HomeAway: Organizing the Vacation Rental Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of HomeAway: Organizing the Vacation Rental Industry
In less than ten years, co-founders Brian Sharples and Carl Shepherd had transformed HomeAway from just another Internet startup into the leading vacation rentals marketplace in the world-a global online platform that linked customers seeking vacation home rentals to the property owners and managers who supplied them. The case traces HomeAway's origins through IPO and beyond, documenting the company's acquisition-led growth and the core elements of its subscription-based business model. By 2014, incumbent travel giants and high-profile startups like Airbnb began to take notice of the vacation rentals sector. To stay ahead, HomeAway initiated a pilot collaboration to show some of its listings on Expedia's site. Sharples was also considering a new commission-based revenue model that promised to attract a broader swath of property listers but risked undermining HomeAway's existing business.
Swot Analysis of "HomeAway: Organizing the Vacation Rental Industry" written by Rory McDonald, Feng Zhu, Cheng Gao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Homeaway Vacation facing as an external strategic factors. Some of the topics covered in HomeAway: Organizing the Vacation Rental Industry case study are - Strategic Management Strategies, Operations management, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the HomeAway: Organizing the Vacation Rental Industry casestudy better are - – there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, geopolitical disruptions, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, increasing energy prices,
central banks are concerned over increasing inflation, there is backlash against globalization, etc
Introduction to SWOT Analysis of HomeAway: Organizing the Vacation Rental Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HomeAway: Organizing the Vacation Rental Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Homeaway Vacation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Homeaway Vacation 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 HomeAway: Organizing the Vacation Rental Industry can be done for the following purposes –
1. Strategic planning using facts provided in HomeAway: Organizing the Vacation Rental Industry case study
2. Improving business portfolio management of Homeaway Vacation
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Homeaway Vacation
Strengths HomeAway: Organizing the Vacation Rental Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Homeaway Vacation in HomeAway: Organizing the Vacation Rental Industry Harvard Business Review case study are -
Strong track record of project management
– Homeaway Vacation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Strategy & Execution field
– Homeaway Vacation 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 Homeaway Vacation in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Homeaway Vacation has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study HomeAway: Organizing the Vacation Rental Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Homeaway Vacation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Homeaway Vacation has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Strategy & Execution industry
– HomeAway: Organizing the Vacation Rental Industry firm has clearly differentiated products in the market place. This has enabled Homeaway Vacation to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Homeaway Vacation to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Homeaway Vacation is one of the leading recruiters in the industry. Managers in the HomeAway: Organizing the Vacation Rental Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Homeaway Vacation 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 Homeaway Vacation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in HomeAway: Organizing the Vacation Rental Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Homeaway Vacation is present in almost all the verticals within the industry. This has provided firm in HomeAway: Organizing the Vacation Rental Industry 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.
High switching costs
– The high switching costs that Homeaway Vacation 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.
Analytics focus
– Homeaway Vacation is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Rory McDonald, Feng Zhu, Cheng Gao can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Homeaway Vacation has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Homeaway Vacation has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Homeaway Vacation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Homeaway Vacation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses HomeAway: Organizing the Vacation Rental Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HomeAway: Organizing the Vacation Rental Industry are -
Products dominated business model
– Even though Homeaway Vacation has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - HomeAway: Organizing the Vacation Rental Industry should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study HomeAway: Organizing the Vacation Rental Industry, it seems that the employees of Homeaway Vacation don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the HomeAway: Organizing the Vacation Rental Industry 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 Homeaway Vacation has relatively successful track record of launching new products.
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 Homeaway Vacation supply chain. Even after few cautionary changes mentioned in the HBR case study - HomeAway: Organizing the Vacation Rental Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Homeaway Vacation vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As HomeAway: Organizing the Vacation Rental Industry HBR case study mentions - Homeaway Vacation 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.
Need for greater diversity
– Homeaway Vacation has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow decision making process
– As mentioned earlier in the report, Homeaway Vacation has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Homeaway Vacation even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Rory McDonald, Feng Zhu, Cheng Gao suggests that, Homeaway Vacation is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Homeaway Vacation needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Aligning sales with marketing
– It come across in the case study HomeAway: Organizing the Vacation Rental Industry 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 HomeAway: Organizing the Vacation Rental Industry can leverage the sales team experience to cultivate customer relationships as Homeaway Vacation is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Homeaway Vacation 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.
Opportunities HomeAway: Organizing the Vacation Rental Industry | 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 HomeAway: Organizing the Vacation Rental Industry are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Homeaway Vacation to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Homeaway Vacation to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Homeaway Vacation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Homeaway Vacation to increase its market reach. Homeaway Vacation 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Homeaway Vacation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Homeaway Vacation to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Homeaway Vacation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Developing new processes and practices
– Homeaway Vacation can develop new processes and procedures in Strategy & Execution 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Homeaway Vacation 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, HomeAway: Organizing the Vacation Rental Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Homeaway Vacation can use these opportunities to build new business models that can help the communities that Homeaway Vacation operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Building a culture of innovation
– managers at Homeaway Vacation 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 Strategy & Execution segment.
Loyalty marketing
– Homeaway Vacation 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Homeaway Vacation can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Homeaway Vacation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study HomeAway: Organizing the Vacation Rental Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Homeaway Vacation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats HomeAway: Organizing the Vacation Rental Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HomeAway: Organizing the Vacation Rental Industry are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Homeaway Vacation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Homeaway Vacation is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Homeaway Vacation in the Strategy & Execution sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Homeaway Vacation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Homeaway Vacation 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 Strategy & Execution industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study HomeAway: Organizing the Vacation Rental Industry, Homeaway Vacation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Homeaway Vacation in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing wage structure of Homeaway Vacation
– 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 Homeaway Vacation.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Homeaway Vacation business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Homeaway Vacation can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study HomeAway: Organizing the Vacation Rental 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. Homeaway Vacation needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Homeaway Vacation.
Weighted SWOT Analysis of HomeAway: Organizing the Vacation Rental Industry 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 HomeAway: Organizing the Vacation Rental Industry 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 HomeAway: Organizing the Vacation Rental Industry 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 HomeAway: Organizing the Vacation Rental Industry 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 HomeAway: Organizing the Vacation Rental Industry 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 Homeaway Vacation needs to make to build a sustainable competitive advantage.
