Running head: AIRBNB IN 2016 AND BUSINESS MODEL 1

Airbnb in 2016 And Business Model

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AIRBNB IN 2016 AND BUSINESS MODEL 2

Case Background

The availability of digital information has changed the game of supply and demand.

Fundamentally, digitalization is the cause of disruption in several traditional industries. It has

fastened the accessibility to sources of supply in unthinkable ways, uncovering the necessity

quickly than before and potentiating their match. It has empowered users to participate in the

process. The case study reflects the emergence and reinvention of business models to match the

rising economic system. The case of study is about Airbnb in 2016 and its business models in

the collaborative economy. However, Airbnb represents a new business-oriented model; it has

been reinventing and adapting its business model.

Applicable Strategic Models

The Airbnb used sharing Business model to analyze the case stated. This model contains

six dimensions and converts the dimensions into a sharing Business model Compass. The six

dimensions include Technology, Business approach, Transaction, shared resources, governance

model, and platform type. There are three options considered in a different size when describing

the sharing business model in this case. Tech-driven and Tech-enabled form the primary extent.

The Tech-driven business model was used to influence technology to connect users and complete

transactions without offline interactions. While the Tech-enabled business approach was used in

the case study to rely on technology to promote connections then enhanced them by offline

interaction (Meleo et al., 2016).

In the second dimension, Transaction is created by Market, Alternative and Free. Market

transaction instates price depending on the market condition, whereas Alternative entailed

service or products exchange for virtual money that could be used later in the same platform.
AIRBNB IN 2016 AND BUSINESS MODEL 3

Free Transaction was not used to charge services or products, such as sharing bikes in several

cities. The dimension business model is described as profit-driven and mission-driven. The

profit-driven approach's primary goal is to attain profits (Gandia et al., 2021). This is considered

the objective of all companies however;, the reality is also changing in Uber. For instance, a

Hybrid or mission-driven approach is profit-driven and in their goal’s creation of benefits in their

communities.

Problem statement

The most common practices are discussing consumption, selling, buying, throwing away,

and buying again. Recently, these words that stand for capitalism's reality are being replaced by

others like lending, sharing, collaborating, reusing, recycling, and swapping. Haring, which has

been known as an activity between family, has also been extended to strangers. The

transformation has taken place via the emergence of business approaches potentiated by digital

evolution. However, in the case study, several enclosed uncertainties, firms with business

approaches depending on peer-to-peer collaboration have economic potentially proven

themselves and their role as contributors to the society. New realities have been created which

have reinvented the traditional way of conducting business. Consumption is being reinvented via

collaboration. The main problem of the case study is that the most valuable accommodation

provider in the world, Airbnb, does not own accommodation of its own (Gandia et al., 2021).

Recommended Solution

Airbnb should take advantage of its exclusive resources and expertise to develop social

value, resulting in creating economic value. When it focuses on shaping its business approach to
AIRBNB IN 2016 AND BUSINESS MODEL 4

have an inclusive role in society, it will build relationships of trust towards various governments.

Airbnb should also play its part to fully promote a shared economy by creating Corporate Shared

Value through its business approaches. The company should rethink the accommodation market

to meet society's demands. Precisely, should make a market that does not belong in a definite

need, to potentiate the match among the ones looking to hire their idle space with those seeking a

place to stay. This will help them deliver unique accommodation and unique experiences at

attractive cot prices. After the company owning housing of its own should enable local cluster

development through the compromises and available experiences permitting guests to explore

communities they would otherwise not visit (Eckert, 2016). Therefore, this will boost economic

progress and strengthen relationships with local communities.

Supportive Logic

This case study employed Porters’ Five Forces analysis. It analyzed the time of entry, the

role of the first-mover advantage. The time of entry is usually paramount and challenging for the

followers to even get close to the market disruptor. The five-force analysis included the treats of

new entrants, buyers' bargaining power, suppliers' bargaining powers, and the threat of

substitute products or services, all linked to rivalry among existing firms.

Another model employed is the dimension Platform Type. There were various decisions

to be made in this type, such as Business to Business or Business to Crowd. The company is

Business to Business type, which promotes sharing and hiring of assets between companies—the

company. The decisions made in all dimensions are made to assist startups in describing their

primary business models when entering the Collaborative Economy. However, the initial

business approach does not mean that it will be a permanent one (Afuah, 2018).
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The results of the finding are that Airbnb, network platform is classified under "Sharing

Economy," a denomination that makes unclear their real nature. The company is a challenging

innovation to which traditional hospitality will respond (Peng, 2020, p. xx). Its impact has led to

a call for legal policies, thus enabling businesses and local governments to define positions and

strategies.
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References
Afuah, A. (2018). Airbnb: Innovation in hospitality *. Business Model Innovation, 258-271.

https://doi.org/10.4324/9780429446481-22

Eckert, R. (2016). Business model management und business model innovation im

Hyperwettbewerb. Business Innovation Management, 173-208.

https://doi.org/10.1007/978-3-658-13456-3_8

Gandia, R., Genet, C., & Colombero, S. (2021). How does Airbnb support business model

replication through a multi-sided platform? Academy of Management Proceedings,

2021(1), 11769. https://doi.org/10.5465/ambpp.2021.11769abstract

Gandia, R., Genet, C., & Colombero, S. (2021). How does Airbnb support business model

replication through a multi-sided platform? Academy of Management Proceedings,

2021(1), 11769. https://doi.org/10.5465/ambpp.2021.11769abstract

Meleo, L., Romolini, A., & De Marco, M. (2016). The sharing economy revolution and online

peer-to-peer platforms. The case of Airbnb. Lecture Notes in Business Information

Processing, 561-570. https://doi.org/10.1007/978-3-319-32689-4_43

Peng, Y. (2020). The analysis of blocking behavior and pricing: The case of Airbnb. Business &

Entrepreneurship Journal, 1-28. https://doi.org/10.47260/bej/911