Multi-Sided Platforms: Understand their strengths and weaknesses

Abstract: Title: Multi-Sided Platforms: Understanding their strengths and weaknesses Seminar date: 2014-05-22 Course: FEKN90 Företagsekonomi: Examensarbete på Civilekonomprogrammet (30 ECTS) Authors: Lucas Ehrenstråhle and Elin Mathies Supervisor: Magnus Johansson Five keywords: MSP, activities, resources, differentiation and platforms The purpose: is to investigate why small actors use multi-sided platforms (MSPs). Furthermore with the number of hotels connected to the MSP, the competition intensifies. We therefore also aimed to investigate how the actors are able to differentiate themselves on the MSPs. Method: We conducted our study on the Swedish hotel market and the use of booking sites. We applied a qualitative case study, with primarily a deductive approach. We made three delimitations: we concentrated on online MSPs allowing users to book hotels online, and limited ourselves to the hotel market in cities. Lastly, we excluded larger hotels and hotel chains, due them having different amounts of resources and varying organizational structures. Theoretical framework: In order to investigate the utilization of MSP we selected Porter’s five forces analysis, Nalebuff and Brandenburger’s coopetition, Hagiu and Yoffies theories on MSP, Katz and Shapiro, and Farrell and Klemperer’s theories on network effects and externalities. To investigate the differentiation on MSP we selected Porter’s theories on competitive advantages and value activities, and Barney’s theory on firm resources. Empirical data: Through a number of semi-structured interviews and an online survey we gathered information about the hotels and the hotel market. Conclusions: We found that hotels utilize MSP because it is easy, allowing hotels to focus on their everyday activities gaining more customers. Furthermore we found that the hotels differentiation lies outside of the MSP and their possibilities to market those on the MSPs are limited and only exist in a basic form. Therefore hotels should more carefully investigate the effects of using MSPs.