Airbnb: Analysis of Management Strategy and Business Decisions

This report provides a strategic analysis of Airbnb's management decisions, examining its business model and the factors behind its success. It begins with an introduction to Airbnb, detailing its background, vision, mission, and values. The core of the report focuses on strategic analysis, specifically applying Porter’s generic strategies to understand Airbnb's approach. The analysis covers cost leadership, differentiation, and focus strategies, highlighting how Airbnb leverages these to gain a competitive advantage in the online marketplace. The report references key academic sources to support its arguments and provides a comprehensive overview of Airbnb's strategic management.

Management strategy of Airbnb
Student Details
9/4/2019

Contents
Introduction......................................................................................................................................3
Background......................................................................................................................................3
Vision...........................................................................................................................................3
Mission.........................................................................................................................................3
Values...........................................................................................................................................3
Strategic Analysis............................................................................................................................3
Porter’s generic strategy..................................................................................................................4
Cost Leadership............................................................................................................................4
Differentiation..............................................................................................................................4
Cost Focus....................................................................................................................................4
Differentiation Focus...................................................................................................................4

Introduction
Airbnb is a corporation that exists in online market place, which facilitates the arranging,
as well as offering of primarily home stays, tourism experiences and lodging. It is claimed that
there is no single real estate listing that is hold by the company for conducting its business. The
main strategy behind the success of Airbnb is that it acts as a broker, which facilitates the link
between room seeker and room provider for rent (Oskam & Boswijk, 2016). The company came
into existence in the year 2008 and start working in San Francisco, California by Brian Chesky,
Joe Gebbia and Nathan Blecharczk. This report is all about analyzing the main strategies behind
all the decisions taken by the company so far.
Background
The idea behind the establishment of this company was came into existence for the first
time in 2007, where two owners of the company that are Brain and Joe start renting their own
rented house to other persons for nights by providing them air mattresses to sleep and charging
very nominal amount from them they once called it AirBed & Breakfast. They were roommates
and do not have must amount for giving their rent to the owner, hence they thought of providing
their room for staying in the night to other people in exchange of some money. In this way, they
collected required amount for their rent as well as slowly they expended this idea and start-
making profit in a very short span of time (Zervas, 2017).
Vision
The vision statement of the company talks about its extended objective that must be
achieved in the end. The vision statement of Airbnb is “To be the leader in the world related to
accommodation industry based on Internet”
Mission
It is related to the core objectives of the company that helps the company in achieving its
vision. The mission statement of Airbnb is “The Company believes in connecting the whole
world and making it in one community. They connect their guests with authentic and safe local

accommodations which are provided by the respective hosts at appropriate costs and technology,
everywhere and anywhere”.
Values
These are the codes, which define the behavior of the company its employees as well as
operations. The values of Airbnb facilitate them in believing in providing the safe services of
accommodation to their customers and taking care of the interest of their hosts as well (Azna &
Sayeras, 2018).
Strategic Analysis
There are various decisions related to success of the company has been made by the
management of Airbnb until now. These decisions were based on the strategic decision making
power of the efficient leaders of the company. the strategic analysis of the decisions made by the
management of the company is analyzed in following lines with the help of Porter’s Generic
Strategy model (Meleo, Romolini, & Marco, 2016).
Porter’s generic strategy
It is a model that is established by a famous scholar named Michael Porter in 1985
through his book. According to Porter, there are manly three generic strategies, which are Focus,
Cost leadership and Differentiation. Focus is further divided into Cost and Differentiation focus
(Tanwar, 2013). According to this model, the decisions taken Airbnb are effective and efficient
in nature. These decisions of company are analyzed with the help of this model in following
lines:

Cost Leadership
The concept behind the business of Airbnb was mainly based on the cost effectiveness.
They facilities the link among house providing and seeker on rent by removing various
mediatory channels and agents which in turn directly connects house on rent seeker and provider.
Hence, this helps them in reduction of extra cost in traction, in this way they have the cost
leadership.
Differentiation
The concept behind the business was very unique and further decisions taken by the
company in order to survive facilitate the management to make some more unique and effective
decisions this in turn provide the factor of differentiation in the working as well as services of
this company (Kaya, 2015).
Cost Focus
The company and its services are focused towards their target market of the people,
which have the interest in providing and seeking house on rent in appropriate cost. Focus of the

company is on low cost provider and seeker of the rooms on rent. This provided the competitive
advantage to the company over others.
Differentiation Focus
This is another component of focus strategy of the model. In this the focus of the
company is on getting the differentiation in their operations and behind the whole concept of the
business (Tanwar, 2013). They differentiated the company from its competitors on the basis
being as a agent and providing best rooms to room seekers and room providers on rent by
reducing involved extra functions as well as cost.

Bibliography
Azna, J. P., & Sayeras, J. M. (2018). Airbnb landlords and price strategy: Have they learnt price
discrimination from the hotel industry? Evidence from Barcelona. International Journal
of Tourism Sciences , 18 (1), 16-28 .
Kaya, N. (2015). Corporate EntrepreneurshGeneric Competitive Strategies, and Firm
Performance in Small and Medium-sized Enterprises. Procedia - Social and Behavioral
Sciences , 207, 662-668.
Meleo, L., Romolini, A., & Marco, M. D. (2016). The Sharing Economy Revolution and Peer-to-
peer Online Platforms. The Case of Airbnb. International Conference on Exploring
Services Science , 247, 561-570.
Oskam, J., & Boswijk, A. (2016). Airbnb: the future of networked hospitality businesses.
Journal of Tourism Futures , 2 (1), 22-42.
Tanwar, R. (2013). Porter’s generic competitive strategies. Journal of business and management
, 15 (1), 11-17.
Zervas, G. P. (2017). The rise of the sharing economy: Estimating the impact of Airbnb on the
hotel industry. Journal of marketing research , 54 (5), 687-705.