Chapter 3: External Analysis:

Industry Structure, Competing Forces,

and Strategic Groups

Joe Mahoney
Fall, 2020
BA 449
 2

Chapter 3: Case Highlight

Airbnb: Disrupting the Hotel Industry

• In 2019, Airbnb had 5 million listings in over 81,000 cities in

some 190 countries, ranging from spare rooms to entire
islands, and valued at $31 billion. With its “asset-light
approach,” based on its platform strategy, Airbnb is able to
offer more accommodations than the three biggest hotel
chains combined: Marriott, Hilton, and Intercontinental to
compete in the global hotel industry.
– In 2010, Airbnb received funding from Sequoia Capital,
one of the most prestigious capital firms in Silicon Valley,
having provided early-stage capital to companies such
as Apple, Google, Oracle, PayPal, YouTube,
and WhatsApp.
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The Firm within Its External Environment, Industry,
and Strategic Group, Subject to PESTEL Factors

Exhibit 3.1

Copyright © 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 PESTEL Framework
• Political (market and non-market) • Technological
 Government pressures  Innovation in products
 Subsidies and incentives and processes
 Lobbying and contributions  Machine learning and AI
 Differences in countries, states,  Diffusion
and regions  Research & development

• Economic • Ecological
 Growth rates  Global warming
 Employment levels  Sustainability
 Interest rates  Pollution (e.g., BP's oil spill)
 Currency exchange rates

• Legal
• Sociocultural  Court system
 Norms, culture, values  Legislation
 Demographics  Hiring laws
 Lifestyle changes  (De-)regulation
 Subway, Whole Foods benefit
 PESTEL: Political Factors
• For example, hotel chains and resort owners have
challenged Airbnb in courts and lobbied local governments,
some of which passed regulations to limit or prohibit short-
term rentals.
• Local residents in New York, San Francisco, Berlin, Paris,
and many other cities are also pressuring local governments
to enact more aggressive rules banning short-term rentals
because they argue that companies such as Airbnb
contribute to a shortage of affordable housing by turning
entire apartment complexes into hotels or transforming quiet
family neighborhoods into all-night, every-
night party hot spots.

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