Changing industry structure in the labor market

Two weeks ago the online social network launched its third version. Hundreds of recruiters, students and job-seeking starters got a new interface to connect to each other. In the light of how internet changes an industry structure, I would argue that is an excellent example to illustrate this topic.

So how does it work? Students subscribe for the free online network and get access to an environment where they can create a standardized resume and choose the industries where they are interested in. Then their profiles should be launched. After that it’s up to the recruiters. Many companies have a paid account on in which they can set preferences of which students they want to connect to. When someone meets the requirements, an invitation is sent and a connection is made. The student gets access to the company’s profile and is able to apply for internships, jobs or other opportunities.

Now here is why the industry structure is changing. In the old days it took weeks to find a relevant vacancy and connect to the relevant recruiter. Large companies had more marketing budget and were therefore much more visible than their smaller competitors. Oral skills were sometimes more important at a job interview than actual accomplishments of applicants. But with the standardization of resumes and the automation of the connection process Porters five forces of industry structure are changed.

Barriers to entry are lower, even small companies can easily connect to potential future employees. Through the standardization of resumes companies are able to select in advance which students are of potential interest and search in there database of connections. Bargaining power of the students is therefore reduced and the threat of substitutes is higher. On the contrary students can easily compare different vacancies and get a good overview of what companies offer in their contracts.

For now is only focusing on Dutch students but it is quite logical to think that this kind of networks become available in the future for all kind of segments. I would say it is a step in the good direction, what do you think?



One response to “Changing industry structure in the labor market”

  1. 361640rh says :

    Thank you for your interesting blog post about Magnet Me. It is interesting to see this little start-up growing and given the proven efficiency of this recruitment method, the potential is enormous.

    The business model of Magnet Me has benefits for both students and companies. For students, knowing what to do after university can be very tough, and even if they do, finding the right place to look can be harsh. The same applies for small companies. In contrast to multinational firms, the amount of attention to their often very interesting offers is relatively small. Magnet Me aggregated these two shortcomings in their platform and therewith they facilitate the recruitment process for both parties. Secondly, as you mentioned in your post, the system of Magnet Me replaces the usually time consuming process with a high efficient and goal orientated platform.

    To start answering your question, yes, it think the industry will shift towards this kind of recruitment. At the moment, LinkedIn is the biggest comparable company, but several start-ups like Magnet Me are likely to arise and enter the competition. In order to obtain a sustainable competitive advantage, Magnet Me should actively look for expansion and differentiation. Therefore it would need external investments or become highly profitable. The latter is where I am concerned about.

    From the perspective of customers and companies, the current business model has its benefits. However, the revenue stream of Magnet Me is minimal. They offer their service for free in the first periods and if a company acknowledges its use and wants additional services, Magnet Me charges costs only up to a thousand euros a year. All this money is directly reinvested in business. If they continue this way, my guess is they won’t make it when severe competition arises.

    The thought behind this, according to the CEO, is that expansion is the number one priority. When, at a certain point, the network is bigger and supported by network effects, profitability would come itself.

    What do you guys think? Is it better to focus on expansion while the competition starts to arise, or should they drastically change their business model in order to survive?

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