Impact of Sharing Economy on Hotel Industry

This assignment requires a comprehensive analysis of the impact of sharing economy, particularly Airbnb, on the hotel industry. It involves examining the effects of Airbnb on hotel sales growth, occupancy rates, and market formation in various contexts. Students are expected to compare these findings with traditional strategic management theories and concepts, such as competitive advantage, nodal advantage, and ecosystem structure. The assignment also requires an understanding of how sharing economy platforms like Airbnb have disrupted traditional hospitality businesses and hotel chains.

Strategic report
(Live case study)

EXECUTIVE Summery
This report will lay a significant impact on the different operations that will be taken in
the effective thought process by Airbnb. The assessment of the internal as well as the external
factors will help in better handling of the different operations that will help in better handling of
the different operations of the organisation. Also, the better strategies are being taken in
consideration for better understanding of operations. The external analysis will help in better
handling of wide range of operations and meeting the needs and demands of the business
organisation. This will help the Airbnb to have a better handling of different operations which
will help in meeting the operations of the organisation in a better way. It will also help in better
risk assessment and will help the firm to make the suitable strategies that will help in sustainable
growth and development of the organisation. Other than this, the internal assessment of the wide
range of operations will help in better handling of different operations which will improve the
functionality of the organisation. This will also help in increasing the operational efficiency of
the organisation. Besides this, it will also help in effective rise in the customer satisfaction level
and help in handling of the different business operations. It will also increase the productivity of
Airbnb and will support the better adoption of the innovative measures that will help in effective
rise in the operational efficiency of the organisation and helps the firm to have a better
sustainability of the market. The various sort of innovative measures that are been taken in
effective consideration will help in meeting the needs and demands of the organisation that will
help in better handling of the operations which will help in significant rise in operational
capacity of the firm. The report will also cover the better handling of different operations that
will help in effective rise in business operations and how the adaption of different business
measures will help in better growth and development of the organisation.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
ANALYSIS OF EXTERNAL ENVIRONMENT...........................................................................1
ANALYSIS OF INTERNAL ENVIRONMENT............................................................................3
THE STRATEGIC ANALYSIS......................................................................................................5
Analysis of the business (competitive) strategy.....................................................................5
Analysis of the corporate strategy..........................................................................................6
ANALYSIS OF ETHICAL ISSUES AND LEADERSHIP............................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
The strategic management of the different operations of a business organisation will lay a
significant impact on its overall operations. An effective business strategy will lay a significant
and crucial effect on the overall operations of a business entity and helps in its better growth and
development (Hill, Jones and Schilling, 2014). This report will lay emphasis on the macro and
micro environmental factors using the latest tools and models and a critical analysis of the
various business strategies that have been taken in effective consideration by UK based aviation
and hotel company, Airbnb. Other than this, the ethical issues related to leadership will also be
taken in consideration that will lay a significant effect on the overall operations of the
organisation. The chosen organisation Airbnb is a renowned American company operating
globally in the lodging industry. It is a privately owned enterprise operating since last 9 years
and is currently headquartered in San Francisco, California (Ahmad, Walter and Sherman, 2016).
It mainly serves in the area of hospitality along with the services related to peer to peer property
leasing. Presently, it is known to have around 3100 employees al around the world. It is with a
major coverage over 65000 cities spread in nearly 191 distinct nations and has assisted in more
than 260 million check ins, till now.
ANALYSIS OF EXTERNAL ENVIRONMENT
Porter’s 5 Forces model
Porter's five forces model for Airbnb is as follows:
Threat of New entrant: Airbnb possesses very moderate to no threat
from the various new entrants that have been
entering into the aviation market (Björk, 2017).
However, Airbnb is a well-known brand and
the competitors have to see through its brand
equity to compete with the company.
Threat of substitution: It is a high risk factor that is required to be
taken in thought process by the cited business
organisation. As the competing aviation
companies are coming up with innovative
products and services, the business firm has to
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look after the strategies to avoid the threat of
getting replaced in market.
Bargaining power of customer The bargaining power of the customers lay a
very deep and significant impact on the
operations of organisation (Blal, Singal and
Templin, 2018). But, Airbnb has the minimum
pressure about the costing as the customers has
no other option as better as the cited business
entity in terms of services and brand equity.
Bargaining powers of suppliers: This is also competitively low for the
organisation as Airbnb controls the relationship
or connection between the room suppliers and
the customers, making its services more cost
effective by eliminating any sort of
intermediate.
Industrial rivalry: It is also comparative minimal for the
organisation as none of the competitor of the
business entity has calibre to meet the
operational efficiency and customer
satisfaction level that has been offered by
Airbnb (Barney, 2014).
The above external factors that are been discussed above, it can be said that Airbnb is the
strong market player which requires few measures to be taken in effective consideration to
maintain its productivity and revenue generation (Ginindza and Tichaawa, 2017). The effective
handling of the legal obligation will help the firm to sustain in market and have a better
productivity and profitability. In addition to this, the legal obligations related to the housing
factors and taxation will help the firm to gain a better control over its business operations. It
helps the firm to open the opportunities in the BLUE OCEAN market (Steinbach and et.al.,
2017).
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ANALYSIS OF INTERNAL ENVIRONMENT
Resource and capability theory:
This theory will help in meeting the needs and demands by analysing the key strategic
measures that will be taken in effective consideration by the organisation on an internal level
(Van Alstyne, Parker and Choudary, 2016). It will help in meeting the operational level of high
scale of operational capacity of company that will help in meeting the operations and customer
requirements of the organisation. This will help the organisation to identify its core
competencies. Besides this, the assessment of the various resources owned by Airbnb will help in
meeting the customer's satisfaction level.
The basis core competency of cited business firm is that it has an effective financial
stability and brand equity that will help in improving the core operations of the organisation. The
better utilisation of the available resources helps the company to have a better cost effectiveness
and competitive advantage over its rivals (Wheelen and et.al., 2017). Moreover, the assessment
of the key financial indicators such as profitability, growth rate, cost effectiveness and free cash
flow or return of investments is the major factor that will help the firm to improve the quality of
services and customer satisfaction level. This will help business organisation in better entry of
the new market segment.
Value chain analysis:
The value chain model will help in handling of the different business operations that will
help the firm to improve its productivity and handle them in a very effective way. The value
chain analysis of Airbnb is as follows:
Internal logistics It involves the effective and strategic data
handling that will help in meeting the
operational capacity of cited business
organisation. The data that is been collected is
thoroughly analysed by the experts at the
organisation. It will lead to the effective
development of the operational capacity of the
organisation. It will also help in maintaining
the future rentals.
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Operations It involves the basic functions that are been
performed by the business organisation. For
instance, Airbnb provided the private house
renting to its customers as per their
requirements. It helps in improving the
satisfaction level of the customers
(Rothaermel, 2015.).
Infrastructure The Airbnb don't have a stable infrastructure of
its own as it works with the collaboration with
private renters who provide their rooms or
houses for rents. Thus, this give the cited firm
a cost efficiency over its competitors.
Although, this infrastructure is needed to be
verified by the organisation to meet their
standards in order to maintaining their quality
and customer satisfaction level.
Marketing and sales: Airbnb uses the updated technology and digital
mediums to have a high level of operational
efficiency and handling the better quality of
services of the organisation (Lasserre, 2017).
The usage of the social media platform and
other marketing tools will help the cited
business entity to attract the maximum number
of customers. The advertising approach is less
utilized but the firm has many regular and
loyal customer's.
Outbound logistics: It involves the better utilization of the high
quality and latest technologies that will help
the firm to have a high customer base and
increase in its productivity and revenue
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generation.
Services after sales: The Airbnb takes the customers as well as the
host feedback in order to make it services more
effective and user friendly (Kay, 2018). This
provide the user with the effective insight to
improve their service quality and meeting the
needs and demands of the customers to gain
their loyalty and maintain the quality and
customer satisfaction standard of the company.
From the analysis of the both internal and external factors that are been taken in effective
consideration by the organisation. This factors will help in better handling of the different
operations which will help in better growth of the Airbnb in local as well as foreign market,
especially in UK (Sigala, 2018). Other than this, the cited business organisation has to look after
the better handling of different issues like housing verification or threat from the substitutional
products or services. This will help the firm to handle the business operations in a better way.
THE STRATEGIC ANALYSIS
Analysis of the business (competitive) strategy
The strategic analysis of Airbnb will involve the factors like cost leadership,
differentiation and blue ocean approach. The cited firm has a cost leading approach as it provides
the services of rental houses on a very low cost and have a product differentiation factor which
provided the firm with high quality of services and gain a better productivity and profit margin
(Bettis and et.al., 2016). The blue ocean or hybrid strategy helps the firm to improve its revenue
generation, that helps the firm to make the better strategies. Airbnb will look after the better
handling of Ansoff matrix. The market penetration corporate strategy will help in better handling
of risk factors in new market, helping in maintaining the productivity. Also, the market
development strategy will help in better handling of different operations that will help in better
handling of wide variety of operations (Zervas, Proserpio and Byers, 2017). This will also
involve the market development process that will help in making the suitable changes in the
organisation to suit the market conditions. Besides this, the approach of product development
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will help in better handling of a wide variety of operations that will help in meeting the
operational effectiveness of the company.
Other than this, Airbnb will look after the better integration approach to enhance its
operational capacity on a significant level. The horizontal integration approach will help in
adoption of innovative, strategic measure that will help in meeting the operational requirements
and customers’ demands of the company. In addition to this, in vertical integration approach,
Airbnb will see through the collaboration or acquisition the better services that will help in better
handling of the different measures to improve its functional efficiency (Ethiraj, Gambardella and
Helfat, 2016). Besides this, the diversification in both related and unrelated way will help in
increasing the product portfolio of the organisation, and provide the customers with high quality,
innovative products and services. Other than this, firm will also adopt the turnaround strategy
like downsizing or liquidation which will help in better handling of the operations of the
organisation. The downsizing approach will help in controlling the excess cost of operations
while liquidation will help in that will help in meeting the operations and handling of the
operations and keeping a check over the assets owned by the organisation.
Analysis of the corporate strategy
Apart from this, the stability strategies like no change approach will help the firm to gain
a stability and sustainability in market. This will also improve the overall functional capacity and
maintain the quality standards of the organisation. Other than this, it helps in keeping the
customers highly satisfied and provide them with the service or product as per their requirements
(Ethiraj, Gambardella and Helfat, 2016). The Airbnb will use the different sort of the basic
strategies and operations that will help in the better handling of the different operations which
will help in better growth and development of the strategies that will help in effective rise in the
business operations. Some major strategies that are been used by the cited business entity are:
 Monitoring the communities: The cited firm will look after the better handling of the
different sort of business measures that will help in the effective rise in business functions
that will help in significant rise in satisfaction level of the customers of the cited firm. It
will help in better handling of the operations in SAF model (Richard and Cleveland,
2016). The monitoring will help in identifying the suitability of the operations and the
customers to provide the services. Other than this, it will also help in accepting the
innovative measures and operations that will help in better handling of the business
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operation. Other than this, it will help the business firm to assess the feasibility of the
operations and manage the profitability of the organisation.
 Tackling the cost obstacles: The Airbnb will see through the better handling of the
different business operations that will help in meeting the operational requirements of the
firm and lead to rise in the customer satisfaction level (Oskam and Boswijk, 2016). It will
also help in handling the different sort of innovative measures that will increase the
productivity of firm. It will help in effective handling of the operations in SAF model.
The Airbnb will use the suitable cost for the assessment and execution of the operations.
Also, it will help the firm to adopt cost effective measure that will help in increasing the
operational feasibility.
ANALYSIS OF ETHICAL ISSUES AND LEADERSHIP
Other than this, various ethical and leadership related issues will also be taken in
consideration by the organisation. The ethical strategies will help the firm to handle the various
sort of business operations and will help in effective rise in business strategy. This will also help
in developing the better trust level among the customers and helped the company to have a better
productivity and profitability (Kumar, Dass and Kumar, 2015). Besides this, the effective
leadership approach will also help in better handling of the different operations that will help in
effective rise in the operational capacity of the company. The efficient leader will guide and
motivate the employee's to handler the business operations in a better way. Apart from this, he
will also look after the better handling of a wide variety of innovative measures and operations
that will lay a significant increase in the innovation approach of the organisation.
CONCLUSION
This can be concluded from the report that the strategies and environment plays a very
crucial role in the overall operations of the organisation that will help in meeting the needs and
demands of the customers. The Airbnb will see through the effective handling of the different
operations that will help in meeting their needs and demands in regard with the operations. The
assessment of the internal and external operations will help the firm to meet the operational
capacity of organisation in a better way. Besides this the various strategies will help in better
growth of organisation. The above report has presented a strategic reporting of a chosen
establishment named Airbnb with assistance of serval strategic tools and techniques. This
involved some well-known theories applied to assess both of its external and internal
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environment. This was followed by a strategic analysis of the cited entity to evaluate the
contending position of Airbnb in its marketplace. Also, its corporate strategy was evaluated with
findings of having several number of opportunities to successfully operate in the market. For this
purpose, the blue ocean strategy was the most assistive tool applied to scrutinize the unexplored
market space for Airbnb. Lastly, the ethical issues faced by Airbnb along with the issues related
to leadership have been investigated with demonstration of effective measures to resolve the
identified problems.
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REFERENCES
Books and journals
Ahmad, N., Walter, H. and Sherman, H., 2016. The home away from home: an analysis of the
lodging industry in 2015. American Journal of Entrepreneurship. 9(1). pp.60.
Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
Bettis, R.A. And et.al., 2016. Creating repeatable cumulative knowledge in strategic
management. Strategic Management Journal. 37(2). pp.257-261.
Björk, B.C., 2017. Scholarly journal publishing in transition-from restricted to open
access. Electronic Markets. 27(2). pp.101-109.
Blal, I., Singal, M. and Templin, J., 2018. Airbnb’s effect on hotel sales growth. International
Journal of Hospitality Management. 73. pp.85-92.
Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2016. Replication in strategic
management. Strategic Management Journal. 37(11). pp.2191-2192.
Ginindza, S. and Tichaawa, T.M., 2017. The impact of sharing accommodation on the hotel
occupancy rate in the kingdom of Swaziland. Current Issues in Tourism. pp.1-17.
Ginter, P.M., 2018. The strategic management of health care organizations. John Wiley & Sons.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated
approach. Cengage Learning.
Kay, J., 2018. Theories of the Firm. International Journal of the Economics of Business. 25(1).
pp.11-17.
Kumar, P., Dass, M. and Kumar, S., 2015. From competitive advantage to nodal advantage:
Ecosystem structure and the new five forces that affect prosperity. Business
Horizons. 58(4). pp.469-481.
Lasserre, P., 2017. Global strategic management. Palgrave.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Oskam, J. and Boswijk, A., 2016. Airbnb: the future of networked hospitality
businesses. Journal of Tourism Futures. 2(1). pp.22-42.
Richard, B. and Cleveland, S., 2016. The future of hotel chains: Branded marketplaces driven
by the sharing economy. Journal of Vacation Marketing. 22(3). pp.239-248.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
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Sigala, M., 2018. Market Formation in the Sharing Economy: Findings and Implications from
the Sub-economies of Airbnb. In Social Dynamics in a Systems Perspective (pp. 159-
174). Springer, Cham.
Steinbach, A.L and et.al., 2017. Top management team incentive heterogeneity, strategic
investment behavior, and performance: A contingency theory of incentive
alignment. Strategic Management Journal. 38(8). pp.1701-1720.
Van Alstyne, M.W., Parker, G.G. and Choudary, S.P., 2016. Pipelines, platforms, and the
new rules of strategy. Harvard Business Review. 94(4). pp.54-62.
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.
Wheelen, T.L and et.al., 2017. Strategic management and business policy. Pearson.
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