Analysis of the Business Model of WeWork

This paper evaluates the business model of WeWork, including challenges in corporate governance, resource management, and managing changes. Recommendations for improvement are also provided.

Analysis of the Business Model of WeWork
Course Title:
Leading and Managing Organisational Resources
Course Code: BSS064-6
Student’s Name:
Aanuoluwapo Oladepo
Student’s ID: 2116080
Date:
4th November 2022.

TABLE OF CONTENT
1.0 Introduction 1
2.0 Evaluation of Challenges 2
Corporate Governance 3
Resource Management 5
Managing the Changes 6
3.0 Issue Analysis: Application of Theories 6
Knowledge Management Improvement 3
Sustainable Leadership Enhancement (Organization Politics) 5
Service Model Redesign 6
4.0 Conclusion 6
5.0 Recommendation 6
6.1 References6

1.0 Introduction
Organizations undergo change regularly in order to accommodate issues presented by the
external and internal environmental conditions of the organization. However, in most
organizations, such changes become ineffective due to inefficient management of change.
Wework, is such a case, which is facing serious issues. WeWork has witnessed years of growth
using a disruptive business model in a quickly changing industry: shared office spaces for startup
businesses and other large organizations, due to its comprehension of workplace trends like the
‘gig’ economy, the advent of millennials and Generation Z within the workforce, increasingly
collaborative office tasks and technology empowered mobility of workers (Brandwein, 2019).
This has made it cater to freelancers as well as multinationals, all the memberships within the co-
working communities and an ecosystem of similar-minded business people. The case permits the
discussion of client-centricity within a B2B service environment, and of how organizations
optimize and digitalize the experiences of the clients by leveraging data.
Hence, the main agenda of this paper is to evaluate the current conditions existing in the
business, and to suggest possible recommendations for improvement. The paper resents an
evaluation on the current issues from various perspectives, such as information systems,
knowledge sharing and management, human resources, and organizational strategy and such.
The paper also suggests some recommendations for improving the present condition faced by the
organization.
2.0 Evaluation of Challenges
 Corporate Governance
WeWork’s business model is effecting its long-term sustainability due to the foreseeable risk of
the shortage in the cash flow and accumulating debts. Like many startups that expand too
quickly, WeWork main concern is around its financial. As stated, the company’s business relies
heavily on private investors, but its business model is rather precarious because the company is
improving the value of property owned by others (landlords) at the expense of their investors
(Muse 2018). To emphasize, the properties with WeWork have experienced quick growth in
value but the company is not capitalizing on that to the fullest (Reader 2019). To elaborate with

Alexander Muse’s summary; WeWork has leased more than 14 million square feet so far and
faced a loss of almost 2 billion in 2018.
WeWork forms subsidiary to represent each lease deal where the lessee only has to guarantee the
lease for 6-12 months on a 15 year agreement (Wong, Huet & Sidders 2018). This allows for
individual locations to terminate without leaving its business with much risk. The bottom line of
its revenue generator of leasing long-term and subletting short-term is somewhat vital to its
business (Alter 2019). To illustrate further, the danger with this business model lies in the fact
that WeWork sign long term leases with the landlords and rent it out on monthly basis, hence, it
operates on a fixed expenses but highly fluctuating revenues (Edwards 2015). Drawing from this,
it can be seen that the risk of this business model is absorb largely (if not entirely) by the
company, and in this case, subsequently the investors. Retrospectively, if WeWork tumbles so
will its landlord (McNellis 2018). Therefore, while its biggest strength is the flexibility of the
office space, it is also one of the greatest threats to its business’s long term sustainability (CB
Insights 2019). Moreover, WeWork’s operation is costly, as alongside with its space renovations,
it also has spending on services, workshops, apps, and not to mention its additional services such
as gyms and schools (Staley 2018). Regardless of concern for its costs, WeWork is approaching
its business like Amazon, where it aims at investing heavily on growth, hoping that profit will
follows (Staley 2018). The company’s timing mismatch also presents risk because as the
recession hit, WeWork would need to pay back $5 billion in 2022 and $13 billion in 2023, which
could lead to the classic run of banking crisis (Pressman 2018). In addition, it is one of the
companies named by the Wall Street Journal that is most likely to fail in an economic downturn
(Amador 2018). While its international growth has enabled increase in its revenue, the massive
spending has also doubled its losses in 2018 to $1.93 billion (Huet 2019; refer to figure 1).
Continuing to lose money, WeWork maintains its exhilarating growth rate after reporting its loss
of $264 million in the first three months of 2019 (Merced 2019).
 Resource Management
A key issue examined in this case is lack of effective management of resources. For example,
WeWork is faced with prospective weakness within its costs of investment because it is
expensive to lease expansive amounts of property at the same time. Particularly in times of
uncertainty such as the present-day cases compounded by the fear of a recession that keeps on
growing, companies have to be concerned. The typical lease period for the company takes more

than a decade and if a recession was to occur, the implication is that the company would find it
so difficult to wrench itself out of the leases it has (Brandwein, 2019). The downside to it is that
it leases to other organizations for just 15 months leaving it so exposed to dangers. Although the
organization makes use of a special delivery vehicle for their long leases to safeguard them from
suits directed at them by the landlords, they still stand to suffer from large capital losses.
WeWork seems not to have suitable corporate governance because it has in several instances
hired people close to the top executive. Furthermore, the CEO has notably cashed out some
substantive amount of finances from his holdings in the company which makes everyone doubt
the longevity of the company.
Considering the resource-based view of the firm, it can be argued that the resource utilisation at
WeWork is below average, resulting in under-utilisation of resources, leading underperformance
of the organisation. The resource-based view of the firm argue that the performance of the firm
depends on the value, rarity, inimitability, and non-substitutability of the organisation (McIvor et
al. 2009). As per this model, it is essential to arrange and coordinate all such resources and
activities in such a manner that produces maximum efficiency at the firm. However, this case
indicates that PB is not capable of utilising such techniques. For example, the previous
management had considerably reduced its human resources to a drastic number, and withdrew its
presence from most profit markets, and stick to the conventional processes and services (Bititci
and Carrie, 2013).
Another key issue evident from the brief, and additional materials is the fact that many
opportunities are present for the company to exploit. For instance, WeWork has the chance to
leverage on the stressed neighbourhoods for the available cheap leases and lend it to others at a
premium price. The company has a market which is concentrated, implying that they have many
locations within one city, but they have covered a few cities (Brandwein, 2019). Whereas it is a
proper business model to maintain growth, it similarly implies that there are some other cities
that the organization can seek entry into in the future. Although it could take time, it will be
more stable than a less concentrated customer base.
Looking at the operation of WeWork, there are threats associated with its model of business.
Since it operates in a somewhat untapped market, the organization must anticipate other
companies to ape their model of business. Nonetheless, the barriers of entry will be somewhat
high because the capital needs for leasing many buildings and workspaces will be very high

(Brandwein, 2019). WeWork must also be cognizant of the imminent recession. As noted, the
company gives short term leases and in the event of a recession, it would dissuade new clients
and lose other old clients. The company must also be cautious with the transforming needs of the
client. It may not be a very serious threat compared to others since office buildings will continue
being there for many years in the future. However, the organization must continue paying
attention to the shifting needs of the clients to offer the best user experiences.
On the other hand, WeWork’s weaknesses are fluctuating revenue, high expenses, and flexible
contract. According to the article “WeWork’s $47 Billion Dream: The Lavishly Funded Startup
That Could Disrupt Commercial Real Estate”, the author mentioned that WeWork offers its
customers with short-term contract. Thus, it can affect the long-term profitability of its business
as its income is vary. After adding amenities, WeWork can offer service to its customers through
partnership such as, 2U, SoFi, Meetup, and Techstar. Also, technologies would enable WeWork
to connect members and to become more convenient for customers to use its app. However, if an
economic turns down, it would have a huge negative impact on WeWork. Because the company
has signed a long-term contract with landlord 15 - 20 years, the company needs to pay to the
landlords even though during the economic downturn or shift in market trends in the future.
 Managing the Changes
Another key issue is that the company is rebranding all activities. Rebranding everything under
the “We” umbrella is not the right move for WeWork especially when they are facing increasing
cost everywhere throughout their operations and do not have enough capital to fund more
activities to continue to grow. Although it is their company strategy to provide the “we”
experience to more than people who use their office space it is not the move for them to expand
into other segments when they are facing enormous amounts of operating cost. If you look at the
financial information provided from the case, you can see that that their operating cost increased
to 3.8 billion dollars while their revenues had only increased to 1.8 billion dollars in a single
year. This type of operation cannot last forever, and it is seen by investors as a risk for them. For
example, in the case it is discussed that WeWorks’s biggest investor Softbank, was preparing to
buy 16 billion dollars of shares of the company in 2018 but ended up backing out of the deal and
only purchased an additional 2 billion dollars more of shares when they had already owned
8billion. One would wonder why Softbanks would back out of a deal when WeWork is

increasing its revenues, and that is because all other operating costs are also increasing much
more rapidly.
There are both pros and cons to having everything rebranded under the “We” umbrella. The
biggest pro of putting everything under one organization is that there is one goal set for the
whole organization. This allows all branches of the company to be under one purpose and
mission statement that can drive them to succeed. WeWork’s mission is to provide people with
better service than competitors and have people enjoy what they are doing even if they are
working. If this is their mission for everything than they will always attract more customers to
their business. The con of this is that WeWork might lose its identity through its expansion into
other segments. Although it is considered to be a real estate company that provides freelancers
the opportunity to have office space without having to deal with any of the hassles that come
with them having to purchase or rent out their own office suite, it is more of a service or
experience provider. WeWork is more of an experience or service provider because they are
providing a certain working environment for their customers and that is one that makes
everything much more pleasing for them to be there. They have built a reputation of meeting
curtain standards to their customers and people expect them to always meet the standards. By
them expanding into other segments such as WeBank they are entering markets they have none
to very little experience thus not allowing them to provide a good service. Along with this they
have studied their core customers and understand what they want, so they cater to them much
more effectively. Having to enter a new market, they would have to gain new knowledge about
that market so they could effectively serve their new customers. It is not ideal for a company
who is already facing huge losses, to continue to expand in size but also try to enter areas it has
no experience in. This inexperience might lead them to inaccurately serve their new market but
as well affect how they serve their current customer base, thus driving them into more loss of
revenue. By branding everything under the “We” umbrella they could also face funding issues to
get other We companies going. As mentioned in the case their investor Softbanks opted out of
investing more money into the company because they probably performed a SWOT analysis on
WeWorks and also probably reviewed the financial statements to conclude they should not be
investing so into the company. WeWork is failing to generate sufficient revenue to keep up with
cost. This causes potential investors to thoroughly think about, whether to invest in them or not.
Another potential pro would be that since they are expanding more into the real estate business

such as there WeLive and WeSleep they already have some information and experience on how
to serve people.
3.0 Issue Analysis: Application of Theories (Area for Improvement)
 Knowledge Management Improvement
While running a B2B business can be very profitable, however, building and sustaining a
successful business can be challenging due to the common problem in maintaining relationships
and avoiding conflicts (Robles 2010). Although it would have been ideal for WeWork to invest
in properties rather than leasing from landlords, but approaching this after eight years of business
partnership is bound to trigger conflicts. WeWork has also wary many investors and brokers in
the way it is running business. At the same time, with so many competitors in the market,
WeWork is accelerating its growth through its rebranding, losing touch of its core business and
brand identity. It can be seen that the company is focusing merely on its growth and expansion
but not enough on relationship management. Therefore, it is important for WeWork to take a step
back and strategically approach this via alignment in its business relationships. The concept of
alignment is an important value creations of between customers and suppliers in B2B marketing
(Cox 2004). It has been found that effectiveness in relationship is largely determined by the
behavior of the buyers and sellers in an attempt to maximize their objectives under situation of
incongruent goals (Eisenhardt 1989; Heide 1994). Relationships act as generators, recipients and
transmitters of change in the networks of business to which this change depends on how
interaction unfolds between parties and relationships which then drives the change in the
evolution of business networks (Havila & Salmi 2000; Hakansson et al. 2009). Therefore,
understanding the source of dissonance between stakeholders is vital to relationship survival
(Medlin 2004). To effectively align interests in B2B marketing, company needs to be able to
identify the key actors in their business networks, then examine and compare the network from
each actor in the relationships to generate valuable insights necessary for relationship
management (Leek & Mason 2009).
 Sustainable Leadership Enhancement (Organization Politics)

Although it is understood that alignment in B2B marketing is crucial, but its implementation is
still difficult (Scherpereel 2006). Researchers have vastly considered alignment as an indicator of
account management performance, which is a desired state that generates positive consequences
for all parties involved (Gosselin & Bauwen 2006). In correspondence to WeWork, divergences
between stakeholders cause problems, hence detecting the misalignment and choosing method to
achieve alignment is essential to the company (Leminen 2001 & Scherpereel 2006). One
understanding is that misalignment often occurs as a results of decision errors and therefore
should be corrected by a realignment (Scherpereel 2006). Another notion is cognitive alignment
which facilitates communication, understanding of behavior, and encourage trust and reciprocity’
all central to business’s success (Storbacka & Nenonen 2011). In addition, when goals between
parties are depicted by high degrees of consistency and compatibility, it elevates effectiveness of
inter-organizational change and connection between relationship activities (Saxton 1997).
Similarly, when goals compatibility is low, conflicts tend to rise and damage further nourishment
of the relationship (Lewis 1990). Along with alignment in business relationships, value co-
creation is another important strategic marketing for WeWork. The importance of value-creation
arises in B2B market as the creation of economic value shifted over the last decades to co-
creating value in the complex service ecosystems (Skålén & Edvardsson 2015). In marketing
development and practice, value co-creation has become a key approach in promoting long
lasting relationships (Frow & Payne 2007). Services platforms such as WeWork, represents the
center of ecosystem of different actors; taking advantage of network externalities through supply
and demand (Lusch & Nambisan 2015). This concept of ecosystem in value creation has moved
from inter-firm competition to a joint approach of competition and simultaneously cooperation
between actors (Adner 2006; Pereira et al. 2017).
 Service Model Redesign
In B2B marketing, value co-creation often describe actor-to-actor ecosystem and the value co-
creation process connecting those actors (Lusch & Nambisan 2015). It is a construct that retains
the evolution of organization towards the development of higher relational orientation and deeper
interaction with their customers (Ballantyne & Varey 2006). The way it functions is the actors
within the network co-evolve their resources and skills in mutual dependency to achieve
effectiveness (Adner 2006). A service ecosystem connect different actors through services which
nurture mutual value creation and shared institutional logic (Lusch & Nambisan 2015). This can
be done in mainly three ways; first, it needs to provide structural flexibility and integrity

allowing for collaboration of actors within the system as well as relationship development
(Tilson et al. 2010). Second, it needs to share standard worldview where actors mutually interpret
the integration of resources and align on resource exchange (Hendriks-Jansen, 1996). Third, the
service ecosystem has to offer architecture of participation through transparency that facilitate
interaction between actors.
4.1 Conclusion
This study and analysis found that the key issues faced by the company lies in ineffective use of
human resources, ineffective process management, lack of understanding about value streams,
inefficient strategies in managing organisational capacity, and inefficient information systems
capabilities for knowledge sharing and communication. Overall, the current strategies followed
by the business is contributing to the issues faced by the business to a large extent. As per the
value stream map created for this paper, it is evident that the internal value creation process in
the organisation is not coordinated or integrated to a centralised command, whereas it is ad-hoc
model structure with each department having different flow of material and process, affecting the
efficiency of engineering and production activities.
Therefore, the desired state of value stream map proposed the integration of both new unit
production and aftermarket parts and services into a single value stream, connected with
information systems and ERP systems. The paper also found that the current strategy followed
by the business is not appropriate for a large company like PB. It is essential for the business to
expand its horizons and grow further through adopting a different strategy like product
development or market development, as the market penetration model followed by the company
is not efficient in promoting growth. Hence, it can be concluded that the current strategy
followed by the company, and its policies and techniques in managing operations are inefficient
to a large extent.
5.1 Recommendation
A number of recommendations were also developed to improve the current situation faced by
wework. It is recommended that the organisation should develop leadership initiatives that will

improve resource management, productivity and performance, with a particular focus on finance
and people. To achieve this, the
organization will need to create initiatives that are sustainable and will have a positive long-term
impact. These initiatives should be designed to improve efficiency and effectiveness in resource
management, and to enhance productivity and performance. Some specific areas that could be
addressed by such initiatives include:
 Improving financial performance through better resource management
 Enhancing productivity through improved resource utilization
 Improving performance through better people management
 Creating a culture of sustainability that supports long-term resource management goals
To be successful, these initiatives must be well-planned and carefully executed. They should be
based on a thorough understanding of the organization & resources and how they are used.
Furthermore, they should be designed to meet the specific needs of the organization and its
people. When designing and implementing these initiatives, it is important to keep in mind that
they should be flexible and adaptable to changing circumstances. They should also be designed
to be scalable, so that they can be expanded or modified as needed to meet the evolving needs of
the organization.
In order to ensure that these initiatives are successful, it is important to involve all relevant
stakeholders in the planning and implementation process. This includes leaders at all levels of the
organization, as well as employees, customers, suppliers, and other key partners. Furthermore, it
is important to ensure that there is buy-in from all stakeholders for the initiatives. Without buy-
in, it will be difficult to get the necessary support for the initiatives, and they are likely to fail.
Finally, it is important to monitor and evaluate the progress of these initiatives on a regular basis.
This will allow the organization to identify any areas where improvements are needed, and to
make adjustments as necessary.
The management can aggressively lower the operational costs of the company to restore investor
confidence to the company. The main role here is refocusing. We work to the main activities.

WeWork can sell the companies that it recently acquired. It can as well sell a private jet that
Neumann used, which symbolized the governance problem in WeWork. There is also talk of the
possible dismissal of 2,000 people and the cessation of experimental offers for coiling or
education. The company will also put up for sale buildings it owns. On marketing, Software, for
example, can be used as a tool to gather complex data from the consumers for evaluation and to
be used in improving services. Sales representatives can place their advertisements on most
digital platforms and reach a big crowd. Online advertisements. WeWork Company can use data
and technology on customer service to advertising their services and products. The company can
use digital platforms for advertisements, for example, television and radio. Many consumers can
access television or radio. Here they can receive information on new products, promotions, or
advancements in a certain product. Technology allows for wide coverage in media services; thus,
a large number of consumers can be reached. To improve quality. Real estate is developing fast.
Wework is seeking to give the best quality of buildings to customers. They are using technology
to come up with buildings that meet the consumers’ demand for cost houses. They are aiming at
giving beautiful and unique structures at affordable prices. WeWork can approach 3D print
houses has seen production cost reduce significantly and quality improved with results
satisfactory to the customers.
A number of recommendations were also developed to improve the current situation faced by
wework. It is recommended that the organisation should develop leadership initiatives that will
improve resource management, productivity and performance, with a particular focus on finance
and people. To achieve this, the
organization will need to create initiatives that are sustainable and will have a positive long-term
impact. These initiatives should be designed to improve efficiency and effectiveness in resource
management, and to enhance productivity and performance. Some specific areas that could be
addressed by such initiatives include:
 Improving financial performance through better resource management
 Enhancing productivity through improved resource utilization
 Improving performance through better people management
 Creating a culture of sustainability that supports long-term resource management goals
To be successful, these initiatives must be well-planned and carefully executed. They should be
based on a thorough understanding of the organization & resources and how they are used.

Furthermore, they should be designed to meet the specific needs of the organization and its
people. When designing and implementing these initiatives, it is important to keep in mind that
they should be flexible and adaptable to changing circumstances. They should also be designed
to be scalable, so that they can be expanded or modified as needed to meet the evolving needs of
the organization.
In order to ensure that these initiatives are successful, it is important to involve all relevant
stakeholders in the planning and implementation process. This includes leaders at all levels of the
organization, as well as employees, customers, suppliers, and other key partners. Furthermore, it
is important to ensure that there is buy-in from all stakeholders for the initiatives. Without buy-
in, it will be difficult to get the necessary support for the initiatives, and they are likely to fail.
Finally, it is important to monitor and evaluate the progress of these initiatives on a regular basis.
This will allow the organization to identify any areas where improvements are needed, and to
make adjustments as necessary.
The management can aggressively lower the operational costs of the company to restore investor
confidence to the company. The main role here is refocusing. We work to the main activities.
WeWork can sell the companies that it recently acquired. It can as well sell a private jet that
Neumann used, which symbolized the governance problem in WeWork. There is also talk of the
possible dismissal of 2,000 people and the cessation of experimental offers for coiling or
education. The company will also put up for sale buildings it owns. On marketing, Software, for
example, can be used as a tool to gather complex data from the consumers for evaluation and to
be used in improving services. Sales representatives can place their advertisements on most
digital platforms and reach a big crowd. Online advertisements. WeWork Company can use data
and technology on customer service to advertising their services and products. The company can
use digital platforms for advertisements, for example, television and radio. Many consumers can
access television or radio. Here they can receive information on new products, promotions, or
advancements in a certain product. Technology allows for wide coverage in media services; thus,
a large number of consumers can be reached. To improve quality. Real estate is developing fast.
Wework is seeking to give the best quality of buildings to customers. They are using technology
to come up with buildings that meet the consumers’ demand for cost houses. They are aiming at
giving beautiful and unique structures at affordable prices. WeWork can approach 3D print

houses has seen production cost reduce significantly and quality improved with results
satisfactory to the customers.
6.1 References
Bititci, U.S., and Carrie, A.S., (2013), Strategic Management of the Manufacturing Value Chain,
New York: Springer.
Dudycz, T., Osbert-Pociecha, O., and Bryce, B., (2015), The Essence and Measurement of
Organizational Efficiency, New York: Springer.
Kumar, D., (2016), Enterprise Growth Strategy: Vision, Planning and Execution, New York:
CRC Press.
Laudon, K.C., and Laudon, J.P., (2015), Management Information Systems (14th edn.), London:
Pearson.
Madanhire, I., and Mbohwa, C., (2016), ‘Enterprise resource planning (ERP) in improving
operational efficiency: Case study’, Procedia CIRP, 40, pp. 225-229.
Markos, S., and Sridevi, M.S., (2010), ‘Employee Engagement: The Key to Improving
Performance’, International Journal of Business and Management, 5 (12), pp. 89-96.
McIvor, R., Wall, A., Humphreys, P., and McKittrick, A., (2009), A Study Of Performance
Measurement In The Outsourcing Decision, London: ButterworthHeinemann.

Olaniyan, D.A,. Ojo, L.B., (2008), ‘Staff Training and Development: A Vital Tool for
Organisational Effectiveness’, European Journal of Scientific Research, 24(3), pp. 326-
331.
Pearson.The WeWork Report. (2019, January 31). Retrieved November 16, 2019, from
https://www.cbinsights.com/research/report/wework-strategy-teardown/#strategy.
Proctor, T., (2014), Strategic Marketing: An Introduction, London: Routledge.
Wallace, P., (2015), Introduction to Information Systems (2nd edn.), London: