SWOT & STEEPLE Analysis: AirBnB (DP IB Business Management)

Revision Note

Written by: Lisa Eades

The Purpose of the Business Management Case Study Below

The business management toolkit is a set of situational, planning and decision-making tools. These tools should be to analyse and evaluate the syllabus content in terms of a real world example
This suite of decision-making tools is designed to help business leaders assess their current situation and implement strategies for the future
To evaluate these tools, you can
- Consider the reliability of the data fed into these tools
- Comment on the the subjectivity of their outcomes
This evaluative approach will help you to apply your knowledge and to engage with decision-making as a process and a skill
You will be assessed on your knowledge of important contemporary business topics through the the analysis of a fictitious or real business. The case study below provides an example of how to effectively use the business Management Toolkit

SWOT & STEEPLE Analysis: Airbnb

Airbnb is known as a cheaper, comfier alternative to hotels. It does not own properties itself; people offer to rent their homes, apartments, or rooms to strangers, providing income for the hosts and profits for Airbnb which collects a fee for each rental. In 2022 the business generated profit of almost $2 bn from its operations in 191 countries and 34,000 cities. In recent years the company’s worldwide expansion has led to a series of issues, though it has also brought several benefits.

Places plus people plus love plus AirBnB equals happiness

Airbnb provides jobs to hosts (people who periodically offer their homes to guests). For cities that lack hotels or motels this is a much-valued service. In the USA Airbnb benefits states by generating millions in spending and full-time-like jobs, particularly for low- and middle-income groups. In New York, Airbnb hosts and associated businesses have generated income of $1+ billion and created over six thousand jobs. The business claims that its platform blends cultures and societies from different parts of the world, bringing diverse groups of people together.

As the global tourism industry was impacted by the pandemic Airbnb experienced a significant lag in growth during 2020 and 2021. Subsequent global economic contraction has continued to affect bookings despite the removal of travel restrictions. In early 2022, in response to hostilities in Ukraine, Airbnb suspended all operations in Russia and Ukraine, removed all fees for hosts in Ukraine, which encouraged members of the public began to make bookings in Ukraine with no intention of travelling as a way of providing financial support to residents facing hardship during the invasion and offered free accommodation to Ukrainians forced to flee their homes following the invasion.

Airbnb has faced fines and court proceedings in Barcelona, New York, and New Orleans because they’ve failed to follow local tourism laws. Some hosts don’t follow established housing rules and in many cases tourist tax regulations have been ignored. Following media and public backlash, Airbnb now requires hosts to agree to terms and conditions agreeing to follow taxation, housing and tourism regulations.

The business takes social responsibility seriously. For example, the “social impact experience” allows non-profit organisations to host and receive 100% of profits.

Airbnb relies heavily on technology. Visitors book rooms on a dedicated app, which has over ten million global users, or through the website, which is also where guests leave reviews and seek support. The use of automation means that if a host doesn’t respond to a guest’s message Airbnb will automatically send a text on their behalf. Online webinars provide training and troubleshooting facilities for hosts.

Airbnb boasts that its model reduces energy usage within America and Europe compared to hotels. A recent business report highlighted how the company's business concept of the shared home uses existing resources, which is a sustainable practice to keep traveling eco-friendly. The brand also pays attention to waste reduction and saving energy. They want their hosts to ensure the limited resources to decrease the wastage of natural resources and water consumption. The company is keen to lower travel impact too and recently highlighted a key research finding that guests are 10-15 percent more likely to use public transportation, walk or bicycle as their primary mode of transportation than if they had stayed at a hotel.

Questions

(a) Define the term ethical factors. [2 marks]

(b) Explain one advantage and one disadvantage to Airbnb of conducting a SWOT Analysis. [4 marks]

(d) Using the STEEPLE analysis framework, evaluate the external environment in which Airbnb operates. [10 marks]

Examiner Tip

When using any of the elements of the business toolkit, you should consider some of the following factors:

Source of the Data?	Context of the Data?	Purpose of the Data?
Internal data may be biased as a result of managers keen to promote their own concerns or ideas External data may originate from unreliable sources	For what reason has it been collected? When, where and with which sampling method has it been collected?	Is there sufficient data to inform decisions? Is the data open to manager interpretation?

Asking these questions can help you to evaluate the usefulness of the business toolkit in supporting decision making.

Solutions to the Questions: AirBnB

(a) Define the term ethical factors. [2 marks]

Model Answer	Guidance & Commentary
The term ethical factors refer to the moral principles that govern decisions and actions within a business [1], including environmental and social responsibility, transparency and respect for workers' rights [1].	Define questions require you to provide a full definition that demonstrates good knowledge and understanding Examples are a good way to do demonstrate good knowledge and understanding The model answer is awarded 2 marks because provides a clear definition of ethical factors with examples.

(b) Explain one advantage and one disadvantage to Airbnb of conducting a SWOT Analysis. [4 marks]

Indicative content	Guidance
Advantages of SWOT analysis include Logical structure which is easy to understand Encourages focus on strategic issues Disadvantages of SWOT analysis include Can quickly become out of date Requires expertise to conduct	In this type of explain question you can be awarded one mark for each correct advantage or disadvantage identified A further two marks can be awarded if you apply both the advantage and disadvantage to the business.
Model Answer 1	Commentary
An advantage of conducting a SWOT analysis is that it will help the business to understand its current position and provide information to allow a business to plan for positive or negative changes that might happen in the future [1 mark]. However SWOT analysis is only as good as the information that goes into it which could be affected by bias or poor research methods [1 mark]	In this example, the candidate has been awarded 2 marks Whilst one valid advantage and one valid disadvantage have been provided, the response has not been applied to the business
Model Answer 1	Commentary
An advantage of conducting a SWOT analysis is that it will help Airbnb to understand its current position and provide information to allow Airbnb and its network of hosts to plan for positive or negative changes that might affect demand for short-term accommodation in the future [1 mark + 1 mark]. However SWOT analysis is only as good as the information that goes into it which could be affected by biased online customer or host reviews or poor research methods that fail to capture the realities of Airbnb's position as a global business [1 mark + 1 mark]	In this improved response the candidate is awarded 4 marks One valid advantage and one valid disadvantage have been provided, and the response has been applied to the business

Indicative content	Guidance
Threats to Airbnb include Conflict in Ukraine Regulations related to housing, taxation and tourism New competition entering key markets Worsening global economic conditions	In this type of explain question you can be awarded one mark for each correct threat identified A further two marks can be awarded if you apply both threats to the business.
Model Answer 1	Commentary
The ongoing conflict in Ukraine presents a significant threat to Airbnb as demand for short-term rentals in a part of the world affected by war is likely to be very low, reducing Airbnb's fees from hosts in the zone. As well as this, Airbnb may face threats from changing housing and taxation regulations which will require it to update its host terms and conditions on a regular basis.	This response has been awarded 4 marks The candidate has identified two valid threats that have both been applied to the business

(d) Using the STEEPLE analysis framework, evaluate the external environment in which Airbnb operates. [10 marks]

Indicative content	Guidance
Social factors include Increased interest in 'off the beaten track' tourism Like-minded customers attracted to Airbnb's social responsibility model Technological factors include Widely-used app and automation used to meet customer and host needs Economic factors include Global economic contraction affecting disposal income available for travel and tourism Environmental factors include Lower carbon footprint compared to hotels Efforts to reduce waste and save energy Guests are more likely to use public transport Political factors include Russia-Ukraine conflict has affected bookings in the region States' restrictive housing, tourism and taxation policies Legal factors include Fines and court proceedings in several cities relating to housing, tourism and taxation breaches Ethical factors include Social impact experience supports non-profit organisations	This is a 'Level of response' answer where the examiner judges how well you have displayed the key skills of knowledge, application, analysis and judgement Your answer will need to show the following elements in order to gain top marks: Appropriate business terms are used throughout STEEPLE analysis is explained clearly and applied purposefully The case study material is used in a way that significantly strengthens the response Chains of balanced analysis are evident throughout the response Judgments are relevant and well substantiated
Model Answer extract	Commentary
In terms of legal factors, Airbnb has faced fines and court proceedings in several cities around the world for breaches of regulations related to housing, tourism and taxation, attracting lots of negative attention and therefore affecting the Airbnb brand. However, in response Airbnb now requires its hosts to commit to a set of terms and conditions that help to prevent further legal problems, negative media coverage and public backlash. This will help Airbnb to protect its reputation and support its social responsibility aims, allowing its hosts to continue to attract like-minded guests.	In this extract, the candidate has correctly used the STEEPLE analysis model They have used the case study material effectively to support both 'sides' of their analysis The chains of analysis are balanced, considering both positive and negative elements

Last updated: 18 June 2024

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