Africa, Asia and South America. The company can invest in contextual awareness to inform potential B2B stakeholders how they will benefit by partnering with them to advertise their products and services. Widespace’s business model equips it with the potential to expand its market base beyond Europe and to countries in Africa and Asia that have limited competition. Additionally, the company needs to develop a planned organizational structure that will assist it in diversifying its services to other countries outside Europe. The chart below shows how Widespace can achieve organizational effectiveness in its future endeavours by integrating the model shown in their organization.

Source: Grewal et al. 2016.

Conclusion

Business firms are becoming aware of the importance of mobile advertising. As such, there is a growing need for organizations such as Widespace to adapt to the numerous technological changes to meet the growing consumer needs. Widespace can benefit from its mobile advertising capabilities by implementing marketing approaches that will allow it effectively respond to consumer reactions. As a marketing firm, Widespace has to adapt to the constant shifts experienced in the industry in order to identify and deliver content that is relevant to its target market. The combined impacts of increasing number of mobile users and wide range of internet network coverage and suppliers has increased competition in the industry; thus, requiring Widespace to develop a new strategy that will assist it in gaining a competitive advantage over its existing rivals. Widespace can achieve mobile advertising effectiveness if it can expand its services to other nations and take advantage of the existing opportunities that currently exist in the market place and the industry as a whole. With a strong leadership and sustainable organizational structure in place, Widespace can apply the proposed framework that will assist it in securing its place in the global market.

 

References

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