The Airbnb Business Travel Vertical in Asia: The Way Forward SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Airbnb Business Travel Vertical in Asia: The Way Forward
In March 2017, Airbnb needed to make some important decisions regarding its strategy for the Airbnb Business Travel Vertical (ABTV) in Asia. Despite a short history of less than three years since the formal announcement of its launch, the ABTV had exhibited promising performance. The business travel market offered many attractive characteristics, including its large size. Despite the attractiveness of the business travel segment, two issues related to the choice of countries and the choice of segments were of concern. Another key issue related to identifying the specific corporate clients to approach-whether to leverage existing relationships with multinational customers or to approach Asian corporate clients directly. The authors Nitin Pangarkar and Yuan Kay Chung are affiliated with National University of Singapore.
Swot Analysis of "The Airbnb Business Travel Vertical in Asia: The Way Forward" written by Nitin Pangarkar, Yuan Kay Chung includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Airbnb Travel facing as an external strategic factors. Some of the topics covered in The Airbnb Business Travel Vertical in Asia: The Way Forward case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Airbnb Business Travel Vertical in Asia: The Way Forward casestudy better are - – challanges to central banks by blockchain based private currencies, there is backlash against globalization, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, geopolitical disruptions, increasing government debt because of Covid-19 spendings, wage bills are increasing,
customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of The Airbnb Business Travel Vertical in Asia: The Way Forward
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Airbnb Business Travel Vertical in Asia: The Way Forward case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Airbnb Travel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Airbnb Travel 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 The Airbnb Business Travel Vertical in Asia: The Way Forward can be done for the following purposes –
1. Strategic planning using facts provided in The Airbnb Business Travel Vertical in Asia: The Way Forward case study
2. Improving business portfolio management of Airbnb Travel
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 Airbnb Travel
Strengths The Airbnb Business Travel Vertical in Asia: The Way Forward | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Airbnb Travel in The Airbnb Business Travel Vertical in Asia: The Way Forward Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– The Airbnb Business Travel Vertical in Asia: The Way Forward firm has clearly differentiated products in the market place. This has enabled Airbnb Travel to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Airbnb Travel to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Airbnb Travel 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 The Airbnb Business Travel Vertical in Asia: The Way Forward - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Airbnb Travel 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 Nitin Pangarkar, Yuan Kay Chung 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.
Innovation driven organization
– Airbnb Travel is one of the most innovative firm in sector. Manager in The Airbnb Business Travel Vertical in Asia: The Way Forward Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the The Airbnb Business Travel Vertical in Asia: The Way Forward Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Airbnb Travel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Airbnb Travel 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
– Airbnb Travel 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 Travel 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 Travel 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.
High brand equity
– Airbnb Travel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Airbnb Travel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Airbnb Travel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Airbnb Travel 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.
Organizational Resilience of Airbnb Travel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Airbnb Travel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses The Airbnb Business Travel Vertical in Asia: The Way Forward | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Airbnb Business Travel Vertical in Asia: The Way Forward are -
Skills based hiring
– The stress on hiring functional specialists at Airbnb Travel has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Airbnb Travel is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Airbnb Travel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Airbnb Travel to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Airbnb Business Travel Vertical in Asia: The Way Forward, in the dynamic environment Airbnb Travel has struggled to respond to the nimble upstart competition. Airbnb Travel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study The Airbnb Business Travel Vertical in Asia: The Way Forward, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
Products dominated business model
– Even though Airbnb Travel 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 - The Airbnb Business Travel Vertical in Asia: The Way Forward should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Airbnb Travel 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.
High cash cycle compare to competitors
Airbnb Travel has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Airbnb Travel 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.
High operating costs
– Compare to the competitors, firm in the HBR case study The Airbnb Business Travel Vertical in Asia: The Way Forward 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 Travel 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Airbnb Travel, firm in the HBR case study The Airbnb Business Travel Vertical in Asia: The Way Forward needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Airbnb Business Travel Vertical in Asia: The Way Forward 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 Travel has relatively successful track record of launching new products.
Opportunities The Airbnb Business Travel Vertical in Asia: The Way Forward | 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 The Airbnb Business Travel Vertical in Asia: The Way Forward are -
Developing new processes and practices
– Airbnb Travel 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Airbnb Travel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Airbnb Travel 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Airbnb Travel can use these opportunities to build new business models that can help the communities that Airbnb Travel operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Better consumer reach
– The expansion of the 5G network will help Airbnb Travel to increase its market reach. Airbnb Travel 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Airbnb Travel in the consumer business. Now Airbnb Travel can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Airbnb Travel 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 Travel 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Airbnb Travel 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.
Creating value in data economy
– The success of analytics program of Airbnb Travel has opened avenues for new revenue streams for the organization in the industry. This can help Airbnb Travel to build a more holistic ecosystem as suggested in the The Airbnb Business Travel Vertical in Asia: The Way Forward case study. Airbnb Travel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Airbnb Travel 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Airbnb Travel 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, The Airbnb Business Travel Vertical in Asia: The Way Forward, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Airbnb Travel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Airbnb Travel 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 Airbnb Travel to hire the very best people irrespective of their geographical location.
Threats The Airbnb Business Travel Vertical in Asia: The Way Forward External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Airbnb Business Travel Vertical in Asia: The Way Forward are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Airbnb Travel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Airbnb Travel business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Airbnb Travel 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Airbnb Travel 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 The Airbnb Business Travel Vertical in Asia: The Way Forward .
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.
Environmental challenges
– Airbnb Travel 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 Travel can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Airbnb Travel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Airbnb Travel demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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 Travel.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Airbnb Business Travel Vertical in Asia: The Way Forward, Airbnb Travel 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 .
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 Travel needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Airbnb Travel 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 Airbnb Travel in the Strategy & Execution sector and impact the bottomline of the organization.
Weighted SWOT Analysis of The Airbnb Business Travel Vertical in Asia: The Way Forward 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 The Airbnb Business Travel Vertical in Asia: The Way Forward 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 The Airbnb Business Travel Vertical in Asia: The Way Forward 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 The Airbnb Business Travel Vertical in Asia: The Way Forward 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 The Airbnb Business Travel Vertical in Asia: The Way Forward 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 Travel needs to make to build a sustainable competitive advantage.
