Question 1’s Answers

A.1. 1 Airbnb has had or still has multiple competitive forces. One being capital requirements.
Securing investors and convincing them the idea of the air bed and breakfast was difficult – that
was until one venture capitalist, Paul Graham, came along. As mentioned in the case study, Mr.
Graham saw potential in the idea and invested in it. Moreover, another posed threat is the legal
and governing barriers. Since Airbnb is well-known worldwide for providing lodging services by
simply becoming a host or a guest, some cities like New York and Los Angeles have banned the
service due to experiences like murder happening in the Airbnb properties (Dudovskiy, 2020).
Furthermore, rivalry amongst its competitors is another force. Any business including Airbnb has
or must have rivals in the market. Competition is constantly growing as customers can move to
different brands effortlessly, if a competitor in the market lowers its prices on rooms/housing or
improves the lodging experience with e.g. technology, they will have a competitive advantage
which will pose a threat to Airbnb’s profits (Nurlansa and Jati, 2017). However, due to a great
number of hosts registered under Airbnb, the company is the market’s leader making it difficult
for other rivals to enter the market. Also, the low prices set by hosts make it difficult for
competitors to enter the market- low cost strategy (Center for Simplified Strategic Planning,
2020). Another force is the power suppliers have on bargaining. Suppliers/hosts can overpower
the company when it comes to bargaining leaving Airbnb with little to no profit (Johnson,
Scholes and Whittington, 2008). However, due to the number of hosts the lodging company has,
the bargaining power of suppliers is low. Also, Airbnb has a strict policy that states if a host has
a listing on the company’s site, the supplier cannot have a listing in another lodging company’s
site (123writing, 2020). Hence, giving Airbnb an advantage to control its hosts/suppliers. In
essence, another force is bargaining power of buyers (Nurlansa and Jati, 2017). As stated above,
there is a large number of hosts or excess supply of rentals- meaning prices are low. Due to this,
hotels responded by lowering their prices too, which gives guests a high bargaining power.
Hence, if Airbnb does not work out for them, they can easily move to a hotel. Moreover, the
weak threat of new entries. Due to Airbnb’s high functioning capacity with operations in over
200 countries in the world, a rival would need large sums of capital in order to apprehend the
requirements/demand of guests and measure up with Airbnb (Airbnb Porter Five Forces, 2020).
Lastly, time of entrance into the market. In 2008, Airbnb being the first of its kind both e-
commerce and a lodging service, the creation of the website, and people actually listing their
houses gave it an advantage and within a matter of a few years the hospitality company has over
6 million listings worldwide and is now worth billions of dollars (Dudovskiy, 2020).
Nevertheless, Airbnb should always look at improving their services in terms of technology and
security and should be aware that a rival can enter the market at any time with another state-of-
the-art idea can re-organize the market within a few years (Dudovskiy, 2020). Word count: 535
A.1.2
(Part 1) The type of economic system adopted in South Africa is mixed. A mixed economic
system as defined by Investopedia (2020), is a mixture of free market and socialism. This
comprises of the ownership of private property and the freedom to produce goods and services in
the market but with government intervention.

(Part 2) If South Africa was to adopt the command system, Airbnb would fail to exist in the
country. A command system also known as communism, is when the state allocates all the
factors of production (Erasmus, Strydom and Rudansky-Kloppers, 2019) -the question of what to
produce, how it should be produced, and who should produce it, all falls under government
hands. In essence, the hospitality company would have to provide services the way the state
would prefer, that is, if the state lets Airbnb operate in the country. However, the odds are slim
that a command economy would let a company like Airbnb operate since, the company would
give the people freedom of choice, whereas the system prohibits that.

A.1 .3 The environment is an unsteady factor and is continuously changing. According to

Thomas Edison State University (2020), environment scanning is the process of gathering intel
about an organization’s events and its relationship with its internal and external environment.
There are many ways in which scanning the environment is important. Firstly, as mentioned
before, the environment is constantly changing. Hence, monitoring these changes is essential in
order to stay up-to-date. Secondly, an organization that scans the environment is more likely to
survive and also strive compared to those businesses and organizations that do not (Erasmus,
Strydom and Rudansky-Kloppers, 2019). This is because a business gets to know the types of
physical, human and natural resources available and also factors like political stability.
Moreover, scanning the environment not only helps in identifying opportunities in markets but
also helps in identifying threats (LinkedIn 2020). These opportunities would help a business
function more effectively and the identification of threats like competitors and other various
factors would help in preparing a business facing these obstacles. Furthermore, scanning helps an
organization properly utilize resources, limit expenditure and decision-making. (Management
Study HQ, 2020). Decision making comes in when an organization has different choices to pick
from but has to choose which one will be the most favorable to the business in terms of factors
like where they can utilize resources the most and another example can be the amount of taxes
charged in a particular market. Last but not least, environment scanning is a huge advantage to a
business or an organization because it helps in planning future strategies and what can be done in
order to stay strong in the market be it improvement of technology, improvement in security and
also being environmentally friendly in order to easily penetrate different markets (Bhasin, 2020).
In conclusion, environmental scanning assists an organization to find out potential threats, find
great opportunities, the ability to grow and survive in a particular market and proper usage of
resources. The founders of Airbnb used different ways of scanning the environment before
starting their business. First of all, they scanned the environment for an opportunity, and as
mentioned in the case study the moved to a city with “sold-out hotels at the time” giving the
company an advantage over their hospitality service. Secondly, it was just the beginning of the
rise of e-commerce, they then decided to start a website, present the idea online and giving them
an advantage over businesses that started as shops. Another opportunity was when they decided
to sell breakfast cereal at a presidential race (these events are usually held every presidential
election and can have thousands of people attend) and raising up to 30,000 dollars in capital as
mentioned in the case study. In addition, they scanned the environment in terms of pricing. The
decided to give hosts an opportunity to make fast money by setting low prices and guests the
opportunity to enjoy these prices in order to easily penetrate the hospitality market even without
owning any properties. Word count: 501

A.1. 4 The main types of resources needed by the founders of Airbnb to start the company was
monetary, human and operating resources. Firstly, monetary resources is the capital that was
needed in the start up. As mentioned in the case study an investor saw potential in the business
idea and invested in it. The company received capital in venture funding from Y combinator, in
exchange for a part of the company. In essence, they sold cereal during the Obama presidential
race, the profits earned were then used towards the funding of the company. Secondly, physical
or operating resources are facilities or equipment or assets used in providing goods or services
(Dynamics 365, 2020). Airbnb’s physical resources are not like any other business’s resources.
The company does not own any physical assets but is one of the largest lodging hospitalities in
the world, this is because its works as a broker, getting commissions from each booking made
(Wikipedia, 2020). Moreover, the human resources needed were website developers and anyone
that contributed to the website that was going to be launched online. This included, computer
geeks and a marketing team.
Question 2’s Essay
Corporate social responsibility with BMW SA
BMW is a German, transnational corporation that produces luxury cars and motorcycles.
Initiated in 1916, the German company manufactures motor vehicles in multiple countries in the
world including South Africa (BMW, 2020). BMW roughly translates to Bayerische Motoren
Werke AG, which in English means Bavarian Motor Works and has Rolls-Royce motor cars and
Mini as its companies (BMW, 2020). BMW SA is a big contributor when it comes to corporate
social responsibility. As a matter of fact, this organisation contributes millions of Rands towards
this cause, annually. As defined by Erasmus, Strydom and Rudansky-Kloppers (2019), corporate
social responsibility looks at how a company can operate without disrespecting the community
around them and around the country. Another definition is the relationship between an
organisation and the people around the area in which the company resides (Crowther and Aras,
2008). According the Sustainable Value Report by BMW group 2014, corporate social
responsibility to them, is taking social accountability for everything that they do as a vital part of
how they see themselves as an organisation. They mainly allocate their social responsibility
funds mainly to HIV/AIDs, community development and education (BMW SA, 2020). The
following piece of information will discuss why BMW SA participates in engaging with
corporate social responsibility, its contributions and how this participation values the local South
African communities. In essence, it will also further converse on how its corporate social
initiatives can be improved, its stakeholders and a conclusion at the end.
Why they do it
There are multiple reasons as to why an organisation would involve themselves in corporate
social responsibility. As mentioned in the BMW SA website, they engage in helping the
community to contribute in structuring a “brighter” South Africa, to improve the quality of the
people and have more sustainable development in the country. Sustainable development
definition as described by Oxford dictionary (2020) is development without unnecessary wastage
of resources. Moreover, the company does it for building a strong reputation (Phillips, 2020).
BMW has contributed to the local South African community in many ways. These ways include:
 The SEED (Schools Environmental Education Development) project – Started in 1996,
BMW SA has helped in the contribution to this project that deals with environmental
issues in the local community and this project also helps children get education in over 60
schools in South Africa (Phillips, 2020). Moreover, the children at these schools get to
learn about how to plant various vegetables and putting it into practice and they get to
learn about standard sanitation (BMW group, 2020).
 Partnered up with SEQUA, a non-profit, founded by the German Federal Ministry of
Economic Cooperation and Development to create a community health centre. This
health centre comprises of an advice-giving service about HIV/AIDs, a library, training
amenities that teaches about computers and it also offers gardening (Phillips, 2020). The
centre opened in 2005 in the locality of the Rosslyn plant in Johannesburg and it is run by
members of the community (BMW group, 2020).
 Education projects covering STEM areas- BMW SA has an excellence project that
promotes the teaching of science, math, technology and the environment in the local
 community around the areas of their plants, more than 30 schools are reinforced (Phillips,
2020).
 A joint project with the LoveLife Trust – During a period in 2007, the two organisations
make the construction of a youth centre nearby Knysna, South Africa possible. This
centre focuses on a disadvantaged community and provides them with a distinct health
program aimed to educate the youth about HIV/AIDs and also education and sports
(BMW group, 2020).
The company has also contributed to other various projects, all to help different communities in
South Africa.
Improving The Corporate Social Responsibility Initiatives
BMW SA has contributed to the local communities and is still contributing in every way that it
can for the betterment of the South African people. However, the initiatives can be improved.
Here’s how:
1. Communicate with the local community and BMW SA’s employees (Team,2020) –
Engaging with the community and employees by communicating with them directly. This
would help the organisation know what the actual needs of the community are rather than
hearing it from an indirect source like the news.
2. Search for opportunities within the vicinity (Johnson, 2020) – These opportunities
include recruiting future employees from the local community. The organisation can fund
projects around the community that promote education which would result in people in
the area learning and picking up a few skills.
3. Have staff volunteer to help the local community (KARI, 2020) – BMW SA could have
their employees visit the local community every now and then to help out on things like
watering plants and story sharing sessions. This would make the local community feel
more valued as they would feel a part of something; like they belong. The staff would
also have the opportunity to see lives of those less fortunate than themselves.
The Five Stakeholders of BMW SA
A stakeholder is a party directly affected by an organisation’s performance (Erasmus, Strydom
and Rudansky-Kloppers, 2019). Stakeholders are classified into two; internal and external.
Internal stakeholders have a direct relationship with the company while external stakeholders
have an indirect affiliation with the organisation (Investopedia, 2020).
1. Shareholders/ Owners – These are internal stakeholders who hold important shares of the
firm. Holders are legally responsible for the impacts the organisation has, and have an
important role in policy.  Owners regularly make extensive verdicts regarding both
internal and external stakeholders in the business (Boundless Management, 2020). The
reward for this stakeholder is profit.
2. Employees – These internal stakeholders are the key aspects to why an organisation runs.
They are part of the production process. The reward for employees is wages and salaries.
3. Managers – Managers are internal stakeholders that play the role of strategizing and
leading the company internally. They act as a point of contact from an organization’s
board of directors and owners and are also often accountable for the organization itself
(Boundless Management, 2020).
 4. Customers – These are the key external shareholders for BMW SA. A lot of businesses
say that their purpose of existence is to serve customers, customers are impacted by the
quality of the organisation’s motor vehicle and their value to the clientele (Corporate
Finance Institute,2020).
5. Local Community – This people are external stakeholders. These are the people affected
by the organisation in the area. The company then comes in to help the community
through corporate social responsibility.

Henry David Thoreau, an American philosopher once said, “Goodness is the only investment
that never fails”, and BMW SA does just that. In essence, BMW SA is one of the organizations
is South Africa with a strong corporate social responsibility drive. Its background suggests the
work they do under corporate social responsibility is for sustainable development rather than
charity. The company has multiple projects across the country including welfare centres and
projects that cover STEM areas. Their contributions to society largely benefit the youth of South
Africa and the people of all ages in South Africa. However, BMW SA does seem to do the most
but there are many more ways they could improve their initiative like actually communicating
with employees and local community to know about their needs. Furthermore, their stakeholders
are mentioned towards the piece of writing above. All-in-all, one could call BMW SA a
company of the people. Word count: 1225

Question 3’s Answer

The Role Of Entrepreneurship In South Africa
Entrepreneurial activity is deemed essential when it comes to economic growth (Erasmus,
Strydom and Rudansky-Kloppers, 2019). Entrepreneurship is significant in any economy as it is
capable to enhance the standards of living and generate wealth, not only for the entrepreneurs
themselves, but also for other related businesses (Investopedia, 2020). A solution for the current
unemployment which is at 35.313 % is entrepreneurship (Bester, 2019). South Africa being a
developing country, there are many opportunities for the people to identify. In essence,
entrepreneurship in South Africa will promote job creation. Job creating will lower the amount
of people unemployed in South Africa. Another role is women empowerment (USB-ED, 2020).
Entrepreneurship is a gender-neutral role. This means women can have the chance to start up
their own organization using their own creative ideas and hire other women or even get hired by
a fellow women entrepreneur in the particular industry. Moreover, entrepreneurship in South
Africa is becoming part of globalistaion which improves economic growth in the country. This is
by entrepreneurs in South Africa being exposed to a wider market and causing faster growth for
entrepreneur organisations in the country (Power,2020). In conclusion, entrepreneurship plays a
vital role in the growth of South Africa in different ways.