Airbnb Case Study: Assessing Competitive Advantages and Strategies

This case study analyzes Airbnb's business environment, identifying both opportunities and threats within the online marketplace and hospitality service sector. It examines the macro and micro environmental factors impacting Airbnb, including online e-commerce, brand recognition, and market potential. The analysis delves into threats such as low advertising strategies, competition, and the ability to meet customer needs. The report uses Porter's Five Forces and PEST analyses to assess the industry's attractiveness and the company's strategic position. An internal analysis, including a SWOT and VRIO analysis, evaluates Airbnb's strengths, weaknesses, opportunities, and threats, as well as its valuable resources and capabilities. The study concludes with strategic recommendations for Airbnb, emphasizing the importance of adapting to market dynamics and leveraging competitive advantages to achieve long-term sustainability and success.

Case
Study

INTRODUCTION
In today's context each and every organisation want to attain sustainability for longer
duration of time for such purpose they need to build proper strategies in order to analysis both
internal and external factor(Kaplan and Nadler, 2015).Along with this factor macro and micro
environment factor play's an important role so that an organisation can know its capabilities,
strength and weaknesses. For such instance, an organisation can attain opportunities and
challenges in competitive marketplace. In this report, Airbnb, Inc. global company that operates
on online marketplace and hospitality service which is accessible through websites and mobile
apps. This report is going to identify number of opportunities and threats in order to assess
industry attractiveness. Additionally, analysing resources and key components of organisation so
that factors can be identified in competitive advantages. Moreover, adopting one strategy that an
organisation need to implement and evaluate it using SAFe criteria.
TASK 1
Defining business environment and identifying number of opportunities and threats
Business environment consist of all external and internal factors such as employees,
customers, supply and demands, clients suppliers, innovation in technology, social and market
trends etc (Oskam and Boswijk, 2016).These factor influences company or business
organisation within an environment both directly and indirectly. It help in identifying
opportunities, utilising maximum resources that assist in planning and improving overall
performance, growth and profitability of the business.
Environment opportunities of Airband
In today's context there are lot of opportunities for Airbnb, Inc. as they are operating on online
marketplace and hospitality services with various usage of app and websites. Herein, some of the
opportunities are determined below:
Online e-commerce: Airbnb, Inc. has various opportunity to reach customers at
worldwide by creating different opportunities to reach its customer's at large amount of base. As
they are making offerings of their product through various websites, hotels official pages and
different booking portals. In such manner this strategies are creating hike sales and large
opportunities in competitive marketplace. Moreover, they can aware about their product and
services through social websites channels such as Facebook, Twitter, Instagram and YouTube.
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Backing flagship design: In toady's context one of the most important factor that help
an organisation to build brand name through their interesting product and services. Herein,
Airbnb, Inc. are coming up with new offers on different occasion, festivals and seasonal offers
then they will always be demand as well as it will attain unique advantage in competitive
marketplace. Moreover, their offerings are able to build large number of customer's towards it by
satisfying customer requirement as per their need and demand. Moreover, their offerings are its
core products of their business which they are offering in competitive marketplace.
`Growth market potential: Airbnb, Inc. is one of the well know brand which is
expanding their services in overall marketplace of same industry line. Moreover, with the rising
capabilities and earning capabilities of customer's directly and indirectly influences their profit
ratio. Moreover, it is the status symbol for consumer that they are operating over many
countries in order to enhance large customer base in order to attain hight market share.
Business Environment Threat of Airbnb, Inc.
Low advertising strategy: One of the biggest threats of Airbnb, Inc. is that they do not
frequently advertise their product and services in competitive marketplace. Herein, for such
instance customer's are not much aware of products and services which they are
offering(Rosenblat and Stark, 2016). Initially, Airbnb, Inc. need to introduce their product and
services through adopting various promotional tools and techniques in order to attract large
number of customer's towards it. Moreover, an respective organisation need to spend
approximately 35 of their sales on advertising their products and service feature so that people
are aware about their offerings.
Competition: In toady's context travel and tourism industry are developing are
delivering their best product but one of the biggest threats for their company is that their
competitors are offering same products with low pricing strategy. Though they are focusing on
high product quality so that their customer's feel happy from their product and services.
Eventually, low cost strategy of their competitors are effecting portfolio as well as declining their
margin ratio.
Unavailability to meet customer's needs: The major aspect in case study of Airbnb, Inc.
that they do not reach large customer's base but the work out exclusively in their apps and
websites. As now as days customer's are mostly attracted towards online apps as it has been
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making easier for them in adopting services. If they are not able to grab opportunities in
competitive marketplace then they will not able to attain sustainability for longer period of time.
Industry analysis:
In order to attain sustainability as well as success and desirable goals an organisation
needs to analysis macro factors that directly and indirectly impacts on the business structure
they are operating in it. Some of the macro factors that directly and indirect impacts on business
function are determined below:
Porter's five force analysis:
Competitive analysis: Herein, Airbnb, Inc. are having large number of competitors in
same industry. This lead to have high competition among themselves which may lead to decrease
or increase their goodwill in competitive marketplace. Herein, if an organisation is able4 to main
their stability in competitive marketplace they will able to have sustainability for longer period of
time.
New entrants threats: In travel and tourism industry there are many rivals as this
industry are boosting up in rapid manner as well as increasing economy of a particular country.
For such purpose, if a respective organisation are able to meet up customer's needs and
requirement in effective manner than they able to have high market base in competitive
marketplace.
Bargaining power of suppliers: In the era of globalisation, marketplace are growing
rapidly in order to achieve their goals and objectives effectively. Herein, the supplier power of
market in such industry are decreasing as wage rate care decreasing as advancements of tools
and techniques are increasing.
Bargaining power of customer's: Airbnb, Inc. are spending that they are spending 0.35
on advertisement and most rely on word of mouth promotions. Now a days customer's are more
attracted towards their internet as they find it most convenient as well as it is one of the most
effective process.
Threats of substitute: In competitive marketplace there are many threats opf substitute
which are competing Airbnb, Inc. in effectively. Herein, for such purpose an organisation need to
sped huge amount of money in maintaining their stability so that threat of substitute can be
reduced.
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Apart from this Airbnb, Inc. are adopting PEST analysis in order to examine their industry
analysis in competitive marketplace. Which is determined below:
Political factors: Political factors refers to those factor that impact an organisation by financial,
government rules and regulation that vary from nation to nation in which an organisation are
operating its function. Herein. Airbnb, Inc. are operating their product and services in different
nation and countries by adopting different norms and regulation. Moreover, in many country
they are not able to function their activities appropriate as per different norms or lack on
investment in order to enlarge business opportunities. Thus, it is essential for an organisation to
deal as per the norms and regularities so that they can establish their business in an effective
manner.
Economic factors: This factor consist of interest rate, inflation, taxation and growth
that directly and indirectly depends on organisation profitability of an organisation. Eventually,
Airbnb, Inc. are dealing in different countries they have to face many problems that impacts on
their profitability and productivity of their business functions and activities. Moreover, with the
adoption of different duties and tariffs they are changing their their business so that they can
bring out diversity with their business and able to deal with different nations effectively.
Social factors: Social factors consist of social trends, buying pattern of customer's,
culture and trend of a particular countryside which positively and negatively impact on
profitability ration of an organisation. In order to deal with the competitive marketplace Airbnb,
Inc. need to have proper knowledge of the marketplace where they are operating so that
accordingly they can offer their product and services.
Technological factors: Technological factors consist of advance tools and techniques
that affect an organisation productivity and profitability of an organisation. Herein, Airbnb, Inc.
are mainly focusing on their product and services. Herein, an organisation need to adopt advance
tools and techniques so that they can attain sustainability for longer period of time.
TASK 2
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Internal analysis
Swot of Airbnd
Strength- Different from hotel. Airbnb is providing rooms in a house instead all other
provide rooms of a hotel. Each of them is unique and contain separate value which provide a
good experience to the customer. Cheaper- It provide totally a new experience to a traveller. They provide a house friendly
environment with a local language and food with in your budget.
 Communication- Interact with people who are local of their city it can help to gain the
depth knowledge of their city and state. By interact with them they can analysis positive
and negative of that city.
Weakness- Airbnb have to face the problems about housing law and regulation. Some
people register their houses for rent but in end if any event or experience is happened wrong then
at time both guest as well host have to face the problems.
 Some host did not follow the guidelines which are set by Airbnb so customer have to face
issue even after paying money it also reduce the company reputation.
 Less rating on social media reduce company profits with these other problem is that
company have to rely on local host which mean to run a business with strangers.
Opportunities: Change in demand of consumer like now customer are also rising up in
favour of Airbnb. Like in mostly cities of United State rules regarding to house policy are
changed which are flexible with Airbnd. Now host and guest are keep in touch they have less
gap in communication. Guest have now alternative option they can find a house instead of a
hotel. Airbnb find the opportunity for inexpensive accommodation and convert it into business
which can provide benefit to both parties guest as well as host.
Threats- Airbnb is holding their business in more than 185 countries, after that every
state and city have different regulation. Companies have to face so many expenses to record legal
rules them as help of a professional is always required to face legal issue. If some one want to
become a host he has to go through to register themselves first and all document are also
required if they cannot fill those needs then they are fine for hosting illegal hotel. In general
necessary documents are always required for a host so people are not comfortable with it because
it have a time consuming process. Other competitor are also trying to enter into this hotel

industry. Many local competitor like travel and tour companies are already doing business as a
guest house for tourist.
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VRIO analysis:
It is important for an organisation to identify and analyse their valuable resources which
drives them to implement pre-determined strategies and plans for the purpose of achievement of
organisational goals and objectives. For example, Airbnb have no knowledge about their internal
capabilities which brings difficulties towards them to achieve competitive advantage. For this,
the management need to proper evaluate their existing resources which includes human
resources, funds, goodwill of company, technological advancement, marketing activities etc. To
evaluate the resources, Airbnb should use VRIO analysis which are briefly explained as under:
Valuable: It refers to the value generated by an organisation in exchange of money
offered by the final customers. If any resources are provided benefits to company then it will
maximises the chances of achieving competitive advantage to them in competitive market. For
example, human resources in Airbnb should be more skilled and knowledgeable so that it can
help company in meeting the needs and demands of the targeted customers by serving best
quality services to them.
Rare: It defines the uniqueness of resources which is attained by company as compared
to their rivals in the competitive market. For example, human resources is valuable for an
organisation but it is more rare as compared to other companies such as VRBO, HomeAway etc.
which has also skilled employees in competitive equality of Airbnb. But on the other hand,
marketing activities of an organisation is valuable and rare in nature which assist them in
creating market awareness in the society and ends up at increasing sales.
Imitate: It describes the concept that how a company copied their rivalry products in
competitive market. For example, financial resources can be imitate by other company as they
have opportunity to raise funds by selling of equity or share in the market. Technology can be
also copied by other nations after launching it in the market.
Organisation: It describes the potentiality of utilising its available resources. For
example, goodwill kept the image of Airbnb in the mind of customers thus it is valuable in nature
which brings more profits to company. It is rare in nature as goodwill or brand image of airbnb
cannot be copied or imitate by their rival companies. Thus, it can be said that an organisation is
properly using their brand image to market their products which in results increasing competitive
advantage for them.
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Strategy Evaluation
It is the theme which is to be adopted by the company for the benefit of organisation. It is
important that which plan does particular company adopt for achieving their goals and target.
The main motive of strategy evaluation says that it is crucial for the company to work as per the
guidelines which they have decided for completing their task so that better results can be
achieved in future. In context of Airbnb, they are one of those company which need to change
their policies and plans as per the requirement of customer. The reason behind changing the plan
and strategy in short period of time just because they are one of those company which deals in
the sector of Hospitality and online marketplace. The area which Airbnb is focusing for their
strategy evaluation is real estate and expanding business at global level.
Real Estate: It is the field which is being focused by Airbnb because as they want to
promote their company at bigger platform. For this, they are targeting the property manager and
builders where they are trying to open Airbnb brand in property sector. It is necessary that how
they execute their plans and policies for achieving the organisational goal.
Expanding the business in international market: Company is working well since it has
been incorporated but it is necessary for them that how they build their brand name in
international market. For that company is planning to provide hospitality service at global level
which can be one of the handy decision as they need to study about the weaknesses and strength
of that particular country where they are willing to setup their business.
TASK 3
SAF criteria on Airbnb Strategy
Whenever company decide to formulate any new strategy it is necessary to be checked
properly so that effective results can be obtained while implementing it in the market. It is
helpful for every organisation as it mainly focuses on the market that whether applied changes
have the market suitability or not. Also, can people accept it or changes are required and what
can be the feasibility of the market. In context of Airbnb, it will be helpful for them as they are
trying to enter into new market just to increase their profit and also they want to enhance the
brand name of their company.
Real Estate is new market for Airbus and it will not be easy for them to grab market.
Firstly, they need to check whether Suitability will be accepted for their market as they need to
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find more number of property manager which is not a easy task. If this department can work in
the market then they need to check whether their existing customer will accept the changes or not
and how they need to convince new customer and property dealer for new ideas and concept. At
the end, it is necessary to check whether Airbus do have feasibility or not which means they need
to know their strength and weaknesses. Also. In this the need to check whether they have large
amount of capital or not as real estate business required huge amount of capital.
Expanding the business at international market will be better option for them to work
in the market as they have sustainability in the market which will help them to work freely at
global market. As, hospitality market is most suitable market in the world as it is helpful for
everyone when they visit from one place to another so it can be said that it can be easily accepted
in current market. At the end, it can be said that Airbnb do have the feasibility when it comes to
work in the international market as they are one of those company which can easily utilise their
resources in efficient manner.
CONCLUSION
From the above discussion it has been concluded that business environment play's an
effectively role for an organisation. It help an organisation to know the capabilities, strength and
weakness that help an organisation to attain opportunities or improve on weaknesses.
Additionally, it help an organisation to attain success by building their product and services
according to the taste and preferences of customer's where they are operating in it. Moreover, in
order to expand market share organisation have to evaluate each and every factor so that they can
be able to enlarge business opportunities. Furthermore, Micro and macro are giving major
attributes give major contribution in getting important insights about strength and weaknesses of
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an organisation. Thus, in this way an organisation can attain desirable outcomes by evaluation of
that factors in proper manner.
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