In February 2014, Amsterdam became the first city to issue new regulations specifically to allow home-sharing. Airbnb's Molly Turner, Global Head of Civic Partnerships; her colleagues at the San Francisco based home-sharing platform; and her counterparts in Amsterdam's city leadership now had to make the new rules function well. By the summer of 2014, the question of how exactly to do that remained unsettled. A Memorandum of Understanding (MOU) that Airbnb was negotiating with Amsterdam officials to supplement the new home-sharing rules was not materializing. Turner was hearing that the company's proposed commitments that spanned education on regulations, enforcement-assistance, and tax collection might not be enough to secure what would be Airbnb's broadest partnership with any city anywhere. Nanette Schippers was Amsterdam's Advisor on the Sharing Economy in its Innovation Office, and its lead at the negotiating table that summer. She was worried by the stand-still, too. A primary reason for the impasse in the negotiations was that Amsterdam wanted access to Airbnb's data in order to enforce the new laws more easily, while Airbnb sought to protect user privacy. For Airbnb, privacy, precedents and platform principles were at stake. For Amsterdam, it was a matter of making sure that the historic city did not become "Venice, or Florence, or 'Disneyland'"; that it wasn't overrun by visitors and that locals weren't crowded out. Could the two parties now find dry land?
Authors :: Mitchell Weiss, Emer Moloney, Vincent Dessain
Swot Analysis of "Airbnb in Amsterdam (A)" written by Mitchell Weiss, Emer Moloney, Vincent Dessain includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Amsterdam Airbnb facing as an external strategic factors. Some of the topics covered in Airbnb in Amsterdam (A) case study are - Strategic Management Strategies, Entrepreneurship, Innovation, Operations management, Policy and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Airbnb in Amsterdam (A) casestudy better are - – increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, technology disruption, increasing energy prices,
increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Airbnb in Amsterdam (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Airbnb in Amsterdam (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Amsterdam Airbnb, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Amsterdam Airbnb 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 in Amsterdam (A) can be done for the following purposes –
1. Strategic planning using facts provided in Airbnb in Amsterdam (A) case study
2. Improving business portfolio management of Amsterdam Airbnb
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Amsterdam Airbnb
Strengths Airbnb in Amsterdam (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Amsterdam Airbnb in Airbnb in Amsterdam (A) Harvard Business Review case study are -
Ability to lead change in Innovation & Entrepreneurship field
– Amsterdam Airbnb 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 Amsterdam Airbnb in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Amsterdam Airbnb in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Amsterdam Airbnb
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Amsterdam Airbnb does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Amsterdam Airbnb 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 Mitchell Weiss, Emer Moloney, Vincent Dessain 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.
Training and development
– Amsterdam Airbnb has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Airbnb in Amsterdam (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Airbnb in Amsterdam (A) firm has clearly differentiated products in the market place. This has enabled Amsterdam Airbnb to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Amsterdam Airbnb to invest into research and development (R&D) and innovation.
High brand equity
– Amsterdam Airbnb has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Amsterdam Airbnb to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Amsterdam Airbnb 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 in Amsterdam (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Amsterdam Airbnb 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 Airbnb in Amsterdam (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Amsterdam Airbnb has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Amsterdam Airbnb 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.
Cross disciplinary teams
– Horizontal connected teams at the Amsterdam Airbnb 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Amsterdam Airbnb digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Amsterdam Airbnb 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.
Weaknesses Airbnb in Amsterdam (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Airbnb in Amsterdam (A) are -
Interest costs
– Compare to the competition, Amsterdam Airbnb 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.
Capital Spending Reduction
– Even during the low interest decade, Amsterdam Airbnb 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Airbnb in Amsterdam (A), in the dynamic environment Amsterdam Airbnb has struggled to respond to the nimble upstart competition. Amsterdam Airbnb has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Amsterdam Airbnb is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Airbnb in Amsterdam (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Amsterdam Airbnb 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 Airbnb in Amsterdam (A) 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 in Amsterdam (A) can leverage the sales team experience to cultivate customer relationships as Amsterdam Airbnb is planning to shift buying processes online.
High cash cycle compare to competitors
Amsterdam Airbnb 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Airbnb in Amsterdam (A), it seems that the employees of Amsterdam Airbnb 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 Airbnb in Amsterdam (A) 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 Amsterdam Airbnb has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Amsterdam Airbnb 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. Amsterdam Airbnb 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.
Products dominated business model
– Even though Amsterdam Airbnb 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 - Airbnb in Amsterdam (A) should strive to include more intangible value offerings along with its core products and services.
Opportunities Airbnb in Amsterdam (A) | 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 in Amsterdam (A) are -
Loyalty marketing
– Amsterdam Airbnb 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.
Better consumer reach
– The expansion of the 5G network will help Amsterdam Airbnb to increase its market reach. Amsterdam Airbnb 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Amsterdam Airbnb can use these opportunities to build new business models that can help the communities that Amsterdam Airbnb operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Amsterdam Airbnb 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 Amsterdam Airbnb to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Amsterdam Airbnb can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Amsterdam Airbnb can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Amsterdam Airbnb 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 Amsterdam Airbnb 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 Innovation & Entrepreneurship segment.
Manufacturing automation
– Amsterdam Airbnb can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Creating value in data economy
– The success of analytics program of Amsterdam Airbnb has opened avenues for new revenue streams for the organization in the industry. This can help Amsterdam Airbnb to build a more holistic ecosystem as suggested in the Airbnb in Amsterdam (A) case study. Amsterdam Airbnb can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Amsterdam Airbnb in the consumer business. Now Amsterdam Airbnb can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Amsterdam Airbnb 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Amsterdam Airbnb can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Airbnb in Amsterdam (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Airbnb in Amsterdam (A) 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. Amsterdam Airbnb 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Airbnb in Amsterdam (A), Amsterdam Airbnb may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
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.
High dependence on third party suppliers
– Amsterdam Airbnb 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.
Environmental challenges
– Amsterdam Airbnb 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. Amsterdam Airbnb can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Increasing wage structure of Amsterdam Airbnb
– 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 Amsterdam Airbnb.
Technology acceleration in Forth Industrial Revolution
– Amsterdam Airbnb has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Amsterdam Airbnb needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Stagnating economy with rate increase
– Amsterdam Airbnb can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Amsterdam Airbnb is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Amsterdam Airbnb 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 Innovation & Entrepreneurship industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Amsterdam Airbnb with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Amsterdam Airbnb 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 Airbnb in Amsterdam (A) .
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. Amsterdam Airbnb needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Airbnb in Amsterdam (A) 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 in Amsterdam (A) 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 in Amsterdam (A) 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 in Amsterdam (A) 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 in Amsterdam (A) 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 Amsterdam Airbnb needs to make to build a sustainable competitive advantage.
