Havard S

Business Model Canvas Airbnb 1
Student’s Name
Professor’s Name
City (State)
Business Model Canvas Airbnb 2
Business Model Canvas Airbnb
Innovation is the process by which an idea or invention is translated into a particular
good or service with some payable value. An idea is called an innovation because it can be
replicated at a low cost and satisfies an existing need. Through innovation, a deliberate action is
taken to apply information, imagination and an initiative taken with the aim of getting different
values from resources used. Innovation includes the process through which various ideas are
generated and converted into useable products. A model canvas serves as a strategic management
tool that is used both for management and entrepreneurial planning. With the model, it is
possible for an entrepreneur to describe his or her business model, design it, challenge, invent
and finally pivot the model that functions for the business. Airbnb is a private company that
operates globally and that provides a platform for online marketing. In essence, accessibility can
be done using the site and mobile applications to access hospitality facilities for lodgings,
homestays or to explore for tourism experiences. The report will examine how Airbnb uses a
Blue-Ocean strategy to reach its clientele by providing a platform for sellers and customers to
serve each other.
Blue Ocean Innovation Theory
The Blue Ocean Innovation Theory discusses strategies which provide a market for a
product or service through by-passing competition or reducing the same. The approach is
enshrined in a practice where businesses search for an area with few firms without the pressure
of pricing (Airbnb 2017). Notably, application of Blue Ocean can take place in any sector. The
current crop of firms operates under intense competition and try to gain the attention of the
market share using a competitive advantage. Pricing pressure experienced by-products usually
threaten the operations of firms as Aznar, Sayeras, Segarra and Claveria (2018) found out. The
Business Model Canvas Airbnb 3
reality of such forces happens in the red ocean. A red ocean is a saturated market in which prices
are not controllable except by the market itself. The limitation of growth forces some businesses
to try and find verticals or new places for the venture (Dehkordi, Rezvani and Behravan 2012).
Blue oceans are known to exist when profits are high, and the competition between different
firms does not exist or is considered to be irrelevant.
The strategy of Blue Ocean is to capture new demand areas and make competition
irrelevant in such scenarios. The products that are introduced in Blue Oceans have new features
that redefine the market (Dehkordi, Rezvani and Behravan 2012). The company that undertakes
a Blue Ocean Strategy makes huge profits considering the steepening of the product or service
based on its uniqueness of features (Hassan 2012). The action framework below illustrate that
new innovation can be created by determining which contributors value creation and can be
adopted, increased above market standard, reduced, or eliminated to restructure what actually
add value and enable customer meet their need (Kim and Mauborgne 2015).
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The use of a traditional competitive strategy seeks to achieve the same as a blue ocean
strategy by avoiding sections of the market where competition is high. On the other hand, a blue
ocean strategy seeks to expound in an area where it can create a new market (Dehkordi, Rezvani
and Behravan 2012). The most dominant idea used in the Blue Ocean strategy is the provision of
market spaces that are new to the competition. The competition has not yet actively been to
exploring these markets through purchasing goods and services as Osterwalder and Pigneur
(2009) found out. The term is use in line with the real-life ocean. The market spaces that are not
yet tapped provide opportunities for businesses to grow by providing products or services that
had not yet been introduced in the market (Pesonen and Neidhardt 2019). The blue ocean
strategic approach assumes that the use of low costs along with differentiation is possible. The
result is a new market arena. In the end, Blue Ocean increases value with a focus on the
customers that exist in the fresh market space.
There are various forces that influence the imperative through which blue oceans are
created. The first is the rate at which technology accelerates and advances leading to a
corresponding increase in productivity at industrial level; suppliers have been able to produce
many products and services (Dehkordi, Rezvani and Behravan 2012). Secondly, globalization
has increased since trade barriers have declined. The third is the fact that information has been
availed on the internet concerning products and services and the prices charged on them as
Oskam and Boswijk (2016) found out. The fourth is the slow elimination of niche markets and
monopolies with the entry of competitors in the market.
Increased competition in the economy leads to various experiences within the market
such as frequent price declines and increments due to wars between firms, commoditization of
services and the available products in the market, and decline of profits (Stabrowski 2017). The
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Blue Ocean creation of new market space has enabled firms to respond to the existing
characteristics in the market and create an opportunity through which profits can be generated
(Dehkordi, Rezvani and Behravan 2012). The trends show an environment in which the
traditional strategy and traditional management practices have begun to fade. Firms therefore
need to open up for blue ocean opportunities as red oceans grow in competition. A good example
is the Nintendo Wii. Nintendo is a gaming company that decided to differentiate is product from
its competitors by introducing a wireless motion control stick that the market had never seen
before. This innovation solved the headache of long wires to gamers, giving them freedom to
control gaming visuals without the worry of unplugging the wires (Yoshida 2018). Nintendo also
replaced the hard DVD with pre-installed internet in their gaming devices for gamers to directly
download a game of their choice. This value innovation put Nintendo ahead of giants like Play
Station and X Box companies
Disruptive Innovation and Blue Ocean Strategy
Disruptive innovation theory and the Blue ocean theory are concepts that are being used
to describe the establishment of new markets to enable organizations form a new demand from
clients they have not previously served. Critically, disruptive innovation entails establishing a
new market by introducing a totally different set of value addition and products to eventually
disrupts an existing market and demand network. It edges out old giant firms from the market
and eventually renders them obsolete with time it (Dehkordi et al. 2012). In essence, disruptive
innovation challenges the managers of organizations to give alternative products or services that
are simpler, more convenient, and less expensive to the underserved customers.
Essentially, both the disruptive and blue ocean innovation acknowledges that business
more needs to articulated rather than merely use their strategy as the standard in the market space
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(Agnihotri 2016). Although the blue ocean and disruptive innovations differ in a way, they both
focus on practices that of ensuring that value of goods and services serve the clients right.
Notably, blue ocean strategies grow, demand from the market, and then break away from the
competition (Yoshida 2018). In comparison, in the case of disruptive innovation, a dominant
technology may mature and is unable to meet the demands of the market thus necessitating the
need for a new technology to replace it. On its part, Blue Ocean creates a new market space
which enables firms to respond to the existing characteristics in the market and create an
opportunity through which profits can be generated (Dehkordi et al. 2012). The trends show an
environment in which the traditional strategy and its management practices have begun to fade.
Therefore, need to open up for blue ocean opportunities as red oceans grow in competition.
Application to Airbnb Company and Critical Analysis
Introduction of Company and Use Blue Ocean Innovation Theory for Airbnb
Airbnb Company has since established a strong brand name in all areas in which it operates
which has made it possible to create a catchy public image. Such a strength means that use of
Blue Ocean Approach is bound to help the organization remain competitive in the market by
overcoming the available barriers while at the same time enabling the company to venture into
new markets with a lot of ease (West, Ford and Ibrahim 2015). The approach is a good way
through which Airbnb will be able to reduce the marketing costs in addition to bypassing the
hardships associated with outdoing the increasing number of competitors in the market (Kim and
Mauborgne 2017). Most important about Blue Ocean Approach is that it will help the company
to identify the new opening in the market as they occur and investing in them before the
competitors identifies such opportunities.
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Hospitality and tourism industries are two industries that are subject to various
changes and a timely identification of such changes is a good way in which Airbnb Company
will be able to adjust its operations to accommodate the new changes meant provide to the needs
of clients. Ability to attend to all needs of clients is a professional manner is a good way that a
company offering hospitality services can remain competitive despite the pressure introduced in
the market by competitors (Streitfeld 2014). The adoption of Blue Ocean technology by Airbnb
Company is a good way to avoid getting into a red ocean market where it is hard to control the
changes in market prices.
Airbnb Company has a growth potential with a worldwide projection and thus the use of
Blue Ocean Technology is a good way the company can venture into new markets successfully
and overcoming the competition mounted by the existing companies offering similar services
(Sitinjak et al 2018). The approach has the ability to identify competitive markets and
introducing strategic changes meant to make the competition irrelevant for competitors. Once the
competitors assume that the market in which they operate is no longer relevant, Airbnb Company
would end up taking such an advantage and investing heavily in the new market.
Business Model Canvas for Airbnb Company
The business model canvas of Airbnb Company is characterized by key partners who
cannot be replaced at any one time. The partners are known to play important roles which have
helped the company to remain successful in the market while at the same time making promising
prospects for its future growth. Hosts are part of the key partners of Airbnb Company who
supply the company with rental units. The company pays competitive prices for the rentals and
thus most of investors in property industries are willing to get into business deals with Airbnb
Company. Investors into the company helps to raise enough money to support its market
Business Model Canvas Airbnb 8
operation (Guttentag 1192). The money raised is used to acquire modern technological
applications used in the marketing strategies of the company. Lobbyists help to sell the brand
name of the company to major corporations and governments, hence the worldwide popularity of
the company. The company has a well-defined network of partners all over the world which
helps to market the band name of Airbnb Company in various parts of the world. The corporate
partners are committed to make sure that the services of the company sell well, hence a good
way the Airbnb Company has been able to penetrate to different regions.
Historical Discussion of Innovation and Blue Ocean Graph
Comparison of Airbnb and Hotel
Comparison of Blue Ocean at Airbnb with Hotel Performance in Amsterdam. Retrieved at
https://www.statista.com/chart/8696/airbnb-an-unfair-competitor-for-hotel-industry/ on March
17, 2019
Blue Ocean (Airbnb) seems to be replacing traditional practices such as the hotel. At the
start, Airbbnb looked like a replacement of the traditional hotel industry but has since become an
Business Model Canvas Airbnb 9
option sought after as a plausible replacement that will eventually be used instead of hotels. At
the start, the traditional hotel industry dominated the market. However, Airbnb has increased its
items between 2009 and 2017 and is projected to overtake the hotels in performance.
People are going to increase their interests in the services given by Blue Ocean
economies while abandoning the traditional industries. Airbnb uses a business model whose
focus is a market platform that allows hosts and guests to exchange their housing at a monetary
value (Aznar et al. 2018). The application process allows the hosts and guests to find the
reviews they need and connect on social media. The connection is meant to help in building trust
between them. The influx of digital technology enables users to dictate the experiences which
they have and how they affect the choices they make in the future on the online platforms.
The platform provides an avenue for peer-to-peer exchanges but does not have any direct
effect on the prices charged on lodging (Pesonen & Neidhardt 2019). The guidelines that it
follows are similar to those that hotels use (Aznar et al. 2018). The guests in search of short-term
stays may pay premiums compared to the ones that want to have extended stays. The hosts are at
liberty to set the prices depending on the terms of stay such as cleaning fees, weekend charges,
and more guests. The platform explains the reason for surge in performance of Airbnb’s Blue
Ocean services is because of the platform provided.
Future Innovation Pathways and Blue Ocean Graph for Future
Business Model Canvas Airbnb 10
Projection of the Performance of Blue Ocean at Airbnb from 2015 to 2022
According to the projections in the change in the number of people using Airbnb (Blue
Ocean), there are significant declines as years go by. The first years have a significant change
which declines exponentially. It will reach a point where there will be no change at all. This
means that either almost all people will have shifted to using Airbnb (Blue Ocean) services or
will have moved to the traditional forms within Airbnb’s industry such as hotel. The other
meaning is that the industry slowly moves away from being a blue Ocean to a being a Red Ocean
(Pesonen & Neidhardt 2019). As more people discover that a certain venture will most likely
perform better than another, they tend to shift towards the performing venture. This explains why
by 2022, there will be more businesses like Airbnb which means that the venture may soon lose
the Blue Ocean status and become a Red Ocean with more similar enterprises. Airbnb will have
to find another way out by coming up with new ways of transforming it into a Blue Ocean
business once more. Alternatively, it can design ways through which it can make the changes in
the numbers of users remain significant. This can be done by working on customer experience to
keep customers from leaving the company for a better competitor.
Business Model Canvas Airbnb 11
Airbnb Company stands a high chance of benefiting from the Blue Ocean Technology
considering it has all it takes to acquire the technology and its subsequent implementation. It is a
fact that the company has managed to market its brand name to a big number of potential
customers and thus any effort to increase the market penetration is welcomed. Blue Ocean
Technology will help Airbnb Company overcome the existing competition in the market by
making potential markets seem irrelevant to competitors while in real sense, the market is
promising. Adoption of Blue Ocean technology will not only help Airbnb Company to maintain
high profit margins in unfavorable markets,but will create a chance for the company to improve
such market and benefiting directly while discouraging competitors who might have an interest
in such markets. Airbnb Company has a strong financial base and thus its ability to penetrate into
diverse markets all over the world. Success in adopting the Blue Ocean Technology will see a
good number of competitors will end up withdrawing from the market, a market change that will
create a good opportunity for Airbnb Company to thrive. The approach is also a good one to help
Airbnb Company identify the new and advanced technologies that can be used to help penetrate
into new markets with a lot of ease despite extremities of the existing competition. Coupled with
competent staff used used by Airbnb Company, Blue Ocean Technology has the potential of
making sure that profit margins remain high despite the unfavorable conditions that might be
experienced in tourism industries. The business canvas model of the company reveals that the
company makes use of able partners who supports the market operations of the company hence
the success the company has registered so far. Adopting Blue Ocean Technology is thus a chance
for Airnb Company to thrive now and in the future.
Business Model Canvas Airbnb 12
Reference List
Agnihotri, A., 2016. Extending boundaries of blue ocean strategy. Journal of Strategic
Marketing, 24(6), pp.519-528.
Airbnb. (2017). Airbnb Business Model Canvas. Retrieved March 17, 2019, from Airbnb:
Aznar, P., Sayeras, J. M., Segarra, G., & Claveria, J. (2018). Airbnb Competition and Hotels'
Camilleri, J. and Neuhofer, B., 2017. Value co-creation and co-destruction in the Airbnb sharing
economy. International Journal of Contemporary Hospitality Management, 29(9),
Chowdhury, M.H.K. and Islam, M.R., 2003. Critical factors in consumer quality perceptions: A
cognitive approach. Journal of Business Research, 5(1), pp.22-34.
Dehkordi, G. J., Rezvani, S., & Behravan, N. (2012). Blue Ocean Strategy: A Study Over A
DOI:10.30958/ajt.5.1.1 .
February 1, 2019. Cham: Springer Nature Switzerland.
for Consistency and Alignment. Cham: Springer International Publishing Switzerland.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
Guttentag, D.A. and Smith, S.L., 2017. Assessing Airbnb as a disruptive innovation relative to
hotels: Substitution and comparative performance expectations. International Journal of
Hospitality Management, 64, pp.1-10.
Hassan, A. (2012). The Value Proposition Concept in Marketing: How Customers Perceive the
International Journal of Academic Research in Business and Social Sciences, 2 (6), 477-
Business Model Canvas Airbnb 13
Oskam, J. and Boswijk, A., 2016. Airbnb: the future of networked hospitality businesses.
Journal of Tourism Futures, 2(1), pp.22-42.
Osterwalder, A., & Pigneur, Y. (2009). Business Model Generation: A Handbook for
Pesonen, J., & Neidhardt, J. (2019). Information and Communication Technologies in Tourism
Response: The Importance of Online Reputation. Athens Journal of Tourism, 5 (1), 7-20.
Simon, D., & Schmidt, C. (2015). Business Architecture Management: Architecting the Business
Southampton in the United Kingdom. International Journal of Marketing Studies, 68-88.
Stabrowski, F., 2017. ‘People as businesses’: Airbnb and urban micro-entrepreneurialism in New
York City. Cambridge Journal of Regions, Economy and Society, 10(2), pp.327-347.
Strategy Which Helps The Firm To Survive From Competitive Environment.
Value Delivered by Firms A Study of Customer Perspectives on Supermarkets in
Visionaries, Game Changers, and Challengers. Amsterdam: Business planning.
Yoshida, K., 2018. Drastic Change in Industrial Environment and Progress of P2M. Journal of
International Association of P2M, 13(1), pp.1-15.
Guttentag, D., 2015. Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), pp.1192-1217.
Streitfeld, D., 2014. Airbnb listings mostly illegal, New York state contends. International New
York Times.
Sitinjak, M.F., Pramawijaya, K. and Gunawan, A., 2018. ICanStudioLive use of Blue Ocean
Marketing Strategy for Value Differentiation. Pertanika Journal of Social Sciences &
Kim, W.C. and Mauborgne, R.A., 2017. Red Ocean Traps (Harvard Business Review Classics).
Harvard Business Review Press.
Business Model Canvas Airbnb 14
Kim, W.C. and Mauborgne, R., 2017. Blue Ocean Shift: Beyond Competing-Proven Steps to
Inspire Confidence and Seize New Growth. Hachette UK.
West, D.C., Ford, J. and Ibrahim, E., 2015. Strategic marketing: creating competitive advantage.
Oxford University Press, USA.

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