In today’s world of rapid tech changes and overnight commercial disruptions, business models are changing practically at the drop of a hat. A prime example of this in the present times is WeWork.
WeWork works on a novel business model that provides office spaces to small businesses. Their clientele primarily consists of new startups and freelancers, who can’t afford to rent full office space of their own. “Co-Working” spaces are open office environments where a common work area is shared by several individuals or companies.
In this business model, organizations pay only for the time they use the shared spaces. Multiple businesses or individuals can use the same space in different time frames. This is a unique business model that has seen great success across the world. And as a result, multiple organizations have copied this model. In this post, we are going to undertake PESTLE analysis of WeWork to understand how various macro-factors affect this business.
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On the surface, political factors don’t have much influence on WeWork. But scratch deeper and we see a different story. Global political turmoil and trade wars have influenced businesses across the world, and this has affected employment rates. As traditional businesses begin to exhibit protectionist tendencies, employment rates are going down. This has resulted in a spate of small businesses and freelancers looking for financial independence. By providing space for these new-age professionals WeWork stands to benefit from this morphing business environment.
Economic factors are one of the largest contributors behind the success of WeWork, and there are multiple reasons for this. The first is the emerging gig economy, which has resulted in an increase in the number of freelance and work-from-home positions. As more and more individuals take the freelance route, they need spaces where they can concentrate on their work.
But the domestic environment is often not conducive to work, with its multitude of distractions. Therefore, modern-day professionals are looking towards companies such as WeWork to provide them adequate workspaces where they can dedicate themselves to their craft.
Yet another reason for the growing demand of WeWork is the fact that across the world, disposable incomes are increasing. With greater wealth in the hands of the people, professionals are seeking to set up their own offices. WeWork has successfully been able to reap the benefits of this environment.
Regular workplaces offer a means of social interaction that is missing in online work. As a result, regular workers transitioning to freelancing, or freelancers who prefer not to work alone, are seeking to take advantage of co-working spaces to bridge the gap between working independently and workplace interaction. WeWork has successfully capitalized on this socio-cultural shift to create a model that’s brilliantly fluid.
The greatest driver behind the success of WeWork has been technology. In earlier times, computers were largely deskbound, and technology was concentrated in the hands of major institutions. Back then the concept of remote working was really not feasible.
Now, however, things have changed. With the advent of disruptive techs such as mobile computers, high-speed internet connections, and virtual private networks, remote working has become ever more pervasive. In fact, a large number of professionals today prefer remote work as it allows them to complete their tasks at locations of their choice.
Further, another factor that has contributed to the rise of remote work is the lowered costs of technology. All over the world, the price of computers and high-speed internet has drastically reduced. This has led to large scale adoption of these technologies by individuals looking to work from remote locations.
Finally, it must be mentioned that remote work tools such as Trello, Google Docs and Slack have also contributed to the rise of remote workers. Using these tools, professionals can remotely collaborate and work in geographically distributed teams. All of the above factors, taken together, have certainly contributed to the success of WeWork.
When it comes to legalities, WeWork has a lot to think about. The first legal conundrum that the company might have to face is that of liability sharing. In case of any mishap at the workplace, WeWork might be held responsible. This might even be the case when two separate renters cause inconvenience to each other.
Another factor that WeWork has to consider is that of subletting. Primarily, WeWork’s business model revolves around the renting of office space. Now, if the company itself is leasing the space (which is most often the case) from a third party, then its business model is classifiable as subletting. Now, while legal in certain regions, subletting is a questionable practice in other locations and might not be allowed. In this case, WeWork can find themselves on the wrong side of the legal fence. The best workaround in such cases is for WeWork to actually buy the space themselves.
As regards environmental factors, WeWork’s business model has to be classified as environment-friendly. Shared workspaces lower the needs of resources such as electricity and heating. Further, they also make sure that businesses can collaborate in contributing to a cleaner and greener workspace.
Further, since WeWork primarily supports remote workers who work from digital platforms, this eliminates the need for paperwork. A paperless workplace ultimately contributes towards a greener environment. So we can say that WeWork has significantly contributed towards environmental conservation.
At the end of the day, it can be said that WeWork has been significantly influenced by political, economic and technological factors. Further, the need for social interaction is also doing its bit for the rise of this rather offbeat business model. While legal problems may somewhat mire WeWork in trouble, this is nothing that can’t be overcome using a bit of legal talent.
And finally, WeWork’s business model is definitely environment-friendly, which means it can significantly feature as a workplace of the future. Taken together, all these factors contribute to a brighter business landscape for WeWork.