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Unit 2 Strategic Report (Live case study) Level 5 Regent College

2193Downloads1 I Published: 25 Mar ,2020

Introduction

The strategic management of the different operations of a business organisation will lay a significant impact on its overall operations. An effective business strategy will lay a significant and crucial effect on the overall operations of a business entity and helps in its better growth and development (Hill, Jones and Schilling, 2014). This report will lay emphasis on the macro and micro environmental factors using the latest tools and models and a critical analysis of the various business strategies that have been taken in effective consideration by UK based aviation and hotel company, Airbnb. Other than this, the ethical issues related to leadership will also be taken in consideration that will lay a significant effect on the overall operations of the organisation.

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Main Body

1. External business environment analysis

Porter’s 5 Forces model

Porter's five forces model for Airbnb is as follows:

  • Threat of New entrant: Airbnb possesses very moderate to no threat from the various new entrants that have been entering into the aviation market. However, Airbnb is a well-known brand and the competitors have to see through its brand equity to compete with the company.
  • Threat of substitution: It is a high risk factor that is required to be taken in thought process by the cited business organisation. As the competing aviation companies are coming up with innovative products and services, the business firm has to look after the strategies to avoid the threat of getting replaced in market.
  • Bargaining power of customers: The bargaining power of the customers lay a very deep and significant impact on the operations of organisation. But, Airbnb has the minimum pressure about the costing as the customers has no other option as better as the cited business entity in terms of services and brand equity.
  • Bargaining powers of suppliers: This is also competitively low for the organisation as Airbnb controls the relationship or connection between the room suppliers and the customers, making its services more cost effective by eliminating any sort of intermediate (Barney, 2014).
  • Industrial rivalry: It is also comparative minimal for the organisation as none of the competitor of the business entity has calibre to meet the operational efficiency and customer satisfaction level that has been offered by Airbnb.

PESTLE analysis:

PESTLE analysis of Airbnb is as follows:

  • Political factors: The political factor plays a very important role in the overall operations of the company that will help the firm to increase its productivity and profitability. This will also help in increasing the operational capacity of firm. But, in the recent time, it has been found that Airbnb has failed to maintain the states regulation that had led to eviction and closure.
  • Economic factors: Airbnb works on the principle of shared economy, in which the product and services have been shared among the enterprise and the individuals. It has created a stiff competition for hotels and motels, by processing the cheap rented rooms to its customers (Moutinho and Vargas-Sanchez, 2018).
  • Social factors: The social factors played a very deep and impacting role in the overall growth of Airbnb. Moreover, the experience and reviews of the services that will be shared by the customers or the users of the services will lay a solid impact on the growth and development of the organisation.
  • Technological factors: Airbnb relies heavily on technology. The customers or the users of the service can get the access to the app or website. It also uses the automation facility. If host doesn't respond to the guest request, the business entity, itself will text the host for them.
  • Legal issue: In the recent time, the company has faced a lot of legal obligation that have impacted the overall operations of the business operations. The failure to follow the housing rules and regulations has proved as the major glitch for the organisation. Airbnb requires host to agree upon all the terms and conditions in order to make its services more effective and collaborative (Ginter, 2018.).
  • Environmental factors: Airbnb focuses on the minimum usage of the energy sources and look after the reduction in greenhouse gases and emission of other harmful products. This has increased the environmental awareness and cost efficiency of the firm.

The above external factors that are been discussed above, it can be said that Airbnb is the strong market player which requires few measures to be taken in effective consideration to maintain its productivity and revenue generation. The effective handling of the legal obligation will help the firm to sustain in market and have a better productivity and profitability. In addition to this, the legal obligations related to the housing factors and taxation will help the firm to gain a better control over its business operations. It helps the firm to open the opportunities in the BLUE OCEAN market (Steinbach and et.al., 2017).

2 Internal business environment analysis

Resource and capability theory:

This theory will help in meeting the needs and demands by analysing the key strategic measures that will be taken in effective consideration by the organisation on an internal level. It will help in meeting the operational level of high scale of operational capacity of company that will help in meeting the operations and customer requirements of the organisation. This will help the organisation to identify its core competencies. Besides this, the assessment of the various resources owned by Airbnb will help in meeting the customer's satisfaction level.

The basis core competency of cited business firm is that it has an effective financial stability and brand equity that will help in improving the core operations of the organisation. The better utilisation of the available resources helps the company to have a better cost effectiveness and competitive advantage over its rivals (Wheelen and et.al., 2017). Moreover, the assessment of the key financial indicators such as profitability, growth rate, cost effectiveness and free cash flow or return of investments is the major factor that will help the firm to improve the quality of services and customer satisfaction level. This will help business organisation in better entry of the new market segment.

Value chain analysis:

 The value chain model will help in handling of the different business operations that will help the firm to improve its productivity and handle them in a very effective way. The value chain analysis of Airbnb is as follows:

  • Internal logistics: It involves the effective and strategic data handling that will help in meeting the operational capacity of cited business organisation. The data that is been collected is thoroughly analysed by the experts at the organisation. It will lead to the effective development of the operational capacity of the organisation. It will also help in maintaining the future rentals.
  • Operations: It involves the basic functions that are been performed by the business organisation. For instance, Airbnb provided the private house renting to its customers as per their requirements. It helps in improving the satisfaction level of the customers (Rothaermel, 2015.).
  • Infrastructure: The Airbnb don't have a stable infrastructure of it own as it works with the collaboration with private renters who provide their rooms or houses for rents. Thus, this give the cited firm a cost efficiency over its competitors. Although, this infrastructure is needed to be verified by the organisation to meet their standards in order to maintaining their quality and customer satisfaction level.
  • Marketing and sales: Airbnb uses the updated technology and digital mediums to have a high level of operational efficiency and handling the better quality of services of the organisation. The usage of the social media platform and other marketing tool;s will help the cited business entity to attract the maximum number of customers. The advertising approach is less utilized but the firm has many regular and loyal customer's.
  • Services after sales: the Airbnb takes the customers as well as the host feedback in order to make it services more effective and user friendly. This provide the user with the effective insight to improve their service quality and meeting the needs and demands of the customers to gain their loyalty and maintain the quality and customer satisfaction standard of the company.
  • Outbound logistics: it involves the better utilization of the high quality and latest technologies that will help the firm to have a high customer base and increase in its productivity and revenue generation (Lasserre, 2017).

From the analysis of the both internal and external factors that are been taken in effective consideration by the organisation. This factors will help in better handling of the different operations which will help in better growth of the Airbnb in local as well as foreign market, especially in UK. Other than this, the cited business organisation has to look after the better handling of different issues like housing verification or threat from the substitutional products or services. This will help the firm to handle the business operations in a better way.

3. Strategic analysis

The strategic analysis of Airbnb will involve the factors like cost leadership, differentiation and blue ocean approach. The cited firm has a cost leading approach as it provides the services of rental houses on a very low cost and have a product differentiation factor which provided the firm with high quality of services and gain a better productivity and profit margin. The blue ocean or hybrid strategy helps the firm to improve its revenue generation, that helps the firm to make the better strategies (Bettis And et.al., 2016). Airbnb will look after the better handling of Ansoff matrix. The market penetration corporate strategy will help in better handling of risk factors in new market, helping in maintaining the productivity. Also, the market development strategy will help in better handling of different operations that will help in better handling of wide variety of operations. This will also involve the market development process that will help in making the suitable changes in the organisation to suit the market conditions. Besides this, the approach of product development will help in better handling of a wide variety of operations that will help in meeting the operational effectiveness of the company.

Other than this, Airbnb will look after the better integration approach to enhancer its operational capacity on a significant level. The horizontal integration approach will help in adoption of innovative, strategic measure that will help in meeting the operational requirements and customers demands of the company.  On the other hand, in vertical integration approach, Airbnb will see through the collaboration or acquisition the better services that will help in better handling of the different measures to improve its functional efficiency. On the other hand, the diversification in both related and unrelated way will help in increasing the product portfolio of the organisation, and provide the customers with high quality, innovative products and services. Other than this, firm will also adopt the turnaround strategy like downsizing or liquidation which will help in better handling of the operations of the organisation (Ethiraj, Gambardella and Helfat, 2016.). The downsizing approach will help in controlling the excess cost of operations while liquidation will help in that will help in meeting the operations and handling of the operations and keeping a check over the assets owned by the organisation. Other than this, the stability strategies like no change approach will help the firm to gain a stability and sustainability in market. This will also improve the overall functional capacity and maintain the quality standards of the organisation. Other than this, it helps in keeping the customers highly satisfied and provide them with the service or product as per their requirements (Ethiraj, Gambardella and Helfat, 2016.).

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Conclusion

This can be concluded from the report that the strategies and environment plays a very crucial role in the overall operations of the organisation that will help in meeting the needs and demands of the customers. The Airbnb will see through the effective handling of the different operations that will help in meeting their needs and demands in regard with the operations. The assessment of the internal and external operations will help the firm to meet the operational capacity of organisation in a better way. Besides this the various strategies will help in better growth of organisation. 

References

  • Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed.
  • Bettis, R.A. And et.al., 2016. Creating repeatable cumulative knowledge in strategic management. Strategic Management Journal. 37(2). pp.257-261.
  • Ethiraj, S.K., Gambardella, A. and Helfat, C.E., 2016. Replication in strategic management. Strategic Management Journal. 37(11). pp.2191-2192.
  • Ginter, P.M., 2018. The strategic management of health care organizations. John Wiley & Sons.
  • Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
  • Lasserre, P., 2017. Global strategic management. Palgrave.
  • Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI Tourism Texts. Cabi.
  • Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
  • Steinbach, A.L and et.al., 2017. Top management team incentive heterogeneity, strategic investment behavior, and performance: A contingency theory of incentive alignment. Strategic Management Journal. 38(8). pp.1701-1720.
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