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BUS501 Strategic Management

Published : 01-Oct,2021  |  Views : 10

Question:

Various strategies used by organizations to help them achieve their objectives.

One such strategy is market development which involves introducing the present product or services into new geographic areas.
 
Airbnb uses this strategy but has encountered opposition from many states due to regulation.

Research conducted will Airbnb be able to overcome geographical restrictions in the future?

What are the implications?

Answer:

Introduction

Airbnb is one of the largest online marketplace and hospitality service offering the organization. Although it’s a company that does not own any lodging, it enables individuals lease and rent lodging for a short-term period. This company targets more so tourist and those visiting new places for vacation and offer them vacation rentals, apartment rental, homestays for immigrants, hostel beds and hotel rooms. Generally, we can state this company acts like a broker since it owns none of the above property of its own. This company is known to be growing very fast globally and benefiting from both sides of the customers, that is the people who want to access accommodation and those who own the property offering accommodation. Both parties pay some commission. It’s a huge company now having a list of more than 30000 lodgings in more than 200 countries. The company has managed to market and develop its services at these fast and in different new geographical areas due to the employment of market development strategy. However, the company is facing lots of opposition different countries due to regulation. (Coldwell, 2014) The reason behind the opposition is basically because it’s preventing business owners owning this accommodation service company to Flagg and lack market.

From a research point of view, this company is in position to overcome these restrictions. Though it is facing and will face the challenge it may end up penetrating the market and even practice monopoly type of market ownership. This is so since the company is an online platform that offers services and people don’t need to travel to book for the house. The booking, negotiations, and payments are domes online. This, therefore, makes its customers work easier and they will definitely prefer this service than traveling to look for the service manually. The company can also succeed because it has excess production of its service. This company is not limited to only one geographical area and therefore the restriction to some part does not mean that the rest have restricted. It has good services and that what it's selling and advertising. Moreover, the company will manage to stay in the market since its already successful and already offering better services than its readily available competitors. It’s offering reliable and cheap accommodation services to its customers.  Lastly, the company can manage despite the restriction by tapping other markets that are unsaturated apart from lodging. It can seek for other markets in a global view. (shatford, 2015)

Implications

  • The company will face lots of pressure from the hotel industry
  • The company will face opposition from local governments in some countries with allegations for breaching of local tourist laws and this may cost them fines
  • Its growth will lead the formation of laws that will also affect local subscribers offering the same service in their cities, e.g. like some countries are already passing laws limiting renting and leasing houses for shorter periods.(KEYSER, 2016)
  • It will lead to the realization of the better market since they will be in a push to look for greener pastures in terms of the market.
  • They will be subjected to taxation (Coldwell, 2014)

References

Coldwell, W. (2014, July 08). Airbnb's legal troubles: what are the issues? Retrieved 11 30, 2017, from the Guardian: https://www.theguardian.com/travel/2014/jul/08/airbnb-legal-troubles-what-are-the-issues

KEYSER, R. (2016, Oct 24). A Guide to Smart AirBnB Regulation for Local Governments. Retrieved 11 30, 2017, from http://www.viewpointcloud.com/blog/local-government-resources/airbnb-regulation-guide/

Hartford, s. (2015, Sep 28). What Effect has Airbnb Regulation had in Santa Monica? Retrieved 11 30, 2017, from http://blog.airdna.co/effect-of-airbnb-regulation-to-santa-monica/

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