MKT 4131

Marketing Strategy and Planning

Individual Report 1:

Strategic Analysis of an organisation’s internal and external environment

Ali Nasir Mubarak

M00667334

Submission Date: 17 December 2020

Word Count: 1835

Table Of Contents

Contents
Introduction.................................................................................................................................................3
Customer Analysis.......................................................................................................................................4
Internal Analysis..........................................................................................................................................5
Competitor Analysis....................................................................................................................................6
Market Analysis...........................................................................................................................................7
Environmental Analysis...............................................................................................................................8
Conclusion.................................................................................................................................................10
Appendix:..................................................................................................................................................11
Appendix 1: SWOT/TOWS Analysis........................................................................................................11
Appendix 2: Strategic Groups................................................................................................................12
Appendix 3: Competitor Grid.................................................................................................................13
Appendix 4: Value Chain........................................................................................................................14
Appendix 5: Space Analysis....................................................................................................................15
Appendix 6: RBV & VRIO........................................................................................................................16
References.................................................................................................................................................17
Introduction

This report conducts a situational analysis of the massive, shared lodging provider, Airbnb. A detailed
description of Airbnb’s current situation is provided through an analysis of their competitors,
environment, market and customers along with an internal analysis. Airbnb was founded in 2008 and
introduced the concept of renting out properties they do not own by allowing the owners to list their
property on Airbnb’s rapidly growing website. The company would go on to be valued at over $100
Billion USD in December of 2020 despite the challenges face by Covid-19.
Customer Analysis
Airbnb is unique in the sense that even their suppliers can count as customers. This is in the sense that
Airbnb charges a 3% commission on all properties listed on their website and app (Marte, 2015). As can
be seen in appendix 2, Airbnb charges one of the lowest commission rates amongst its competitors. This
helps attract property owners of all sizes to rent out their property on their platform. This in-turn allows
Airbnb to target a wide range of tourists and provide all services ranging from small pods to large villas
and estates.

Due to the diversity of all the properties listed on Airbnb’s platforms, tourists of a wide range of ages,
income level, psychographics and ethnicities can be attracted to enjoy the unique genuine experience
provided by Airbnb.

Airbnb’s customer service also covers a wide range of communication mediums such as email, call and
text. These can be done in more than 30 languages, helping customers from all over the world to
streamline their experience with Airbnb.
Internal Analysis
Airbnb’s internal strengths play a crucial role in its success. As can be seen in appendix 1, the SWOT and
TOWS analysis, the company’s strengths and how to leverage them are presented. A great strength of
Airbnb is their massive reach and variety of products. Airbnb boasts its operations in 192 countries,
30,000 cities with over 6,000,000+ listings. Along with their massive presence, these 6,000,000+ listings
range all the way from small pods and bed space all the way to luxury villas and estates. Airbnb
competes with almost all forms of lodging and hotel services due to the sheer number and range of their
listings. In addition to this, Airbnb pushes their unique selling point (USP) of being a more authentic and
genuine experience as it is unique in comparison to conventional hotels and resorts. This helps the
brand attract and retain many customers as nearly all levels of service can be provided under one roof.

Another strength includes Airbnb’s ingenuity in managing to rent out and maintain properties that do
not belong to them. The business allows individuals to rent their properties on their platform, which
Airbnb leverages to get the handling and maintenance to be done through the hosts rather than having
to employ more people to carry out and monitor these tasks. This leveraging is complimented through
Airbnb’s excellent use of technology in their website and app, allowing for a more streamlined and
simple process for both hosts and guests. As the business heavily depends on communication between
themselves, hosts and guests, their effective process of communication plays a big role in Airbnb’s
strength. Appendix 4 shows the company’s value chain which shows their functions and how value is
added to each step of their processes.

A great opportunity for Airbnb to further expand its reach and services is in the form of car rentals and
travel guides. Focusing on expansion in this are could help Airbnb acquire more customers from the save
and different industries too. Airbnb could slowly be transformed to provide the entire travel and tourism
package under one roof and not only accommodation.

Although Airbnb excel in their market, there are several weaknesses and threats that need to be
addressed. The most prominent and most challenging weakness to control is the fact that Airbnb relies
on strangers to host guests. This could mean that poor service from hosts could lead to them damaging
Airbnb’s brand image. It could prove difficult to control the service the customer receives from the host,
but Airbnb does attempt to improve all services through providing incentives for hosts to provide the
best service. Furthermore, both guests and hosts can be rated on their online platforms to help pair
hosts and guests with ideal opposites.

Furthermore, A substantial threat to Airbnb’s processes are legal issues. There are several housing laws,
tourism laws and taxes that need to be addressed in Airbnb’s processes. The threat is in the fact that the
company relies on the hosts to avoid any violations. Poor adherence to these laws add to the already
present number of lawsuits the company is facing.

Appendix 5 is a SPACE analysis to further understand how all this information ties into what business
strategy Airbnb employs. Through thorough study of the company’s internal and external strategic
positions including competitive, industry, financial and environmental factors, it was determined that
Airbnb employs a more aggressive strategy. This is greatly influenced by the company’s high finance
score. This is mainly due to the fact that there is no large sum of money invested into the properties as
they are not owned by the company. This helps keep Airbnb’s cash liquid and eliminates the threat of
damage and depreciation to properties.
Competitor Analysis
This segment of the report focuses on Airbnb’s main competitors. Due to the massive size of the hotel
and lodging market along with Airbnb’s success attracts large amounts of competition. Along with that,
The company’s unique shared economy lodging aspect proved to be massively successful. Although,
their business structure is easy to replicate, introducing companies with similar services that directly
compete with Airbnb. Other competitors include conventional hotels, resorts and other lodging brokers.
Appendix 2 displays strategic groups and further displays Airbnb’s position amongst other traditional
hotels.

Appendix 3 displays the competitor grid, which is a measure of crucial factors to succeed or indicate
success in the industry. Airbnb and 3 of its biggest competitors VRBO, Booking.com and Tripping.com.
These factors include Number of listings, charge on property hosts, cancelation policies, 2019 revenue
and technological breadth. Each of these factors were given a score and then averaged out to give each
business a rating in relation to the market’s top competitors.

The grids gave the following ratings:

• Airbnb = 5
• VRBO = 1
• Booking.com = 6
• Tripping.com = 0
As can be seen, Airbnb is rated very highly amongst its competitors. The only competitor rated higher is
Booking.com. It is important to note that booking.com is not a direct competitor as it does not provide
shared lodging services. The reason it is involved in this study is due to the fact that booking.com is the
largest tourist housing brokerage.
Airbnb rates higher than its direct competitors due to the high number of listings, excellent use of
technology (website and mobile application) and an attractive cancelation policy.
Market Analysis
Airbnb is the leader in a market it created itself. Although similar to the hotel and resort market, the
shared economy strategy is a key difference. Airbnb were the first to introduce the idea of renting out
an individual’s home to strangers. Their idea proved successful and have dominated the market ever
since.

The following is the Porters 5 forces framework applied to Airbnb and its competitive market space to
analyze and understand it. The framework studies the threat of new entrants, bargaining power of
suppliers, threat of substitute products and bargaining power of buyers. This information is then used to
study the rivalry amongst the existing competitors in the market.

As can be deduced from the model above, Airbnb has exploited their unique business structure to keep
the barriers to entry high, ensuring they will continue to dominate the market. The uniqueness also
ensures that buyers do not have much bargaining power as there is no direct alternative to the services
Airbnb provides. The threat of substitutes stems from other hotels and resorts. Although traditional
stays provide more of an experience, Airbnb ensures that customers receive a different, more authentic
and genuine experience. This helps the company differentiate its service from other competitors. The
analysis also displays that suppliers do not have much bargaining power due to the high amount of
competition in the market.
Environmental Analysis
This is section contains a study of the environment in which Airbnb operates. A PESTLE analysis is
presented that studies what factors are affected and can significantly impact the environment which
Airbnb operates in. The analysis provides a good overview as to what aspects can be exploited, should
be avoided and those the require constant monitoring.

Political
 Politics can greatly impact levels of tourism
 Mix of politics and brand values
 Political contests between governments and the hotel industry

Economic
 Shared economy (resources are shared between organization and individuals)
 Benefits cities by generating millions in spending ($600+ Million in New York)
 Can create full time jobs (4000+ in New York)

Social
 Airbnb’s business model is nearly entirely social as it is hosts offering their home to
guests.
 Guests document and rate their experiences
 Most exposure is received from social media and word of mouth

Technological
 Airbnb functions nearly entirely on their app or website
 All bookings, communication and reviews are done through mentioned mediums
 Automation is applied to manage hosts, guests and listings

Legal
 High risk of legal issue and law suites
 Hosts are presented with terms and conditions that comply with housing, tourism and
taxation laws and regulations
 Adherence to Housing Laws / Regulation - Hotel / Tourist taxes - Tourism Laws

Environmental
 Highly subject to hygiene issues
 Much higher concern and demand for hygiene especially after the spread of Covid-19
 No need for construction or materials as homes are only shared
The analysis displays areas of concern in the environmental, political and legal factors. It can be seen
that these can have substantial impact on he tourism and lodging environment with each of the mbeing
almost entirely out of Airbnb’s control. The aspects mentioning the economics, social aspect and
technology prove to be great areas of focus for the company. It is shown that Airbnb puts much effort in
the aspects it can control and attempts to maximize all benefits that can be reaped from them.
Conclusion
In conclusion, a thorough strategic analysis was conducted. This included studies of the company’s
internal analysis, Customer analysis, Competitor analysis, Market analysis and Environmental analysis.
These were done through the application of several model and theories that were presented throughout
the essay and in the appendix. It was found that Airbnb is the market leader in its unique shared
economy lodging market. The company adopts an aggressive approach to its business strategy which
appropriately fits into addressing the issues and challenges, along with complimenting the strengths that
Airbnb holds. This strategy also works well with the complications discussed in the environmental
analysis. It does well to maximize those aspects that can be controlled while avoiding issues that can be
caused by factors out of the company’s hands.
 Appendix:
Appendix 1: SWOT/TOWS Analysis
Strengths:
 Operational in 192
countries, 30,000 cities,
6,000,000+ listings
 Wide range of options
available
 Local and Authentic
experience
 Cheaper rates than
conventional hotels
 Wide global presence /
reach
Weaknesses:
 Dependent on strangers to
host potential guests
 Dependent on strangers to
meet housing laws and
avoid regulation violations
 Poor hosts damage AirBnb’s
Image
 Business model/service is
easy to replicate
Opportunities:
 More cities are opening up
to Airbnb (Reduces legal
issues)
 Ease of communication
between host and guest
(User-Friendly app)
 Celebrity endorsements
 Expansion to car rentals and
travel guides
Strength – Opportunity strategies:
 Airbnb can use their
presence in certain cities to
help spread other cities in
the same country
 Can pair less expensive rates
with car rentals or travel
guides in packages
 Leverage easy
communication to pair
guests with appropriate
hosts
Weakness – Opportunity strategies:
 Airbnb can use their user-
friendly app to give hosts a
rating, helping guests select
hosts more likely to provide
a smooth and decent
experience.
 Can leverage global
presence to dominate the
market and eliminate
copying businesses
Threats:
 Damage to properties by
guests can trouble hosts
 Airbnb can only hope hosts
are following housing laws
and regulations, they cannot
enforce it.
 Airbnb is facing several
lawsuits globally
 Competition is growing
 Covid-19 concerns severely
impact global tourism
Strength – Threats strategies:
 Can leverage inexpensive
rates and global brand name
to increase barriers to entry
for competitors
 Wide reach can be used to
promote cleanliness and
sanitation of listings
Weakness – Threats strategies:
 Poor hosts can create many
legal issues for Airbnb to
tackle
 Poor host/guest
relationships can hurt
Airbnb’s image
 Competition can figure out a
way to tackle the massive
issue of Covid-19
 Appendix 2:
Experience
Strategic
Experience / Accomodation
Premium / Luxury Groups
Address - Armaani
Atlantis - Ritz Carlton
Five Palm - Burj Al Arab
Mid-range flexible
accommodation
Golden Sands
Emirates Stars
Fortune Classic

Shared Economy Lodging

Airbnb Affordable Long-term
accommodation
Accomodation VRBO Smana Hotel

Booking.com City Max Hotel

Holiday Inn

Short Long
Stay Duration
 Appendix 3: Competitor Grid

Airbnb
Number of Listings -2 -1 0 1 2 Airbnb has over 6 million listings (NewsAirbnb)
Charge on hosts -2 -1 0 1 2 Charges 3% host fee (Marte, 2015))
Cancelation Policies -2 -1 0 1 2 Free cancelation until 24 hours prior to check in
2019 Revenue -2 -1 0 1 2 $4.7 Billion USD
Technological breadth -2 -1 0 1 2
Total: 5

VRBO
Number of Listings -2 -1 0 1 2 VRBO has over 2 million listings (Tripping.com, 2020)
Charge on hosts -2 -1 0 1 2 Paid and free-to-list options
Cancelation Policies -2 -1 0 1 2 Depends on cancelation policy and communication with host
2019 Revenue -2 -1 0 1 2 $2.8 Billion USD
Technological breadth -2 -1 0 1 2
Total: 1

Booking.com
Number of Listings -2 -1 0 1 2 Booking.com has over 28 million listings (Booking.com)
Charge on hosts -2 -1 0 1 2 Charge average of 15% (Partnerbooking)
Cancelation Policies -2 -1 0 1 2 Can filter by free cancelation
2019 Revenue -2 -1 0 1 2 $15 billion USD
Technological breadth -2 -1 0 1 2
Total: 6

Tripping.com
Number of Listings -2 -1 0 1 2 Tripping.com has over 5 million listings (Tripping.com, 2020)
Charge on hosts -2 -1 0 1 2 Charges hosts 10%
Cancelation Policies -2 -1 0 1 2 50% refund if cancelled a week prior to check in
2019 Revenue -2 -1 0 1 2 $5.1 Billion USD
Technological breadth -2 -1 0 1 2
Total: 0
Appendix 4: Value Chain

Firm Infrastructure: Airbnb’s infrastructure is smaller than can be assumed from the size of the brand. As Airbnb does
not personally purchase, handle or handover their listed properties, this eliminates the massive need for hiring
employees to acquire properties, clean them and other services. Airbnb leverages people that want to rent out their
properties and allows them to advertise on their platform, charging a commission.

Human Resources: Airbnb has over 6,300 employees involved in property management, customer service and other
sectors

Technology Development: Airbnb boasts highly successful and user-friendly website and mobile application, further
streamlining the process for both hosts and guests

Procurement: The procurement of Airbnb listings are done through the app or website, later the physical service is
handed over to the host. Airbnb charges the host 3% for having their property listed on Airbnb’s platforms

Value
added –
Inbound logistics: Medium for peer-to-peer accommodation. Hosts can list their property on Airbnb in a matter of cost =
minutes. All processes are carried out online, streamlining all functions and simplifying the hosts role. Margin

Operations: All of Airbnb’s operations including providing amenities and handling keys are conducted by hosts,
eliminating the need for additional employees. Assigning almost all responsibilities to the hosts themselves provides
the value of carrying out all operations online and in small periods of time to Airbnb.
Outbound logistics: In Airbnb’s case, outbound logistics do not directly apply. This is due to the reason that almost all
services and functions are provided and carried out by hosts.
Marketing & Sales: Airbnb’s main value proposition is the wide variety of listings and very competitive prices. Their
marketing strategy is heavily centered around providing a more local and authentic experience. The brand pushes this
message through brand partnerships, celebrity endorsements and social influencers.
Service: Airbnb excels in their after sale and customer service. Their customer service team consists of hundreds of
agents readily available through call, chat and email. This includes 30 unique languages. Furthermore, the rating
system is highly affective. Both hosts and guests rate each other, encouraging both parties to be considerate and
improve their level of service. (Dudovskiy, 2019)
 Internal Strategic Position External Strategic Position
Resource or Competitive
Valuable? (CA)Rare? Costly to Organized? Industry
Impact of (IS)
Capability Imitate? Resource
Brand Name -1 Market
Yes Share Yes Yes Yes +5 Sustained
Growth potential
Axis X

-3 Product Quality +3 Competitive

Profit potential
-4 Customer loyalty +3 Advantage
Technological know-how
Effective -1 Vertical
Yes Integration
Yes No Yes +4 Competitive
Resource Utilization
communication Average: -2.25 Average: 3.75
Parity
Leveraging Yes Yes Total Yes
axis X score: 1.5Yes Sustained
Hosts Financial (FS) Environmental
Competitive (ES)
Advantage
Widespread +6 Liquidity
Yes No Yes Yes -4 Competitive
Technological Innovation
Axis Y

availability +4 Cash Flow -4 Demand variability

Parity
Appendix 5: Space Analysis
Range of prices+5 Risk
Yes (Low risk) No Yes Yes -3 Competitive from substitutes
Pressure
+5 Working Capital (Low) -4 Price elasticity of demand
Parity
Average: 5 Average: -3.75
Total axis Y score: 1.25

Conservative Aggressive
Appendix 6: RBV & VRIO

Competitive
Advantage Financial Strength

Industry
Strength

Defensive Competitive

Environmental Stability
References
Airbnb. 2019. Airbnb Hosts Share More Than Six Million Listings Around The World. [online] Available at:
(https://news.airbnb.com/airbnb-hosts-share-more-than-six-million-listings-around-the-
world/#:~:text=Today%2C%20we%20are%20announcing%20that,hotel%20groups%20have%20rooms
%2C%20combined.) [Accessed 6 December 2020].

Booking.com for Partners. 2020. How Much Commission Do I Pay?. [online] Available at:
(https://partner.booking.com/en-gb/help/commission-invoices-tax/how-much-commission-do-i-
pay#:~:text=The%20Booking.com%20commission%20percentage,your%20property%20type%20or
%20location.) [Accessed 12 December 2020].

Dudovskiy, J., 2019. Airbnb Value Chain Analysis - Research-Methodology. [online] Research-

Methodology. Available at: (https://research-methodology.net/airbnb-value-chain-
analysis/#:~:text=Airbnb%20value%20chain%20analysis%20is,global%20rental%20and%20experiences
%20platform.) [Accessed 11 December 2020].

Frue, K., 2017. PESTLE Analysis Of Airbnb. [online] PESTLE Analysis. Available at:
(https://pestleanalysis.com/pestle-analysis-of-airbnb/) [Accessed 12 December 2020].dudovskiy, j.,
2019. Airbnb Porter’S Five Forces Analysis - Research-Methodology. [online] Research-Methodology.
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December 2020].

Frue, K., 2017. SWOT Analysis Of Airbnb: Is Its Business Model Flawed?. [online] PESTLE Analysis.
Available at: (https://pestleanalysis.com/swot-analysis-of-airbnb-is-its-business-model-
flawed/#Strengths_The_experience_you_need_at_a_price_you_want) [Accessed 3 December 2020].

Marte, J., 2015. Thinking Of Renting Out Your Home On Airbnb? Consider These Costs First.. The
Washington Post. Available at: (https://www.washingtonpost.com/news/get-there/wp/2015/07/24/the-
many-unseen-costs-of-renting-out-your-home-through-sites-like-airbnb/) [Accessed 7 December 2020]..

Porter, M. (1979) ‘How Competitive Forces Shape Strategy’, Harvard business review, 57(2), p. 137–

Statista (2019) Available at: https://www.statista.com/statistics/289856/number-sharing-economy-

users-us/

SWOT & PESTLE. 2020. Airbnb SWOT & PESTLE Analysis | SWOT & PESTLE. [online] Available at:
(https://www.swotandpestle.com/airbnb/) [Accessed 19 December 2020].

Tripping.com. 2020. Owners Guide To Tripping.Com. Available at:

(https://www.tripping.com/owners/vacation-rental-tripping-com-guide-owners) [Accessed 7 December
2020].

Tripping.com. 2020. VRBO Vs Airbnb Rentals. [online] Available at:

(https://www.tripping.com/industry/rental-companies/vrbo-vs-airbnb) [Accessed 13 December 2020].