Executive Summary

Incorporated on August 2008 with headquarters in San Francisco, California; AirBnB

seek to be a trusted community marketplace for individuals to list, explore, as well book
exceptional accommodations globally through the internet. Regardless of an apartment, castle, or
villa, the company seeks to connect people to exceptional travel experiences at any place on
earth. With great affinity for world-class customer service couple an outstanding community of
friendly and hospitable users, the company seeks to promote an easiest way for individuals to
monetize their additional space as well as showcase it to a global audience to reach millions of
people.
The company will be operating as a peer-peer accommodation platform connecting hosts
who own the accommodation or rooms and travelers. The company will charge a service fee
without taking ownership of the room. The model disrupts the traditional industries as it creates
new sources of supply. The travelers and host be responsible with regards to security vetting and
should rely on the published reviews. Different to the traditional hotels, the company will not
scale inventory nonetheless it will increase the travelers and hosts thereafter match them
together. The core peripherals and service include the following: booking, verification,
loyalty/bonus, feedback paying, programs, travel guide, neighborhood social network, and
insurance. The business would require $10 Million as start-up capital to finance the business.
Funding would be sourced through venture capital from reputable and reliable investors.
INTRODUCTION
Company’s Background
Joe Gebbia, Brian Chesky, as well as Nathan Blecharzyk, foundedAirbnb in 2008. San
Francisco is the locality of the head offices of the Company. The Company operates in the
hospitality industry by offering short-term accommodation or lodging services to the clients,
mainly the tourists. The Firm operates as a two-sided industry, which sought to match real estate
owners and the clients of the lodging services. As at 2015, the Company had over 1.8 M listings
in more than 34000 cities across the globe (Airbnb, 2017). For less than ten years in business
operation, the Firm has greatly developed as well as upgraded its security system to ensure that it
offers excellent lodging services to its guests as well as encourage crime prevention. Within this
short period, Airnbn has grown substantially to become a global business.
In fact, due to its global presence, the regulatory risk is a major challenge that faces the
Enterprise since each jurisdiction has varying rules and requirements (Peppard& Ward, 2016).
For example, Countries have laws that control lodging industry as well as the Internet-based
firms such as Airbnb. Cultural adaptation is another challenge that the Company faces. Airbnb is
required to understand every Country’s culture as well as those of the individual cities (Airbnb,
2017). For instance, some conservative cultures often have great concerns concerning sharing of
the accommodation. Thus, the Company needs to develop their services to match those cultures
to help the Company develop its markets (Lane & Woodworth, 2016).
ENVIRONMENTAL ANALYSIS
Internal Analysis
Core Competencies
The Company’s public funding as at 2015 stood at $ 1.5 Billion, and the revenue streams
amounted to over $3.5 Billion. Apparently, this suggests that the company is continuing to
record an astronomical growth. The legal matters require immediate attention although the
uptake remains high (Euromonitor.com, 2017).
Strengths
Firstly, the industrial leadership is the key strength of Airbnb. The Company offers
differentiated services in the industry making it have an iconic status. In fact, the Firm offers
internet-based accommodation services to its guests (Airbnb, 2017).
Secondly, the price competitiveness is another key strength of the Firm. Airbnb offers
different market offerings hence making it possible to offer competitive prices. Apparently, this
competitive pricing makes the Firm have the upper hand in the leadership position in comparison
to their rivals (Airbnb, 2017).
Airbnb is highly connected to its customers due to its model of strong engagement (Lane
& Woodworth, 2016). The Facebook platforms among other social Medias provide an avenue for
interaction with the clients hence helping the Firm to collect critical marketing information that
is useful in the accomplishment of their business success (Airbnb, 2017).
 Fourthly, the Company experiences low operation costs. Since its inception in 2008, the
operation costs of the Company has always been low. The use of internet in their business
models has helped to Firm to keep their operating expenses as low as possible (Airbnb, 2017).
Fifthly, many market offerings is another strength of the Firm. Such offerings comprise
of pricing mechanism, business locality, styles, as well as experiences. Airbnb supports an
authentic domestic experience which is an added alternative to local tourism as well as home-
made food. Besides, the Company has already created a Wish List for the encouragement of their
guests to select services according to their wishes (Airbnb, 2017).
The user-friend website system is another strength. The simplicity of its website and
application leads to easy and quick accessibility by both the guests as well as the hosts (Airbnb,
2017).
Seventhly, Airbnb has built its business model in a manner that leads to revenue
generation. Essentially, such model leads to revenue generation by both the host and the guests
(Airbnb, 2017).
Lastly, the business expansion is another strength of the Company. Within a very short
duration, the Company has already acquired a large customer base making to have a global
presence. In fact, the Company operates in over 65,000 cities in all countries. The Company has
succeeded in increasing its listing to 3 M in 2017 from 1.8 M in 2015. The low operating cost is
a key factor that has offers the opportunity for growth and expansion of Airbnb (Airbnb, 2017).
Weaknesses
Firstly the security system gap of Airbnb is a major issue. Such aspects endanger the
safety of both the host and the visitors (Airbnb, 2017).
The public relations is a major challenge facing the Company. Therefore, this is an area
that requires improvement (Airbnb, 2017).
Thirdly, the customer relations, as well as services, need improvement. In spite of good
client engagement, Airbnb still needs to develop their customer services as well as relations
(Airbnb, 2017).
Fourthly, improper control of lodgings. The Company has poor control over the actual
conditions of the services listed. Such aspect affects the experience levels as well as the client
trust (Airbnb, 2017).
EXTERNAL FACTORS
Opportunities
Growth helps in improvement of the revenue streams and profitability. The Company can
penetrate in more cities. The already acquired success of the Firm especially due to its low
operating costs among other strengths is useful factor for tapping such lucrative opportunities
(Airbnb, 2017).
Secondly, Airbnb has a chance to acquire market share from the prevailing economic
status since such as aspect is likely to be their choice. Maintenance of the operating expenses as
low as possible is necessary for the accomplishment of their objectives (Airbnb, 2017).
Threats
Political instability in some countries is a major threat that faces Airbnb. Moreover, the
application of varying laws by different jurisdictions is an aspect that threatens the survival of
the business. Other political factors that affect the forms success comprise o trade embargos and
restrictions (Airbnb, 2017).
Ultimately, a monetary emergency is another risk that may hit AirbnbSuch aspect may
make the Company lose their stock value, earning, or even the business failure that may force the
closure of the Company (Airbnb, 2017).
PESTLE Analysis
Political
Airbnb operates in a unique business environment. Individuals often rent their homes to
guest and strangers. Due to diversity in a political climate in different jurisdictions, individual
may be required to also live in the properties that they rent. Airbnb has experienced fine
payments in some cities such as Barcelona, and New York among others (Frue, 2017).
Economic
The Company uniquely benefits the hosts as well as the cities. Currently, the Company is
an industry leader, and it even competes with hotelier firms. Airbnb is developing trends in
which the resources can be shared between enterprises as well as individuals. Airbnb offers
cheaper accommodation services than hotels. The Company has led to economic development of
the cities as well as countries due to revenue generation through renting of homes for short
durations (Frue, 2017).
Social
Airbnb operates in the social industry. Here, the hosts often offer their rental services to
guests while the clients document their experiences via the internet. The stories in the Social
Media allows the spread of the corporate services is hence making Airbnb grow through a word
mouth. Thus, this has made the Company to learn the “experience” initiative (Frue, 2017).
Technology
The Company solely relies on technology in marketing its services. The guests often
book their rooms through online. Moreover, Airbnb website allows the clients to write reviews.
Moreover. The Firm allows automation of services. In case the host fails to respond, the
Company automatically texts their next hosts. Without this technology, booking of rooms would
be complicated (Frue, 2017).
Legal
The Company is required to comply with all legal requirement. On their site, they address
the requirement for hosts to take after these principles. Finally, an ecoHosts must agree to terms
and conditions, given by means of Airbnb, consenting to take after assessment accumulation,
hotel, and tourism headings (Frue, 2017).
Porter’s Five Model
 According to this model, one can conclude that this industry is an attractive industry and
the one that is continuously growing. Moreover, the industry poses a challenge to other industries
such as hotelier business (Airbnb, 2017). In fact, Airbnb competes with hotels, restaurants, and
motels, among others. Airbnb is Firm that has a good control of their competitiveness. In fact,
the horizontal and vertical competitiveness is medium. Such perspective gives Airbnb a good
opportunity for the continuance of its business growth (Airbnb, 2017).
Strategic Plan
Airbnb will revolutionize the manner in which people think with regards to travelling and
promote a sharing economy. We will work to have 10 million new users signing up with the
company and increase our presence globally.
Mission
The company seeks to promote quality and authenticity of local hospitality, be a number
one promoter of a sharing economy globally.
Goals
Within the first three years the goals of the company will include:
It will work to exceeding client’s expectation, increasing users to almost 60 million, and
assembling a competent team of staff.
It works to change people’s thinking with regards to travelling and promote sharing of private
space with other people.
Core Competency and Sustainable Competitive Advantage
Organizational culture, our people, increasing global competition, customer service, and
seamless operations define our core competency and secure the company’s competitive
advantage (Mullins, 2012). The company seeks to be an industry leader with regards to
promoting online marketplace for rentals connecting users with property owners. The merit
listing, review portals, shared social connections, and private messaging system allows users and
host to interact positively.
Situational Analysis (SWOT)
The main strengths include: shared culture, human connection, enhanced travelling
experience, the company is well capitalized, good corporate image, local sourcing, leveraging on
technology/internet in the operations, motivated workforce, and global presence. It is also a
source of income for the hosts as well as the government since the service fee is subjected to
taxation (Sahlman, 2008). Airbnb weaknesses include security concerns since one host strangers,
lawsuits have been damaging the company’s reputation, the lack of legal contracts between the
traveler and user, some cities have passed zoning laws as well as administrative codes forbid a
host to receive any form of payment from a guest for short period. Opportunities include
increased use of social media to grow customer base, more awareness has been created among
the masses on Airbnb services, and there is a larger pool of investors who seek invest in the
company. Threats include economic recession and restrictive government regulations (Barringer,
2012).
Impact
 The company seeks to revolutionize further the traditional hotel model and promote a
sharing economy.
Criticism and Controversies
The company can face increasing criticisms with regards to violation of housing laws
relating to rental of residential units for a month. The security of the host or traveler as well
property can be jeopardized since both are strangers. The company has insured both parties for
any property damage or loss due to theft or vandalism for up to $50,000 and there is also a
hotline number, besides, there is implementation of other security features. There are many
financial, legal, and tax liabilities to be covered by the company.
The company has also faced criticism for its identity verification system known as
‘Verified ID’ which many customers perceive it as extremely intrusive of privacy. Some cities
enforce or restrict the size of rental for instance, Berlin. The aspect of drip pricing also has been
criticized due to the hidden charges when charging per-night services. It faces massive boycott
especially in the Middle East as a result on including some settlements in Israel which many
believe they belong to Palestine.
Competitive Analysis
Threat of new entrants is very moderate for the company. There are no restriction with
regards to online and exit in the market. The company is well capitalized with global operations.
It is hard for other company to compete with Airbnb brand since it is a household name.
Furthermore, the threat of substitutes is relatively high since switching costs are currently non-
existent. Customers have an option of choosing hostels, traditional hotel, couchsurfing, among
others. Additionally, the bargaining power of customers is very low since customers lack
alternative and they cannot benefit in anywhere from group buying (Mullins, 2012).
Bargaining power of suppliers: This is also very low because people trying to rent out
their rooms don't have much in the way of an alternative for connecting with customers. Airbnb
really controls the connection between the two parties. There's nothing comparable to a union for
these suppliers, so they can't work together to place demands on Airbnb. Lastly, inter-firm
rivalry is low or moderate there are no other known companies competing against Airbnb’s
model.
Defining major competitors’ future goals, current strategies, and assumptions about the
industry
The company expects in the near future such companies which provide similar services
but for free might change strategy to be for-profit organization. This will increase competition,
currently the company has invested heavily and it has global operations allowing it to dominate
and secure market leadership.
Comparing Company’s Strength and Weakness against Competitors.
The main competitors include: 9flats.com, wimdu.com, bewelcome.org,
couchsurfing.com, vrbo.com, homeaway.com, sleepout.com, roomorama.com, among others.
Being a market leader the company enjoys good press and it has grown to be a global or
household brand. The successful idea attracts new users and investors alike. From venture
capitals, it expects to receive over $800 million within six years. The company has a high
valuation in the market as compared to competitors. It also guarantees the host’s security through
insurance coverage valued at $100 million per booking.
Capitalizing on Competitor’s Weaknesses
The company always seeks to develop new products and service that suit the market, it
also rely heavily on technology to enhance operations, the company is also heavily capitalized to
allow it penetrate the market, and also by use of interactive media as well as social networks it is
able to enhance customer experience. It works hard to get support from government to allow it
operate smoothly.
Product/Service Differentiation
The services being provided are unique together with the peripherals. It ensures that it is
the link between the host and traveller. It also relies greatly on technology to increase its
customer base.

Monitoring Competition on a Continuous Basis

The company will engage in constant environmental scanning, Porter’s Five Forces
Analysis, PESTLE analysis, and SWOT Analysis to analyze market trends and strategically
position the company.

OVERALL STRATEGY AND CHALLENGES

Challenges
Security is a major issue to the Airbnb. The Company needs to develop and upgrade its
security as well as a safety system. Such perspective is likely to guarantee the security safety of
the guests and hosts. Apparently, this is a major area of weakness that the Company is currently
facing (Lehr, 2015).
The regulatory risk is another challenge that faces the Company. Since its establishment
in 2008, Airbnb has grown significantly, and it has a presence in over 191 countries. Airbnb is an
internet-based form hence this implies that it is affected by a variety of stipulations (Lehr, 2015).
Cultural adaptation is another significant issue affecting Airbnb. Airbnb needs to adapt
themselves to socio-cultural aspects of countries in which they operate as well as their cities.
Thus, to facilitate the development of these markets, Airbnb needs to understand the cultural
aspects of cities among other jurisdictions that they operate (Lehr, 2015).
Strategies
In summary, it gives the idea that Airbnb has gained a notorious status and it's in a solid
initiative and aggressive position for its quick development.Firstly, Airbnb is already an
industrial leader suggesting that they are in a strong competitive position within a rapid
expansion and growing industry. The industry needs to continue employing strong competitive
position for improvement of their growth and expansion rate. Such perspective can help the Firm
accomplish its vision of becoming a global leader in offering Internet-based lodging services
(Peppard& Ward, 2016).
Secondly, the Company requires improvement of their show by at least 10 percent
particularly in Middle Eastern countries and Africa. Thus, this requires the Firm to develop their
market needs through the creation of cultural exchange programs especially to the youths.
Aggressive growth strategies are necessary for the Company to accomplish its strong position.
The Company may employ a five-year plan strategy which combines related product
diversification, product development as well as market penetration among others (Peppard&
Ward, 2016).
Another strategy that the Company can employ comprises of the acquisition strategy of
other small firms for improvement of its growth. Development of a plan for acquisition of new
models of hotels in different localities such as the Middle East is likely to improve the business
competitiveness. Maintenance of low cost to remain competitive in the challenging market
environment is important (Lehr, 2015). The Company can finalize their partnership agreements
with Uber for the management of their internal transfers. Implementation of the market
communication plans for improvement of the market growth in the current and target market by
at least 30 percent is significant. Apparently, this will help the Firm to accomplish its projected
market share by 2021.
Recommendations and Conclusion
In summary, it appears that Airbnb has acquired an iconic status and it’s in a strong
leadership and competitive position for its rapid growth. Thus, the Firm requires continuing
being competitive through tapping into the opportunities and using its strengths to benefit from
such opportunities. For example, the Firm may use its strength of low operation costs to expand
more in the target segments. Apparently, this will make Airbnb remain competitive within its
industry and make it accomplish its dreams, goals, visions, and objectives.
At Airbnb, they believe in making the globalization. Thus, they apply the internet-based
technologies hence improving easy and rapid access to their services by the hosts and the guests.
The power of technology has led to a reduction of the operating costs as well as helped in the
collection of the important marketing information through client reviews. Moreover, customers
often book their needs via the internet platforms hence making the hosts to identify a variety of
the needs that the clients require. In fact, Airbnb applies technology in all areas of operation.
Lastly, product diversification is another alternative strategy that Airbnb may employ to
improve its competitiveness. The Company can consider offering other services and products.
Such strategy helps the business to success even if one product segment fails. For instance, the
company may also offer food and restaurant services amongst other products hence encouraging
the business to grow and improve its competitiveness.