External Business Challenges Assignment

Running head: EXTERNAL BUSINESS CHALLENGES
External Business Challenges
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1EXTERNAL BUSINESS CHALLENGES
Table of Contents
Introduction......................................................................................................................................1
Discussion........................................................................................................................................2
PEST factors................................................................................................................................2
Opportunities...............................................................................................................................4
Challenges....................................................................................................................................5
Summary..........................................................................................................................................5
References:......................................................................................................................................6

2EXTERNAL BUSINESS CHALLENGES
Introduction
This paper has been elaborated on the external environment analysis of a company
based in United Kingdom. The company chosen for this report is Airbnb. Airbnb is widely
known as one of the cheapest and comfortable hotel alternatives. Most of the people rent their
rooms for guests in an exchange of money in order to provide income for the profits and
hosts for Airbnb (Ikkala, Tapio and Airi Lampinen 2015). However, the company is also
facing severe challenges and complications in recent days. This paper will shed light on the
same. The main purpose of the report is to explore the opportunities and challenges presented
by the Russian emerging market for Airbnb in the Indian beverage industry.
Discussion
PEST factors
Political Factors-
 Unregulated housing laws
 Political conflicts
 Tax regulations
 Wars and conflicts in the country
The Russian legal system relies on the statutory laws instead of case law. The main egal
acts of Russia are the federal constitutional laws, the constitution, presidential decrees,
federal laws and governmental regulations.
Economic factors-
 Slow down of the economy
 Local hotel chains present recognizes the threats
 Competitors

3EXTERNAL BUSINESS CHALLENGES
Air Bnb is a leader in Shared economy. It is growing trend where it shares the resources
in between the individuals and the corporations. It is one of the major competitors to motels
and hotels (Lampinen and Cheshire 2016). It offers alternatives for renting that are
comparatively cheaper than the other providers. It has also grown exceptionally in a very
short period of time (Zekanovic-Korona and Grzunov 2014). It serves more than 9 million
people around the world and it really has the potential to serve the Russian market as well.
Social factors-
 Trends in lifestyles
 Change in the frequency of travelling
 Media
 Growth in population
 Ethical issues
Russia has been converted to a democratic character from the autocratic one. Like, the
other parts of the world, there is also change in the trend in lifestyles of the Russian. Airbnb
is social business. It is a platform where the company blends societies and cultures from
several different parts of the globe (Schor and Attwood-Charles 2017). Social media too
plays a very significant role in spreading the voices of both the tenant as well as of the host. It
is operating in 191 different countries (Shuford 2015).
Technological factors-
 Increase in use of internet among the Russians
 Efficient data collection
 Access to Information Technology systems
 Extensive market research

4EXTERNAL BUSINESS CHALLENGES
Russia is rich in scientific tradition and AirBnb depend greatly on technology. The
visitors can go through and book their rooms either through their mobile application or
through the company website (Khaskheli, Jun and Bhuiyan 2017). The tenants also review
their experiences there. The company also makes use of automation. Without the use of
technology, the company would not function so good that it does today.
Opportunities
As it can be seen from the economical analysis under the ‘PESTLE factor’, there is a
notable slowdown in the economy of Russia. This in turn will help the company in causing
more number of travelers to abandon the expensive and costly hotel chains in order to save
their money. Furthermore, the trends in the lifestyle of the Russian people can increase their
frequency of travelling over the world. This will be highly beneficial to the companies like
AirBnb, which relies on such opportunities to increase their income (Ward and Linehan
2013). With the same, it has been seen from the above analysis that there is an ever
increasing amount of users who access internet in Russia. They use internet and social media
every now and then. With the advancement in science and technology, people in Russia could
access to the things anywhere and from everywhere, sitting at their homes alone. They now
seek to access internet for every minor requirement of theirs and so are in case of hotels and
lodging. Russians access internet in order to shop for hotels and rent at the very first. This has
opened up a great opportunity for AirBnb to flourish its business in the Russian market.
Lastly, the access to the Information Technology (IT) system has allowed a more efficient
and effective data collection methods (Sobel and Clark 2017). With the same, it has also
allowed extensive market research in order to address the threats present for it and
weaknesses of its own so as to develop more.

5EXTERNAL BUSINESS CHALLENGES
Challenges
There are many challenges present for AirBnb in the business environment of Russia. The
conflicts in between the local laws and regulations on the housing and the business model is
to be a major threat that is present as this will impact on the overall business of Airbnb in
Russia (Guttentag 2015). With the same, the various types of tax regulations present here
could restrict the business. Like for example, in places like New Orleans and Barcelona, New
York, Airbnb has faced court proceedings and fines as it have failed to follow the laws of
local tourism (Interian 2016). Another challenge present for the company is that like any
other successful companies, the business model could also be copied. With the same, the
increase in the local housing demand has left low amount of hosts’ offering their housing to
the travelers in Russia could act as an obstacle. It is also to be mentioned that the change in
lifestyle of people living in Russia could also have an opposite impact. It can also decrease
the amount of travel of the travelers. With the same under the social factors, the ethical issues
like irresponsible travelers or hosts could bring bad publicity and this would jeopardize the
business image. Furthermore, one of the notable challenges that are also to be considered
under this section is the media. Media can have an influence on the company both positively
and negatively. To consider the negative one, highlighting about the bad or low quality
aspects of the business of the company would affect it in serious ways.
Summary
To conclude it can be said that Air bnb has moved at a fast pace and the business of it
has begun bearing the results in the current years. It is running in profits in the recent years.
However, in the Russian market, Air Bnb too has to face several legal as well as political
issues. As there are several opportunities present for the company to expand in Russia, there
are several threats too that have the potential to destroy the business. But still, the company

6EXTERNAL BUSINESS CHALLENGES
has generated few exceptional social and economic values that are indeed working in favor of
it and it has gained huge popularity in many parts of the world and so it can in the Russia as
well.

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References:
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
Ikkala, T. and Lampinen, A., 2015, February. Monetizing network hospitality: Hospitality
and sociability in the context of Airbnb. In Proceedings of the 18th ACM conference on
computer supported cooperative work & social computing (pp. 1033-1044). ACM.
Interian, J., 2016. Up in the air: Harmonizing the sharing economy through Airbnb
regulations. BC Int'l & Comp. L. Rev., 39, p.129.
Khaskheli, A., Jun, Y. and Bhuiyan, M.A., 2017. M-Commerce and Mobile Apps:
Opportunities for SMEs in Developing Countries. Journal of International Business Research
and Marketing, 2(2), pp.20-23.
Lampinen, A. and Cheshire, C., 2016, May. Hosting via Airbnb: Motivations and financial
assurances in monetized network hospitality. In Proceedings of the 2016 CHI Conference on
Human Factors in Computing Systems (pp. 1669-1680). ACM.
Schor, J.B. and Attwood‐Charles, W., 2017. The “sharing” economy: labor, inequality, and
social connection on for‐profit platforms. Sociology Compass, 11(8).
Shuford, J., 2015. Hotel, motel, Holiday Inn and peer-to-peer rentals: the sharing economy,
North Carolina, and the constitution. North Carolina Journal of Law & Technology, 16(5),
p.301.
Sobel, R.S. and Clark, J.R., 2017. The use of knowledge in technology entrepreneurship: A
theoretical foundation. The Review of Austrian Economics, pp.1-13.

8EXTERNAL BUSINESS CHALLENGES
Ward, A. and Linehan, M., 2013. An Investigation into the Impact of Airbnb on Hotel
Accommodation in the Cork City Area. Tourism and Hospitality Research in Ireland, p.95.
Zekanovic-Korona, L. and Grzunov, J., 2014, May. Evaluation of shared digital economy
adoption: Case of Airbnb. In Information and Communication Technology, Electronics and
Microelectronics (MIPRO), 2014 37th International Convention on (pp. 1574-1579). IEEE.