If you are the CEO of Airbnb, how would you decide between expanding to football cities versus capitals of new countries?
Question Explain
The question challenges your strategic thinking and prioritization skills. As the hypothetical CEO, your decisions will have a significant impact on the company's expansion direction and success. Therefore, you should decide on solid data, facts, and strategies.
Understand that the term "football cities" refers to cities where football, perhaps as a local sport or a prominent sport, attracts a large number of spectators and tourists, thereby driving demand for accommodations. On the other hand, "capitals of new countries" refers to exploring new market potentials in countries where Airbnb is not operational yet.
To address this question, consider factors like:
- The market potential in both options - football cities and new country capitals
- The company's mission, vision, and long-term goals
- The competition in both markets
- Risks involved and the company's risk appetite
- The investment required and the company's financial position
Answer Example 1
As CEO of Airbnb, I would first gather data and conduct rigorous analysis on both potential expansion strategies. I would look at factors such as market size, demand predictions, competition, and legal regulations in both football cities and capitals of new countries. If data showed stronger potential for success in football cities with large influxes of tourists and lower competition, I would lean towards that direction. However, this could be a short-sighted strategy as football games are seasonal, while expanding to new countries provides a more stable growth trajectory.
Yet, it all depends on Airbnb's strategic goals. If we are in a 'land grab' mode trying to scale as quickly as possible, then expanding into the capitals of new countries may provide the fastest way to grow. However, if we are in a mode of consolidating our position and enhancing our brand, aligning ourselves with major sporting cities might offer considerable advantages.
Answer Example 2
In this scenario, I'd be considering the long-term vision and values of Airbnb. If we're aiming to connect people across the globe and support sustainable tourism, then expanding into the capitals of new countries may align more with our mission. This approach also offers a diversified risk portfolio - if one market struggles, other markets can compensate.
On the other hand, if our goal is to maximize short-term profitability and tap into established affluent markets, then focusing on football cities where high-demand periods coincide with matches might be the smarter move. These cities have an existing infrastructure to support tourism, thereby lowering the setup costs.
No matter the chosen strategy, the company should test the market first on a smaller scale, analyze performance data, and then decide whether to continue investing further or pivot to an alternative strategy.