Olivia Beck – Exam Answers
Question 1
How each of the macro-environmental factors had a significant impact on Airbnb’s
performance: a PESTEL analysis.
The macroenvironment, as analysed through PESTEL, is composed of political,
economic, social, technological, environmental, and legal factors. The political environment
encompasses trading policies, the government, foreign pressures, and shareholders. The social
environment includes religion, demographics, trends, education, and preferences. The
technological aspect of PESTEL transcends all factors due to its integration with every aspect of
life and business. Specifically, however, it focuses on patents, licensing, communication,
research and development, and of course, technological advancements. Furthermore, there
are environmental factors. This not only includes natural and ecological factors, but also
management style and staff attitudes. Finally, the legal factors regard employment law,
consumer protection, and industry-specific regulations.
Political
As Airbnb operates across 191 countries, they are constantly affected by political and
regulatory decisions across multiple jurisdictions. Governments in major cities such as San
Francisco, and Barcelona have introduced short-term rental laws to control housing
affordability and protect residents (Gyódi et al., 2025). For example, there have been many antitourist protests in Barcelona, where the cost of renting or owning a home has increased
significantly since the introduction of Airbnb (González & Ignacio, 2018). This led to financial
losses, as hosts remove themselves from the site, and as fewer tourists travel to these places.
Additionally, Airbnb’s expansion relies on negotiating with local authorities to create legal
frameworks for hosts and customers. Such as collecting tourist taxes on behalf of
governments.
Economic
Airbnb’s performance is strongly linked to global economic conditions. During periods of
economic growth, people travel more, which boosts bookings. On the other hand, economic
downturns, such as the Covid-19 pandemic, significantly reduce demand. For example,
according to Filieri et al., (2023), “during the pandemic in 2020, Airbnb had a decline of 72% in
revenues compared to 2019. They lost 5% of its total listings from January through June 2020”.
Recovery has been steady since 2022, but it is still dependent on economic stability across the
EU.
Social
Social trends can work in Airbnb’s favour. When the company first started, it rose
alongside the sharing economy and promoted values such as authentic and local experiences.
These concepts aligned well with the original target demographic of millennials, who place
value on belonging, community, and sustainability. Airbnb then centred its brand around this.
However, religious and cultural factors play a huge role in the success of a company
when expanding to a new market. This was evident during Airbnb’s attempt to expand into
China. Whilst the Chinese government strongly promoted the sharing economy, the citizens
remain cautious of new brands. Additionally, Airbnb’s core business model was misaligned with
local needs; the customer-to-customer, low-touch model lacks the built-in features for trust,
service, and safety, such as professional cleanings, verified listings, and insurance (Elphick,
2025). Ultimately, Airbnb left the Chinese market after just a few years due to these misaligned
social factors.
Technological
Technology is central to Airbnb’s entire business model. They act as a digital
marketplace to connect hosts to guests internationally.
Airbnb has also been able to integrate social media. This alone has led to massive
growth in recent years (Innes, 2025). As of late, Airbnb has also been able to integrate AI into its
search and pricing algorithms, which has increased ease of use for both hosts and customers.
However, this also means that the Airbnb business model struggles in countries where
access to technology is limited. Moreover, such a heavy reliance on technology can also lead to
cybersecurity and data risks. Airbnb must comply with strict EU data protection laws (GDPR).
These regulations ensure user privacy, payment information safeguarding, location details, and
communication logs. If a data breach were to happen, it would massively impact revenue as
customers and hosts would no longer use their platform due to a lack of trust.
Environmental
Airbnb’s operations are affected by both environmental trends and sustainability
pressures. Growing awareness of climate change has increased demand for eco-friendly
travel. Airbnb has responded by promoting sustainable tourism and encouraging stays that
support local communities rather than large hotel chains (Airbnb, 2018).
Legal
Legal challenges have followed Airbnb since its creation. Issues include zoning
laws, licensing requirements, taxation, and liability disputes. Many cities have cracked down on
unregistered hosts, forcing Airbnb to implement compliance systems and work with local
governments (Heinzl & Gorelick, 2024). The EU has even criticised Airbnb for lack of price
transparency and demanded legal changes (European Commission, 2018). Moreover, lawsuits
around safety, discrimination, and host responsibilities have led to new legal frameworks and
stricter verification processes.
Interaction Between Factors
One clear interaction is between social and legal factors. As public concern over
housing shortages and gentrification has grown (a social issue), governments have responded
with stricter short-term rental laws (a legal response). Similarly, technological innovations like
Airbnb’s platform design have influenced economic outcomes, by increasing convenience and
lowering accommodation costs. These overlapping influences demonstrate that Airbnb’s
performance is shaped by how these macro-environmental factors interact, not just by each
one individually.
Question 2
The case of Ford Motor Company and Toyota: a VRIO application
The VRIO framework is a tool used to analysis a company’s internal resources and
capabilities to understand if it provides a sustained competitive advantage. If a capability meets
all four criteria, it gives the firm a sustained competitive advantage. It was first developed by Jay
Barney in 1991. VRIO stands for:
•
V – Valuable: Does the resource help the firm exploit opportunities?
•
R – Rare: Is the resource possessed by few or no competitors?
•
I – Inimitable: Is it hard for others to copy or substitute?
•
O – Organised: Is the firm structure able to capture value from the resource?
Ford Motor Company
Ford revolutionised car production when they integrated the assembly line into their production
in 1913 at the Highland Park plant. The system used conveyor belts to move car parts past
stationary workers who each performed a single repetitive task. This never done before
technique vastly cut production from over 12 hours to just 93 minutes, and lowered the price of
the Model T, making it affordable for the average consumer and transforming manufacturing
forever (Binder, 2025).
-
Valuable: Ford’s manufacturing was valuable as it allowed for mass production of cars
efficiently. Without this efficient manufacturing, Ford couldn’t compete on price, quality,
or scale with other car producers (Britannica Money, 2025). Additionally, it is highly
adaptable. Ford was able to use this same system to also produce their Truck/SUV range
as well as electric vehicles. This makes it highly valuable.
-
Rare: At the time of implementation, Ford was the only company to utilise this system,
making it extremely rare. However, nowadays, this system has been implemented by
most other automakers, reducing its rarity to moderate. However, the decades of
experience cannot be matched.
-
Inimitable: After Ford’s system was implemented, competitors rushed to copy their
efficient methods. However, employee expertise, long-term supplier relationships, and
established factory systems are hard to imitate. Some aspects, however, are easier to
copy, such as robotics, automation technology, and production methods. The overall
imitability is moderate.
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Organised: Ford’s automation system is well integrated into their business model. They
connect manufacturing with R&D and supply chains for ease of operations. They have
the ability to scale production up or down depending on the consumer demand, which
is particularly important with electric vehicles right now with the dynamic markets
(Britannica Money, 2025). Additionally, they continually invest and upgrade their plants,
which indicates the organisational ability to leverage manufacturing for future growth.
Overall, their organisation is very strong.
In conclusion, their strategic process capability was implemented upon invention. Ford’s
manufacturing method gave them a temporary competitive advantage. The advantage is not
fully sustained, purely due to the fact that other companies can and have imitated their system.
Toyota
Toyota utilises concepts known as Just-In-Time (JIT) and lean manufacturing. Inspired by Kaizen,
Taiichi Ohno wanted to reduce waste and costs by producing only what is needed, when it is
needed, and in the quantity needed (Toyota, n.d.). Coming from a post-World War II context,
Ohno wanted to be more efficient in all aspects of the company.
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Valuable: The value stems from the saved resources from Lean and JIT manufacturing.
It reduces waste, improves quality, sped up production, and cut costs. JIT minimised
inventory, lowered storage costs, and ensured parts arrived exactly when needed. When
done correctly, this is a highly valuable capability.
-
Rare: Toyotas Lean and JIT system is rarely implemented as effectively anywhere else.
Whilst other companies are familiar with the concepts, few can match Toyota’s decades
of experience and cultural integration. This is indeed a rare capability.
-
Imitability: Toyota’s use of these concepts is widely known, however replication is still
difficult due to Toyota’s expertise, supplier networks and employee culture. Lean and JIT
manufacturing are based off the concept of Kaizen, which is well established in
Japanese culture (Sanni, 2025). Trying to implement this in a non-Japanese firm may not
have the same effect. This makes Toyota’s capability difficult to imitate.
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Organised: Toyota is perfectly shaped around these capabilities are in a great position
to exploit Lean and JIT manufacturing. The Toyota Production System is applied globally
very efficiently, and employees are trained in Lean thinking. They are fully organised to
extract maximum value.
In conclusion, Toyotas Lean and Just-In-Time manufacturing provides a sustained competitive
advantage. Their dynamic process capabilities retains their reputation for efficiency, flexibility,
and high-quality production worldwide.
Question 3
IKEA’s ability to attract and retain employees using the Cultural Web Model
The cultural web is a visual tool to show the behavioural, physical, and symbolic factors
of a culture, which are developed by the assumptions of an organisation. Centred around a
main paradigm, the cultural web is made up of stories, symbols, power structures,
organisational structures, control systems, and rituals and routines, with each factor playing an
important role in shaping how a firm’s culture is perceived. Organisational culture can be further
defined using the ‘culture in four layers’ model, which includes values, beliefs, and behaviours.
IKEA is known to be one of the most attractive employers in the world (Randstad, 2020).
This has to do with their internal organisational culture. This will be further analysed using the
cultural web.
Behavioural Activity
Behavioural activities fall under the rituals and routines aspect of the cultural web. This
discusses what behaviour do IKEA’s routine encourage, and what training programs emphasise.
It also talks about which behaviours are embedded in history and what some of the key rituals
are. One key behavioural activity at IKEA is the collaborative, team-oriented routines which are
embedded in daily work, such as regular team meetings, problem solving sessions, and peer
guidance between new and experiences employees. These routines encourage communication,
knowledge sharing, and support. Employees feel a sense of community and inclusion which
helps retain existing staff. This reputation then proceeds to attract new staff who want to work in
such an environment.
Physical Activity
Physical activities fall under the symbols category of the cultural web. According to the
cultural web, symbols are physical objects, events, and even people who convey meaning. IKEA
attracts and retains employees through innovative physical and interactive experiences that let
potential hires explore the work environment before joining. For example, “The Co-Worker
Game” on Roblox allows users to virtually perform IKEA jobs, providing a hands-on sense of the
company’s routines, teamwork, and culture (IKEA, 2024). This immersive approach engages a
younger, tech-savvy audience in a way traditional job postings cannot, helping them understand
what it’s like to work at IKEA and encouraging them to apply. Beyond digital experiences, the
physical store layouts themselves are strategically designed to guide employees through
different departments, encouraging curiosity and increasing the likelihood of discovering new
roles or career paths. Together, these physical and interactive elements give potential and
current employees a tangible connection to IKEA’s culture, enhancing attraction, engagement,
and retention.
Symbolic Activity
Symbolic activities also fall under symbols on the cultural web. However, in this case, it
also reaches across to stories. IKEA uses both symbols and stories to communicate its value
and attract and retain employees. The company’s iconic blue and yellow logo and bright store
colours are not just visual elements, but symbols to represent the story behind it. They
symbolise IKEA’s Swedish heritage and simplicity. These symbols are reinforced by stories
shared internally and externally. Each piece of furniture states the designer’s name, and a story
to go along with it. Even the titles of the furniture are named after iconic Swedish symbols,
whether it be people or natural landmarks. These stories and symbols give employees a sense
of identity and purpose and show explicitly the kind of organisational culture they are a part of.
By constantly reinforcing these stories and symbols, IKEA reminds employees of the
organisation’s purpose and values, creating a strong emotional connection that encourages
loyalty and long-term engagement.
Conclusion
Overall, IKEA’s ability to attract and retain employees is deeply rooted in its
organisational culture, as illustrated through the Cultural Web. Collaborative behavioural
routines promote a sense of community and inclusion, encouraging both engagement and
knowledge sharing. Physical activities, such as immersive digital experiences and thoughtfully
designed store layouts, provide employees with a tangible and interactive connection to the
work environment. Symbolic activities, including the iconic blue-and-yellow logo, store colours,
and the stories behind IKEA’s products, communicate the company’s values and heritage,
creating a strong sense of identity and purpose. Together, these behavioural, physical, and
symbolic elements create a cohesive and supportive culture that not only attracts talent but
also motivates employees to remain loyal and engaged over the long term.
Question 4
First mover vs late mover strategies: A comparison of Netflix and Facebook
A first mover is a company that enters a market early, gaining an early foothold before
competitors, whereas a late mover enters the market after others have established products,
often learning from first movers’ successes and mistakes.
Netflix as a First Mover
In the case of Netflix, as a first mover there were many opportunities to exploit. Netflix
began in 1997, originally as a DVD-by-mail service. In 2007, they launched its streaming service,
which surpassed the DVD business and lead to global expansion (Hosch, 2024).
By being an early entrant in the streaming market, Netflix became synonymous with
streaming and were the first to build a loyal subscriber base. Early entry allowed Netflix to shape
user expectations and behaviour around on-demand streaming (Arora, 2025). They invested in
content delivery networks, recommendation algorithms, and even original content, which
created a large technological barrier for later competitors.
However, being a first mover also comes with many risks and uncertainties. Netflix had
to invest heavily in unproven technology, user acquisition, and content without fully knowing
how the market would react. Additionally, they had to educate consumers on streaming and
encourage them to not rent physical DVD’s anymore, which is something than can pose as a
challenge to societies where change is not always welcomed. Furthermore, later entrants could
learn from Netflix’s mistakes and offer services or features that surpassed even the quality of
Netflix. This is seen now where Netflix has less market share as it competes with a multitude of
other streaming services.
Facebook as a Late Mover
Facebook started in February 2004, by Mark Zuckerberg. Originally called ‘TheFacebook’
and meant only for Harvard university students (Bellis, 2025). Eventually, the service expanded
to other universities and then ultimately to the public in 2006. It started out somewhat
controversially and was thought that it would never be able to compete with established social
medias such as Myspace and Friendster. But instead of falling behind, Facebook learned from
the failures of these platforms and went on to be the most popular social media in the world
(Press, 2018).
Friendster for example, was starting to be abandoned by users because of technical
difficulties and a lack of trust for the software, and Myspace then gained all their customers
(Press, 2018). However, Myspace then began being abused by the owner as a means of
advertisement and revenue and pushed the actual technology development to the side, which
frustrated users (Press, 2018). In April 2008, Facebook officially overtook Myspace as the most
popular social media. Facebook learned from the mistakes of both these companies and
focused on what the customers actually wanted and needed. Additionally, the infrastructure
that has started to be created to benefit Friendster and Myspace could be instead utilised even
more so efficiently by Facebook. Facebook was able to control their growth, gradually building a
strong and supportive technological infrastructure (Press, 2018). They constantly added new
features to keep users engaged. Being a late mover also meant there was reduced market risk.
Facebook could avoid initial market uncertainty and save costs from doing trial-and-error
experimentation.
Nevertheless, risks and disadvantages are always apparent. There will always be an
element of brand loyalty or fear of switching costs. Users may already be committed to first
movers, which makes it harders for late entrants to gain traction. There were still many years
where Myspace and Facebook users were tied in number of users, where Facebook just
couldn’t overtake the majority market share. There is also the aspect of extreme competitive
pressure. Late movers face strong and established competitors, and thus require aggressive
marketing, innovation, and pricing to gain market share.
Conclusion
The comparison of Netflix and Facebook highlights that both first-mover and late-mover
strategies come with unique advantages and challenges. First movers like Netflix benefit from
shaping markets, building early customer loyalty, and creating technological barriers that
protect them from competitors, but they also face high uncertainty and the risk of paving the
way for more efficient challengers. Late movers like Facebook, on the other hand, can learn
from the mistakes of early entrants, reduce market risk, and build their platforms more
strategically, but they must overcome established user habits, brand loyalty, and strong
competitive pressure. Ultimately, success depends not just on timing, but on how well a
company leverages its position to meet user needs, innovate, and adapt to market dynamics.
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