Strategic Analysis of Airbnb: Porter's, SWOT, and Innovation

This report provides a comprehensive strategic analysis of Airbnb, examining its competitive environment using Porter's Five Forces, including competition, new entrants, customer and supplier power, and substitutes. It explores the technological cycle and the three phases of the innovation model, from fluid to specific phases, offering insights into Airbnb's evolution. A detailed SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The report also covers the era of ferment and incremental change for Airbnb, along with its innovation model phases, and concludes with an overview of Airbnb's business model and its impact on the hospitality industry. The analysis includes stakeholder analysis, Porter’s Value Chain Model, PESTEL, and the McKinsey 7-S Model for a well-rounded strategic assessment.

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INNOVATIONS
Running Head: NEW TECHNOLOGIES & INNOVATIONS 0

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Table of Contents
Introduction................................................................................................................................2
Five forces analysis of Airbnb...................................................................................................2
Competition between existing competitors............................................................................2
New entrance threat................................................................................................................2
Customers bargaining power..................................................................................................3
Suppliers bargaining power....................................................................................................3
The threat of substitute...........................................................................................................3
Technological cycle...................................................................................................................3
The era of ferment for Airbnb................................................................................................3
The era of incremental change for Airbnb.............................................................................4
Innovation model phases............................................................................................................5
Fluid phase..............................................................................................................................5
Transitional phase...................................................................................................................5
Specific phase.........................................................................................................................6
SWOT analysis...........................................................................................................................6
Strengths of Airbnb................................................................................................................6
The weakness of Airbnb.........................................................................................................6
Opportunities for Airbnb........................................................................................................7
Threats of Airbnb...................................................................................................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
This paper discusses the Airbnb. Airbnb is an organization website that permits ordinary
people to rental residence as visitor accommodation. People can rent lodgings that suit their
budget. This organization was established in 2008 (Georgios & Proserpio, 2017). After
completing eight years organization gets a rapid growth as reaches at a millions turnover of
rooms every year. Industries within the nations are rapidly enhancing competitions. The
development of an organization or industry is driven by the system of information to serve
customers. This discussion of the paper includes an analysis of Porter's five forces model as
the nature of the industry is competitive. Competition at a high level is the essence of success.
The purpose of the analysis is to define the competitive analysis. Further discussion covers
the discussion about technology cycle, three phases of innovation model, and SWOT
analysis.
Five forces analysis of Airbnb
This model of a competitive analysis is an approach to improve a strategy in various
industries (Naraynan & Fahey, 2015). Porter referred that competitive nature of the business
is seen as a arrangement of five powers, namely competition among existing opponents, new
entrants’ threats, substitute threat of services or products, suppliers bargaining power, and
buyers bargaining power.
Competition between existing competitors
This is the best between porter’s five competitive forces (Pines, 2016). An organization that
holds a competitive advantage over rivalry organization, it is going to be successful. There
are many organization that delivers similar services like Airbnb is either low or moderate. It
has high-quality competitors by outstanding websites and network that are same to websites
of Airbnb. Websites like HomeAway.com, Expedia.com, OneFineStay.com, and
Tripping.com are regularly working around the clock to Airbnb from market domination.
Organization to overcome from the threat of the competitors has simplified existing system
relating to tenants Airbnb accommodation and lodging deliver regarding booking and
payment. There are still issue regarding room as providers are declared illegal for not
remitting taxes as hotels do.
New entrance threat
The source of barriers consists of differentiation of product, changing suppliers cost, indirect
costs, requirements of capital, and access towards channels of distribution (Indiatsy, 2014).

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The new entrance in business come by the new desires and abilities to achieve a share of the
market by putting pressure on the rate of investment, price, and costs that is viable to
complete. For Airbnb new entrance threat in the market is flexible and weak. There are not
many barriers to entry as any website can compete and a popup with Airbnb. This
organization has added an effective mobile payment to ease transaction by warding off
competition from new entrants. Airbnb has refined performance system that is faster and
appealing to customers.
Customers bargaining power
Influential customers can get more values by forcing rates down by demanding more services
with better quality drives increase costs by playing participants of business against one
another (Renko, et al., 2011). This is completed at the expenditure of profitability of a
business. The bargaining power of consumers is high as there is an extensive range of
services that can choose from price, ratings of hosts, and location.
Suppliers bargaining power
Suppliers bargaining power is a threat to Airbnb. This is negligible as it controls both clients
and suppliers. This makes it hard for individuals that control both clients and suppliers. This
generates difficulties for a purchaser that try to rent out rooms or apartment with no another
way to connect with customers using an application or website of Airbnb.
Threat of substitute
Airbnb has a higher level of threat from substitute products. The profitability of the industry
is on receiving end. This serves to limit the profit of industry potential by developing a lid on
rates. Substitute product for Airbnb is B&B, traditional hotel, couch surfing, and hostel.
These put a limit at upper on that rates that can be set before customers moving to replace the
product. This can be measured by the share of market captures and organization plans to
develop the capacity with market penetration.
Technological cycle
The industry of Host did not deliberate Airbnb a threat. Both industries considered to serving
the different market and hold different underlying models of business (Amelio, 2017). This
organization has become more successful as grown towards a larger organization than
organizations in the hotel industry.

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The era of ferment for Airbnb
Airbnb was founded in 2008. Disruption of Airbnb’s is very important for both economically
and existentially. It has got only 1% growth in the supply of Airbnb in ten key hotel markets
in the U.S. with a decrease of 0.02% across all segments in 2008. This organization is
impacting customers as seek travel and consider it has effects for the hotel dynamic and
Airbnb. The effect of Airbnb on occupancy and ADR was a little severe.
The era of incremental change for Airbnb
This organization has become the most important and successful pioneers of the sharing
economy (Huber, 2018). This organization has shaken up the business of hospitality and
urban real estate markets. It has produced a new kind of travel by attracting a different tier of
travelers that have traveled before due to high average daily rate (ADR). Airbnb has also
encouraged travelers to increased stays that lead to an increase in expenses of travelers,
positively impacting local economies by higher tourism revenues.
 The attraction of Airbnb
It provides a simple technological infrastructure that connects guests and hosts. This
organization was started to provide free access and generated a dedicated following of hosts,
users and overcame the initial entry and mobilization barrier.
 Technology implementation
The industry of hotel is continuously introducing new technologies to increase the experience
of the customer and generate a competitive advantage over Airbnb. For this Airbnb has
started to provide a Bluetooth enabled application by their loyalty program that can be used
as a room key.
 Further explorations
Airbnb listings predominantly that consist of almost sixty-three percent entire homes, thirty
percent private rooms, with three percent of all listings. It has remained as a relatively robust
that seems to move forward to more private rooms due to an increase in regulations in the
market of homeownership. Supply of organization is regularly growing and put pressure on
the residential markets and hospitality it has been criticized by cities to regulate services. It
has started to work with municipalities to expand and find solutions to its services.
 The legal and regulatory environment

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This organization has an impact on decreasing vacancies and increasing rental rates in the
rental market as competitor’s efforts to limit exposure of Airbnb towards the sector of
accommodation to search for effective solutions to control growing situation between
provides and ensure affordability.
Innovation model phases
Innovations are challenges that are characterized by risk, complexity, and uncertainty
(Franken, 2013). It helped Airbnb to make more important to establish a system, structure,
and methodology for development and implementation. This consists of a practical
innovation procedure in many phases that leave enough area for creativity that leads to the
objectives in a focused manner. Following are the phases:
Fluid phase
This phase of innovation for Airbnb started by the search for discover innovative potentials
and ideas derivation that is subsequently evaluated. This discovers more options for
innovation as a new clarification in the logic of new product or amenities. This merge in a
one-pager by a sketch and description of ideas that are relevant for the organization, potential,
and usefulness of the idea that is very important. This support Airbnb to assesses the idea.
Transitional phase
This is also known as a phase of development (Papinniemi, 2019). The organization begins to
mature and earning decelerate the growth rate of the economy. Airbnb is currently in the
transitional phase. It is followed by Airbnb to gather more information as possible regarding
the ideas and its further procedures. At present organization is leading the industry as
understand requirements of customer and market. It is working within the possibilities to
enter the new market. The organization is capable enough to re-emerge in the new market
with the systematic approach by professional methods like interviews of customers, group
focus, observations of customers, and lead user workshops that are recommended to achieve
the greatest possible insight. For this organization uses technologies like marketing
implementation. This includes logistics behavior, production capabilities, and procurements.
Airbnb uses disruptive innovation to predict changes in the industry. Disruptive is a type of
technology breakthrough. Disruptive innovation and growth of a casual tourism
accommodation sector classify the organization as disruptive innovation by use of
Christensen's theory. This argues organization is disruptive due to an advanced internet-based
model and distinctive appeal with tourists. By the use of customer profiles, reviews,

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verification of identity, it permits peer to peer lodging. Hosts are capable to promote lodgings
using organization technology infrastructure to promote content. For visitors, it costs less
than staying in a room and delivers a local experience. This appeals low end of the market as
to offer low cost to rent. The prices of Airbnb for full apartment/home are lesser than five-
star hotels and rates of Airbnb are roughly comparable towards one and two-star hotels. The
organization is capable enough to price low due to fixed costs and minimal labor. By
delivering the unique benefits of low prices and local experience it has experienced higher
growth since 2007. It has transformed the industry into disruptive innovation.
Specific phase
This phase support organization to improve a ready to an answer that can be conveyed in the
market (Jing, 2010). These developed and built prototypes and tests carried out. These
concepts include bringing the produce to potential customers. This includes actions of Airbnb
regarding marketing and sales channel that are activated. The organization brings actions that
can be summarized like innovation marketing. It delivers the responsibility for the
management that is based on continuous evaluation and product analysis on the market. This
is fully based on the feedback of customers, market analysis at the quantitative level, and
measures to increase margins, sales, and satisfaction of the customer.
SWOT analysis
This organization allows to rent out, book accommodations, and explore people houses on a
short term basis. It enables people to share extra space and get an extra income. Head office
of the organization is established in San Francisco, United States. It is functioning in more
than 192 nations. Following are the SWOT analysis of Airbnb.
Strengths of Airbnb
It is a very well recognized brand and holds a reputed image in the public by good operations.
The business model of the organization enables the organization to compete by low price as
compare to guest houses and hotels. It has a global presence within 34000 cities with one
million listings as investors are available globally. The business model of Airbnb holds great
growth potential globally.
Weakness of Airbnb
Organization violating the housing laws and regulation in many nations. It is facing problems
regarding stemming from housing regulation and laws violations. Hoteling, housing laws, and
guest houses are illegal in domestic areas. The industry of hoteling as a competitor is

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destructive its concept. This organization is depended on the quality delivered by the hosts.
Many of the hosts do not monitor guidelines at a standard level that damage the reputation of
the organization. Model of business can be copied easily.
Opportunities of Airbnb
Many nations have changed housing regulations and laws. They have legalized the listings of
Airbnb as hosts must be listed by authorities that will pay the tariffs on review earned. It
provides the place with low prices and hosts personal touch. Organization exploits into
markets that ratios are low and hotels are expensive like UAE. Successful business model
innovation has provided many options to increase business rather than core business model
like car rentals, travel guides. The organization is fully automated and facilitate guests and
hosts to connect a secure way. For delivering security this organization verified guest profiles
and hosts by services of messaging. Cities are growing up in Airbnb favour. This has
increased the legal weight of the organization shoulders. This enhances a bit to its hosts as
they requisite to be accurately registered and pay tariffs after receiving a payout. The gape of
communication has been filled by the mobile application for two way communication. A
person uses mobile phones to reviews of room and looks up listings. This allows people to
look on the go.
Threats of Airbnb
The organization is facing lawsuits and fines throughout the nations like Florida, New York,
etc. Authorities of Barcelonan has fined Airbnb 30000 euros for violating laws of tourism.
Competitors of Airbnb are growing like FlipKey, Wimdu, VRBO, etc. In the subsequent year,
competitors can give a hard time with competition.
Conclusion
This paper illustrated the Airbnb porter five forces analysis. This support to identify that
organization has developed many strategies to gain a competitive advantage within the
industry. Airbnb technology cycle refers that the organization has suffered from many
changes. It has overcome many problems and established a specific position within the
competitive market. Further, it covers three phases of innovation model in which the present
phase of the organization is the transitional phase as an organization uses disruptive
innovation to lead the market with many strategies. At the end SWOT analysis of Airbnb
present that organization is enough capacity to deal with market situations.

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