Airbnb CASE ANALYSIS

Document Type:Thesis

Subject Area:Business

Document 1

It aims to create a world where one can belong anywhere. Airbnb hosts its extra rooms and flats, creating a unique pricing structure, providing residence to its designated guests. it makes money from both its visitors and the allocated hosts from the services they provide airbnb employs a business approach where they have minimal regulations in most places. This has resulted in both the clients and service providers’ use of signal processes in order to gain and build trust. This has led to the optimization for the potential of successful booking. Airbnb has also developed an online review system whereby on completion of all transaction, the client and the service provider can grade each other. This has helped in the reinforcement of the desired behavior. Pestle Analysis Airbnb is popularly known for it being a comfier and cheaper hotel alternative. Most people get to rent their rooms to guests for money, which in turn earns income for the hosts and profit for Airbnb. The firm has however faced complications from its worldwide expansion that has brought up many issues. But this has never deterred their expansion and still they’ve been of economic benefit to most cities and to the environment. The PESTLE analysis of Airbnb is as below: The PESTLE analysis aims at describing the main opportunities and threats of the environment that Airbnb operates within- the hospitality industry. Some of the threats that Airbnb faces are: Legal factors that may comprise thorough terms and conditions of compliance. Airbnb faces serious legal issues for failing to comply with the housing regulations.

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From their website, they go ahead to address need for the hosts to follow the set rules and regulations. The hosts normally must agree to the terms and conditions that Airbnb provides for its hosts. The set terms and conditions may comprise of housing, tourism and tourism regulations that the hosts must agree to comply with. Hosts not agreeing to such terms causes threats and compromises to some extent the existence of Airbnb as a competitive firm in the hospitality industry which may cause its downfall by legal measures. Political factors that arise from unregulated housing laws Airbnb being a peculiar business, most people normally offer their homes, apartments and/or rooms for rental to strangers which at times runs the company into legal issues since there are places which offer their services which do not follow set legislature on housing.

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Airbnb at times has been facing fines and court proceeding in some other countries since they have failed to follow the local tourism laws that are set for them. Airbnb also has and uses an automation system that texts a guest incase the host does not respond to the message. Without the technology aspect, the rooms and houses can’t be booked which means hosts can’t also be contacted. This would not result into a smooth functioning of Airbnb as it is today. To conclude on the pestle analysis, Airbnb has proven to be a leader in the sharing economy by offering jobs to their hosts-the ones who rent their apartments, rooms and houses to visitors. From the threats facing Airbnb, it has ensured that all the set standards and regulations are adhered to by accepting to follow the housing terms and conditions.

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Its diverse supplier base limits its bargaining power. Bargaining power of customers This aspect looks at the capability of the client to affect the pricing structure set by the service providers as well as the quality of service in offer. Airbnb gets good feedback from its visitors and guests through the reviews given about their stay. Which influences how they price and the quality of services that they provide. Threat of new entrants This involves the evaluation of the ease which competitors can join the line of work as well as the impact they will have on already existent entities. Airbnb should consider capturing more conference spaces so that to push the business travel hotel to stars. Stars Are products or segments of a firm that operates in a competitive industry with high growth in sales and it occupies a relatively large section of the market share (Øivind Madsen, 2017).

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In this case study, the high-end hotel's segment of Airbnb is in this category. More people prefer using the high-end hotel's service thereby raking in more revenues to the company. Management should consider undertaking expansive market and product development techniques so that to continue generating high income. Product Development The main objective of this strategy is coming up with new services for the existing market by exploring how it will meet the needs of clients and gain a competitive advantage (Yin, 2016). Airbnb can consider putting up homes in Texas that are well maintained, comfortable, and well-furnished to accommodate tourists that prefer apartments to hotels. The approach will have a unique product that will attract more clients. Market Development The strategy involves outsourcing new buyers for a service that is already offered by the company(McDonald and Meldrum, 2007).

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Introduction of multi-unit houses has attracted the attention of more people than the single-units. The company receives income on a daily basis because most of the customers are travelers who aim at leasing the houses. The company records a minimum of $11,000 on a daily basis. The revenue generated by the company has been enough for the company to cover its expenses and other associated costs. To increase the profit margins for the company, the organization should adopt criteria that is aimed at reducing the production costs and increasing the overall income in terms of finances. Recommendations. If the number of customers is large, the marginal cost that the company would incur in the maintenance of the rooms would reduce. The prices charged by the company would then be lower than the average total cost of maintenance of the houses and this would translate into more profits for the owners of the rooms.

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The other strategy that the organizing committee should apply is to concentrate on their strengths. The prices charged by the hotel are much less than those charged by other competing organizations. The committee should maintain this and instead better the conditions of the rooms. Due to the large number of customers that the hotel receives on a daily basis, it may be optimal for the company to build more rooms in so that they may house more and more customers per day. The organization should also consider leasing more rooms from the available construction firms. Leasing is often a cheaper means of attaining assets and in case an organization adopts it, it will end up making more profits. The cost of leasing is low and thus the organization would end up making more money.

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The organization should also adopt a more robust form of advertisement.  European journal of operational research, 152(3), 631-640. Dekker, H. C. Value chain analysis in interfirm relationships: a field study.  Management accounting research, 14(1), 1-23. Chi. L. Rev. Dialogue, 82, 103. Kaplinsky, R. Øivind Madsen, D. Not dead yet: the rise, fall and persistence of the BCG Matrix.  Problems and Perspectives in Management, 15(1), pp. Zervas, G. Proserpio, D.  Available at SSRN 2366898. Yadav, H. Study of the BCG Matrix for Hindustan Unilever Limited.  SSRN Electronic Journal. Yin, N.

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