Strategic Management and Leadership: A Case Study of Airbnb

Running head: STRATEGIC MANAGEMENT AND LEADERSHIP
STRATEGIC MANAGEMENT AND LEADERSHIP: A CASE STUDY OF AIRBNB
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STRATEGIC MANAGEMENT AND LEADERSHIP1
Table of Contents
Introduction............................................................................................................................ 3
Overview of Airbnb.................................................................................................................3
Challenges faced by Airbnb....................................................................................................4
Success and Balanced Scorecard..........................................................................................7
Finance............................................................................................................................... 7
Customer perception towards the services offered by Airbnb.............................................8
Internal Processes.............................................................................................................. 9
Reasons for the success........................................................................................................9
Safety............................................................................................................................... 10
Customer satisfaction.......................................................................................................10
Use of digital marketing strategies....................................................................................10
Cost Cutting...................................................................................................................... 10
Cost Competitiveness.......................................................................................................11
Value Chain Analysis........................................................................................................... 11
Primary Activities.............................................................................................................. 12
Inbound Logistics.......................................................................................................... 12
Operations..................................................................................................................... 12
Outbound Logistics........................................................................................................12
Marketing and Sales......................................................................................................12
Services........................................................................................................................ 13
Secondary Activities......................................................................................................... 13
Firm Infrastructure......................................................................................................... 13
Procurement.................................................................................................................. 13
Technology.................................................................................................................... 13
Human Resource Management.....................................................................................13
VRIN Analysis...................................................................................................................... 14
Leadership and its contribution towards the success attained by Airbnb..............................17
Porter Generic Strategy........................................................................................................17

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Cost Leadership................................................................................................................ 17
PEST Analysis...................................................................................................................... 17
Conclusion........................................................................................................................... 18
References........................................................................................................................... 19

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Introduction
As stated by Aaker (2019), the modern-day business enterprises are using different
kinds of disruptive technologies as well as innovative business ideas for the purpose of
attaining a higher amount of profitability. Forgacs and Dimanche (2016) are of the viewpoint
that the change or the transformation that the contemporary business world had undergone
over the years not only manifests itself in the kind of commodities which are being offered by
them but at the same when an analysis of the business models or processes used by them
is undertaken. In this regard, it can be said that the different business enterprises rather than
focusing the traditional brick and mortar model of business are using the e-commerce
business model and others which would be more in conjunction with the requirements or the
expectations of their clients or customers (Lee, 2016). This in turn had also necessitated a
change within the framework of the services or products which are being offered by them
and it is seen that they are increasingly using the constructs of market surveys and others to
gather the data or information regarding the expectations or the demands of the customers
from the commodities or services offered by them. More importantly, it is seen that the
business leaders associated with the business firms are increasingly wielding a significant
amount of influence on the business operations or activities and thereby have become
pivotal for the effective performance of the firms (Kwok & Xie, 2018). Furthermore, the
conglomeration of all these factors had made the present-day business world much more
complex in nature than that of the earlier times. This report will analyse the success attained
by the business enterprise Airbnb over the years and also the factors or the strategies which
have contributed towards the same in the particular context of Airbnb.
Overview of Airbnb
Airbnb, established by Brian Chesky, Joe Gebbia and Nathan Blecharczyk in 2008, is
a “global online marketplace and hospitality service” provider which offers a wide array of
services to the clients or the customers from the different parts of the world (Airbnb.com,
2019). The speciality of the enterprise under discussion here is the fact that rather than
directly offering the different services that it offers to the clients or the customers it acts as a
broker or an intermediary between the actual firms or enterprises which offer those services
and the customers so as to ensure the fact that the clients or the customers are being able
to get the desired kind of services in a highly cost-effective quality manner (Sherwood,
2019). In this regard, it needs to be said that the enterprise under discussion here offers a
wide gamut of services to the clients or the customers starting from basic lodging facilities to
other kinds of hospitality or tourism services (Collinson, 2019). The actual name of the
concerned enterprise is “AirBedandBreakfast.com” and the innovative business idea on the

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basis of which the business venture had been developed was formulated when the founders
of the enterprise placed an air mattress in their living room to convert it into “a bed and
breakfast” (Fortune.com, 2019).
Figure 1: Image showing the establishment of Airbnb
Source: Airbnb.com, 2019
The enterprise under discussion here is presently operational in more than 170
different nations of the world and offers employment to more than 3,000 individuals from the
diverse parts of the world (Airbnb.com, 2019). In this context, it needs to be said that the
annual revenue earned by the concerned enterprise had increased steadily and for the year
2017 it was $2.6 billion and is expected to grow substantially in the coming years
(Fortune.com, 2019).
Challenges faced by Airbnb
An important challenge that the business enterprise Airbnb is presently facing and
which in turn is adversely affecting its growth prospects or profitability is the challenge of
high competition (Carroll, 2019). Oskam and Boswijk (2016) are of the viewpoint that the
popularity gained by the business idea of short-term rental hotels and also the ever-
increasing propensity shown by the customers towards hospitality or tourism services had in
turn laid the groundwork for the mushrooming of a plethora of business firms which are
offering similar kind of business services like Airbnb. Another important challenge that the

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concerned enterprise is facing currently is the fact that the majority of the service users of
the services offered by the concerned enterprise are women and the male customers
generally do not like to opt for the services offered by the enterprise (Krotoski, 2019). The
below given figure highlights this challenge faced by Airbnb-
Figure 2: Customer Segment of Airbnb
Source: Airbnb.com, 2019
Another important challenge that Airbnb is presently facing is the fact that the
majority of the customers opt only for the rent or mortgage services offered by the concerned
enterprise and the enterprise is finding it very difficult to make adequate revenue from the
other services offered by it (Cosslett, 2019). This in turn is adversely affecting the overall
revenue earned by the enterprise under discussion which in turn is being indicated by the
below given figure-