Strategic Management and Leadership Analysis of Airbnb's Success

This report provides a comprehensive strategic management and leadership analysis of Airbnb. It begins with an introduction to Airbnb, defining success, and outlining the reasons behind its achievements. The report delves into an internal analysis of Airbnb, including a value chain analysis that examines primary and support activities, and identifies the company's core competencies. The VRIN framework is used to assess the sustainability of Airbnb's competitive advantages. Furthermore, the report explores the contributions of leadership to Airbnb's success, discussing leadership methods, management theories, and organizational culture. The analysis also covers the company's strategy, and concludes with an analysis of Airbnb's future prospects and recommendations. The report uses quantitative data, graphs and tables to support its arguments.

Running head: STRATEGIC MANAGEMENT AND LEADERSHIP 1
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Contents
Introduction................................................................................................................................................3
Definition of success..................................................................................................................................3
Reasons for success...................................................................................................................................4
Internal analysis of Airbnb........................................................................................................................6
Value chain analysis..............................................................................................................................6
Inbound logistics....................................................................................................................................6
Operations..................................................................................................................................................7
Outbound logistics.................................................................................................................................8
Marketing and sales...............................................................................................................................8
Services..................................................................................................................................................8
Three core competencies of Airbnb...........................................................................................................9
VRIN Framework....................................................................................................................................10
The contribution of the leadership to the success of Airbnb...................................................................10
Review of the strategy used by the company..........................................................................................12
Analysis of the future of Airbnb..............................................................................................................13
Conclusion...............................................................................................................................................14
Introduction
Airbnb Inc is a private online company operating in the hospitality industry. The
company has faced various challenges since it started operating. The major problem

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faced by Airbnb is that it has had many legal battles due to different laws in different
countries in which it operates (Hitt, Ireland &Hoskisson, 2012). The company is also
facing stiff competition from the hotel industry players who offer their services
online. Privacy and terms of use are also one of the major issues that the company is
battling currently.
Definition of success
Success can be described as an achievement of an action within a specified period
or a specific parameter. The definition of success depends on the subject under
discussion. The success of a company or an organization depends on the vision and
mission of a company. Different stakeholders in an organization view success in
different ways. Shareholders will measure success depending on profits of the
company and customers may judge according to quality of products and image of the
organization.
Another method of measuring success is depending on the rewards awarded to the
company. Airbnb was named Inc company of the year in2014. The other recognition
that Airbnb has received is the best employer of the year 2019 among the mid-sized
companies.
Data from Glassdoor company ranked Airbnb as the best workplace in the year 2016.
the conclusion was based on anonymous employee reviews where 90% of the
employees stated that they would recommend the company to others. This indicates
that there are high levels of customer satisfaction within the company.

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Airbnb has come a long way especially over the last one decade.The company
has seen an increase in number of listed customers, hosts as well as increase in
revenue. Within a period of 10 years, Airbnb has been able to host approximately
260million guests(Farronato&Fradkin, 2018). Currently, Airbnb has approximately
150million customers who are registered in their systems as users. As at the end of the
year 2018, Airbnb has approximately four million rooms/ apartments
(Farronato&Fradkin, 2018). The company operates in more than 191 countries
globally and 65,000 cities.As at the end of the year 2018, it was estimated that Airbnb
hosts at least two million people every single night(Biber, Light, Ruhl & Salzman,
2017). The company experienced a 60% increase of guests between the year 2017 and
2018.

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The revenues of Airbnb currently stands at $2.8 billion which is almost double of
the closest competitor.Airbnb has been able The following is a graph showing growth
of Airbnb revenue between the year 2008 and 2017;
Source;growthhack
This shows the degree of growth that the company has experienced within a
relatively short time. The growth rate of the company cannot be compared to
competitors in the hospitality industry. Below is a table comparing the financial
performance of Airbnb and its main competitors.
Company name Employees Revenue($)
Airbnb 4000 2.8B
Homeaway 2000 500M
Tripadvisor 3366 1.6B
Hotels.com 499 200M
KAYAK 205 375M
Source;Owler.com

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According to a survey conducted by peers Morgan, the customer loyalty for Airbnb is
89%. The customer loyalty can be attributed to unique experiences of guests who use
the service. The following is a graph showing the level of customer satisfaction based
on various parameters;
Source:growthhack.com
Reasons for success
There are various factors which contribute to the success of a business. The
factors that may contribute to the success of one organization may be different from
the reasons for success for another business. There are however basic factors which
contribute to the success of any given business organization. The reasons which can
be attributed to the success of Airbnb are:
Having an innovative unique idea-Today`s business environment is very
competitive irrespective if the industry in which the company is operating. MrChesky

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and MrGebbia had a very unique idea of sharing homes and rooms(Gibbs, Guttentag,
Gretzel, Morton & Goodwill, 2018). Not many people at the time would imagine
renting out their room to another person. This idea is the main reason why Airbnb
exists today.
Having talent-Long term success of business requires an entrepreneur to
assemble a team with outstanding talent (Liu & Mattila, 2017). MrChesky who is the
CEO of the company employed highly qualified engineers who helped to build a user
friendly interface which was critical to the long-term success of the company.
Building networks-It is important that an entrepreneur identifies like-minded
individuals and organizations. When Chesky became CEO,one of his main
responsibility was to forge networks which resulted to partnerships and hence the
success of Airbnb (Forgacs& Dimanche, 2016).
Hard work- Hard work involves doing more than necessary in order to aid the
growth of an organization. Both Chesky and his co-founder worked for so many hours
to establish and grow the company.
Having adequate resources- For any business to become successful, it must have
enough resources which aid in production. Airbnb depends on angel funding as well
as debt financing as a method of raising capital(Gutiérrez, García, Romanillos& Salas,
2017). Therefore, resources need to be available at the right time and in the right
quantities.
Another reason for the success of a business is its ability to market itself as well
as the products or services offered. Airbnb leveraged on internet marketing and
Facebook to attract new customers.

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Dedication- For a business to become successful, it must have leaders who are
dedicated to the organization. MrChesky is the CEO of the company and this means
that he is very committed to the company that he started.
Planning-planning is very crucial for the success of an organization. Planning
involves putting the right resources and materials in place . The management of
Airbnb has been able to plan appropriately and hence this has contributed to optimal
utilization of resources (Guttentag, 2015)
Internal analysis of Airbnb
Value chain analysis
Value chain analysis is a method of determining the critical path which enhances
customer value while at the same time minimizing the cost of offering a product or
service (Coyle & Yeung,2016). The method was developed by Michael Porter, and it
encompasses five forces of a value chain. The method has been very useful to firms
especially at this period where there is stiff competition in every industry. The method
helps organizations to develop competitive advantages which help them to remain
competitive in the market. A value chain refers to all activities that take place until a
product of value is delivered to the end consumer. Value chain analysis of Airbnb
helps in identifying changes in areas or activities which could result from increasing
efficiency or profitability of the company. Below is an illustration and discussion of
Airbnb Value chain :
Primary activities
Hosts list properties
For lease
Customers profile
Created in Airbnb
Client chooses
and
Books room
Remittance of
agreed fee
Customer
occupies the
facility

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Support activities
Inbound logistics
Airbnb is a company offering hospitality services online. It is important to
identify activities which go on to facilitate the availability of services to customers.
For Airbnb to provide value to customers there has to be the host. Hosts are the
suppliers of the apartments which are offered to customers for rent. The host brings
apartment units/homes to the table. For Airbnb, there are two types of hosts;
Rental hosts- they offer houses, rooms and places for exotic stay such as castles
and many more.
Events host-the events hosts organize events such as food, art, fashion, and nightlife
which customers can enjoy in the places they visit.
Each of the inbound activity created offers value to consumers. The following is the
value proposition for the inbound logistics of Airbnb:
Airbnb offers customers individual connections. Unlike hotels and restaurants, the
company helps to create a unique connection between the customer and the host
(Bashir &Verma, 2017). This means that the company offers tailor-made services to
both the customer and the host.
Procurement Firm infrastructure Human resource Research and
development

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Airbnb also helps to offer community connections to both parties. Content
generated previous is used to connect guests as well as hosts in the same locations or
wishing to visit specific locations and hence they can exchange useful information
(Libert, Wind &Fenley, 2014). This platform is not available for hotels.
The Company offers increased information to the client and offers a wide range of
options from which customers can choose.
Customers can book conveniently through cashless transactions and hence to make
the system more secure.
Operations
The operations of the company are very efficient and streamlined. This is because
the business model of the company is based upon the online network. Customers have
full-time access to apartment offered on the website by the hosts. A customer can
book an apartment at any time of the day or week they may choose. This offers
customer convenience which they may lack in hotels. The interaction between the
host and client is also very fast since it happens online through the platform that the
company offers (Guttentag, 2015). The customer can gain value since the platform
enables the customers to transact without handling any cash.
Outbound logistics
For Airbnb, the processing of customer bookings is very fast since the bookings
by a customer are reserve once the customer has paid for the room. This is unlike
many hotels where customers have to quire and provide many details to be able to
check in. The customer is also able to interact easily with the locals through the
contacts offered in the platform of homeowners as well as customers in the same
location (Freeman, 2010).

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Marketing and sales
Airbnb has a team of talented and experienced management which has helped to
develop marketing strategies that are appropriate for the organization. The team of
management is made up of people with vast experience and understanding of
customer needs in the hospitality industry. The top talent has helped the company to
identify methods of minimizing costs and hence increasing value for the customer.
The company also has substantial financial resources which support the company in
enjoying economies of scale. Airbnb was valued at $31b as at June 2017. Airbnb has
been able to market itself as a low-cost option that offers customers increased
convenience, choice while at the same time saving them money.
Services
Airbnb has customer care employees who are highly trained and professionals.
They know how to handle customers and cater to their needs whenever they face
challenges in using the companies system (Kavadias, Ladas & Loch, 2016). The
company carries regular training programs for employees to equip them with
knowledge and skills to help improve the experience of customers who use Airbnb
online platform. Given the fact that customers do not interact directly with the
employees of Airbnb, the company has undertaken to train homeowners on customer
relations. The model of the company also allows customers to review the hosts and
vice versa and hence customers can get an idea of the type of person they are
interacting with.
Human resource management
Airbnb has a very strong team of employees who are highly talented. The company
has employees in the engineering and IT department which helps the company to
remain innovative and to offer high quality services to customers. Airbnb also has

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employees in other department who help in supporting the core activities of the
company.
Technology development
The company keeps on improving its website in order to provide a user friendly
interface through which customers can interact easily. The company has also invested
heavily in research and development in technology.
Procurement
The procurement process at Airbnb is centralized. This greatly helps in increasing
efficiency as well as minimizing procurement costs for the company.
Three core competencies of Airbnb
Low cost-According to a comparison carried out by Busbud.com, prices for
apartments and units in Airbnb vary from one city to another. The study was based on
more than 200,000 Airbnb listings. The study revealed that generally, the prices of
Airbnb are way lower as compared to prices of hotels of similar quality (Demary,
2015). Customers booking single rooms can reduce costs since amenities such as
kitchen and bathroom are shared.
Innovation- Airbnb innovation is one of the main contributors to its success
today. The company develops new products and services tailor-made to meet
customer needs. The company has also come up with innovative ideas which have
helped to solve the challenges experienced since the company began operations. This
has helped to offer customers increased value for their money and to improve
customer experience.
Convenience- Customers using Airbnb can get services more conveniently since
they can compare a variety of rooms available in a particular location (Zervas,

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Proserpio& Byers, J. W. 2017). All transaction are also carried out online and hence
increasing convenience.
VRIN Framework
Activities VRIN Sustainability
Inbound logistics V-YES. Host property is the
most important resource it is
the product offered to
customers. Without the listed
properties, the organization
would cease to exist.
R-No. This resource is not rare
since any willing person can list
their property to be leased out
to customers on Airbnb.
I-Yes. Any person can list their
house on Airbnb but they
cannot imitate the systems of
the company.
Non-substitutable-Yes.Host
property cannot be
substituted.Airbnb cannot find
another resource to substitute
the listed properties.
Yes-More and more hosts are
willing to list their property and
hence the supply of renting
units will be constant for the for
the future.
Outbound logistics V-Yes. Customer satisfaction is
of great value since it ensures
that customers become loyal to
the organization.
R-Yes. It is very difficult to
achieve the levels of customer
satisfaction like Airbnb which
has a rating of 89%.
I-No. It is not possible to imitate
customer satisfaction since
different companies use
different means.
N-No. It is possible to substitute
this resource with another.
Yes-The company keeps
customer satisfaction at the
center of its strategy.The
company ensures that each and
every customer gets value for
their money and offers them
convenience.
Marketing and sales V-Yes. The marketing strategies
of the company are highly
valued since they contribute to
Yes- the company uses modern
methods of marketing which
are sustainable to the business.

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the growth of the organization
R-No. There are several other
companies which applies similar
marketing and sales strategies.
I-Yes. It can be imitated by
other players in the market
since its not unique to Airbnb
N-No. The marketing and sales
cannot be substituted since it
would result to decline of the
company
Online and social media media
marketing has been very critical
to the business.
Operations V-Yes. The network used by the
company is very valuable
because it provides good user
interface which enables clients
to interact with the hosts. The
system also enables the clients
to transact payment as well as
provide feedback.
R-Yes. There is no other firm
with a strong online user
interface like Airbnb. Despite
other competitors offering
online booking, their systems
are completely different and
are not as reliable as those of
Airbnb.
Inimitable-No.It is very costly to
imitate this resource because
the systems of Airbnb are
patented. Creating such a
system would cost a competitor
a lot of resources.
Non-substitute-Yes. It is not
possible to have an alternative
of a strong user interface for a
company with a business model
similar to Airbnb.
Yes-Thecompany keeps
upgrading the system to meet
the needs of users.Operations
are also being streamlined by
solving the legal challenges
faced by the company.
Service V-Yes. The services are of very
high quality hence customer
loyalty
R-No. The services can be
offered by hotels and
Yes-the services help in
resolving issues facing both
hosts and customers. The
services are very sustainable
since there will always be

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restaurants
I-Yes. Can be copied by
competitor
N-Cannot be substituted
demand for hospitality services.
Firm Infrastructure V-highly valuable since they aid
in delivering high quality
services
R-Competitors can have the
same infrastructure
I- can be imitated easily
N-Not substituted for any other
form of infrastructure
Yes-the company has a very
strong infrastructure which
supports its own core activities.
The infrastructure system of the
company mainly comprises the
online network which enables
both hosts and customers to
transact easily.
Human resources V-They contribute to added
value in the organization
R-People with the knowledge
and expertise are many
I-Yes. The human resources of
the company can be imitated by
competitors.
N-can be easily substituted for
machines and robots
Yes- Airbnb has highly qualified
and talented employees. The
company offers training and
mentorship programs to ensure
sustainability of the workforce.
Technological development V-very valuable to the company
since it offers customers great
convenience.
R-The technology used by
Airbnb is common and its used
by many other companies both
within this industry and in other
industries.
I-can be easily imitated to
produce similar technology
N-No. The technology cannot
be substituted for any other
type of technology.
Yes-the company has invested
in research and development
and has employed many
engineers to improve the
website to make it easy for
customers to use.
Procurement V-this occurs by hosts listing on
the website mostly through
referrals
R-Highly optimized and hence
Yes-The company procures
from the hosts. It recruits hosts
on its websites and the number
of listings have increased by

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increasing efficiency
I-can be imitated by other
companies
N-can be substituted because
other companies can come up
with similar procurement
processes.
more than 70% over the past
five years. Listings in cities are
expected to increase further in
future
This framework is used to analyze how the resources of an organization
contribute to the competitive advantage of the organization. Resources of a firm
include assets, processes, firm attributes as well as knowledge and information.
The contribution of the leadership to the success of Airbnb
Leadership is a very important aspect of contributing to the success of any
business. The success of Airbnb can be mainly attributed to the leadership of the
company since its inception up to the point which the company is currently. The
leadership of Airbnb contributed greatly to the establishment of the company. In
October 2007, Brian Chesky and Joe Gebbia lived in San Fransisco, and they
struggled in paying rent (David & David, 2013). They had to think creatively, and
hence they focused on an upcoming conference on industrial designer’s society. The
pair knew that there could be a shortage of rooms due to the huge number of people
visiting the city and hence they rented out their air mattresses for $80 a night. After
the apartment was booked for the occasion, they set a venture which they called
Airbed & Breakfast. The venture would focus on designing blogs with an
advertisement on the features of the apartment. The following is an illustration of
MrChesky transformational leadership style.

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I
MrChesky is a very visionary leader. Even when other people do not believe in
his vision, he was able to move on and execute what he believes .At the time when
Airbnb started, none of the three co-founders had prior management experience.
Gebbia and Blecharczyk had prior experience in business, but none of them had
played a role in the management of a company (Noe, Hollenbeck, Gerhart & Wright,
Transformational leadership
Leading through
change
Translating
strategy into
action
Building strategy
relationship
Leveraging
emotional
intelligence
Inspirational
motivation

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2017). The leadership of the company has learned through experience. Airbnb has had
a fair share of challenges and controversies in the recent past. Airbnb CEO Mr.
Chesky has contributed immensely to the growth of the company over the years. Mr.
Chesky faced the challenge of sourcing finances for the company. He approached
venture capitalists who invested in the company, and this helped Airbnb to expand its
activities.
MrChesky can also be described as a transformational leader . The theory of
transformational leadership establishes that a leader works with the team to identify
needed change and create and guide the organization towards achieving the
vision.The CEO of Airbnb also helped to establish an organizational culture based on
unique human experience (Sans &Quaglieri, 2016). The company requires each
apartment to have a kind and personal touch which is highly hospitable. The CEO
believes that human touch is essential in meeting the needs of customers. This
explains why one of the core values of the organization is a passion for humanity as
well as a commitment to being helpful and hardworking(Antikainen&Valkokari,
2016). . The leadership style of the CEO is democratic. Mr. Chesky allows employees
and other junior staff to get involved in making important decisions for the company.
He allows every employee to express themselves and maximize their talents in
helping to solve the challenges facing the organization.
The other aspect of transformational leadership that MrCheskyposses is the
ability to transform strategy into action.The management of the company through
Chesky and Gebbia built a perfect user interface which is essential in making it easy
for customers to use the system (Wang &Nicolau, 2017). They used a principle by
Steve Jobs about helping customers to book accommodation with just three clicks.
This has made the system more convenient and attractive to consumers.

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MrChesky also uses the strategy of leading the company through change. He
understands the change management process and is ready to take risks. By leading
through change, MrChesky has been able to improve the image of the company and
improve the experiences of customers(Freeman, 2010).Mr. Chesky has helped Airbnb
to become successful because he has confronted the challenges faced by the company
broadly. He has been able to solve safety issues which were a major black spot for the
company. Chesky raised the Host Guarantee insurance from $5,000 to $50,000.
(Zekanovic-Korona &Grzunov, 2014, May) The company also publicly apologized
after the much-publicized case where the apartment of the host had been vandalized.
In addition to this, the leadership of the company has steered the company to
overcome most of the legal battles, and this has greatly contributed to the growth of
the company.
Review of the strategy used by the company
Airbnb uses blue ocean strategy.The strategy is a combination of differentiation
and cost strategies. These strategies have helped the company to grow despite the
fierce competition that it faces from hotels and other players in the hospitality
industry. The blue ocean strategy focuses on aligning innovation with utility, price
and cost to the company. Airbnb has been able to outdo its competitors by coming up
with a unique product which is highly differentiated and less costly than that of
competitors. Below is an illustration of Airbnb position in the blue ocean strategy:

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Pioneers
Migrators
Settlers
2003
2008 2013 2018
Airbnb has outgrown its rivals in this industry because it was able to
revolutionalize hospitality and travel by offering customers unique products. The
products offered by Airbnb are differentiated from those of competitors because the
company focuses on shared accommodation. The company does not own any of the
apartments or homes that are put up for lease in the companies` website. Instead, the
company recruits home owners who are willing to offer their rooms or homes for a
particular fee. Airbnb. The owners of the apartments are referred to as hosts.
Information about the listed property is then uploaded on Airbnb website with all the
relevant information including photos of the rooms, location and costs. Any
Tripadvisor Airbnb
Hotels.com Airbnb Homeawa
y

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customers visiting the website are therefore able to book and occupy any apartment
they choose. Airbnb therefore acts as a bridge between the hosts and the clients. This
is unlike the hotels and restaurants who own the spaces. Airbnb products are
differentiated since most of the rooms are more spacious, luxurious and offers more
privacy compared to competitors. The other differentiating factor between Airbnb and
competitors is that Airbnb offers customers convenience. All bookings take place
online within just a few minutes. The platform also offers both clients and hosts an
opportunity to interact and communicate important information which could be
crucial to both parties.
Research carried out in the US indicates that generally, prices of Airbnb
apartments and rooms are generally lower compared to hotels of similar quality and
standards(Oskam& Boswijk,2016). This has greatly attracted customers to use this
service. Airbnb also offers customers convenience compared to hotels and restaurants.
Customers can book a room within a few seconds, and they can use cashless payment
methods. The company also offers customers a wide range of options to choose from.
Analysis of the future of Airbnb
So far, Airbnb has been very successful despite the challenges it has faced. The
future of Airbnb is analyzed using the PEST method. The political and economic
aspects of PEST analysis are used in this paper.
Airbnb faces political and legal issues which may hamper its growth in the future.
Airbnb has faced opposition in some countries, and hence this may act as a challenge
as the company grows in the future (Mittendorf, 2016). Most states don’t have
unregulated housing laws, and this has made the operations of Airbnb difficult. Cities
also have different regulations and complying with the varying regulations has been

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very difficult for the company. Airbnb is therefore expected to overcome political and
legal issues in the future to continue with its growth trajectory.
Airbnb is expected to boost the economy of most cities since it will contribute to
more people visiting these cities as a result of affordable accommodation. Most
people will, therefore, be encouraged to travel in different cities of the world since
they can rely on Airbnb to get affordable quality accommodation even for a big
family. Airbnb is also expected to contribute to a shared economy where people
embrace the sharing of resource for the mutual benefit of both parties. Airbnb is
developing a new culture where resources are shared between individuals and
corporate organizations (McNamara, 2015). Airbnb is expected to increase its market
share and gain a significant portion of the market held by hotels and restaurants. The
company is becoming increasingly popular in Asia and Africa which are some of the
areas that the company has not been doing well.
Conclusion
This report analyzes and discusses the strategies which have helped Airbnb to
become a highly successful company. The paper begins with a discussion of different
measures of success for an organization. KPIs and profitability are discussed in the
paper. The general reasons for the success of business include; innovations,
determination and persistence, hard work, networking and having the required
resources. A value chain analysis of Airbnb is conducted to determine core
competences which give the company an advantage over rivals. The primary as well
as support activities of the business are discussed. The VRIN framework is also
presented in this paper. This report also examines the contribution of the leadership of
the company to its success as well as the future of the company.

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