Introduction
The business strategy and business model of any company determine its development, profit, and future opportunities. At the same time, the strategy must be strengthened and adapted according to the requirements of the time and the competitive market for the company to maintain its position. This paper will examine the WeWork case study to identify problems and challenges for the company’s development and propose recommendations and changes to overcome them.
Overview
WeWork is one of the companies that has demonstrated that innovation and market understanding can bring rapid business growth. WeWork calls itself a partly true technology company, but it is more a real estate company. The primary service of WeWork is the provision of offices to small, medium, and large businesses in many cities around the world. The main feature of WeWork’s business model is its approach to its operation, since initially the company rented premises in buildings, improved them, and then rented them out as offices, making a profit (Brandwein and
Niessing 10). At the same time, the feature that attracted customers is that the office space is optimized for employees and has everything they need, from a comfortable workspace to beer in the kitchen and a ping-pong table. At the same time, the tenants did not worry about ensuring the office’s work, since all organizational issues, such as connecting the Internet or purchasing coffee, WeWork also tool for itself (Brandwein and
Niessing 10). These features allowed the company to scale up its operations and generate significant profits in a short time.
Internal and External Analysis of WeWork
Like any company, WeWork has its strengths and weaknesses, as well as external threats and opportunities; thus, the SWOT analysis will be used for the company’s internal and external analysis. The case study demonstrates that the company has several strengths. First, WeWork offers a unique “vibing” atmosphere, design, and office provision that satisfy all the member’s needs (Brandwein and Niessing 6). Secondly, WeWork performs the functions of an office manager, which allows a company that rents an entire office not to waste efforts to provide the office with necessary items. Thirdly, WeWork offers various solutions for different types of business, from renting a workplace by one entrepreneur or freelancer to organizing several floor offices for a large corporation. Fourth, the company uses technology and machine learning to design workspaces and use space more efficiently and cost-effectively (Brandwein and Niessing 15). In addition, WeWork takes into account the interests and needs of clients according to the direction of their work and can organize an office of any specificity, for example, a call center. Consequently, this customer focus allows WeWork to retain and receive new customers and profits.
However, WeWork also has some disadvantages, such as a lack of privacy and high prices. Firstly, the prices for renting the offices of WeWork are pretty high, especially if a single entrepreneur wants to occupy an office (Brandwein and Niessing 7). Such a price is justified for all the services that WeWork offers; however, it may be too high for freelancers or small businesses. In addition, since most offices are designed with glass walls and open space, the lack of privacy and noise may not satisfy clients. However, the company usually offers options of closed or private offices that can address this complaint (Brandwein and
Niessing 6). Nevertheless, these disadvantages are the company’s characteristics, which exist as consequences of its numerous advantages. At the same time, the case study does not point to any internal obstacles to the company other than the need to maintain authenticity in the face of significant company growth (Brandwein and Niessing 16). This feature can also affect the organization, structure, and communication of employees since they are divided into multiple offices in dozens of cities.
Consequently, the company’s main opportunities are to expand the business according to the original idea of the creators. Neumann planned to develop other similar to WeWork projects for hotels, boutiques, cruise ships, and banks (Brandwein and Niessing 2). The availability of capital makes such initiatives possible, although they differ significantly from workspaces and, therefore, require careful analysis and planning. Another more profitable opportunity is creating and deepening services WeWork to offer unique options that competitors cannot provide. Since most of WeWork’s competitors offer similar conditions for customers, the development of new options and approach can give the company a competitive advantage. At the same time, the main threats are associated with high competition in this area and the demand for services. First, since WeWork has many competitors, there is always a threat that some kind of innovation and marketing will help them outperform the company. Secondly, there is a threat of a decrease in demand for offices in general due to economic instability, technological development, or, as the last year has shown, the epidemiological situation. Therefore, the company needs to strengthen its current position but not develop other areas.
WeWork’s Clients
The core of WeWork’s work is that it signs long-term leases or buys premises and then modernizes them according to the target audience’s needs. For this reason, WeWork has different categories of clients and various offices for them. Firstly, clients are freelancers or aspiring entrepreneurs who rent a table or office in a co-working. Another category is small businesses that occupy part of the office and share it with other companies. In addition, large companies that require offices spanning multiple floors are also WeWork’s customers. Thus, all categories of clients have similar needs for a convenient place to work, and space for team meetings and breaks, but they can also have specific requirements depending on the direction of work. WeWork can meet most of these needs by adapting shared offices or re-making offices due to the requirements of corporate clients.
WeWork’s Strategy and Its Weakness
This overview demonstrates some of the features that determine the company’s strategy. One might note that, according to Porter, the WeWork business model manifests itself as operational efficiency but not a strategy. The company offers clients the same services as its competitors but performs them better, providing modern design, supply of office equipment, and paying attention to detail (Nirgudka). However, the fact that WeWork uses machine learning and technology to plan their offices demonstrates the difference. This feature allows the company to understand the needs of its customers better, as well as to increase the efficiency of the use of space. Hence, the strategy of WeWork has needs-based positioning, which, however, has its drawbacks (Nirgudka). The main problem with WeWork is that almost all of its services are also provided by competitors; consequently, WeWork’s strategy is unsustainable.
According to Porter, the fit is one of the aspects that helps ensure the sustainability of the strategy, since it is more difficult for competitors to repeat interlocked activities than individual ones (Nirgudka). However, almost all features of the WeWork work have the first-order fit; that is, the activities coincide with the main strategies (Nirgudka). For this reason, while Big Data is used primarily by WeWork today, competitors will be able to repeat this approach and take the company’s competitive advantage.
Factors Challenging WeWork’s Future Viability
Analysis shows that WeWork’s future viability is challenged by such factors as strategy sustainability and external threats. First, the first-order fit creates an environment in which the company has little difference from its competitors, and they can replicate its features. At the same time, the rebranding of WeWork into The We Company and the expansion of its area of work to WeLive and WeGrow demonstrate that the company will probably not deepen its strategy of providing office spaces (Brandwein and Niessing 6). This approach threatens the loss of profits from WeWork, which should cover some of the costs of new projects. At the same time, although the case study was published in 2019, it is also worth noting that the events of 2020-2021 jeopardized the sphere of tourism and co-working due to quarantine restrictions. Consequently, competition has increased due to a lack of demand as many companies have switched to remote work or closed. Hence, it is too risky for a company to invest in projects like WeLive.
Recommendations
The factors defined above help determine the following recommendations for the development of WeWork or The We Company after rebranding. First, the company should focus on deepening and developing options for WeWork initiatives to make the strategy more sustainable. The company’s significant capital, as well as the availability of technology tools, allow WeWork to offer new options and office formats for companies or freelancers that require it. At the same time, the company can strengthen its position by using more expensive options that are not available to its competitors and applying the second-order fit and the third-order fit to offer unique working conditions for members (Nirgudka). Such changes will be especially relevant in connection with the new requirements for public places due to the pandemic. However, there is also another option to save profits, which, however, requires drastic changes. The company could, as planned, move to the WeGrow project, which aims to create elementary schools and coding academies (Brandwein and Niessing 6). However, such a transition requires significant investment, precise planning, and risk assessment as the project failure could result in the bankruptcy of WeGrow and WeWork if the company intends to maintain both directions.
Conclusion
Therefore, the analysis demonstrates that WeWork has many strengths that attract customers; however, the company’s strategy is not very different from its competitors. Consequently, the main challenges for the company are to improve the sustainability of the strategy, which will help it gain a competitive advantage. In this case, the solution option is the development of new functions and features to improve the work of the offices that the company offers to its clients and straighten the fit of the strategy. This approach will allow the company to resist external threats and maintain its position in the market, while the planned expansion of the company’s area of activities can threaten the failure of current and new projects.
Works Cited
Brandwein, Nancy and Niessing, Joerg. “WeWork – Service Excellence Through Business Model Innovations: Creating Outstanding Customer Experience by Leveraging Data, Analytics and Digital Technologies.” SMGT 3000 R Course Kit, edited by Charles McMillan, York University, 2021, pp. 5-20.
Nirgudka, Aarti. “Porter, M. E. 1996. What is a strategy? Harvard Business Review: 61-78.” Management And Accounting Web, 2002.