Question

MBA 5010 Week 4 Integrative Assignment

This week, you’re going to build on the knowledge you gained. Your assignment is to deconstruct the economics underlying Airbnb. Specifically, I want you to answer the following questions:

• Does Airbnb capture a sufficient amount of any value generated to remain a viable business?

The purpose of this question is to provide you an opportunity to demonstrate your understanding of the economics of value creation. So, emphasize this aspect of your answer. Try to limit yourself to 500 words. Your answer will be evaluated based on correctness, completeness, and clarity. As always, be attentive to your writing.

Answer 1

Airbnb is basically a commercial online marketplace or e-market that connects residential property owners who want to rent out their homes or part of their homes to the tenants or property renters. The operational scale or volume of the company practically ranges over 191 countries globally in more than almost 81,000 cities worldwide. Based on the fundamental business model adopted and followed by Airbnb, the operational or commercial mechanism of the company essentially focuses on the market value creation or proposition from mainly two fundamental market perspectives, the buyer or the renter in this case and the property or homeowners/landlords. From the standpoint or perspective of the property owners or landlords, the company e-portal provides the scope to post and advertise or promote any vacant space or residential unit and subsequently earn money if someone intends to rent the advertised space or property. Furthermore, the company also provides insurance to the home or property owners against any physical damage or depreciation and provides an absolutely free of cost photoshoot for the listed properties and plots by hiring freelance professional photographers thereby primarily contributing to the consumer convenience and value. Now, from the perspective of the property renters or the buyers, the company often offers a lower price to the renters compared to other commercial accommodation and travel websites such as MakeMyTrip, Orbitz, Trivago, etc. Additionally, unlike most of its direct or prominent market competitors or rivals, the guests or renters can directly book or rent private residential properties and homestays at a fairly reasonable price in comparison to what is usually offered by other similar counterparts. Most importantly, the company essentially strives to provide a completely homely or residential feel and experience to the guests or renters which can generate and enhance customer satisfaction and the market reputation of the company and this is one of the particularly unique and distinct features or characteristics of the company service in comparison to most of its market counterparts. Therefore, successful and effective value creation is evidently one of the important attributes of increasing commercial success and geographical expansion of the operational scale of Airbnb at a global or universal scale and if the company effectively continues to capitalize on the same, it can potentially become one of the foremost leaders in the global real estate market or arena in the near or distant future.

Reference

https://digital.hbs.edu/platform-rctom/submission/airbnb-and-the-sharing-economy-creating-value-for-everyone/#