MAN601: Micro and Macro Factors Affecting Airbnb's Business Strategy

This report provides an in-depth analysis of the micro and macro factors impacting Airbnb's business operations. It begins with a business overview and then delves into the macro environment using the PESTLE framework, examining political, economic, social, technological, legal, and environmental factors. The report then explores the micro environment, focusing on customers, suppliers, employees, competitors, media, and shareholders. It discusses how these factors directly and indirectly influence Airbnb's strategies and performance. The analysis highlights the importance of understanding both controllable micro factors and the less controllable macro factors for overall business success. The report concludes with recommendations for Airbnb to maintain a competitive edge, particularly in the dynamic hospitality industry, and emphasizes the importance of adapting to environmental changes and understanding the link between macro and micro factors. References from academic journals are included to support the analysis.

MICRO AND MACRO FACTORS AFFECTING AIRBNB

Executive Summary
In this paper the link between the macro and micro factors that affect a business is discussed.
The company Airbnb has been able to efficiently manage the micro factors that influence the
business. The macro factors have the most impact on the company as well as on the micro
factors that affect the company. Micro factors are direct whereas the macro factors are
indirect. The macro factors are analysed by using PESTLE and the micro factors by using
customers, employees, suppliers, media and shareholders.
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Table of Contents
Introduction................................................................................................................................3
Business Overview.....................................................................................................................3
Discussion..................................................................................................................................4
Macro.....................................................................................................................................4
PESTLE..............................................................................................................................4
Micro......................................................................................................................................6
Customers...........................................................................................................................6
Suppliers.............................................................................................................................6
Employees..........................................................................................................................6
Competitors........................................................................................................................7
Media..................................................................................................................................7
Shareholders.......................................................................................................................7
Conclusion..................................................................................................................................8
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Introduction
There are many factors that affect the operations of a business. The factors can be
divided into macro and micro. These factors affect the business in different manners, the
micro environment factors have an impact on the business activities directly. The micro
factors have the impact on the daily activities of a business, the macro factors on the other
hand affect the general running of the business. These are the external factors and can have a
dynamic impact on the business as it is continuously changing. The macro factors create an
indirect effect on the decisions that a company takes. The micro factors can be controlled,
whereas the macro factors are uncontrollable. The most significant micro forces that affect
the business is the customers, suppliers, competition and the new companies that are entering
the market. The major macro factors that affect a business is political, economic, social,
technological, environmental and legal. These factors can be assessed by using PESTLE for
macro and the customers, suppliers, employees, competitor, media and shareholders for
micro.
The purpose of this paper is to understand the influence of the macro and micro
factors on Airbnb. Airbnb is a company that provides bed and breakfast to consumers at an
affordable price.
Business Overview
Airbnb is one of the largest market place for having a unique experience in places to
stay and having activities to do. The company has tie up with locals that provide them with
homes that the company provides the consumers for staying. The company has its branches
available across more than 220 countries and regions and the company is trying to promote
the connection that is their between people. They aim to build a community and trust around
the word. The company is in the travel industry, and offers places to stay that are hosted by
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other people. Airbnb is a company that helps people in renting places for a short period of
time when they are going on a vacation. The company offers a place to stay, meals, tickets
and dry cleaning services. The company has changed the way the traditional travel companies
worked and has revolutionised the industry. It is one of the fastest growing travel companies
and is now one of the leading companies in this sector.
Discussion
Macro
PESTLE
Political
There are many political factors that affect the company. There are many laws that the
company has to adhere to survive in the competitive environment. The company in the
United States has been confronted by national laws, where the renting of rooms comes under
the category of being an illegal hotel (Martinez, 2016). The people who are renting the rooms
do not have to pay the hotel taxes and there is an absence of the safety and health standards in
these accommodations.
Economic
Since there has been an economic crisis in many parts of the world, people generally
do not like to spend much money on travelling. The consumers prefer cheaper rooms for their
stay whenever they plan to go somewhere. Airbnb is known to offer cheaper rates for their
rooms that are in some places more luxurious than hotels (Sedlacek, 2016). The company is a
great example to explain shard economy or the collaborative consumption, where there is a
market place for people to share their resources with people who require it for a short amount
of time. The company has managed to provide a lot of people with employment, the hosts and
the employees that they have hired.
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Social
Airbnb can be termed as a place where there is a blend of cultures and societies by
people from different parts of the world. Both the tenants and the host submit a form filled
with their experience and expectations. The role of social media is also huge role in spreading
the experience of the both (Ranjbari, Esfandabadi & Scagnelli, 2019). As there many
countries in which Airbnb is operating there are many issues that also crop up; the hosts and
the tenant both have different cultures and those must be respected by both the parties. The
company to bridge this gap has built community centers where the parties can talk to each
other and share their experience.
Technological
Technology is advancing in the world and Airbnb is using it to its advantage. The
company is using technology to connect the people with each other. They have created an
application where the parties can connect with each other and complete the transaction. The
application verifies the profiles of both the parties to maintain a secure and healthy
environment (Festila & Müller, 2017). Airbnb without technology would not have been able
to achieve the status that it has gained today.
Legal
There are many taxes that are levied on the company like the tourism tax and the
online accommodation sharing services that have an impact on the operations of the
company. The national organisations are also coming up with laws and regulations to ensure
that the company meets the health and safety standards that is to be followed for the proper
stay of the people (Biber, et. al 2017). The local laws, housing laws and the tourism
regulation all must be followed by the company and the hosts to avoid litigation.
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Environmental
The company as mentioned earlier has a shared economy, it is an advisable option to
use for the hosts, the guests and the planet. It reduces the wastage and the energy
consumption. The company has shared the report that the sharing of home had a positive
impact on the environment as they are utilizing the existing resources and are making
travelling more green and eco-friendly.
Micro
Customers
The customers play an important role in the role of the success and reputation of the
company. The user experience that the people have with staying in Airbnb is shared impacts
the company’s image and the status. The price is also impacted by the consumers and their
experience that they have with the company (So, Oh, & Min, 2018). The company as grows,
the impact of the consumers becomes less and less significant. The negative reviews that the
company receives has a collosal influence on the standing of the company. The number of
people using the application has increased drastically in the past years.
Suppliers
The suppliers are the hosts that provide their homes to rent. The hosts are the ones
that decide the price of the homes. The company charges a 3% commission from the hosts.
The company to be the leading service provider must have prices that are competitive to
attract more consumers. The basic working of Airbnb is to attract more suppliers to have
more consumers. The more the suppliers the more the consumers. The company has more
than 600000 listings in the entire world.
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Employees
The company has few employees and is mainly managed through the technology. The
employees do not have much say and opinion in the working of the company. The employees
are there to just have a smooth functioning of the hosting of the rooms (Guttentag, 2015).
They provide assistance to the hosts and the tenants on the renting of the room and how it
functions. The company though without employees cannot have a smooth operation.
Competitors
The main competition of the company is the traditional hotels that provide the
consumers with bed and breakfast and the other rent sharing companies that are coming up to
fill the gap in the market. Airbnb offers a unique experience to the consumers, thus has a
competitive edge over the traditional hotels that are there (Aznar, et.al, 2018).
Media
Media plays an important role in the growth of the business. It aids the company in
reaching out to more consumers and hosts, and to also build a brand image for themselves.
The hosts and the tenants share their experiences and messages on social media sites that
reaches to a mass of people and can make or break the company.
Shareholders
The company mainly received money in the form of funding from different venture
capitalists and has been continuously raising money since it was established and has been
valued at $31 billion in the recent years. It has raised money from Google Capital,
Technology Crossover Ventures and many other such venture capitalists (Zervas, Proserpio,
& Byers, 2015). The company has increased its valuation threefold times since it has been
established.
Recommendation
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The understanding of the micro and macro factors is important in understanding the
business decisions that Airbnb takes to be one of the most liked by the consumers and to have
a competitive advantage over the other companies in the industry. Airbnb aims to create a
community in which everyone can connect, offering local, real, diverse and sustainable safe
journeys. Using this interest, hosts should increase their occupancy rate. The hospitality
industry is complex, with regular fluctuation in prices and demand. Airbnb should evaluate
each month and consider their competitors ' rates, the criteria for listings depending on the
number of visitors during that monthly and the listing of their competitors.
Conclusion
The purchasing power of the customers and the price that the hosts set are also
affected by the economic conditions and the economic factors that are prevailing in the
country. The link between macro and micro factors is important for any company and must
be looked into for the overall growth of the company. The micro factors are controllable and
thus must be controlled in order for it to not affect the company much in a negative manner.
Airbnb can be seen as a perfect example for a company that manages the macro and micro
link in an efficient manner.
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References
Aznar, P., Saveras, J. M., Segarra, G., & Claveria, J. (2018). Airbnb competition and hotels’
response: the importance of online reputation.
Biber, E., Light, S. E., Ruhl, J. B., & Salzman, J. (2017). Regulating business innovation as
policy disruption: From the model T to Airbnb. Vand. L. Rev., 70, 1561.
Festila, M., & Müller, S. (2017, January). The impact of technology-mediated consumption
on identity: The case of Airbnb. In Proceedings of the 50th Hawaii International
Conference on System Sciences.
Guttentag, D. (2015). Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), 1192-1217.
Martinez, L. (2016). A customer-oriented, research based marketing plan for
indiecoach (Doctoral dissertation, NOVA–School of Business and Economics).
Ranjbari, M., Esfandabadi, Z. S., & Scagnelli, S. D. (2019). Sharing Economy Risks:
Opportunities or Threats for Insurance Companies? A Case Study on the Iranian
Insurance Industry. In The Future of Risk Management, Volume II (pp. 343-360).
Palgrave Macmillan, Cham.
Sedlacek, N. (2016). The Sharing Economy: Does Airbnb Pose a Threat to Hotels and Guest
Houses in the Czech Republic? Analysis (Doctoral dissertation, Empire State
College).
So, K. K. F., Oh, H., & Min, S. (2018). Motivations and constraints of Airbnb consumers:
Findings from a mixed-methods approach. Tourism Management, 67, 224-236.
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Zervas, G., Proserpio, D., & 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), 687-705.
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