Airbnb Case

There are several key issues that Airbag faces throughout the case. The biggest key issue that the company faces is maintaining the trust of their market participants, both hosts and guests. It became hard for hosts to trust who they were renting their room, apartment, or house to after several previous hosts had their places destroyed and valuable items stolen. It also became hard for guests to trust the room that they were renting after several previous guests were unhappy and mislead by the host. The resulted in the reputation of Airbag to significantly decrease and they began to lose customers fast. The other key Issue that Airbag faces Is their online reputation system. There Is a lot of missing Information In their online system that makes for worried and discomforted customers. Users on the Airbag site would have incomplete profiles, some with even only a first name. The company also had a weak consumer review system and It lacked common features. In their system they even penalized hosts that turned down reservation requests for a posted room by making hat host appear lower in the search results.

This makes no sense as a host should be able to reject a guest’s request if he or she feels uncomfortable with that guest without a penalty. In addition, the company’s online system did not presence hosts or guests at all and they don’t provide insurance for hosts or guests. There are a lot of key issues that Airbag faces in this case, critical decisions need to be made immediately to build up the company’s reputation and regain people’s trust. To understand the external environment of Airbag there are a few things that you just know.

The defined Industry of Airbag is a social networking service for people to rent out lodging. Wealth this Industry, they are a big player, as of July 2011 the company was reportedly valued at $1 billion and had rented over 2 million rooms. Their chosen competitive strategy is differentiation as they seek to develop a competitive advantage through supplying a service that is different to how the competition does. Basically, the company transformed any house Into a possible hotel making their target market anyone that Is 18 or older. From the Internal analysis you learn a lot about the company’s online system.

Airbag created a forum where hosts could post their room listing and description. Guests could search for a room and filter by location, price, size, etc. The guest then submits a reservation request and the host can either accept or decline. If accepted, then payment went through and the guest paid 6% to 12% of the reservation cost to Airbag and the host paid a 3% fee to Airbag for each booking. Since everything was done online, Airbag The company also did not need to hire an extensive amount of employees allowing hem to save more money. The problem with the internal environment was the faulty system.

Customers needed change in Airbag’s reputation system immediately or the company won’t be able to be trusted and sales will continue to drastically decline. There are a few different ways to approach the issues that Airbag is facing. The first alternative approach that I would take would be to sell the company. Due to all of the negative reviews and problems occurring, selling the company now would be a way out of continued trust issues for the company. The second alternative approach hat I would take would be to inherit a consumer review system identical to Yelp.

By doing this you strengthen confidence between hosts and guests. Eventually, the company’s reputation will get better and consumers will be able to trust Airbag. The third and final alternative approach that I would take would be to completely revamp the company’s reputation system. Improve the company’s customer review system by implementing one similar to Yelp or Trapdoors. Regarding a personal profile within the Airbag system, I would implement each user to provide their full name, a picture f themselves, and their occupation. I would also recommend not penalizing hosts that turn down reservation requests.

Instead, reward hosts for posts to relieve pressure of accepting requests. I would highly recommend providing insurance not only for a host that experiences damaged or stolen property, but also for a guest that arrives to a room that is in a worse condition that was stated. Also, provide discounts and rewards for repeat customers and customers who receive high reviews. Finally, all hosts and guests should be preferences after making their account. A background heck, credit record check, prior arrests, and Google searches should all be implemented of every user.

These are a few of the many alternatives that Airbag can implement given their current issues. After further analysis I would recommend that Airbag should seriously consider implementing the third alternative approach previously mentioned. By implementing the various additions and changes within the Airbag online system, the company will improve their reputation. There will still be minor issues such as some damaged furniture or a stolen item, but will the improved review system, people that commit hose crimes will be noted of it and people will know to avoid them and insurance will cover it.

Mandatory thorough prescribing of all users will allow customers to feel more comfortable will the host or guest that they are dealing with. Discounts and rewards will create a much more loyal customer base. In conclusion, if all of the following is implemented to Airbag’s online system, guests and hosts will be able to trust not only each other, but the company itself too. This will result in an increase of the company’s reputation as well as success in sales.