mgmt
THOMPSON CRAFTING & EXECUTING STRATEGY
Chp. 3 Evaluating a Company’s External Environment Chp. 4 Evaluating a Company’s Resources, Capabilities, and Competitiveness
Anthoneal davis
This paper will discuss chapters 3 Evaluating a Company’s Environment and 4 Chapter, Evaluating a company’s resources, capabilities, and competitiveness. Chapter 3 mainly focuses on evaluating a company’s external environment this has to do with its competitors as well as opportunities that are in the marketplace. And chapter 4 goes over techniques for evaluating a company’s internal situation, including its collection of resources and capabilities and the activities it performs along its value chain. Internal analysis enables managers to determine whether their strategy is likely to give the company a significant competitive edge over rival firms.
Chapter 3, Evaluating a Company’s Environment
LO 1: How to recognize the factors in a company’s broad macro-environment that may have strategic significance.
This objective is based on the idea that every company operates in a broad “macro-environment” that comprises six principal components: that fall under the "PESTEL analysis, an acronym that serves as a reminder of the six components involved (political, economic, sociocultural, techno-logical, environmental, legal/regulatory)".
1. Macro-environment presents different factors that affect companies that fall within different industries and it's up to managers to assist this risk and come up with a plan to that with have a greater impact on long-term success. For example, Airbnb has run into many political factors but one of these is the polices that it faces with local government and its area to area taxes and hotel regulation. Similar offerings in the marketplace like hotels must pay occupancy taxes and adhere to zoning or health regulations. The company says that they follow all the rules that is can but that in the long run is its just the middleman between the homeowner and the customer. This has not gone over very well as most cites want the taxes that the company should pay on the behave of their host or by doing things like banning temporary rentals withing the cites. Currently, Airbnb is doing things like supporting lobbyist groups to fight for them in these situations.
2. Sociocultural forces are those that impact the demand for a particular good and services, the cultural influences and the lifestyle changes are a factor as well. These are factors that may have worked in favor of Airbnb, this the rise of platforms like Lyft and Uber there was a shift in some traditional spaces and people were looking for an alternative to lodging when traveling. This may come from the fact that most of the users and of a younger age group but even those of the older age group find Airbnb to be more convenient and a cheaper alternative as discussed by Tim Lott editor with The Guardian “Quite apart from the social implications, Airbnb opens the world to families who could otherwise not afford it”.
3. Technological factors are those developments that have potential for a wide range effects on society. Airbnb is considered a “tech” company before the are a lodging company everything is done on the Airbnb App or website a customer can enter the city you would like lodging in and you will be paired with any number places that are in that area as well as countless ratings and reviews that are designed to help with an easy and interactive way to book. Without this advance in technology Airbnb could not have made the disruption that they have in the hotel and lodging space, the company is redefining what an Bed and Breakfast is and can be.
LO 4 How to use multiple frameworks to determine whether an industry’s outlook presents a company with sufficiently attractive opportunities for growth and profitability.
This objective is the final step when it comes to evaluating and industry, its completive environment, and how these analyses performed to determine if there are strong prospects for competitive success and profit.
1. Of these evaluations is "What kinds of competitive forces are industry members facing, and how strong is each force?". Rivalry within the industry outside of the hotel market there are other platforms that offer a similar service of connecting host with a potential guest but Airbnb has positioned itself in such a way that it is hard for other platforms to get a hold of the market share. A big part of this is the inroads being made by the sellers of substitutes, much like social media sites it’s a hard sale to convince consumers to migrate to a new platform as well and those that are host would have to re-register the property on the substitute which could prove to be inconvenient.
2. "What are the key factors for competitive success?" the ways that Airbnb has been able to differentiate itself is the fact that outside of the technology it doesn’t need a whole lot in the way of resources, for example, a hotel chain must buy land get approved for the building, pass inspections, get equipment, employees and so on to operate. Which has been a long-standing barrier to entry and what Airbnb has done is borrow the resources from other owners to accommodate its needs while giving incentive to those who are the host by cutting them in on the rental fees.
3. "What strategic moves are rivals likely to make next?" The path that the hotel industry has already begun to take is to lobbing to their local governments to shut the app down in the area that they operate in so they can regain that market share, other are opting to shake things up by pervading small apartment-style rooms, more bars, live music, and more free amenities. Now the idea of doing this is to offer something that you would not be able to get from renting an Airbnb, as mentioned above the legal issues is something that they have been ready for and have been doing some lobbying of their own to make sure they aren’t steamrolled by the big hotel chains. The offerings of the opportunity to stay in a unique home or area are still the thing that has given Airbnb a competitive advantage.
Chapter 4 Evaluating a Company’s Resources, Capabilities, and Competitiveness
LO 1. How to take stock of how well a company’s strategy is working.
This objective discusses the three best indicators of how a company’s strategy is working. The first of these is
1. “whether the company is achieving its stated financial and strategic objectives". Up until the three-quarters of 2019 Airbnb’s financial goals were all being met, the 3 quarters its financials were all in the red, the speculation is that the company grew too fast and too soon. Although it was in the red the company announced that it was going to officially make the move to go public as it expects to continue its growth, which as of last year was From 2009 to 2019, Airbnb’s compound growth rate was 153%. (Source: https://www.stratosjets.com/blog/airbnb-statistics/).
2. "whether its financial performance is above the industry average," because of the unique nature that is Airbnb, it can be looked at from a few different metrics, if you are going of other traveling sites Airbnb is worth three times what the popular website Travelocity. Or if you are using the metric of biggest rooms and listing that are available compared to the major hotel chains Airbnb sits at over 3 million while the hotel and second place sits at 1.1 million rooms and listings. Now although Airbnb has the lager listing its profits per room is at 1 million while Marriott International is at 1.1 million. So that would still place the company well above the average sitting at the top 3 among the industry leaders.
3. "Whether it is gaining customers and gaining market share." This is another category that Airbnb is doing well in it has 2.9 million hosts worldwide over 7 million listings and has taken the number two spot beating the Hilton group in revenue as well as a 30% growth overall since last year. “Out of all US consumer lodging spending last year, Airbnb made up nearly 20 percent, according to Second Measure data. HomeAway, its home-sharing competitor owned by the travel booking site Expedia, brought in 11 percent” (Molla). Based on all of the factors mentioned above Airbnb seems to have a foothold on the company’s strategy is one that is working and that has made them a successful rival in the lodging space to the hotel market space.
LO 3. How to assess the company’s strengths and weaknesses in light of market opportunities and external threats
The main key to this chapter is what is known as a SWOT analysis this is most common way that a company can get an over all look at a company’s strengths, weakness, opportunities, and external threats.
1. A company’s strengths is depending on the quality of its resources and capabilities, in the case of Airbnb its strengths come done to the service that it is offering. In some areas that they operate in, they can bring value by not only saving the potential traveler money but proved them with an opportunity to stay in places such as a nice home downtown area, a castle, or the last blockbuster on earth. The website itself provides feedback that is well trusted about the host as well as its guest, this makes it a safe environment for all parties involved in the transition. This quality reflects on the company’s mission to give a world-class service at the tip of your fingers.
2. Opportunities depend on the circumstances, a company’s can be plentiful or scarce, fleeting or lasting, and can range from wildly attractive to marginally interesting to unsuitable. At the moment the Airbnb only really focuses on the younger customers that it has already market share with but may not be reaching out to the older consumers that have money, like to travel, and are not aware of the service that the company provides. Buy marketing using more traditional means it may be able to pull in those who do not know that there is an alternative to hotels or motels when traveling.
3. Threats can stem from such factors as the emergence of cheaper or better technologies, the entry of a lower-cost foreign competitor into a company’s market stronghold since the popularity of Airbnb there have been quite a few competitors to pop up that offer a similar service the one that is the next in line as the site Homeaway which had about 11% of the market share while Airbnb had about 20%. These newcomers in the competition are a good way to keep the managers at Airbnb on the ball with coming up with new ways to keep that strong foothold on the growth that they have been making to ensure that they stay the most popular app and site of this type.
Work cited
Deane, Steve. “2020 Airbnb Statistics: Usage, Demographics, and Revenue Growth.” Stratos Jet Charters, Inc., 31 Aug. 2020, www.stratosjets.com/blog/airbnb-statistics/.
Martineau, Paris. “Inside Airbnb's 'Guerrilla War' Against Local Governments.” Wired, Conde Nast, www.wired.com/story/inside-airbnbs-guerrilla-war-against-local-governments/.
Molla, Rani. “American Consumers Spent More on Airbnb than on Hilton Last Year.” Vox, Vox, 25 Mar. 2019, www.vox.com/2019/3/25/18276296/airbnb-hotels-hilton-marriott-us-spending.
? Crafting and Executing Strategy: Concepts. https://platform.virdocs.com/r/s/0/doc/585051/sp/179594896/mi/572242319?cfi=%2F4%2F4.