Air BnB Business Analysis

Topics: Strategic management, Porter five forces analysis Pages: 10 (2336 words) Published: December 5, 2014


Airbnb Company Analysis
MNGT 3100-003
November 7.2014

Colin Harrang
Daniel Kundla
Lindsey Payne
Daniel Robertson
Daniel Robinson

Company Description
History/Background
Airbnb is a unique company that provides a different kind of lodging option to travelers. Ultimately, Airbnb is a social networking site that allows people to share their space as if were a hotel. In order to use the site, each individual must be registered with their own profile that includes recommendations, rating and such. As well as personal profiles, each property must also have an association with the host profile. Through this network hosts and guest can be connected and communicate in a safe and monitored environment as well as share their lodging experiences with other users. Two of the founders, Brain Chesky and Joe Gebbia, first formulated this revolutionary idea when they could not afford their rent living in San Francisco. Rather than taking traditional routes to make ends meet, the young men transformed their living room into a hotel room of sorts that accommodated 3 guest and included homemade breakfast. From this creative money making strategy the idea for an Air bed and breakfast was born. After the founding in 2008 the site focused their efforts around scheduled events when hotel space was limited and grew exponentially from there. From humble beginnings of renting rooms similar to their own living room, Airbnb has expanded to an international company through which a variety of spaces can be shared. Anything from an castle to an igloo can be found within the site’s content. Not only does this website provide unique accommodations from other lodging options but as a guest you are actually hosted by whomever you stay with. Having a type of social connection with the host allows visitors to utilize a special perspective of an unfamiliar city or community. From this connection Airbnb derived their mission statement “Belong Anywhere”. On the Airbnb blog Brian writes about belongingness and trusting relationships, how in our modern culture we have lost the value of community. He says “Airbnb is returning us to a place where everyone can feel like they belong.” The company culture of Airbnb is community centered and focuses to result in personal rewards beyond financials. With a mission of belonging, it is inevitable that the work environment has somewhat of a family feel. Employees have given reviews saying upper level management genuinely cares for employees and the community of users which permeates throughout the company. Overall employees have great reviews of the way the company is geared towards a laid back and productive culture that builds lasting relationships within the staff.

Business Level Strategy
Porter’s Five Forces Analysis
Porter’s five forces analysis provides companies with an outline to determine where the competition lies within their markets. The first is the potential of new entrance. Being a social media website, there is high potential for entrance in this market to compete with Airbnb yet no other companies have created a similar business model. This would be an aspect that should be considered as a future threat for the company. The next two aspects of Porter’s Five Forces are bargaining power of buyers and sellers. Ideally, a company wants a large amount of both buyers and sellers in order to reduce the bargaining power of each. However in this business model Airbnb has does not set the prices for rental, this is left up to the sellers. Instead, the company makes its profit by charging a six to twelve percent service fee for each rental property. Their profit is derived from the overall experience of the renter and then deducted from the amount that is paid to the host. The last two aspects of Porter’s five forces is the threat of substitute products and rivalry among competitors. These forces are where Airbnb excel. Substitute products are alternate products whereas competitors...

Cited: "Airbnb Mastering the Service Networking Economy But Can It Play in the Big Leagues?" Capitalist Creations. N.p., n.d. Web. 30 Oct. 2014.
"Airbnb." Technology Pioneers 2014. N.p., n.d. Web. 30 Oct. 2014.
"Airbnb." World 's Largest Professional Network. N.p., n.d. Web. 30 Oct. 2014.
Chezky, Brian. "Belong Anywhere - Airbnb 's New Mark and Identity." The Airbnb Blog. N.p., n.d. Web. 30 Oct. 2014.
"Surviving the Financial Risks of Fast Growth." CKGSB Knowledge. N.p., n.d. Web. 30 Oct. 2014.
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