Csba1000 Business Strategy - Airbnb Assessment Answers

Assessment Description:

The Rise of a Unicorn-Airbnb

Answer:

The strategy statement I would propose for Airbnb is;

‘To grow into a global company that offers economical, comfortable, welcoming and reliable airbed accommodation services to people from all walks of life.’

The ‘Three Horizon’ analysis

It is a framework used by businesses in determining the way forward for their activities. This framework covers three elements, which include; present challenges, future aspirations and possible innovations that can be put in place to address the first two horizons. The present challenges are a combination of all the obstacles being faced by a company now. Such challenges may include unhealthy competition, lack of funds, a small market share, lack of customers, high production costs resulting in little or no profit, lack of employee motivation, cyber crimes among other problems. Future aspirations are all the plans that a company has for its future endeavors. Innovations are the methods and ways that can be implemented to address challenges and aspirations (Essays, 2013).

Basing on ‘Horizon 1’, the Airbnb Company’s current challenges include;

Unhealthy competition- the competitors of Airbnb are tarnishing the name of the company by pointing out their mistakes to the public. For example, claiming that Airbnb does not insurance and hence it is illegal, complaining about the very low prices being charged by Airbnb, creating a website with the name ‘www.airbnbhell.com’ to create a negative perception to people and also imposing standard to Airbnb through inappropriate means (Fallon, 2017).

Lack of enough funds- as much as donors have invested in Airbnb for several years now, the amount is not able to drive the company into a global one. The profits are gauged at $3 billion, an amount that the company intends to surpass (Ghezzi, 2013).

Legal requirements- the company does not fully meet all the legal requirements put in place to guide such businesses (Hahn, 2011). This has become the attacking point of the competitors.

‘Horizon 2’ talks about Airbnb future aspirations, which include;

• Maximizing profit
• Growing into a global company
• Being the best in the market despite competition
• Increasing their finance worth

Lastly, ‘Horizon 3’ of Airbnb covers innovations, which include;

• Building the culture through core values
• Encouraging discussion
• The establishment of annual meetings
• Organizing parties

The ‘Three horizons’ analysis might positively affect the future strategic direction of Airbnb. Having known challenges, the company can work through the innovations put in place towards future aspirations (Adams, 2015).

Key positioning issues for Airbnb

• Environments

The environments surrounding Airbnb are both social and economic. In the social environment, this company is widely distributed and it is very famous. In 2016, there were bookings being done every two seconds. Basing on the economic environment, the key positioning advantage of Airbnb is the cheap price offered to customers for quality services (Jajja, Vijay, Shaukat & Syed, 2016).

• Strategic capability

Strategic abilities of Airbnb include; cheap prices for friendly services, high-quality professional pictures for attracting customers, employing five hundred more people, and updating their website frequently. The company is also flexible in such a way that any slight decrease in their bookings results in a critical investigation and solution. A key positioning issue will ensure survival in the competitive market.

• Strategic purpose

The strategic purpose of Airbnb is to promote culture through a consideration of core values in the organization. Having a mission statement and vision to conserve culture is also one of their strategic purposes. The strategic purpose will give the employees a sense of direction, as they will be guided by the company’s core values (Kim, 2013).

• Culture

Airbnb intends to build their culture among employees through holding parties, annual meetings, baby showers and holding frequent discussions concerning their core values. This is both relevant and important since it will create stronger bonds between the stakeholders and build trust among them, resulting in an improved working environment.

Alternative strategies for Airbnb

• Product differentiation

In this strategy, Airbnb should identify distinctive features of their services that will guarantee them a sustainable competitive advantage. Such features may include price, comfort, quality, and brand. Airbnb can also give offers of free or discounted accommodation occasionally to attract more customers.

• Gaining an advantage in terms of technology

Airbnb can gain a technological advantage by making use of all social media platforms including Facebook, tweeter, Instagram, and other platforms. Such platforms can help them in advertising their services and hence expanding their market coverage and share.

• Cornering a growing market

Airbnb may consider merging with other upcoming competitors to reduce the intensity of the competition. Although this may be against their policies since they are still growing, it may be a good strategy for them to thrive and stay on top of the market share (Saul, Bill & Karen, 2011).

How Airbnb has converted strategic thinking into action

First, Airbnb has defined its strategic focus area, which is offering accommodation to people in festivals and conferences in America. Second, they created a measurable outcome from the focus area, which is money. Next, the founders of Airbnb designed a project that could lead them to gain the outcome; money. This project involved renting rooms with airbeds and a home-prepared breakfast to guests at conferences and festivals. Furthermore, they drafted a strategic plan, which involved taking professional pictures of the rooms and posting them on their website.

They also advertised low prices, airbeds, and breakfast. Finally, they kept reviewing their strategy for improvement. For example, when they prepared listings during the Democratic Party National Convention in Denver, they did not get any profits. They changed strategy by re-packaging cereals to sell to the people in the conference. Furthermore, they also employed professional photographers to take nice photos of the rooms. This is after they realized that the rate of bookings had drastically gone down.

To wrap up, Airbnb has grown amazingly from a simple idea into a unicorn through challenges and endurance. Its founders were very determined people who used their entrepreneurial and design skills to create a better world for themselves and for others, enabling them to afford their rent.

Bibliography

Adams, C., 2015. HSBC's Coporate Reporting. [Online] Available at: https://drcaroladams.net/hsbcs-corporate-reporting/ [Accessed 15 May 2018].

Essays, U., 2013. Corporate Governance and Ethics Practice. [Online] Available at: https://www.ukessays.com/essays/business/corporate-governance-and-ethics-practice-business-essay.php?vref=1 [Accessed 15 May 2018].

Fallon, N., 2017. What is Corporate Social Responsibility? [Online] Available at: https://www.businessnewsdaily.com/4679-corporate-social-responsibility.html [Accessed 15 May 2018].

Ghezzi, A., 2013. Revisiting business strategy under discontinuity. Management Decision, 51(7), pp.1326-58.

Hahn, T., 2011. A new future for business? Rethinking management theory and business strategy. Development and Learning in Organizations: An International Journal, 25(1), pp.25-26.

Jajja M.S.S, Vijay R. K., Shaukat A.B. & Syed Z.H., 2016. Supply chain strategy and the role of suppliers: evidence from the Indian sub-continent. Bencmarking: An International Journal, 23(7), pp.1658-76.

Kim, B., 2013. Competitive priorities and supply chain strategy in the fashion industry. Qualitative Market Research: An International Journal, 16(2), pp.214-42.

Saul J. B, Bill B. & Karen F., 2011. New business models for emerging media and entertainment revenue opportunities. Strategy & Leadership, 39(3), pp.44-53.