The general manager for Airbnb in Spain and Portugal, Jeroen Merchiers is pondering about several issue as he prepares to delegate responsibilities in Iberia and take on a larger European role. Airbnb, the peer-to-peer tourist accommodation market place that was one of the most successful representatives of the so called "share economyA? had experienced tremendous growth since its inception in 2008. The spectacular growth was based, besides its first mover advantage, on the fact that the company knew how to foster the one key ingredient that allows a peer-to-peer online business to thrive: trust. Besides choosing the correct strategy for dealing with the opposing hotel industry association on regulatory issues and with cities and municipalities over taxation and safety concerns among other topcis, JeroenA?s other main challenge was how to sustain the enviable growth the region had experienced in his three year tenure. To that extent several growth initiatives were considered such as addressing more high-end segments beyond the usual budget-conscious travellers or to look beyond the traditional city-break traveler to reach tourists seeking rural getaways or vacation rental properties. As a possibility he wondered if the Pyrenees region was worth looking into but he would be entering a competitive landscape where several other providers, such as the travel service giant Booking.com, already had a strong foothold.But rapid growth into unfamiliar territory brings its own set of issues. Without the right mechanisms in place to continue fostering trust, such rapid expansion could compromise quality and service levels. Merchiers and Airbnb senior management had a lot to think about and no easy answers. How should the company grow in new geographic and demographic segments without compromising the trust between property owners (hosts) and guests that has been at the heart of AirbnbA?s success? How should they engage with city officials to answer the regulatory issues? Finally, what should they do to integrate hosts into the business model and decision-making process, in order to strengthen their sense of community and avoid bad press?
Authors :: Mario Capizzani, Tommy Kim, Stefan Obersriebnig
Swot Analysis of "Airbnb: WhatA?s Next?" written by Mario Capizzani, Tommy Kim, Stefan Obersriebnig includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airbnb Peer facing as an external strategic factors. Some of the topics covered in Airbnb: WhatA?s Next? case study are - Strategic Management Strategies, Economy, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Airbnb: WhatA?s Next? casestudy better are - – there is backlash against globalization, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Airbnb: WhatA?s Next?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Airbnb: WhatA?s Next? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airbnb Peer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airbnb Peer operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Airbnb: WhatA?s Next? can be done for the following purposes –
1. Strategic planning using facts provided in Airbnb: WhatA?s Next? case study
2. Improving business portfolio management of Airbnb Peer
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Airbnb Peer
Strengths Airbnb: WhatA?s Next? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airbnb Peer in Airbnb: WhatA?s Next? Harvard Business Review case study are -
Learning organization
- Airbnb Peer is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Airbnb Peer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Airbnb: WhatA?s Next? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Airbnb Peer in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Airbnb Peer has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Airbnb: WhatA?s Next? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Airbnb Peer is one of the leading recruiters in the industry. Managers in the Airbnb: WhatA?s Next? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Sales & Marketing industry
– Airbnb: WhatA?s Next? firm has clearly differentiated products in the market place. This has enabled Airbnb Peer to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Airbnb Peer to invest into research and development (R&D) and innovation.
Strong track record of project management
– Airbnb Peer is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Airbnb Peer has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Organizational Resilience of Airbnb Peer
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Airbnb Peer does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Airbnb Peer is present in almost all the verticals within the industry. This has provided firm in Airbnb: WhatA?s Next? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Low bargaining power of suppliers
– Suppliers of Airbnb Peer in the sector have low bargaining power. Airbnb: WhatA?s Next? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Airbnb Peer to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Sales & Marketing field
– Airbnb Peer is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Airbnb Peer in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Airbnb Peer are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Weaknesses Airbnb: WhatA?s Next? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Airbnb: WhatA?s Next? are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Airbnb: WhatA?s Next? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Airbnb Peer has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Airbnb: WhatA?s Next? HBR case study mentions - Airbnb Peer takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Airbnb: WhatA?s Next?, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Increasing silos among functional specialists
– The organizational structure of Airbnb Peer is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Airbnb Peer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Airbnb Peer to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Airbnb Peer products
– To increase the profitability and margins on the products, Airbnb Peer needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Airbnb Peer, firm in the HBR case study Airbnb: WhatA?s Next? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Airbnb: WhatA?s Next? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Airbnb Peer 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Airbnb: WhatA?s Next? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Airbnb: WhatA?s Next? can leverage the sales team experience to cultivate customer relationships as Airbnb Peer is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Airbnb Peer has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Interest costs
– Compare to the competition, Airbnb Peer has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Airbnb Peer supply chain. Even after few cautionary changes mentioned in the HBR case study - Airbnb: WhatA?s Next?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Airbnb Peer vulnerable to further global disruptions in South East Asia.
Opportunities Airbnb: WhatA?s Next? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Airbnb: WhatA?s Next? are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Airbnb Peer can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Airbnb Peer has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Airbnb Peer can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Airbnb Peer can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Airbnb Peer can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Airbnb Peer can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Airbnb Peer to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Airbnb Peer to increase its market reach. Airbnb Peer will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Airbnb Peer can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Airbnb: WhatA?s Next?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Airbnb Peer can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Airbnb Peer can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Airbnb: WhatA?s Next? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Airbnb Peer can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Airbnb Peer can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Airbnb Peer is facing challenges because of the dominance of functional experts in the organization. Airbnb: WhatA?s Next? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Airbnb: WhatA?s Next? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Airbnb: WhatA?s Next? are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Airbnb Peer will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Airbnb Peer.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Airbnb Peer in the Sales & Marketing sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Airbnb Peer has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Airbnb Peer needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Airbnb Peer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Airbnb Peer high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Regulatory challenges
– Airbnb Peer needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing wage structure of Airbnb Peer
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Airbnb Peer.
Environmental challenges
– Airbnb Peer needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Airbnb Peer can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Airbnb Peer needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Airbnb Peer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Airbnb: WhatA?s Next? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Airbnb: WhatA?s Next? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Airbnb: WhatA?s Next? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Airbnb: WhatA?s Next? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Airbnb: WhatA?s Next? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Airbnb Peer needs to make to build a sustainable competitive advantage.
