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Airbnb, Inc. Strategic Plan 2017-2021 MBA - strategic Management Assignment (Harvard case study June 2017 )

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Airbnb, Inc. Strategic Plan 2017-2021
MBA - Assignment for strategic Management course
(Based on Harvard business review - case study June 2017 )
content :
History
Strategic Issues
Situational Analysis
Strategic Analysis and Choice
Recommended Strategy
Vision
Mission
Goals
Strategy
Objectives

Published in: Education
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Airbnb, Inc. Strategic Plan 2017-2021 MBA - strategic Management Assignment (Harvard case study June 2017 )

  1. 1. Airbnb, Inc. Strategic Plan 2017-2021 MBA - strategic Management Assignment (Harvard case study June 2017 )
  2. 2. • Mohie Ismail (Team Leader) • Lina Hamdy (Team Reporter) • Ashraf Yusif • Wael Goda • Mohamed Fadl Challengers Team Members
  3. 3. I. History II. Strategic Issues III. Situational Analysis IV. Strategic Analysis and Choice V. Recommended Strategy • Vision • Mission • Goals • Strategy • Objectives VI. Q & A Agenda
  4. 4. History
  5. 5. History Airbnb is a two-sided marketplace that sought to match people that owned real estate properties with people interested in renting short-term lodging. The company was founded in August 2008 and based in San Francisco. Joe Gebbia, Brian Chesky and Nathan Blecharzyk are the founders of Airbnb.
  6. 6. History 2008 • Startup 2009 • More than 1000 Customers 2010 • Airbnb photography Program launched 2011 • More than 1M customers 2012 • Airbnb employed more than 2000 freelance Photographers 2015 • Airbnb had 1.8M listings in 34,000 cites
  7. 7. Strategic Issues
  8. 8.  Security and Safety: We have greatly developed and upgraded our security and safety system to guarantee safe and secured experience for both our guest and our host and prevent crimes. Strategic Issues
  9. 9.  Regulatory Risk: We are a global company and each country has different regulations and legislations that control home accommodation industry in general and specially the interned-based ones like Airbnb. Strategic Issues
  10. 10.  Cultural Adaptation: We have to adapt ourselves to the culture of every country and even city. Some conservative cultures have concerns about sharing accommodations, for this in order to develop these markets; we need to continuously develop our product to match with their cultures. Strategic Issues
  11. 11. Situational Analysis
  12. 12. A. Porter’s Five Forces Analysis
  13. 13. A. Porter’s Five Forces Analysis
  14. 14. A. Porter’s Five Forces Analysis According to Porter’s Five Forces analysis, we can conclude that:  The internet-based home accommodation industry is attractive.  Airbnb has good control over its competition as its horizontal competition is medium; as well as its vertical competition. This gives Airbnb a very good chance to continue its aggressive growth.
  15. 15. B. SWOT Analysis
  16. 16. B. SWOT Analysis Strengths Industry Leadership: Airbnb is a leader in the internet-based home accommodation industry Price Competitiveness: Airbnb has variety of market offerings which makes it able to provide competitive prices Customer Engagement: Airbnb has strong customer engagement model: Facebook Connect, Wish List and Heart icons Operating cost: Airbnb has a relatively low operating cost since it is an internet-based company Expansion: a. Airbnb has high supply supported with high demand which gives it the chance to expand and develop new markets. *Airbnb has more than 150 million guest using its services. *Airbnb in currently available in 65,000 cities in 191 countries *Airbnb succeeded to increase host listings from 1.8 million in 2015 to 3 million in 2017 b. Another chance that supports Airbnb expansion is the low operating cost
  17. 17. B. SWOT Analysis Strengths Variety of market offerings: Airbnb has a variety of its market offerings in terms of price, locations, styles & experiences etc. Airbnb encourages the authentic local experience so developed added the option of home-made food and local tour. Also, Airbnb created the Wish List to encourage its guest to select their wishes User Friendly System: Airbnb website and application are very simple, easy & quick to be used by both the guest and the host Business Model: Airbnb built its model in a way that is generating revenue from both its supplier (host) and buyer (guest)
  18. 18. B. SWOT Analysis Weakness Security: Airbnb still has a gap in the security system for both the host and the guest Public Relations: Airbnb still need to work on its Public Relations to be more effective Customer Services/Relations: Despite the good customer engagement that Airbnb succeeded to develop, it is still need to develop its customer services/relations specially during and after guest/host experience Lack of control of accommodations: Airbnb has no control over the real conditions of the accommodations listed this affects the level of experience as well as the guest trust in Airbnb
  19. 19. B. SWOT Analysis(External Factors-Mega)
  20. 20. B. SWOT Analysis(External Factors-Mega) Criteria Opportunities Threats Political Political instability has a negative impact on the business of Airbnb Economic In low economic status, Airbnb still has a chance to continue growing as it became an opportunity for both the host and the guest as follows: a. Host: Airbnb became a source of income for its hosts: *79% of hosts share the home in which they live *52% are moderate to low income *48% of host income is used to pay for regular household expenses like rent and groceries b. Guest: Airbnb provides variety of offerings so it can be an opportunity for Airbnb to get share from the low economic status as it will be their choice rather than the hotels Economic crisis/recession: can lead decreasing the demand
  21. 21. B. SWOT Analysis(External Factors-Mega) Criteria Opportunities Threats Social Culture Exchange: Airbnb still has an opportunity to continue its growth while encouraging culture exchange and promoting it. *86% of travelers want to 'live like a local' *79% of travelers want to explore an authentic neighborhood Culture Conflict: Airbnb might face difficulty in developing some markets due to the culture conflicts and conservatives Technological Technological Updates: Airbnb is an internet-based firm, so it has a good opportunity to make useful use of any new technologies for more guest and host engagement and satisfaction Environment Airbnb can utilize the environmental trend and create a wish list for those who are environment friends Legal Country Regulations: a. Many countries are studying to put internal-based home accommodation industry into a more controlled legal regulatory framework b. Increased taxes on online accommodation-sharing services
  22. 22. B. SWOT Analysis(External Factors-Task) Criteria Opportunities Threats Guest Large market scale Risk of having guest using Airbnb services for doing illegal issues like theft, etc. Host Large market scale with variable offerings Risk of having hosts using Airbnb services for doing illegal issues like theft, etc. Competitors a. New Entrants: easy to enter the market b. Existing competitors like Booking.com, Expedia and TripAdvisor are taking share from Airbnb
  23. 23. Situational Analysis Conclusion Based on the Situational Analysis we can conclude that:  Internet-based home accommodation industry is promising and still growing.  Airbnb has good opportunities to continue its aggressive growth by developing new markets, developing new products and penetrating the existing markets.
  24. 24. Strategic Analysis and Choice
  25. 25. A. SPACE Matrix
  26. 26. A. SPACE Matrix
  27. 27. A. SPACE Matrix
  28. 28. A. SPACE Matrix Strategy Definition Forward Integration Gaining ownership or increased control over distributors or retailers Backward Integration Seeking ownership or increased control of a firm’s suppliers Horizontal Integration Seeking ownership or increased control over competitors Market Penetration Seeking increased market share for present products or services in present markets through greater marketing efforts Market Development Introducing present products or services into new geographic area Product Development Seeking increased sales by improving present products or services or developing new ones Related Diversification Adding new but related products or services Unrelated Diversification Adding new, unrelated products or services From the analysis, we can conclude that Airbnb is in an aggressive position. The Aggressive Quadrant in the SPACE Matrix suggests the following strategies:
  29. 29. B. Grand Strategy Matrix
  30. 30. B. Grand Strategy Matrix
  31. 31. B. Grand Strategy Matrix Based on the position of Airbnb in the Grand Strategy Matrix, we can conclude that:  Airbnb has a strong competitive position in a rapid-growth industry and Airbnb should continue using this strong competitive position to increase its growth rate.
  32. 32. Recommended Strategy
  33. 33. “To be the world leader of internet-based accommodation industry” Vision
  34. 34. Values Enjoyment Competitiveness SharingSafety Hospitality
  35. 35. “We believe in making the whole world a big community that we all belong to. We connect our guest with unique authentic local accommodation experiences provided by our host at competitive prices anywhere and everywhere, utilizing the power of technology.” Mission
  36. 36. This section provides goals for Airbnb based on its vision, mission, strategic issues and situational analysis as well as the industry analysis. They are well defined, planned, measurable and time bound goals that Airbnb has to achieve by the end of 2021 to make its vision true. Goals
  37. 37.  To achieve market growth with overall 80% market share from the existing markets. Goals
  38. 38. To diversify in related business to be able to develop new markets and penetrate the existing ones: 1- Acquire small low cost 3 hotels in the following destinations in order to expand in Middle East and Africa while adapting to culture difference: i. A hotel in Morocco with estimated cost 30 million USD ii. Two resorts in Egypt, especially in Hurghada as a low cost destination with estimated cost 40 million USD Goals
  39. 39. 2-Make partnership agreement with Tui International and FTI (tour operators), that will help to control demand in our new hotels also support our end goal to be top leaders of the industry. These tour operators can help us in arranging the flights, transportation, and local tours and excursions for the guest 3- Make partnership agreement with Uber that will help in arranging the internal transportation and local tours for the guest. Goals
  40. 40. To have 10% market share from Middle East and Africa  To develop our services and products that match with target markets needs: 1- Add an option “from home to home” utilizing our partnership with Uber, and tour operators, where the guest can choose a full package including flights, internal transfer and local tours and excursions. 2- Develop the following programs: I. Culture Exchange program for young people II. Environmental awareness program for environment friends Goals
  41. 41. According to the situational analysis and industry analysis which we conducted for Airbnb, aggressive strategies were recommended according to Airbnb strong position. So we recommend a 5 year aggressive strategy that combines Related Diversification, Product Development, Market Penetration and Market Development together. Strategy
  42. 42. 1. Related Diversification 2. Product Development 3. Market Penetration 4. Market Development Strategy
  43. 43. Strategies Strategy Recommended Ways to Execute the Strategy Related Diversification 1. It is recommended that Airbnb acquire small low cost 3 hotels in the following destinations in order to expand in Africa while adapting to culture difference: A. A hotel in Morocco with estimated cost 30 million USD B. 2 resorts in Egypt, especially in Hurghada as a low cost destination with estimated cost 40 million USD 2. Make partnership agreement with Tui International and FTI ( tour operators), that will help to control demand in our new hotels also support our end goal to be top leaders of the industry. These tour operators can help us in arranging the flights, transportation, and local tours and excursions for the guest 3. Make partnership agreement with Uber that will help in arranging the internal transportation and local tours for the guest.
  44. 44. Strategies Strategy Recommended Ways to Execute the Strategy Product Development 1. Adding an option “from Home to Home” utilizing its partnership with Uber, and Tour Operators. Where the guest can choose a full package including flights, internal transportation and local tours and excursions 2. Develop the following programs: A. Culture Exchange program for young people B. Environmental Awareness Program for environment friends
  45. 45. Strategies Strategy Recommended Ways to Execute the Strategy Market Penetration Increase the market shares from the existing markets through greater marketing efforts, utilizing all social media engagement tools, marketing in heart program and investing in Google display advertising with banner ad campaigns including images from actual housing being offered on Airbnb website Market Development The recommended ways to execute the above 3 strategies will help Airbnb to develop Middle East and Africa and take a good share from it.
  46. 46. This section presents one year objectives for Airbnb to achieve its goals based on the above recommended strategies. These objectives are to be achieved by the end of 2017 Objectives
  47. 47. 1. Develop a plan for acquiring a new type of hotels in middle east to be in the same style of local homes and low cost to maintain our competitive advantage regarding price competitiveness and authentic local experience 2. Finalize a partnership agreement with Uber to be able to mage internal transfers 3. Implement the approved market communication plan in order to increase market growth in existing markets by 30% and achieve 4% market share in the developed markets by the end of 2017 Objectives
  48. 48. 4. Increase repeater guest to average 50% of total guests using Airbnb services 5. Develop an environmental awareness program for environment friends 6. Develop a culture exchange program for young people Objectives
  49. 49. 7. Enhance and upgrade Airbnb Customer Management Program for both host and guest to increase their satisfaction to 90% as measured by Airbnb satisfaction survey 8. Enhance and upgrade Airbnb safety and security program to reduce compensations by 8% 9. Development and implement policies and guidelines for the minimum standards of service quality and accommodation quality to guarantee its users experience Objectives
  50. 50. Any Questions ?

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