eHarmony Case

Topic: eHarmony Case (PESTLE, VRIO ANALYSIS, porters 5 forces only diagram)

Introduction

The eHarmony company, founded in 2002, is a prominent dating site, based in Los Angeles. In the personal industry, this firm is in the limelight for many tears due to its uniqueness and differentiated initiatives for the customers. The study examines the environmental analysis to derive insight from the personal industry, VRIO analysis to examine the competitive advantage of the company and evaluate the competitive position through the navigation of porter five forces analysis.

1-Critically analyze and evaluate the macro-environment in which eHarmony operates. What do you believe to be the key drivers affecting the online personals industry? What are the critical success factors for this industry? (Using PESTLE)

eHarmony’s operations can be evaluated through navigations of the macro environment, including political, economic, social, technological, legal and environmental factors. In all these aspects, it seems easy to derive the critical success factors.

PESTLE Analysis for eHarmony

• Political

Political and commercial ties are famous in the personal industry (P 2, Para 1). The government usually provides freedom to all dating sites engage a relationship with people. For Instance, marriage market supports or legitimizes sexual relationships and reproduction (P 1, Para 5). Dr. Warren worked with different organizations, which are politically financed, supported and empowered. The political integration is important for eHarmony and other dating sites, (Piskorski, Hałaburda and Smith, 2008).

• Economical

The economic conditions of the whole United States are good and suitable for the online businesses 5% of 94 million US singles are paying members to date sites (P 13, Para 6).  Due to the income level, according to Waldorf, people make a medium-term relationship, and eHarmony algorithm plays an important role (P 13, Para 6). Thus, economic factors play prominent roles in this industry (Piskorski, Hałaburda and Smith, 2008).

• Social

Personal Industry is containing different segments, such as marriage markets, to integrate with the social needs of people. Interestingly, the companies are targeting some factors such as special state, social, or religious privileges to make segments successful and enhance the visibility of people’s contract. Warren and Buckwalter, to enhance the social integrations, depicts some personality characteristics on the site. Major and minor personality designations on the site are actually a depiction of social values and integration (P 12, Para 3). The company, despite having social insights, uses Dyadic Adjustment Scale to enable the relationship and happiness (P 6, Para 2). It is how this industry works along with some differentiating factors. (Piskorski, Hałaburda and Smith, 2008).

• Technological

The companies in this industry are looking forward to having modern technologies regarding communications and engagement. Communication and recording technology have helped dating sites to present people as the best partner (P 3, Para 3). Young people use technology such as Android apps, internet, and many others. For Instance, on dating site, online daters are younger than the general population and its issues in the rapid use of technology. For example, matching algorithm is a remarkable technology, as management team feed answers into the matching algorithm, the system works automatically, and find the best partner (P 6, Para 2). Accordingly, this organization has a tightly integrated system, which helps to build the personality profile and match the algorithm, the success is triggered by these technological insights, and eHarmony is quite up to it (Piskorski, Hałaburda and Smith, 2008).

• Legal

In online personal industry, all organizations are bound to link with the legislation regarding human rights. The company usually has limited membership due to married and underage people. It may be a case of discrimination (Lawsuit), as people consider it discrimination. California’s Unruh Civil Rights Act comes into the life regarding a controversial membership policy (P 5, Para 4). In addition, the company has also faced lawsuits by gays and lesbians because there are not same-sex matches (P 6, Para 1). Thus, dating sites should keep these legalities and possible lawsuits in the loop. (Piskorski, Hałaburda and Smith, 2008).

• Environmental

eHarmony and other dating sites are intended to create the environment for couples. The example of eHarmony is visible, as, in 2007, it initiated the four-year-old signature campaign. Sharing love stories of couples by dating sites have created an environment, which increases love, attraction, and goodwill (P 8, Para 3).It seems a social responsibility of these firms to bring people closer to each other. Interestingly, the society goodwill can be created if the company demonstrates a perfect match by matching the algorithm, based on the data, derived from the subscribers. Increasing relationship, love, and harmony are good insights for a good social environment (P 8, Para 1) (Piskorski, Hałaburda and Smith, 2008).

In the end, six macro-environmental factors have been discussed. Political stability, technological change, buying trends, linkage with legalities and social responsibility are some key critical success factors

2-What do you believe to be eHarmony’s sources of competitive advantage, if any, and to what extent are these sustainable over the long-term. Use relevant concepts to justify your answer. (Here, use VRIO ANALYSIS, resources and capabilities).

This section revolves around some resources and capabilities, which create a direct impact on the competitive advantage of the company. In this section, some sources of suitable competitive advantage have been identified and critically evaluated.

VRIO Analysis of eHarmony

Resource & Capabilities	Valuable	Rare	Inimitable	Organization Exploitation	Competitive Advantage Impact
Superior Innovation	Yes	Yes	Yes	Yes	Sustainable
Financial Position	Yes	No	No	Yes	Parity
Customer Responsiveness	Yes	No	Yes	Yes	Sustainable
Market segments	Yes	Yes	Yes	Yes	Sustainable
Research & Development	Yes	Yes	Yes	Yes	Sustainable

 

Valuable

All resources and capabilities are valuable to the company. The firm has expressed the superior innovation in operations, which has helped to produce outputs, which have never been experienced before by the customers. It creates value for the customers and the company. Due to churning American marriage market, despite emerging divorce rate, the financial position of the company is good. Sexual, communication, mid-life crises, addiction, and health problems are in the limelight. Due to these issues, people separate and find the new partner. Usually, e Harmony is the best platform for people who suffer from these issues by his/her partner. Thus, this responsiveness of customers is a big cause of sustainable advantage. The management is focusing on new geographical regions to target upbeat segment. In research and development process, for example, eHarmony has worked on biological, sociological, and neurological underpinnings of love to target the customers. The value has been created by these factors

Rare

Innovation, segmentation and research and development are rare for the company because all these aspects depict differentiation. Getting insights regarding physical attraction is rare and inimitable for other competitors and the company is way ahead of its competitors. It seems differentiation in services, which is effective and lucrative. Therefore, the advantage is quite sustainable.

Inimitable

Except, financial position, all resources, and capabilities of this company are inimitable due to immense creativity and innovation. Instead of just demonstrating the value for the customers, it seems pertinent to restrain the competitors from resembling services or operations, and eHarmony did. However, critically, to sustain the advantage, the company has too strict to new things regarding relationship constantly.

Organization Exploitation

This is a fact that the firm has a good management team and contains the readiness to exploit these resources and capabilities. People love to work and face several challenges in this company, which is also one of the top competitive factors. However, due to the changing trends, the exploitation may be slow but it seems steady.

In end, it is to conclude that Sources of competitive advantage can be changed due to the new market and operational trends in the industry. Importantly, the firm is quite capable to sustain the competitive advantage for a long run and serve the customers through unique offering and efficient operations.

3-Diagram for Porter’s five forces for eHarmony

In this diagram, some competitive insights can be evaluated. In this porter five forces diagram, main aspects are bargaining power of buyers, bargaining power of suppliers, threats of new entrants, threats of substitutes, and competitive rivalry. All points have been covered in different shapes.

Diagram for Porter’s Five Forces

In end, this is to conclude that competitive rivalry, supplier power, buyer power and threats of substitutes are quite high in this industry for eHarmony. The threat of new entrants is low. All factors are triggered by the competitive rivalry, which looks high for eHarmony, and the management has to make decisions or strategies accordingly (Piskorski, Hałaburda and Smith, 2008).

Conclusion

In end, this is to conclude that the eHarmony exists in an industry, which contains a potential to let the dating sites gain and sustain the competitive advantage for a long run. Continuous research and development process regarding the customers and market and change with the passage of the time is a big factor to make the company successful in the presence of some dating giants in the United States of America.

Reference

Piskorski, M.J., Hałaburda, H. and Smith, T. (2008) ‘eHarmony’, Harvard Business School Publishing, pp. 1-26.