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,