Assignment (WeWork Company) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Assignment (WeWork Company) Case Solution

Company Background

WeWork is a business that delivers public workstations, communal and facilities for businesspersons, out workers, startups, and minor companies. Established in (2010) by “Adam Neumann and Miguel McKelvey” in New York, the company has rapidly expanded into a global business with locations in over 100 cities worldwide.

Initially, WeWork focused on providing coworking spaces to freelancers and small businesses. However, in 2014, the company introduced a new concept called "WeLive", which offers shared living spaces for young professionals. WeLive offers furnished apartments, shared kitchens, and common areas for residents.

WeWork's success continued to grow, and in 2017 the company was valued at $20 billion. However, the company faced several setbacks in 2019, including a failed IPO and concerns about its finances and management practices. “Adam Neumann” walked down as president and Softbank, WeWork's major financier, acquired controller of the business. Despite these challenges, WeWork continues to operate, providing shared workspaces and services to businesses and entrepreneurs around the world. The company restructured its operations, cut staff, and implemented other cost-cutting measures to improve its financial position.

Industry Background

WeWork operates in the real estate industry, specifically in the flexible office space market. This marketplace provides short-term office space rentals to companies, entrepreneurs, and self-employed people who need a flexible office space solution. It has become a popular alternative to traditional office space leasing, especially for small and medium-sized businesses that require agility and flexibility in their office needs.

The market for flexible office space has seen significant development in current ages, determined by the increase of the performance economy, startups, and out workers. According to a report by Coworking Resources, the amount of co-working places universally is predictable to spread (26,000) by 2022, with more than 5 million people working in these spaces.

The report also states that the flexible office space industry is predicted to develop at a “CAGR” of 13.2% between 2020 and 2025. This evolution is determined by features such as cumulative demand for coworking spaces, increased adoption of flexible working policies, and the need for businesses to reduce overhead costs.

Central Issues Faced by WeWork

WeWork has faced several central issues that have impacted its business operations and overall financial performance. WeWork's business model has been criticized for being unsustainable. The company signs long-term leases on commercial real estate and then subleases those spaces to startups, freelancers, and other businesses. However, during times of economic downturn, WeWork may struggle to fill those spaces and pay its rent, which can lead to financial difficulties.

WeWork's corporate governance has been called into question, specifically regarding its former CEO Adam Neumann. Neumann was known for his unconventional leadership style, which included self-dealing and conflicts of interest. His behavior ultimately led to his ousting from the company in 2019. WeWork has struggled financially, reporting significant losses in the years leading up to its attempted IPO in 2019.

The company was forced to pull its IPO after investors expressed concern over its valuation and business model. WeWork has since experienced important rearrangement and economizing actions in an exertion to shoot its financial performance round. Like many companies, WeWork has been impacted by the COVID-19 pandemic.

With more people working from home, demand for office space has decreased, and WeWork has had to offer more flexible terms to keep customers. Additionally, the pandemic has slowed down the company's efforts to turn its financial performance around.

External Analysis

PESTLE Analysis

This analysis presents a framework that is cast off to understand the outside situation in which a business functions. In the event of WeWork, the breakdown reveals several factors that impact the company's operations.

Political

Political factors include regulatory issues that arise from the nature of WeWork's business. The corporation works in manifold nations, apiece through its set of rules and principles regarding real estate and shared office space. Changes in regulations can impact WeWork's ability to operate in a given market.

Economical

Economic factors are also relevant, as the demand for office space can fluctuate with economic conditions. The COVID-19 pandemic highlighted this vulnerability, as many companies shifted to remote work and reduced their office space needs. Economic downturns could lead to decreased demand for WeWork's services................

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Assignment (WeWork Company) Harvard Case Solution & Analysis