Integrating Business Model Canvas in Feasibility Assessment of Share Economy Businesses - Essay Example

Integrating Business Model Canvas in Feasibility Assessment of Share Economy Businesses Introduction AirBnB is a company that manages a website, which allows listing and reservation of rooms or apartments for accommodation. The company started its operations in 2008 when it first opened its doors in Francisco, California. The co-founders are Joe Gebbia and Brian Chesky. AirBnB acts as an intermediary connecting traveller with prospective hosts. AirBnB’s business model is authentic and researchers can use it in conducting a feasibility analysis. This paper maps out the elements of the business model canvas, which enables testing ideas, and determination of the financial viability of a business. The Business Canvas Model’s Inspiration is from an artist who does his work on canvas paint. The chassis of the model takes into consideration the consumer, the product offered, the infrastructure and the monies of a business model. The Canvas Model is a visualization of a business model that seeks to explain how a firm creates, delivers and captures value. There are nine building blocks within the Business Canvas Model. Its popularity is mainly with entrepreneurs for business innovation. An alignment of a feasibility study with a business model is a strategic business-planning tool. Customer Segments Being a share economy business, most of AirBnB’s customer segments are interdependent usually consisting of personal and business travellers (PPTPOP 2014). Identifying the different markets such as the mass market, niche market, segmented, diversified, or a multi-side platform is a crucial stage in the process (Osterwalder and Pigneur 2013, p.164). The company caters for a multi-sided market. It offers shared rooms; private rooms or a guest could just rent out the entire place. Feasibility analysis is necessary to find out the gap in the current market (Hass2 008, p.48). The personal travellers were the initial target for AirBnB as they were the most alive to pricing and more amenable to where they stayed. AirBnb’s offering is especially popular with business travellers who want to stay in a place for more than a week and want to feel more homely than in a hotel. Channels The main channels for customer acquisition for AirBnB are its website and application, social media, public relation and word-of-mouth. A share economy business encourages collaborative consumption in the economy (Botsman and Rogers2010, p. 132). Identifying how the value proposition of the company is a fundamental stage in the feasibility study (Johnson 2010, p.158). AirBnB carries out intensive and bellicose online marketing. It has numerous ads through a sizeable network of affiliate sites. Public relations comprise one of the core competences of AirBnB. Its founders are not shy of the media. Describing the industry conduct in a feasibility analysis entails gauging of available channels as well as product distribution techniques (Bowersox 2013, p. 256). The founders believed that by providing exceptional service customers would spread the word by word of mouth to others. The social media is also a tool for spreading the word about the company. Customer relationships As explained earlier, AirBnB has two market segments: the host who offers accommodation and travellers who went to rent apartments or rooms. The hosts provide inventory and are crucial in that they are the representative of AirBnB to the customer (Silva’s Blog, 2014). They have made a choice from a wide range of options to use AirBnB to sell their product offering. Therefore, AirBnB has to ensure that they have strong relationships with homeowners. The travellers are essential elements because they are the ones paying cash for the accommodation service (Lovelock, Patterson, and Wirtz 2015, p.78). Competition is high in the housing sector, and travellers have many options to choose (Weitzman 1984, p.155). In accord with other service industry providers, AirBnB focuses on enhancing their customer experience to keep them coming back. Consumer relationship management ensures that organizations stay profitable and gain a competitive advantage (Sashihara 2011, p.79). A feasibility study into customer relationships investigates how various groups interact as explained above, the bargaining power of buyers and the peril of substitutes or new entrants. Revenue Streams AirBnB mostly engenders its revenue from commission gained from both the homeowners and the renters. They charge 6-12% commission to renters and 3% commission to hosts. It has to ensure that these fees are little so that their customer segments do not decide to use offline alternatives. Revenue centres rely on the absorption rate, business size, and market demand (Crawford and Di Benedetto 2015, p.363). In a feasibility study, it is necessary to consider the sources of revenue of the business at all angles (ICSOB (Conference), Lassenius and Smolander 2014, p.77). The company intends to adopt dynamic pricing strategies in the near future. Value Proposition AirBnB takes underutilized assets from their owners and makes money out of them. It created an international platform for connecting both the host and the traveller. The site is a preferred location because both the homeowners and the renters trust it (Stephany 2015, p.183). In the registration process, a traveller must login to the site with their social networks, establishing credibility by having user reviews and provision of insurance in the occurrence of an incident. Conducting a feasibility study entails investigating the product/service offering, value delivery to customers and meeting the needs of customers (Lovelock, Patterson and Wirtz 2011, p. 150). The company has thousands of listings and choices, operates a community driven business, allows travellers to conveniently book rooms in advance, and offers reduced prices in bookings.  Key Activities The company has involvement in community development, product development, and marketing in their everyday operations. Feasibility studies need to assess the activities that are crucial to a company’s operation (Samples and Hoffmann 2013 p.45). AirBnB conducts marketing activities in various countries around the world, they continually develop their product with a team of technology savvy experts, and they regularly carry out community events to involve homeowners. These strategies enhance loyalty to the AirBnB platform. Essential Resources The well-networked founders of AirBnB have managed to get easy access to funds. The feasibility study needs to put into consideration the available resources that are necessary for product delivery (Perry 2009, p.65). The funds have allowed its operations to be smooth, and they have managed to attract the best talent available. Principal Partners The key partners for AirBnB are the tourism ministries in different countries. In a feasibility analysis, understanding key partnerships is crucial to the success of the business (Johnson 2010, p.133). However, there is not much of a regulatory body for AirBnB, which might be a contending issue for homeowners. Cost structure The cost centres for AirBnB are marketing, technology, and sales (Silva’s Blog, 2014). Feasibility studies require identifying the businesses’ cost centres (Botsman and Rogers 2010, p.176). Marketing involves public recognized relation and paid advertising. The technology incorporates hiring of expertise and server space. Sales include teams in different markets. Conclusion Basing a feasibility analysis on a business model ensures testing the viability of a product. It answers the question of whether to proceed with product development. Mapping the nine steps of the business model leads to testing of the completeness of an idea. A properly conducted study saves a potential investor effort and money. Thereby, researchers ought to consider Business Model Canvas as a tool for assessing a business design. Reference List Botsman, R., & Rogers, R. (2010). What's mine is yours the rise of collaborative consumption. New York, HarperBusiness. Bowersox, D. J. (2013). Supply chain logistics management. New York, McGraw-Hill. Clemence Lepers 2014, How Airbnb Built A Rock-Solid Business Model (+Free Template), PPTPOP, retrieved on 22 April 2010, http://www.pptpop.com/airbnb-business-model/ Crawford, C. M., & Di Benedetto, C. A. (2015). New products management. New York, N.Y, McGraw-Hill Education. Hass, K. B. (2008). The business analyst as strategist translating business strategies into valuable solutions. 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