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Entries in business model (28)

Friday
Jul292016

When the sharing economy starts to take

The sharing economy has swept the world, disrupting a number of industries, particularly the hospitality industry. From the onset, there was a significant push from consumers for this new business model, which launched as a model for the little guy, and companies within disrupted industries continue to face pressure from this new era of individuals and groups making money from underused assets, as PwC describes it.

Tom Slee, a well-known critic of the sharing economy model, however, suggests in this Harvard Business Review article that sharing economy leader Airbnb is “facing an existential expansion problem.” A model that started out as one that allowed individuals to rent out living spaces for extra income and to spur local economic growth has reached a tipping point, becoming a mass vehicle for tourism. But it is also beginning to erode the atmosphere and livability of the same locations it attempts to build up, claims Slee.   

The number of Airbnb listings in Paris has skyrocketed in recent years, starting at just 20,000 two years ago and now up over 40,000, with Airbnb listings representing approximately 11.9% of hotel supply. In London and New York, Airbnb listings represent roughly 10% and 17% of hotel supply, respectively. In Lisbon, where toursim is on the rise, there is concern that this shift from residential to financial investments and short rentals is having a negative impact on the historical centers of the city.

The issue Slee has with Airbnb is that it positions itself as a service where individuals rent out their living spaces from all areas of a region (not just the downtown core or tourist hotspots) allowing economic opportunities for smaller areas where, prior to the sharing economy boom, this was a challenge. Through his independent review, however, Slee has determined that many Airbnb renters rent more than one residence, placing them in the commercial category. He also found that much of the rental uptake is taking place within central districts.

City officials and residents around the world are starting to pushback against Airbnb, which is where Slee derives his remark that the company is facing an existential expansion problem. What started out as a business model that supported new financial opportunities for local residents has reached a turning point, creating animosity among the basic foundation of Airbnb’s business model; that is, the local residents. 

We welcome your thoughts. Has the sharing economy reached a point where it’s no longer achieving what it set out to do?

-- Yassine el Ouarzazi

Thursday
Jun302016

Business-NGO partnerships and a call for a more systemic approach

Darian Stibbe, executive director of The Partnering Initiative, says the NGO-business collaborative model has already progressed from the transactional (fee-for-service) to the transformational. Using the example of drug maker GSK and the NGO Save the Children to illustrate the latter model, Stibbe notes that the partners combine capabilities, resources and influence over the long-term to increase value. However, he adds a transformational approach is limited in that scaling requires greater financial inputs, which may not be sustainable from a donor's point-of-view.

In a recent article for Business Fights Poverty, Stibbe contends a more systemic approach can increase the reach of business-NGO collaborations. In this model, the partners integrate with the governmental sectors that offer relevant infrastructure and local expertise (bearing in mind the introduction of more partners inevitably leads to greater complexity of the model, sometimes creating issues surrounding the process and accountability).

To avoid getting bogged down, Stibbe recommends collaborators choose soft ties (i.e., ongoing communication, sharing current and future activities and plans, exchanging knowledge and experience), which encourage organic, integrative activity, over hard ties (i.e., formal MoUs, clearly defined partnerships with specific goals). We're interested to know what you think about how partnerships can be most effective -- please share your thoughts!

-- Catalysts

Friday
Jun242016

Alibaba, rural consumers and the last mile

China's leading ecommerce company, Alibaba, may be dealing with some growing pains, but there is no question that it has been successful in expanding its size and reach.

One factor in this success is Alibaba’s Taobao Village project, which is bringing rural areas of the country access to online shopping. In October 2014, Alibaba announced plans to invest 10 billion yuan in logistics, hardware, and training to push its e-commerce model into 100,000 villages in the next three to five years. It’s opening warehouses and working with delivery companies and local officials.

A Bloomberg article from last August profiles how the project works in Yunnan. The project is centered on the Taobao rural service center -- often located in local convenience stores -- where villagers can access a computer and Internet connection to browse and order goods. Their purchases are then delivered through the same service center, a convenience for the customer, and a benefit to the shop owners. Alibaba provides computers and monitors, ensures timely delivery of purchases, and trains villagers to serve as its representatives in the centers.

This is happening against a backdrop of shifting demographics and economics in China. More Internet-savvy migrant workers are returning home, and Alibaba's success is even attracting competition. JD.com planned to open more than 500 rural service centers by the end of 2015.

According to Bloomberg, the companies’ rural forays fit in with government policy. Beijing wants to boost household consumption as a share of gross domestic product, so China’s government will “support migrant workers, college graduates, and army veterans who wish to return to their rural home towns to start new businesses” and “encourage e-commerce in rural areas” the Xinhua News Agency reported last June.

We are interested in how Alibaba and its competitors are trying to solve the last mile infrastructure and talent issue in the countryside by working with local businesses and government, while attracting Internet-savvy migrant workers to return to their homeland.

Image source: Alibaba.com

-- Yichen Rao 饶一晨

 

Thursday
Apr072016

Catalyst and Saïd Business School Forum: Can you do well by doing good?

Mars Catalyst and Oxford's Said School of Business are pleased to host an event that examines the question of whether you can ever really do well as a business by doing good.  Details of the event can be found on our Events page, as well as the SBS website, and we will post more information here in the lead up to the forum.

The Responsible Business Forum is part of a joint research programme launched in 2014 between Saïd Business School and the Catalyst think-tank at Mars Inc., the global food and beverage company, to co-develop a business management theory for the Economics of Mutuality with corresponding teaching curriculum, new management practices and business case studies.

This uniquely insightful forum will tackle the tough questions of companies producing and selling good products badly and bad products well, providing a comprehensive evidence-based overview of how companies can and are seeking to become more responsible and where they succeed, or fail.

Friday
Apr012016

The race to connect the next billion, and the business models to get there

Google and Facebook both have a mission – to “connect the next billion,” as Google puts it. This Financial Times article, “Facebook, Google and the race to sign up India,” explores the tech giants’ initiatives that are “bringing internet access to India’s masses as a way of alleviating poverty, improving education and creating jobs.”

Google, in partnership with NGO Tata Trusts, is sending thousands of tech-connected bikes to women in rural Indian villages. (In these regions, women are much less connected than men.) The bikes, loaded with two Android smartphones and two tablets, educate women about using the internet, and these women can then pass their knowledge on to other villages. Google also aims to launch its pilot technology, “Project Loon” later this year, sending balloons into the sky that will provide internet connectivity to remote areas. Additionally, the company, through a partnership with India’s railway ministry, is in the process of rolling out high-speed wifi to a hundred train stations this year.

Facebook, on the other hand, has been heavily focused on its “Free Basics” program. This program, an app that is part of the social network’s Internet.org initiative, offers users of partner telecoms networks free access to Facebook and a number of other well-known sites (Wikipedia, BBC News, Accuweather, etc.) Since it’s 2004 launch, 38 countries have come on board.

Both companies’ goals are echoing those of the United Nations’ 2030 Agenda for Sustainable Development, which includes an aim of universal internet access. What’s notable is that these tech giants aren’t using funds they’ve set aside for corporate social responsibility, rather they’re driving these initiatives with money from their core budgets. This speaks to their belief that connecting the unconnected is more than just a charity effort, rather that there is “solid business logic of investing in connectivity in India and other developing markets,” according to the Financial Times article, and a benefit for both companies to gain a first movers advantage in these regions.

Despite their grandeur and reputation, these companies still face challenges developing business models that incorporate their social impact efforts. Recently, Facebook’s Free Basics app was blocked by India’s telecom regulators, after they ruled that “differential pricing” by internet companies infringes on the principles of net neutrality. While the ban wasn’t targeted specifically at Facebook, it has created a major roadblock for the company. However, the tech giant isn’t ready to wave the white flag allowing Google to take the lead in this race to connectivity just yet, saying it plans to pursue other connectivity projects in the region.

-- Clara Shen