Individual Research Report on Airbnb Company

This report analyzes Airbnb Company's internal and external environment, including its strengths, weaknesses, opportunities, and threats. It also provides strategic solutions for growth and profitability, such as diversification and product development strategies.

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Individual Research Report
Airbnb Company
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Individual Research Report 1
Contents
Introduction......................................................................................................................................1
Heading 1.........................................................................................................................................1
Heading 2.........................................................................................................................................1
Heading 3.........................................................................................................................................1
Conclusion.......................................................................................................................................1

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Introduction
The purpose of this report is to enlighten the reader about the information about the company
Airbnb. Airbnb is a privately held global company that deals in the hospitality and peer to peer
property rental services. The company is based in San Francisco that operates an online
marketplace and hospitality services that is accessible via mobile apps and websites. Further, the
report evaluates external and information about the company along with options for growth and
strategic solutions for the company. Further, more detail about the report are discussed below:
Part 1: Internal and External Environmental Analysis
PESTEL200
Political: political factors have deep and a global impact on the hospitality industry worldwide.
The political stability of a country always positively affect to the hospitality industry. Stability
portrays ease and safety in the environment due to which people prefer going to such places.
Economic: Better the economic factors, higher the tourism rate. In most countries like Spain,
Thailand etc. the economy of the country works according to tourism rate. Good economic
conditions improve the environmental features of the country that attracts the visitors.
Social: The social factors of a country attract the visitors in the industry. For instance, the culture
of India is rich due to which tourism rises during festive seasons. Fewer features in social or
cultural background reduces the level of tourism (Zervas, Proserpio and Byers, 2017).
Technological: These factors make services in this industry more efficient. As Airbnb make use
of technology to increase the comfortability of visitors that ultimately increases tourism.
Environmental: Sustainability is the key concern in tourism as better the environment condition,
better the tourism rate of the industry.
Legal: regulatory obligations hamper the growth of tourism industry as it acts as a barriers for the
industry in many cases (Guttentag, 2015).

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Porter Five Forces
Bargaining power of buyer: High
There is high bargaining power as the group of visitors can ask the companies to reduce the
package of tours. Buyers also exercise their powers while renting rooms in hotel when required
in bulk (Ert, Fleischer and Magen, 2016).
Bargaining power of Supplier: Low
The suppliers of the power works according to the requirement of the customers present in the
market. They customize the package according the wish of travellers only.
Industry Rivalry: High
There is high degree of industry rivalry because there is low switching cost and low product
differentiation cost as well.
Threat of New Entrants: Moderate
There is moderate degree of threat for new entrants as there is high capital cost but good amount
of profits as well (Liu and Mattila, 2017).
Threat of Substitution: Low
As such there is relatively low as there are few replacements present in the industry.
It should be noted that bargaining power of buyer is most imperative for the Airbnb as it
directly affects their work and profit margin (Oskam and Boswijk, 2016).
Opportunities and Threats
Opportunities: On the basis of PESTEL, the company gains the opportunity to expand their
scope of business in the countries that are rich in heritage and culture. Further, technological
factors also support the functions of the company as it helps them to locate the visitors using
mobile application.
Threats: On the basis of PESTEL analysis, the threat for the company are legal and political
dimensions of the countries. These aspects stagnate the growth of the company in different

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market. Strict political rules make it difficult for the organization to effectively initiate the
business in the external market (McNamara, 2015).
Resource and Capabilities Analysis
The resource and capabilities of an organization helps them to effectively attain competitive
advantage by making use of such capabilities in the company. Technology is the biggest resource
of the company that helps them to grow and diversify scope of business in different parts of the
world. Technology induced in the application of the company helps the travellers to find out
reviews of various restaurants and book a table for them. Further, the company has diversified
resources with the help of which they target people from different segments in order to achieve
success for them. The channels of the company and their service providers also play a major role
in helping the company to meet customer’s expectation in the market (Guttentag and Smith,
2017).
VRIO150
Resources Valuable Rare Imitable Organization Advantage
Brand Management Yes Some
What Yes Yes Temporary
Technological
Expertise Yes Yes No Yes Permanent
Service Quality Yes Yes No Yes Permanent
Diversification Yes Yes No No Temporary
Qualified IT Team Yes Yes No Yes Permanent
Cost effectiveness Yes Yes Yes Yes Permanent
Customer Service Yes No Yes Yes Permanent

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Valuable – Yes, as the services of the company are highly preferred by the customers in the
target market.
Rare – Somewhat, as there are many other organizations present in the market that provide
similar services to the customers.
Inimitable – No, as the technology used by the company is efficient that increases their
competitive advantage in the target market (Bridges and Vásquez, 2018).
Organized to exploit – Yes, as the resources and capabilities are organized in such a way that
they deliver successful results to the company in the target market.
Result = Temporary competitive advantage
Strength and Weakness
On the basis of internal analysis, the strength of the company Airbnb is that it efficiently make
use of technology in the environment to connect with the customers and deliver them services as
well. The weakness of the company is that there is presence of high degree of competition in the
industry (Guttentag, et al. 2018).
Strategic Recommendation
The company should make use of differentiation strategies in the market. Differentiation strategy
will help the company to make use of technology in such a way that they effectively gain
competitive advantage. Differentiation will also help them to create pipelines with the premium
customers and attract skimmed clients (Mody, Suess and Lehto, 2017).
Part 2: Options for growth
Business Success
The company Airbnb is currently at the third level of success where the organization has
achieved desired business outcomes because of effective engagement of employees. At this stage
the hard work of the employees is helping the company to effectively make use of resources and
grow. There is no doubt that the company is successful in the market as it is the most profitable
technological company present in this industry. The company is present at the growth stage

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where they are adequately using the available resources but still have the scope of profitability in
the external market (Lehr, 2015).
Ansoff Matrix
Market Development: Under the market development strategy, the company should aim to
expand the scope of business in different geographical areas by offering different services to
customers in international market. New areas should be considered by the company where they
can expand tourism and invite the visitors in the country. This will help the company to develop
the market base and increase sales as well (Zervas, Proserpio and Byers, 2015).
Diversification: Under the diversification strategy, the company should aim to grow the market
share by diversifying the scope of business using various innovative strategies present in the
market. On the basis of this strategy the company should try to develop the market as well as
product.
Market Penetration: On the basis of market penetration strategy, the company should aim to
penetrate the market in which they are currently present. With the help of this type of strategy,
the company should aim to capture the un-captured customers present in the market in which the
company already exist.
Product Development: With the help of this type of strategy, the company should aim to
diversify the product and service base. The company Airbnb should increase the level of services
that they are providing to the customers in the target market so as to successfully increase their
satisfaction level.
On the basis of Ansoff Matrix Framework, the company should market use of product
development and diversification strategy to expand their scope of business in the target market
(Airbnb, 2018).
Financial Analysis
The company Airbnb is one of those companies that successfully earn their expected targets in
the external market. In the previous year 2017, the company had a profitable cash-flow statement
of $100 million. The profitability graph of the company has increased with their expansion
strategy in the country China. The business model of the company works with minimal

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regulatory controls due to which the company is able to deliver the services to the customers
appropriately. The company charges 9 to 12 % service fee from every guest and they charge 3%
service fee from host to cover the cost of processing payments (Bort 2018). Further, it is keen to
note that in the year 2017, the company earned a profit of $93 million and $2.6 billion revenue
from the international market. Thus, it can be said that the company Airbnb is a highly profitable
organization present in the hospitality industry.
Part 3: Strategic Solutions of Airbnb
Strategic Action Plan
Activity Time Period
(in months)
Manager Growth
Objective
Concerned
Department
Market Analysis 2 Marketing Head Collection of
authentic
information
R&D
Identifying New
Market
Opportunities
1 R & D Head Identification of
market
opportunities
R & D
Defining audience
and prioritizing
groups
3 Manager Deciding target
groups and people
Marketing
Allocating
Resources and
technology to
meet client’s
expectations
4 R & D Head Procuring
Resources
R & D
Product/ Service
Development
Strategies
2 Operations Head Analysing
strategies and
comparing with
the real world
situation
Operations

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Communication
and promotion
with potential
partners
3 PR Manager Attracting
sponsors and
distributors
Public
Relations
Development of
channels/ hosts
1 Sales Head Development of
platforms to make
more effective
sales
Sales
Initiation of Sales
through different
channels
12 Manager Implementing
sales campaign
Management
Viability of Option
According to the above discussed market opportunities and threats, the company should market
use of product development and diversification strategy in the market in order to successfully
grow and sales. Diversification strategy will help the company to grow in different market and
the product development strategy will help the company to increase profitability in the existing
market by making use of innovative practices. The strategies and action plan chosen for the
company Airbnb will be effective because these actions will not hamper and disturb the business
plan instead support the company in its growth plan. These options are feasible and financially
viable because they are easily accessible by the company and cost effective as well
(Airbnbcitizen, 2017).
Longevity of Changes
It should recommended to the company that they should continuously get in touch with
technological innovation to attain success for the company. Innovation and technology are two
most important aspects that help Airbnb to continuously grow and attain profitability in the
market. The changes recommended above can be maintained overtime because they are easily
feasible and approachable by the company. It is sure that these strategies will help the company
to earn revenue so the company will definitely make use of such strategies in the future period to
be in competence (Zekanovic-Korona and Grzunov, 2014).

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Conclusion
Thus, in the limelight of above mentioned events, the fact should be noted that the report
evaluated information about the company Airbnb. The report evaluated internal as well as
external analysis of the company to attain information about the strength, weakness,
opportunities and threats of the company. Further, few strategies along with action plan are
recommended to the company to grow and success in their business objectives.

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References
Bort, J., (2018) Airbnb made $93 million in profit on $2.6 billion in revenue, but an internal
showdown with the CFO has put an IPO on pause [online]. Available from <
https://www.businessinsider.in/Airbnb-made-93-million-in-profit-on-2-6-billion-in-revenue-but-
an-internal-showdown-with-the-CFO-has-put-an-IPO-on-pause/articleshow/62812434.cms>
[Accessed on 18 Dec. 18].
Zervas, G., Proserpio, D. and Byers, J.W., 2017. The rise of the sharing economy: Estimating the
impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), pp.687-705.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
Ert, E., Fleischer, A. and Magen, N., 2016. Trust and reputation in the sharing economy: The
role of personal photos in Airbnb. Tourism Management, 55, pp.62-73.
Liu, S.Q. and Mattila, A.S., 2017. Airbnb: Online targeted advertising, sense of power, and
consumer decisions. International Journal of Hospitality Management, 60, pp.33-41.
Oskam, J. and Boswijk, A., 2016. Airbnb: the future of networked hospitality
businesses. Journal of Tourism Futures, 2(1), pp.22-42.
McNamara, B., 2015. Airbnb: A not-so-safe resting place. J. on Telecomm. & High Tech. L., 13,
p.149.
Guttentag, D.A. and Smith, S.L., 2017. Assessing Airbnb as a disruptive innovation relative to
hotels: Substitution and comparative performance expectations. International Journal of
Hospitality Management, 64, pp.1-10.
Bridges, J. and Vásquez, C., 2018. If nearly all Airbnb reviews are positive, does that make them
meaningless?. Current Issues in Tourism, 21(18), pp.2057-2075.

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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.
Guttentag, D., Smith, S., Potwarka, L. and Havitz, M., 2018. Why tourists choose Airbnb: a
motivation-based segmentation study. Journal of Travel Research, 57(3), pp.342-359.
Mody, M.A., Suess, C. and Lehto, X., 2017. The accommodation experiencescape: a
comparative assessment of hotels and Airbnb. International Journal of Contemporary
Hospitality Management, 29(9), pp.2377-2404.
Lehr, D. 2015. An Analysis of the Changing Competitive Landscape in the Hotel Industry
Regarding Airbnb. [Online] Available at: https://scholar.dominican.edu/cgi/viewcontent.cgi?
referer=https://scholar.google.co.in/&httpsredir=1&article=1189&context=masters-theses.
[Accessed on 18th December 2018]
Airbnb, 2018. Airbnb for Work Expands To Help Companies and Professionals Keep Up With
the Changing Ways We Work. [Online] Available at: https://press.airbnb.com/airbnb-for-work-
expands-sep-2018/. [Accessed on 18th December 2018]
Airbnbcitizen, 2017. Airbnb announces Sustainability Advisory Board. [Online] Available at:
https://www.airbnbcitizen.com/airbnb-announces-new-sustainability-board/. [Accessed on 18th
December 2018]