Abstract
The ability to create conditions for the sustainable and continuous growth of authority in the market distinguishes companies with well-chosen development strategies. Today, with technological innovation and increased accessibility for Internet users, many organizations focusing on the online environment as a potentially profitable activity area. At the same time, even for modern rising business models, the strategic management theory is a valuable methodology that allows assessing growth prospects objectively and implementing appropriate development tools to gain a competitive advantage and market recognition. Such global organizations as Netflix, Uber, and Airbnb will be considered as examples of companies working with new approaches to business, and a particular focus will be made on the last one mentioned. The current operating results will be reviewed, and comparisons will be made to determine how these organizations have achieved significant success. As a background for the analysis, the strategic management theory will be used as a methodology that allows coordinating different areas of activity. The contribution of this concept to the development of the aforementioned companies is significant, and the example of Airbnb proves that the existing gaps may be addressed through competent strategic planning
Introduction
The rapid development of technology and the emergence of new entrepreneurial activities due to the introduction of popular digital services are factors that largely determine the shifts that have taken place in the management environment in recent years. Traditional business process management models have given way to more progressive and dynamic practices with higher efficiency potential. However, despite the emergence of new models and approaches to monitoring, some aspects of the management sphere remain unchanged. As an example, one can cite the strategic management theory as a tool that does not lose its relevance and allows strengthening the transformed modern new rising business models.
This work aims to determine what contribution the strategic management theory brings to new business models promoted by large modern corporations that build their businesses on the use of digital developments and virtual communication with consumers. As an example, the activities of such global sites will be considered as the recognized leaders in their fields of activity, such as Netflix, Uber, and Airbnb, with a focus on the last one mentioned. Particular attention will be paid to the competitive advantage enhancement model as an approach that is part of the strategic management program. The process of introducing appropriate tools to ensure sustainability will be considered, as well as errors that can weaken the business potential of modern companies. Strategic management planning recommendations include a set of measures aimed to strengthen specific aspects of the market activity of contemporary business models and help organizations adapt to a dynamic business environment. The strategic management theory based on the advancement of the competitive advantage model is a valuable addition to innovative control practices in modern digital companies and contributes to creating an effective background to maintain both consumer interest and stable profits.
Features of the Strategic Management Theory
The strategic management theory is a concept that includes a set of principles and approaches to control over activities in various business areas. According to Makadok et al. (2018), this mechanism involves the impact on organizational performance as one of the main criteria that determine the sustainability of different departments and the productivity of implementing the set goals and objectives. As a result, due to the use of effective approaches to the organization of the work process, the management of an organization can regulate different operational activities through the effective control practices and optimization of individual industries. In other words, different companies’ departments should develop in accordance with the outlined plan but not just specific areas of work. Barney (2020) gives an example of a situation in which stockholders are the main regulators of firms’ activities and remarks that this traditional approach to doing business is inconsistent with the strategic management theory and inhibits the generation of sustainable economic profits. Therefore, as the main feature of the considered managerial concept, one can note the coverage of various work directions in an enterprise to maintain stable operations in different areas of activity.
The totality of approaches to control defines strategic management as a complex and multifaceted practice with numerous branches. As Makadok et al. (2018) argue, economic, business, social, and other paradigms are involved in this concept and form a single algorithm for organizing sustainable operational activities. At the same time, those companies promoting modern entrepreneurial models that differ from the classical methods of gaining consumer attention and market recognition can implement the theory effectively. Barney (2020) states that one of the main conditions that should be taken into account is to follow a firm performance program to support profit generation tactics, which, as a rule, imply the ultimate goal of any business project. If such a sustainable practice is absent or underdeveloped, this slows down the progress of a company and prevents the natural growth of its authority among competitors. Moreover, a poor performance strategy is a factor that weakens all processes without exception, including those that are not directly related to production or sales, for instance, control over the resource base. Thus, the strategic management theory proposes to cover the business process comprehensively to achieve sustainable business activities effectively.
Strategic management is a relatively young methodology for managing business projects, which has grown on the foundation of a long-term planning system. However, this sphere has already been approved by a solid theoretical base. This concept turns organizations’ activities into a volumetric model that takes into account various factors, including both external features, for instance, consumer tastes, economic and social changes, or the political environment, and internal nuances of activities – the level of employees’ of skills, resources, or organizational schemes. According to Makadok et al. (2018), the object of strategic management is an enterprise that is considered an open socio-economic structure consisting of subdivisions of various levels and significance. The leadership of such companies, as a rule, uses many theoretical approaches, conclusions, or control methods but, at the same time, develops original solutions to emerging problems, which are suitable for each specific case. As a result, the formation of a development strategy is focused on the implementation of general goals and the continuity of development. All these conditions are relevant aspects of the strategic management theory and allow creating a multilateral model of control over business models, including new approaches.
New Business Models: Contemporary Approaches
Due to the introduction of technological developments and other innovations into entrepreneurship, new business models have evolved, which are characterized by distinctive approaches to interacting with the target audience and making profits. Broekhuizen et al. (2018) analyze these strategies and note that one of the features of operating activities in these conditions is a shift in the resource base. In particular, the authors argue that digital orientation has become dominant in the organization of businesses, and online methods of promoting goods and services have acquired a leading role in shaping development strategies (Broekhuizen et al., 2018). This shift is objective and logical since, in the conditions of the massive use of the Internet and the possibilities of virtual interaction, gaining consumer interest remotely contributes to maintaining stable demand. Moreover, the involvement of digital platforms helps avoid complex schemes with the organization of outlets and the formalities associated with control over the workflow in them. As a result, new business models apply innovative principles of communication with consumers and offer convenient interaction algorithms.
The transition to an updated business regime has led to the creation of a new strategy for asset management and service delivery to the public. Kraus et al. (2018) call such a phenomenon digital entrepreneurship and note that this area is characterized by the involvement of Internet technologies and other forms of digital communication as key tools in organizing interaction with the target audience. Companies that operate in this mode focus on remote communication and offer online services that eliminate intermediation through sellers. Despite the potential challenges of such a regimen, which Kraus et al. (2018) mention, for instance, a clear adherence to market interests and the need for constant feedback from the client base, the demand for this approach to business determines the trend for creating narrow-profile digital applications and platforms. Thus, the increasing demand for services of this nature is the main factor explaining the transition to remote business management strategies.
In addition to expanding opportunities for engagement with target audiences, those companies that adhere to business models based on digital entrepreneurship use the benefits of such approaches in the context of maintaining a competitive advantage. According to Kraus et al. (2018), the open field of the contemporary business environment offers relatively equal working conditions, and organizations use different tools and methods to attract consumer interest through online interaction. This practice has evolved substantially due to an opportunity to contact customers remotely, and entrepreneurs utilize its terms to their advantage. As Broekhuizen et al. (2018) note, the online space is a convenient test platform to determine the interests of consumers, their views on specific innovations, as well as opinions on the existing range of goods and services. These essential factors make it possible to achieve a competitive advantage as one of the main criteria for the success of business activities in the context of broad market entrepreneurial activities. Therefore, the strategic management theory is a valuable background for promoting the aforementioned business model as a productive approach to making profits in a dynamic market environment.
Value of Competitive Advantage Model: Modern Examples
Using the strategic management theory within new rising business models is a way to realize the potential of competitive advantage tactics, which, in turn, fosters business opportunities in a dynamic environment. Failures to implement this approach increase the risk of losing customer demand and reduce the potential success of entrepreneurial activities. To assess an appropriate operating environment in such models, examples of modern companies adhering to the aforementioned digital work practices will be considered and evaluated. The activities of such global organizations as Uber, Netflix, and Airbnb are indicative from the standpoint of the necessary principles of interaction with the target audience through the online environment. The strategic management theory is the basis for the application of tactics to increase competitive advantage as one of the drivers of business success.
Airbnb’s Strategy
Airbnb is a convenient and highly sought-after digital platform that allows finding and reserving temporary or long-term accommodations in almost any country. According to Bashir and Verma (2016), one of the company’s major advantages over other hospitality organizations is that its managers do not need to spend significant funds on creating advanced hotel infrastructure. In addition, associated costs are minimized, for instance, hiring and paying for personnel services, organizing transport services, and other items of expenses. As the authors note, the online business building strategy offers ample opportunities, and one of the main conditions for success is the acquisition of a wide client audience (Bashir & Verma, 2016). Lu and Kandampully (2016) compare Airbnb’s performance with those of Hilton’s, one of the most prominent global hotel chains, and Figure 1 shows crucial metrics that explain the productivity of Airbnb’s business activities in the market. As a result, strategic management priorities based on control over the assets and resources of the business in a virtual environment have allowed the company in question to gain customer recognition and an obvious competitive advantage due to a carefully thought-out development strategy.
Uber’s Management Approach
Uber is another digital platform whose work is digitalized and available online. This application was one of the first to provide transport ordering services, and over ten years of its activities, Uber has developed into a global market participant with an expanded client base. Constantiou et al. (2017) consider this organization from the standpoint of its management features and argue that coordinating all services remotely speeds up data processing time and increases the performance of this platform. Since Uber has proven its competitive advantage over many other similar applications, the chosen strategic management tactics are valid and relevant as an approach that belongs to the category of new business models built on digital entrepreneurship. In Figure 2, the selected operational aspects of Uber and Airbnb are presented and compared, and the global nature of the operations confirms the productive working algorithms of both these platforms (Constantiou et al., 2017). As a result of timely measures to expand the range of coverage, the company under consideration has developed a client base significantly and secured a solid entrepreneurial background by following the terms of strategic management based on achieving a competitive advantage.
Netflix’s Business Model
Netflix is a global online service that streams TV shows and other digital content. As Daidj and Egert (2018) state, one of the key advantages that the company has achieved over the years of its activity is the establishment of a sustainable system of cooperation with other large platforms, for instance, Amazon. The authors add that this direction of business development is consistent with the strategic management theory and allows the company to expand the client base significantly (Daidj & Egert, 2018). Moreover, due to careful work on the selection of digital content, Netflix has almost no competitors in its field and is one of the generally recognized leaders in the provision of such services. In Figure 3, Daidj and Egert (2018) demonstrate how this corporation operates, and the use of an online environment is the only channel of interaction with the target audience. Through the implementation of an effective strategic management program to achieve a competitive advantage, Netflix has become one of the most sought-after virtual platforms in its field. Therefore, the value of this approach is reasonable in the context of the activities carried out by the company.
Contribution of the Strategic Management Theory to Airbnb
Evaluating Airbnb’s business performance and comparing its individual performance indicators with Hilton, the other global hotel reservation chain, proves that a modern approach to interacting with the target audience through digital communications is in demand and convenient. Based on this fact, a deeper analysis of the company’s work can be carried out by focusing on the contribution of the strategic management theory and the value of following specific development algorithms. In addition, relevant guidelines may be provided, which could potentially strengthen Airbnb’s business and make its operational strategy mode more successful and less risky. For this, the online platform’s activities will be considered, and alternative options for strengthening the work of the service will be proposed with an emphasis on the importance of the strategic management theory in the success of all innovations.
Unique Approaches
The strategic mechanism promoted by Airbnb may be characterized by the depersonalization of the decision-making process. According to Venkatesh et al. (2019), this trend manifests itself in the involvement of stakeholders and the productive distribution of responsibilities, when all levels of the company are engaged in the development process, and each employee contributes within one’s competence. This business organization strategy is not unique, but in a virtual environment where customers do not interact directly with service providers, this practice can be considered a new business model. The benefits of a planned strategy give Airbnb’s management an opportunity to organize more complex activities since mechanisms for fast and high-quality analytics, organizational structuring, and control over external and internal processes appear. The case of the organization in question cannot be compared with other companies doing business in accordance with traditional models because both the interaction environment and operational processes differ significantly. Therefore, the principle of strengthening work activities through the strategic management theory is a valuable method that contributes to achieving a competitive advantage and high profits due to specific steps of organizing the work process.
One of the positive features of Airbnb’s business within the strategic management theory is planning, as expressed in the structuring of tactical tasks and decisions. As Venkatesh et al. (2019) note, the presence of clearly formulated concepts and tasks eliminates discrepancies in the understanding of motion vectors. For the company that provides services to a wide range of customers in the online environment, this aspect of work is of high importance due to the impossibility of maintaining a clear process of monitoring production activities in real mode. Since one of the main mechanisms for obtaining real data on the results of operational interventions is accountability, formulating tasks accurately eliminates ambiguity in results interpretation and allows creating a convenient control mechanism based on the comparison of specific indicators. Cheng and Foley (2019) state that Airbnb encourages employees’ “ongoing learning and development in their workplace,” which has a positive effect on organizational performance (p. 35). Therefore, one can assume that creating a working environment implies organizing unambiguous and understandable tasks that competent personnel can cope with to achieve success in realizing the company’s short-term and long-term goals.
Insufficiently Developed Aspects of Airbnb’s Strategic Activities
Since accountability is of high importance if a company promotes the strategic management theory as one of the key development algorithms, work on this aspect should be intensified. However, as Cheng and Foley (2019) note, in Airbnb, this performance criterion is not met comprehensively, which, in turn, is an error and entails operational difficulties and potential problems. The authors draw attention to incorrect scorecards that are calculated experimentally and are not accurate data reflecting real indicators of Airbnb’s business development (Cheng & Foley, 2019). Despite the company’s leading position in its market area, this field is dynamic, and due to the expansion of digital technologies, the number of services following this business model is increasing. Consequently, the lack of accurate data on development indicators creates potential challenges and can be an obstacle to achieving a competitive advantage. Adhering to the strategic management theory as a key development mechanism makes it possible to avoid such difficulties and is a valuable approach to building a sustainable business.
Based on this gap, creating a productive business ecosystem is complicated because, in the conditions of massive access to online services, the interests of customers can shift in favor of companies with more advanced performance control algorithms, which, in addition, react to any market changes more quickly. Venkatesh et al. (2019) provide a corresponding diagram that clearly shows which components of the work process need to be promoted to comply with the provisions of the strategic management theory in the framework of work in the virtual space, and in Figure 4, this scheme is presented. Based on this data, one can note that Airbnb may address specific gaps successfully since the company has sufficient resources to take adequate steps towards streamlining its workflow. Otherwise, the risk of losing a competitive advantage arises because strategic management is implemented incorrectly due to omissions in certain aspects of planning. Thus, the use of all available control and management mechanisms is an important indicator that unlocks business potential, and in relation to Airbnb, the promotion of specific development tools is an integral part of the risk mitigation strategy.
Recommendations for Applying the Strategic Management Theory in Airbnb
Based on the aforementioned features of Airbnb’s business, enhancing strategic management and following the related development theory can be realized in the framework of multiple objectives. For instance, according to Alrawadieh et al. (2020), safety planning correlates with customer security directly because people using this online company expect to find suitable accommodations for temporary stays. Consequently, Airbnb’s management should evaluate the resource base of the platform properly and focus not on rapid growth but on the stabilization of the business, which is crucial in the context of the spread of similar development models. This will provide an opportunity to strengthen the company’s position in the target market and enable the implementation of the components of the strategic management theory successfully.
Another recommendation that concerns the possibility of expanding the application of the valuable strategic management theory to the business in question relates to strengthening the price control system. Kwok and Xie (2018) consider this aspect of Airbnb’s operations and note recurring customer complaints about incorrect pricing, which, in turn, affects the platform’s recognition negatively. To fill this gap, the company’s leadership should resort to such a component of strategic management as creating an effective pricing strategy. The distribution of finances, personnel policy, and other aspects of operating activities, which directly influence the quality of work, will depend on these calculations. Establishing an effective pricing control system minimizes the risk of complaints and characterizes the service as a competent market participant.
Finally, business flexibility is another valuable addition to Airbnb’s strategic management plan. According to Fjeldstad and Snow (2018), the ability to respond quickly to consumer needs and preferences characterizes most modern development models. For the online platform in question, evaluating customer interests is one of the most valuable tools for increasing loyalty. Moreover, the adequate assessment of the promising areas of development is consistent with all the aforementioned activities, including reporting, safety planning, and pricing. As a result, if Airbnb is successful in all of these aspects of operations, its credibility in the market will be unwavering, and the value of the strategic management theory to the business will be proven.
Conclusion
The value of the strategic management theory to new rising business models is explained by an opportunity to create a profitable competitive advantage and establish productive activities in the conditions of innovative approaches to operations. Based on the examples of individual companies, including Airbnb, Netflix, and Uber, conclusions have been drawn about distinctive business practices, but their success is explained in terms of the contribution of strategic management to the work process. The emphasis on Airbnb’s operations provides an opportunity to consider how this online service has achieved the global recognition, what success it demonstrates due to effective control over operational processes, and what gaps deserve particular attention. The implementation of the strategic management theory is a potentially effective mechanism for strengthening Airbnb’s position in the market and increasing customer loyalty.
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