Airbnb Home Sharing in China - Edited

Running head: CASE DECISION SCENARIO 1
Airbnb: Home Sharing in China
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CASE DECISION SCENARIO 2
I. Analyzing a Decision Scenario Case
What is the decision that needs to be made in the case?
 Airbnb needs to decide whether it should build a customer from the ground up
or whether it should collaborate with other companies.
What are the major decision options?
 Airbnb can acquire or merge with a local competitor to efficiently have access
to the Chinese market base.
 Airbnb can avoid merging with another competitor and instead adopt a
strategy and expand on its own.
 Airbnb has to decide whether the adopted strategy should be based on the
established formula, hence replicate its American platform in china, or
whether Airbnb should adopt a localized strategy.
What questions will help you decide which decision option is best?
 The type of consumer market in china; how do the Chinese travelers prefer their
accommodation.
 The performance of foreign companies in the local market of China
What concepts and frameworks might help answer your questions?
 The motivators for Chinese consumers to use home-sharing platforms such as
enjoyment, trust, price, and value.
 Data analysis on the Chinese landscape, such as tourism industry and the sharing
of economy and regulations.
 Data analysis on the competition such as the American competitors and the local
competition.
Possible Criterion 1: Tourism Industry

Facts/Evidence What the evidence Short-term steps Long-term steps
indicates about the
decision options
The Chinese inbound Chinese traveler Explore the outbound Airbnb should
tourism market preference is and inbound tourists establish itself with
growth rate is 4.1 changing. Many are since it is a growing the domestic market
percent opting to visit Greater sector. There is an since the inbound
While the outbound China, for example, opportunity to tourists carry the
travel from travel is Hong Kong and expand since the visa most people.
merely a 4 percent, Taiwan. regulations are
between 2014 and Inbound travel is the loosened.
2015 (Page 3). biggest driver for the
Chinese tourism
industry.
Possible Criterion 2: Competitors
Airbnb's direct Tujia is Airbnb's Airbnb can venture Airbnb should align
competition is main local competitor into delivering with achieving
HomeAway. as a result of its bookings of short- traditional
HomeAway has a partnership with term rentals before accommodations.
minority stake in the HomeAway. understanding the Moreover, Airbnb
local rental platform Therefore, the market well. needs to improve the
(Page 4). challenge for Airbnb Additionally, it level of service
should merge with should take into delivery to its
one of its competitors account consumer customers. They are
to expand on its beliefs when building critical in achieving
market share. the Airbnb platform. marker advantage.
Possible Criterion 3: Market
The Chinese The china market Airbnb can establish Airbnb should strive
consumer prefers trusts the online official monitoring of to make the home-
home-sharing platform business its home-sharing sharing model more
platforms based on model due to the platform to increase reliable than
motivators such as business giants such its security. Airbnb traditional hotels;
trust, enjoyment, as Alibaba; This is should enable high- This can be
value, and price because the credit risk tolerance of the increasing the
(Page 4). system is not fully security to attract confidence of its
established. more consumers. consumers in
security.
What decision do you recommend?
 My recommendation is for Airbnb to acquire one of its competitors to gain its
market share.
What are the major reasons that support your recommendation?
 Previous technology platforms in the past failed. Airbnb, therefore, has a low
success rate (Page 6).
 The Chinese consumers have a low-risk tolerance and are comfortable with the
uncertainties involved with home-sharing platforms (Page 4).
 Airbnb is faced with competition from one of the largest rental platforms in china,
Tujia. Therefore, Airbnb needs to merge for it to survive the competition(Page 5).
 There is no evidence of a foreign online platform that gains market share without
merging. HomeAway, a foreign competitor, merged with Tujia to attain the china
market share (Page 5).
 Lack of experience. Airbnb has successfully expanded in numerous countries with
the same strategies without growing inorganically (Page 6). However, since it is
only possible for Airbnb to grow by tailoring its business model, merging is a
viable option for the company (page 5).
What are the significant risks of your recommended decision?
 The main risk of Airbnb merging is that it could result in brand dilution, meaning that the
brand will no longer be recognized globally for its contribution; This happens as a result
of merging with a more powerful company and more popular than it.
 Also, Airbnb risks losing its control; This is because it will have to implement policies
that may not align with its principles, but they would have to compromise to merge to
work.
II. Writing about a Decision Scenario Case
Recommended decision I recommend that it easier for Airbnb to

acquire a market share by merging with one
of its competitors.
Summary of significant reasons for a The main reason is that there are few success
recommended decision rates of an online platform in China.
Moreover, one of the successful foreign
online platforms, HomeAway, survived by
collaborating with HomeAway. However, the
main reason is that the china travelers have a
completely different taste; they favor
traditional accommodation. Hence, merging
will help understand the local preference.
Evidence Proving Recommended Decision
Criterion 1 Tourism Industry
I. Airbnb will need resources for the company
to attract outbound tourists and grown. For
example, an online travel agent and
translation of its website into mandarin (3-5).
Criterion 2 Competitors
I. Airbnb grew because of collaborating with
HomeAway. It had access to resources such as
online travel agents. Additionally, it
contributed to its success in translating its
online platform into mandarin (page 5).
II. Tujia grew to over 310,000 homes in 393
cities because of partnering with HomeAway.
Therefore, the success rate greatly improved
due to their collaboration. Tujia was
beneficial to HomeAway since it provided a
hands-on approach when facilitating
transactions between renters and owners
(Page 5).
Criterion 3 Market
I. Major competitors such as Xiazhou and Tujia
have tailored their business model to suit the
market in China (Page 5). Therefore, it will be
difficult for Airbnb to establish a customer
base and gain market share with the same

strategy it uses in numerous countries
worldwide.
Action Plan
Identify the high-level goals for your action plan. In other words, how do you want the
action plan to change the situation in the case?
The action plan should contribute to achieving a market share and establishing a customer base
in China. Therefore, it focuses on creating a local strategy by partnering with competitors to
adjust to consumer preference.
Short term
 Ensure that the online platform fits the china market; This is achieved by adjusting the
language to mandarin to attract outbound travelers and its service to offer traditional
accommodation and a high level of service.
 Airbnb should deliver high-quality services that achieve the motivators such as trust,
enjoyment, value, and price.
Long term
- Create services that connect the renters that connect the travelers looking for economical
accommodations (Page 5).
- Form a relationship with authorities and adjust to china's regulatory landscape.
- Overcome lack of trust and security issues by helping the guests verify the
accommodation photos to ensure the safety and authenticity of the rental listings.
Significant risks: Identify the most important one or two risks associated with your action
plan
- Lack of trust from the Chinese consumers makes it difficult to establish the company.
Many are uncomfortable with uncertainties involving home sharing (page 4).
- Airbnb is vulnerable to competitors such as Tujia and Xiaozhu, who have gained control
over the market.
- Consumers expect a high level of service. Additionally, they mostly prefer traditional
accommodation.
Mitigation of risks: How would you eliminate or reduce the risks?
- Airbnb should merge with one of the competitors to understand the domestic
market.
- Research on the reason for the lack of trust of online platforms and establish
measures to increase confidence among the people.
- Analyze and identify the market gap that results in a niche to attain a competitive
advantage among other competitors.
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Running head: CASE DECISION SCENARIO 1

Airbnb: Home Sharing in China

I. Analyzing a Decision Scenario Case

What is the decision that needs to be made in the case?

or whether it should collaborate with other companies.

What are the major decision options?

to the Chinese market base.

strategy and expand on its own.

established formula, hence replicate its American platform in china, or

whether Airbnb should adopt a localized strategy.

 The performance of foreign companies in the local market of China

What concepts and frameworks might help answer your questions?

 The motivators for Chinese consumers to use home-sharing platforms such as

enjoyment, trust, price, and value.

of economy and regulations.

Possible Criterion 1: Tourism Industry

What decision do you recommend?

 My recommendation is for Airbnb to acquire one of its competitors to gain its

What are the major reasons that support your recommendation?

success rate (Page 6).

uncertainties involved with home-sharing platforms (Page 4).

market share (Page 5).

 Lack of experience. Airbnb has successfully expanded in numerous countries with

viable option for the company (page 5).

What are the significant risks of your recommended decision?

II. Writing about a Decision Scenario Case

Recommended decision I recommend that it easier for Airbnb to

base and gain market share with the same

action plan to change the situation in the case?

in China. Therefore, it focuses on creating a local strategy by partnering with competitors to

adjust to consumer preference.

accommodation and a high level of service.

enjoyment, value, and price.

accommodations (Page 5).

- Form a relationship with authorities and adjust to china's regulatory landscape.

over the market.

Mitigation of risks: How would you eliminate or reduce the risks?

measures to increase confidence among the people.

advantage among other competitors.

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