The Benefits of Sharing Economy - Case Study Example

Sharing Economy Paper Name Student’s Name: Introduction Sharing economy is a socio-economic system the works to have to ensure that human and physical resources are shared (Botsman and Roo, 2010). The sharing involves consumption, creation, production, distribution and trade of goods and services by different people. The system involves sharing of information about the resources that are idle but can be utilised by someone else for pay. This allows individuals and organisations to earn income by letting other people use their resources. This means that people who do not have ownership of resources can comfortably use them by letting from other people (Botsman and Roo, 2010). The system is also called peer to peer or collaborative economy. It created by use of social media and internet which allows people to be connected to people who have the resources to offer for use by other people. This is a new platform where people have easy to access of goods and services through the search of websites (Friedman, 2013). This is a business which is being carried through the principle of trust because most people who engage in these activities barely know each other. This platform has led to use of resources which their owners have not utilised for example, according to statistics most private cars are not for used for 92% of their life time (Leonard, January 2012). This means that the cars are packed for a very long time. Therefore, sharing economy companies such as eBay, Airbnb, BorrowMyDoggy have ensured that willing people let other people to use these resources and pay for them. This paper aims at analysing the business process of the sharing economy as well offering recommendations to improve the sector (Friedman, 2013). Nature of the Business Sharing economy is an E- Marketplace which is an online market where buyers and sellers exchange goods and services. E-marketplace mainly is B2B or P2P. Sharing market takes the form of P2P which is peer to peer (Turban, King and Lang, 2011). The attributes of e-marketplaces are consortia, public and private. In this case people tend to share their private properties and offer their services to other people who require them (Gansky, 2010). This is done online and people do not need to meet one on one because of the nature of the provided platforms. This has enabled people to earn extra income even if they are operated (Friedman, 2013). There are employed people who market their services on sharing business platforms. For example, there are people who have permanent jobs take on part time jobs such as peeking and dropping other people to airport (Turban, King and Lang, 2011). Such jobs require only a few minutes or hours and this does not affect the employment schedule of the people. Peer to peer services are offered online but there is no company involved apart from the platform (Friedman, 2013). Therefore, the business allows individuals to share their cars, houses or even services (Leonard, 2012). E-market places are different from the physical markets in that in a physical market place that both parties are present while in e-marketplace the transaction is done through online (Leonard, January 2012). The sharing economy offers digital products which are goods that can be transformed and marketed in a digital format and can be delivered over the internet (Botsman and Roo, 2010). Company Analysis The paper will discuss Airbnb a sharing economy company which is considered to be the first company to take the shape of online business. The company was started by two housemates Joe Gebbia and Brian Chesky, who were cash trapped and wanted something that would save them from their current situation (Geron, 2012). They started the company in 2008 and it was based in San Francisco. They first bought air mattresses with the aim of rent ting them out to people attending a design conference near their home. This was the first step in their road to financial recovery because the returns were very high. Through the motivation of the earning they got from the weekend they developed a website where people could to the people who require them. Their aim was to connect people who required accommodation with those willing to offer these services. The company is currently worth over $10 billion (Geron, 2012). The company attracted other services and properties. The company and the business gained a very popularity because a lot of people used it. The website required a lot of private properties because people had found a platform to let other people use their property and they would earn extra cash. The company attracted a lot of people from many different countries and this was very good for people who travel a lot because they would have their accommodation and transportation catered for before they arrive (Geron, 2012). This will ensure that their travel becomes hustle free and enjoyable. This goods and services are not expensive for the users because people offering them do not have to have formerly registered their businesses. The performance of the industry as a whole has been on the rise and improving day by day. This is due to the increased usage of the services by the highest number of people both internationally and domestically. The company has been in a stable financial position because it has been earning profits which have highly been motivated by many subscribers the business has attracted (Geron, 2012). Benefits of the company The company has a lot of benefits which it has offered to its users. They include that the company provides income earning avenues for resources that are lying idle. This has enabled to connect with people who are willing to let out their property. This has allowed the resource owners to earn increased extra income from these activities. Airnbn has been able to bring all these people together through their website. This has also made to realize that it is not a must for an individual to own resources in order for them to use them. This has made acquiring goods and services hassle free because it only involves searching the website and comparing the prices of goods and services as they are charged by the resource owners. This means that the prices are somehow controlled by the market forces because those who charge high prices for their services do not get any customers to ask for them (Friedman, 2013). The company has helped people to access jobs. The company does not employ but it has created a lot of opportunities of people being employed. There are people who post some tasks on the website which have to be completed. This allows qualified people to contact the customer with their pay and skills (Geron, 2012). The customers have the chance of interviewing the candidates online before they decide on whom to give the task. This means that there is a chance for the customer to choose someone who is employed and is looking for extra cash. Therefore, sharing business and Airbnb involves a lot of freedom because one has to do what is right without supervision (Botsman and Roo, 2010). Airnbn is environmental friendly. Loaning out of resources means that many people have access to property and resources without buying them. This has helped reduce environmental degradation in that there are reduced emissions from use of cars (Geron, 2012). It also means that trees are not cut down in order for one to build a house but gives one a chance to enjoy such properties which are owned by other people and they are idle. Therefore, sharing economy promotes use of less natural resources by reducing their competition (Rosenberg, 2013). This has highly been enabled by social networking which has created a well-connected family. The company keeps on gaining popularity in that those who use the website keep on referring their friends to the site. This has increased trust among people seeking use of the property and services because of the high use (Friedman, 2013). The company promotes cost effectiveness. The cost of owning property and services is very high for example, owning a car or a house means one has to pay for insurance and keep on maintaining it (Geron, 2012). It also the same when it comes to services because one has to keep on upgrading so as to reach the current standards(Hamari, Sjöklint, and Ukkonen, 2013). This has seen even the companies preferring to use the sharing platform instead of owning property because it allows them to grow organically and ensure that their cost is sustainable. The reasoning behind this is that companies do not have to pay maintenance cost on property but their employees tend to enjoy using them through the sharing economy and Airbnb (Hamari, Sjöklint, and Ukkonen, 2013). Disadvantages The use of the sharing economy has some disadvantages and these has led to some people opposing the existence of sharing economy platforms such as Airbnb. The disadvantages include lost business for hotels and taxis. The sharing economy has seen people shift from using hotel and taxi services when they travel and instead prefer getting willing people to rent out their apartments and cars. This has reduced the income of the hotels and taxi companies. This has been to a great extent in that they have moved to court to oppose these platforms. For example, in the USA hotel owners have moved to court with an intention of blocking people from renting out their apartments when they are absent for a period of not less than 30 days (Geron, 2012). This move will highly affect the business operations of Airbnb because most people tend to rent out their apartments for periods of less than 30 days. Thee proponents of this idea want to ensure that Airnbn listings are illegal and people will go back to renting hotel rooms instead of private apartments. There has also been opposition from taxis and thy have moved to court to oppose sharing a ride and renting out private cars. This has seen these services banned in many cities for, example; in San Francisco any ride sharing and renting out of private cars has been banned (Friedman, 2013). The platform has led to loss of revenue to the government. This has also been a concern to those opposing the sharing economy. Many people in the sharing economy do not pay taxes which are paid by other traditional businesses (Geron, 2013). This makes it cheap for the sharing economy companies to operate. The opponents state that Airnbn and other sharing economy companies do not follow the rules and regulations that should be followed by normal businesses. This makes sharing economy hassle free. They say that the sharing economy is not checked like traditional businesses where hotel rooms and kitchen have to be clean and equipment such as fire alarm must be in working condition (Geron, 2013). The cabbies should also be insured and ensure that they are well versed with the cities they operate in and they have no criminal records (Leonard, January 2012). This ensures the safety of the people using the services. This has made the sharing economy companies tightened on insuring their drivers and volunteered to collect hotel taxes from their customers. This will help reduce the opposition from the government side. They also have a rating system where people rate their customers and people offering them services (Geron, 2013). Sharing economy companies such as Airbnb have led to reduce first time purchases. In this case there are a lot of people preferring to rent out a car instead of buying one. This has great implications in that companies will reduce their production and their market share will reduce. Their operation costs will remain the same but they will have reduced profits. This will push the companies to device ways to reduce their operating costs and increase their profits. This can lead to companies reducing the number of employees as one way of reducing operating costs. Loss of employment is a great blow to individuals and the country (Geron, 2013). Recommendations to improve sharing economy There is need to eliminate the problems associated with the business and ensure that there is no opposition. The sharing economy companies should invent ways in which they will ensure that every person earning income through these platforms is registered and does not use the services for criminal purposes (Geron, 2013). They also pay taxes for the money earned through the Airbnb platform this will help the government recover the income which would have been lost as a result of carrying out business online. This will attract the government attention and will tend to support the sharing economy because it has a lot of benefits to offer than its evils. The great opponents of Airbnb state loss of taxes to the government as one of disadvantages of the sector therefore, if it is eliminated it will receive more support (Geron, 2013). The company should invest in research and development so as to keep up with the growing needs of the customers. There are a lot of services and properties that people seek and offer in the market. Therefore, through research and development the company will have ways of handling all the services placed in the market (Leonard, January 2012). Sharing economy is about use of online platforms and there technology is important. The company should keep on innovation and improving its applications. Most of the companies have undertaken innovation management. Innovation management is used to ensure the companies moves towards development and towards customer satisfaction. Innovation management provide the stakeholders with the necessary tools that will help them in the platform without any difficulties (Leonard, January 2012). This will allow the company and other stakeholders to react to external and internal challenges and opportunities that may arise in their sharing economy operation. This will enable the management to come with creative ways of fight any pressure either from internal or external so as to maintain their current customers or even increase their customers’ base by introducing new products and new ideas so as to gain competitive advantage. The company should ensure that safety of the people involved is guaranteed. It is important to ensure that the platform does not endanger the lives of people involved. The company should have a way of identifying the people accessing their website so as to ensure that no threat is posed and private property is safe. They should also have ways of tracking their customers just in case it is required. This will make the customers more responsible and it will scare away people with ill intentions. Conclusion In conclusion, Sharing economy is one of the greatest inventions of the digital era and it has highly helped people gets services and properties which would have been had without the platforms such as Airbnb. It has helped create opportunities to earn income and market one services or resources which had been lying idle. The benefits of the platform are very many and it should be embraced because it will help eliminate some of many problems associated with the service industry. There is need to keep on improving the Airbnb platform so as to handle all the customer needs and requirements. This will also ensure that the platform is not used by criminals. The company should also follow the rules and regulations set by the government. This will help reduce the opposition from the government. There is need to support the sharing economy because it is here to stay and since it has been embraced by many people government should work to improve its performance. References Botsman, R, and Roo R. 2010. What's Mine Is Yours: The Rise of Collaborative Consumption. New York: Harper Business. Friedman, T. 20 July 2013. "Welcome to the Sharing Economy". The New York Times. Gansky, L. 2010. The Mesh: Why the Future of Business is Sharing. Portfolio Hardcover. Geron, T. January 23, 2013. "Airbnb and the Unstoppable Rise of the Share Economy". Forbes. Retrieved 31 August 2014. Geron, T. November 9, 2012. "Airbnb Had $56 Million Impact On San Francisco: Study". Forbes. Retrieved 31 August 2014. Hamari, J., Sjöklint, M., & Ukkonen, A. 2013. "The Sharing Economy: Why People Participate in Collaborative Consumption". SSRN Working paper. Leonard, A. January 2012. "The Economy of Sharing". Sunset Magazine. Rosenberg, T. 5 June 2013. "It's Not Just Nice to Share, It's the Future". The New York Times. Turban, E, King, D and Lang J. 2011. Introduction to Electronic. (3rd Ed). New York: Pearson Read More