Analysis of Innovation, Creativity & Entrepreneurship in Business

This report provides a critical analysis of the collaborative economy, examining its impact on various industries, with a specific focus on the hospitality sector and the disruptive influence of companies like Airbnb. The report explores the advantages and disadvantages of the collaborative economy, highlighting the importance of trust, authenticity, and transparency for success. It investigates how the hospitality industry is challenged by the collaborative model, with an analysis of job losses, revenue impacts, and evolving business models, including the application of Porter's framework. An in-depth case study of Airbnb showcases its competitive advantages, focusing on its innovative business model, scalability, and the creation of value for both hosts and guests. The report concludes with insights into how collaborative business models maintain their competitive edge through innovation and consistent value creation.

Running head: INNOVATION, CREATIVITY & ENTREPRENEURSHIP
Innovation, Creativity & Entrepreneurship
Name of the student
Name of the University
Author Note

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Executive Summary
In this assignment relating to innovation, creativity as well as entrepreneurship, there will occur a
critical analysis of the collaborative economy and in this regard, a particular industry will be
selected. Due to the development in the technological aspect, there is occurring a bright future in
respect of the collaborative economy. For getting success in the collaborative economy, the
companies are required building the trust among the users and do the conveying of authenticity
as well as transparency.

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Table of Contents
Introduction......................................................................................................................................3
Advantages and disadvantages of the collaborative economy........................................................4
Description of an industry being challenged by a collaborative economy model...........................5
Selection of an existing collaborative economy firm within the hospitality industry.....................7
Identifying certain unintended outcomes of the collaborative economy model..............................9
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................12

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Introduction
The collaborative economy business model is now considered being a known occurrence
in respect of customers as well as businesses throughout the globe due to the technological
development. The strength of individuals participating in the collaborative economy has
increased immensely and businesses like Airbnb as well as Zipcar functioning amid its impact
are in equal competition with large chain of hotels as well as car rental services. There will occur
the existence of the collaborative economy only when individuals will be having the willingness
for sharing. However, in respect of sharing there is the need for both the parties in being reliable.
Therefore, it is necessary that the users as well as the owners of the business do the leveraging of
reviews for providing assistance in building reliance all through the process. Also, due to the
development in the technological aspect, there is occurring a bright future in respect of the
collaborative economy. For getting success in the collaborative economy, the companies are
required building the trust among the users and do the conveying of authenticity as well as
transparency. In this respect, there is the requirement for having awareness regarding the four
significant values that are associated with the social aspects, economic aspects, practical aspects
as well as sustainable aspects, and integrating them as a significant part of the collaborative
economy experience.
In respect of Airbnb, it can be stated that the company does the selling of products that
are considered being uncommoditized. Individuals are caring a lot on respect of where they
would stay and therefore, variety is considered being significant. The key is the process of
listing. Airbnb is having at present, more than a million listings. In addition with the economic
advantages, collaborative economy will be contributing as well to new experiences, new

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associations and, most importantly, the capability of getting the service or product at a
convenient time as well as location.
Advantages and disadvantages of the collaborative economy
Collaborative economy is also considered as the sharing economy that will be allowing
individuals in sharing assets, services as well as time with other individuals and getting
incentives, in monetary or in kind. Nevertheless, collaborative economy is having its own
advantages as well as disadvantages. Collaborative economy has brought with itself various
opportunities related to outsourcing. There occurred benefit for businesses through the supply of
part-time workers that are having the availability at reduced expenses. They will be hiring
freelance workers and will be continuing to do their employment when they prefer. Uber as well
as Task Rabbit are considered being the examples of such organizations (Lu 2016). This aspect
states that the collaborative economy is considered being effective in respect of businesses and
professionals.
Amongst the other advantages of the collaborative economy, lower cost is considered
being an advantage along with affordable price and regarded as one of the major criteria
associated with the selection of collaborative economy. For instance, to rent a luxury apartment
on Airbnb can be compared to the price regarding a hostel and a ride utilizing BlaBlaCar will not
be costing more than a train ride. Along with the economic advantages, collaborative economy
will be contributing as well to new experiences, new associations and, most significantly, the
capability of getting the service or product at a convenient time as well as location (Zhou 2015).
For instance, there occurred the launching of the Airbnb service naturally when decision was

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made by the homeowners for renting it out to the conference visitors when there wasn’t the
availability of any hotel rooms.
Irrespective of the various advantages, collaborative economy is also having certain
disadvantages as well. One of the major concerns is associated with the aspect of lacking
adequate attention relating to security concerns. For instance, Airbnb can also do the raising of
issues relating to customer safety as well as annoyance in respect of the hosts’ neighbours.
Hotels are having regular inspection for ensuring that they there are no fire traps and they are not
posing any threat respect of the visitors. But, the hosts of Airbnb are not facing any such
scrutiny. Also, in respect of Uber it can be stated that the company is presently having
disagreements with the regulators over whether its cars are meeting the safety as well as
insurance needs imposed on normal taxis (Norman 2017). One more disadvantage of the
collaborative economy is that it will be leading towards the degradation of wages.
Description of an industry being challenged by a collaborative economy model
The hospitality industry is being challenged by the collaborative economy model. With
the coordination of transactions through the internet and taking place amongst private
individuals, key brands within the hospitality industry is facing the economic influence of the
online resource sharing platforms. It has been estimated that the hotels are losing approximately
$450 million in direct revenues every year to Airbnb. According to a report, between September
2014 and August 2015, there occurred the reservation of 480,000 hotel room nights while there
occurred the booking of more than 2.8 million room nights on Airbnb. By 2018, it is being
estimated that Airbnb room nights will be reaching 5 million every year (Kitchin 2016).
Therefore, it is clear that Airbnb (vacation rental site) has reduced the demand in respect of

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traditional hotel rooms (Dino 2015). In addition, many hotel staffs are facing job losses due to
these plummeting demands. Also, the vacation rental site is less labour intensive in comparison
to hotels since they are not requiring similar level of service. There have occurred almost 2,800
direct job losses to Airbnb and a loss of around $200 million in income in respect of the staffs of
hotels. Because of the reduced demand of the hotel rooms will be occurring an additional adverse
impact in respect of the hotels as well as their staffs. When guests will be selecting not to stay in
a hotel then the money that would have been spent on foods and beverages at the bars and
restaurant of the hotel will be spent somewhere else (Gundry 2014). As a result, the hotels are
losing out on the profit they would have otherwise received from the visitors and to be precise,
around $108 million of food and beverage revenue is getting lost since travellers are making the
choice of booking with Airbnb.
The incumbent business model in the hospitality industry has started evolving in due
course of time, because of the impact of the technological, social as well as economic factors.
The social factor, the changing aspect regarding the customer behaviour was having the highest
influence in relation to evolution of the business models towards the innovative model of
business. The new technological developments has turned out to be a way to ensure success as it
is offering the scope to expand the channels of distribution, reducing the reservation processing
time as well as creating the organizational network that is having the involvement towards the
maintenance of the value chain (Ahlin 2014). For meeting the higher power of negotiation
regarding the buyers as well as competition, hospitality companies are required making
continuous innovation for maintaining their market position. Moreover, there is occurring
continuous change relating to the needs of the customers, and there occurs the triggering of this
change through new technological aspects.

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Porter’s Framework of Competitive Advantage
The framework of Porter will also be referring to the power of suppliers as well as
buyers. The suppliers of Airbnb will be having limited power, or else their rooms will be
remaining vacant. The buyers of Airbnb are similarly having limitation due to the dearth of
competition in the space. They could possibly do the identification of the space they would like
renting on the website of Airbnb and then contacting the seller in a direct way, evading the
Airbnb premium, but to do the seller will be bypassing the insurance clause of Airbnb as well as
the payment collection process. The last part of the Porter’s framework is concerned with the
threat that the substitutes are posing. There is another service similar to Airbnb that did the
actualization of remarkable opportunity but has not been able to achieve Airbnb-type profits.
Couchsurfing.org will be facilitating free stays on “couches” in respect of members regarding
their network, but the business model and experience is very much different from Airbnb
(Dawson 2014).
Selection of an existing collaborative economy firm within the hospitality industry
An existing collaborative economy firm within the hospitality industry is Airbnb. Within
a span of only seven years, Airbnb did the disruption of the 1300-year-old hotel industry through
the creation of a “collaborative travel revolution” where everyone will be capturing superior
value. Airbnb started its operation in 2008 and did the creation of an online marketplace that
connects travellers to the potential hosts. At present, Airbnb is having more than 1,50,000 host
listings offered in more than 30,000 cities and more than 190 countries. It all begins with the
basic supposition that home owners are having vacant rooms that might not be getting used.
Airbnb is allowing these home owners in making some additional cash by posting these rooms

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on listings, together with photographs as well as details, making connection with potential guests
and renting them out (Florida 2014). Airbnb is considered being a marketplace that is facilitating
the exchange between the home owners as well as travellers and providing an online method of
reservation that is facilitating transactions in an honest as well as dependable way.
Having a flexible platform, transparency, trust as well as dependability, Airbnb did the
management of relying upon listings as well as contents that are generated by the users. It’s
function is facilitating as well as assisting the value creation of other individuals and through that
the value is getting multiplied in an exponential manner. In respect of that, Airbnb is charging a
3% host service fee in respect of every booking as well as 6 to 12% of the cost of reservation in
respect of the guest.
Unlike linear businesses within the hotel industry, Airbnb will be scaling at an incredibly
fast rate at little to no marginal expense. By making their customers partners, Airbnb did the
creation of a platform for the creation of value for every individual as well as sharing that value
through the orchestration of the network as well as facilitation of the connections. With a solid
platform, a better reputation as well as a developing community, Airbnb will be finding itself to
be in a strong position for the sustenance of its competitive advantage. Through innovation as
well as proven consistency, Airbnb will be continuing with the creation of value.
The ways by which the collaborative business model in respect of Airbnb will be
maintaining a competitive advantage is mentioned as under,
1. One of the competitive advantages of Airbnb is that unlike hotels, it is not controlled by the
growing variable costs. As an alternative, Airbnb will be offering an incredibly generous list of
rooms, in countries throughout the globe. The company website is having listings in 192

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different countries as well as 34,000 varied cities. Airbnb will be allowing the users in navigating
these listings in an intuitive manner because of the various characteristics on its website. The
Airbnb model is therefore, an example of ICT that might be lowering the costs of searching by
offering a plethora of information as well as the methods for managing, processing as well as
evaluating it easily (Carland 2015).
2. Another competitive advantage of the expansiveness regarding the listing of Airbnb is the
manner in which the organization will be tracking the user’s preferences. Along with the
collection of data through the tracking of the browsing behaviour, Airbnb will be having the
ability for gaining a better portrayal of its users when they sign-up for the service via the
website’s Facebook Application Programming Interface (API).
3. Another competitive advantage of the company is also associated with its major investment
regarding “big data” information technology. The major objective of such an investment is
mainly learning more about the user’s habits as well as preferences (Anderson 2014).
Identifying certain unintended outcomes of the collaborative economy model
The collaborative economy is having a steadfast growth. Websites such as EBay,
TripAdvisor that are relying on peer to peer communications are established, everyday services.
An increasing number of sectors are having a peer to peer component, from accommodation and
travel to lending as well as retail. In general, this has been a positive growth. There is occurring
the circumvention of the old structures of power as individuals are providing things in respect of
one another. Increasing number of individuals is having the ability of making an income from

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their interests, their vacant rooms as well as with the spare time they have. But from a different
perspective, it can be stated that the broad shift in the cultural aspect is creating winners as well
as losers (Ludvig 2016). At times, mistakes are taking place. In certain places, the authorities are
acting fast for getting acquainted with the business models that are blurring the boundaries
amongst the individual as well as commercial interests in certain new as well as confusing
manners (Dentchev 2016). For instance, when a website such as ‘Zopa’ will be set up and peer-
to-peer lending becomes a possibility, it will be undermining the voracious banking industry and
will be feeling like financial power getting redistributed.
When collaborative economy substitutes will be undermining the traditional small
businesses, it must be dealt with utmost concern. For instance, let us consider the situation of a
family-run bed & breakfast that will be seeing its number of visitors getting reduced due to the
coming up of new Airbnb rooms in close proximity. In another scenario, it might occur that all of
a sudden, individuals start facing eviction from their rented apartments due to the fact that owner
had felt he could be making more money doing temporary lets (Pacione 2014).
In another scenario, taxis in San Francisco might be taken into consideration. In 2012,
there was the launching of the ride-sharing app Uber and in the next two years there has been the
dropping of the number of cab journeys by 65%. This might be regarded as a matter of ease in
respect of the users but on the other hand, this has been proved to be a overwhelming income
loss in respect of taxi-drivers (Dawson 2014).
This challenging situation is occurring in Britain in recent times in respect of courier
services. Certain courier services that are considered being the cheapest are keeping their costs
low through the hiring of freelance drivers or ‘lifestyle couriers’. These drivers are being paid as

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less as 35p per delivery in certain cases, making it a very underpaid work in respect of those that
are depending upon the income (Pillay 2014).
There also occur concerns relating to taxation as individuals who are running little
businesses on the side are not making declaration about it. There is also occurring the aspect of
overlooking the rules regarding health and safety that will be getting applied to traditional
businesses. Finally, it needs to be understood that there is nothing completely positive regarding
peer-to-peer models of business (Cropley 2014). It cannot be assumed that these business models
are always better, that there always occurs sustainability of the ‘eco-products, or that the digital
products are having a reduced carbon footprint in comparison to the physical ones.
Conclusion
To conclude the assignment it can be stated that the advantages as well as disadvantages
regarding the collaborative economy have been explained briefly. Then, there has been the
selection of the hotel industry that is being challenged by a collaborative economy model. An
explanation has been provided regarding the hotel industry’s incumbent model and ways to
create as well as capture value. A selection has been made in respect of one existing
collaborative economy firm such as Airbnb within the hotel industry. There has also been the
requirement for analysing in what ways the collaborative economic business model will be able
to do the creation as well as capturing of superior value. Moreover, the competitive advantage
regarding the collaborative economic business model has been discussed as well. Also, there has
been the identification of certain unintended outcomes of the success regarding the collaborative
economy model.