Renegotiating NAFTA Case Essay
ByteDance Technology Co. must make a decision of whether it plans to
1. Keep Musical.ly a separate company or
2. Merge it with Tik Tok in order to focus on global expansion
ByteDance should make the decision to merge both Musical.ly and Tik Tok because: it can increase focus on company globalization, strengthen defenses against bigger companies (Snapchat, Facebook, etc.) and can create a faster route or more opportunities for monetization.
· Company Globalization
· Company Strategy
· Monetization
The main character of the case has to recommend a decision about if it would be better to keep Musical.ly as a separate platform. Or should Musical.ly be replaced to create a global app under the Tik Tok brand. In this case, they need to decide if they should keep Musical.ly, as a separate platform or they should replace it to create a global app under the brand of Tik Tok. This informs the reader that the character has to decide the Musical ly. In this case, the main aim of the parent company is to gain more and more viewers for their growth.
Given the situation faced by Tik Tok, the case can be analyzed by a decision scenario where the company has to agree to make a decision whether to merge with the musical.ly brand to become part of the Tik Tok brand. Given the history between the two, the two products sell the same product and exist in the same industry as competitors. Merging both markets has a high chance of leading to the rapid growth of the parent company. The other option whereby Tik Tok and Musical.ly exist as separate entities but Tik tok as the holding company would enhance Musical.ly to grow and increase its users in North America, and Tik Tok would increase users from China to other states. The decision will be based on which option favors users of the two products and enhances the growth of the two companies without losing originality and content.
Company Globalization
ByteDance Co. is focusing on the globalization of Tik Tok and providing a platform for users to upload short videos while also creating a personalized and unique experience for each user. The decision to merge both Musical.ly and Tik Tok will broaden these opportunities because it will give Tik Tok the opportunity to enter the U.S market and markets in Europe. With the success of TikTok thus far, there have been many “copycat” in the market that have tried to incorporate similar experiences onto their apps. Merging both apps will create more room for growth with the help of teams that have already worked in different regions and know the market and their users well.
Company Strategy
In this case study we are provided with a deeper understanding of TikTok and how it began to spread. This information helps us deeply understand the background of the company and will help assess if Musical.ly is fit to merge the two brands into TikTok. It is clear that Musical.ly has been a competitor for TikTok and has many users in North America, where TikTok has not gained much popularity. Merging Musical.ly with Tik Tok will allow both user groups to be on a single app and eliminate the high competition in this market in the U.S. Making Tik Tok and Musical.ly a single brand, will likely grow more users in other regions. In addition to that, Tik Tok will gain the strengths of Musical.ly and be able to use them to appeal to other markets and other user groups. Since Tik Tok has gotten some backlash on the quality of the content they provide, Musical.ly’s operating standards can also help in that department.
Monetization
ByteDance CEO is now thinking of ways Tik Tok can begin to bring in revenue. There have been a few partnerships with companies like Tmall and Taobao that provided users a link to buy products from someone’s videos that were uploaded. In other regions, Tik Tok is still creating the user base necessary to begin making money with bigger companies. Despite the efforts in globalizing Tik Tok and engaging new users, TikTok's engagement rate is only 29%, bigger companies like Facebook, Snapchat and Instagram all have engagement rates above 90%. Low participation rates and cross-market differentials will continue to be Tik Tok’s main fight towards monetization. Merging Musical.ly with Tik Tok could help with cross-market differentials by merging two different user bases.
The Middle Option
The middle option to keep Musical.ly and Tik Tok as their own companies has major cons:
· Keeping their separate target audiences can hinder potential global expansion because they will be focused on two separate goals rather than reaching one big goal as a merged company.
· Although both Musical.ly and Tik Tok have proven to be extremely successful, there are still promising competitors that are looking to globally expand and take out either company. Merging both can mean a better chance at global expansion.
· Keeping the companies as their own seems to keep progress stagnant because users will most likely continue to use the app that they are already on and not consider the other option.
Risks
Merging both companies does come with some risks. This can potentially not appeal to the users of Musical.ly who have already established a fan base or comfortability with using the app. There are content creators already invested in the app who might decide to not continue the use of Tik Tok over feeling “annoyed”, as the Harvard case study puts it, at the company decision. In addition to that, there is the possibility that the different networks and audiences do not end up benefiting from each other. This would mean that Tik Tok gained nothing from the Musical.ly acquisition. Carefully analyzing these risks and creating an action plan to minimize them is key for ByteDance’s global success.
Action Plan
The ultimate goal of this action plan is to mitigate the risks that will come with the acquisition of Musical.ly while also maximizing efforts of global expansion.
Short Term
· Announce to both Musical.ly teams and Tik Tok teams that the acquisition will take place but making this a smooth transition being kept top of mind.
· Create a team in the U.S that will focus on bringing the strengths of both companies to be shared as one, on Tik Tok.
· Begin a marketing team with members of both companies from the U.S that will understand how to get users to want to transition to another app.
Medium Term
· Begin the official acquisition of Musical.ly and focus on Tik Tok’s global expansion.
· The marketing team can begin their marketing plan or finish up the last of the plans and then put it in action. This will be essential to the global expansion of Tik Tok since Musical.ly users will need to make a decision on what app they will be using.
· Track company progress of the initial steps that are being taken while also keeping in mind the team’s commitment to the action plan. Workshops or training can be offered/given to employees in order to make sure they are being kept up to date and are willing to do what is required. These workshops can also be used to hear any team concerns.
Long Term
· Listen to the user's feedback on the app and then use that feedback to provide an extra user friendly experience. This can make the difference when competing against other global giants.
· Begin to look at ways to make revenue if Tik Tok has successfully acquired Musical.ly users, created strong defenses against major competitors, and gained global traction.