International University Vietnam National University - HCMC: Date: 19/8/2021
International University Vietnam National University - HCMC: Date: 19/8/2021
Group members:
1. Phạm Nguyễn Uyên Nhi - BABAWE18460
2. Trần Ngọc Thanh Ngân - BABAWE18222
3. Nguyễn Phương Hà - BABAWE18166
4. Nguyễn Trọng Nhân - BABAWE17491
5. Bùi Công Tuấn Anh - BABAWE17488
6. Nguyễn Minh Trí - BABAWE17455
TABLE OF CONTENTS
I. INTRODUCTION………………………….……………………………………... 3
IV. SOLUTIONS…………………………………………………………………… 10
1. Environment…………………………………………………………………… 10
2. Management…………………………………………………………………… 10
3. Employee training & clear career…………………………………….……….. 11
4. Equipment arrangement based on customer target……………………………. 12
V. ACTION PLAN…………………………………………………………………. 12
1. Plan…………………………………………………………………………….. 12
2. Do……………………………………………………………………………… 13
3. Study…………………………………………………………………………... 14
4. Act……………………………………………………………………………... 14
VII. REFERENCES:……………………………………………………………….. 16
TABLE OF CONTRIBUTION……………………………………………………… 17
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I. INTRODUCTION
WeWork company was established in 2010 by Adam Neumann and Miguel McKelvey
with the vision to create shared workplace for people and companies to come together
and do their best. Since opening the first location in New York city, Wework has grown
into a global co-working space provider committed to delivering flexible solutions in
workplace for members including freelancers and remote workers who prefer working
in unmatched communities. Because of the rapid development of sharing economy, this
growing business culture is undoubtedly a large component of WeWork's success. Over
slightly a decade, WeWork’s footprints have expanded to nearly 120 major cities around
the globe and its valuation is around 9$ billion.
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expense by laying off employees. WeWork’s failure shows that loss-making companies
cannot raise billions of dollars of capital in the public equity market without caring about
their outside shareholders and investors avoided pouring billions of dollars into a value-
destroying business while simultaneously forcing important leadership and governance
reforms.
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some noise issues. Besides, because of renting to too many customers and adding staff
of wework, it can create a noise in the coworking place if the tenants are not conscious.
2. Management
2.1 Bad publicity
WeWork's slide from a startup valued at $47 billion in January 2019 to the collapse of
the IPO plan, running out of cash, having to be rescued by SoftBank and now a valuation
of only $ 8 billion will surely go away. in business textbooks.
According to CNN, WeWork's parent company, The We Company, on August 14
announced its IPO filing with the goal of raising $ 1 billion with the registered stock
code "WE". The company went ahead with its IPO plan despite a $1.9 billion loss last
year, according to the IPO prospectus. This is an unprecedented loss for a company
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preparing for an IPO. Previously, Uber and Lyft went public with 2018 losses of $1.8
billion and $91 million, respectively.
This year, The We Company continues to "burn money. In the first half of 2019, the
company lost $ 904 million, an increase of nearly 25% compared to the same period last
year. This loss was largely due to operations in China, Japan and the wider Pacific region
where the company has joint ventures with investors - mainly SoftBank.
Many people expressed concern about the sustainability of the company's core business
amid the global economic slowdown. In the IPO filing, WeWork also mentioned the
impact of factors such as the decline of the office leasing market, the failure to negotiate
a satisfactory lease point or the retention of current members, on business operations.
In addition to using his shares in WeWork to borrow money, the WeWork founder also
collected WeWork nearly $ 6 million in trademark usage fees when using the word
"We" in the company name was renamed "The We Company". However, CEO
Neumann also returned the money and did not discuss the matter further.
2.1 No planning
Neumann's ambition was as ludicrous as his character. “Rather than just renting out
desks,” Fast Company reported in January, “the company aims to include all aspects of
people’s lives, in both the physical and technical worlds.” number". This includes
expanding the WeWork model to residential and educational housing. Before Neumann
founded the company, he envisioned “WeSleep to WeSail to WeBank”. While these
will never materialize, perhaps he was right to think beyond sublease of office space.
The company you built it is in crisis.
But because the target is a technology company, the offering to tenants is known to be
flexible: you can rent monthly and can easily expand or shrink the space depending on
your needs. For WeWork, this means revenue can vary significantly in a year. If demand
for flexible office space has ever suffered a massive drop, WeWork will still have its
own lease payments to deal with. In its company filing, WeWork puts the average lease
term at 15 years, and writes that it is in good shape with a $47 billion payout, with just
$4 billion in revenue commitments. from members. Basically, the company is making
long-term leases and short-term subleasing, leaving the same risks as self-financing
financial institutions with short-term loans while maintaining long-term financing
commitments.
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2.3 No direct
The company's business model has been known to be expensive and less profitable since
at least 2015, when BuzzFeed published the first document WeWork used to attract
investors. Meanwhile, Neumann's strange behavior had been part of the sales ploy from
the start. What seems to make this year's WeWork stories different and more damaging
is the addition of alleged self-dealing practices, and Neumann enriching himself with a
core model of leasing office buildings. , turn them into “shared” workspaces, offer free
beer to tenants and then rely on a large number of freelancers, venture-funded startups,
and a handful of corporations Larger unions to pay rent can be as short as one month at
a time. But Neumann's tendency to sell stock and lease out buildings he partially owns
for WeWork is also not news - it was revealed by the Wall Street Journal earlier this
year, before the trouble began.
Unlike the real estate boom of the past, WeWork's sub-leaseback race won't leave much
of a legacy: no unfinished skyscraper complex in Kuala Lumpur, no meaningless airport
in the countryside. Spanish village. Instead, the money is found into already existing
infrastructure, visible only by discreet signs or logos on windows scattered across office
buildings in New York, San Francisco, Seattle and Boston.
He simply took the money available and poured it back into the company, trying to
deliver the impressive revenue growth that venture capitalists deemed desirable. In other
words, hinted by one of WeWork's great chronicles, journalist Reeves Wiedeman,
Neumann was the genius of this era of venture capital mania.
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stock — that gives his shares much greater voting power than those sold to regular
people. With these votes, no one can get rid of founders if he did not want to resign
because he could fire the entire director board. According to Bloomberg report,
Neumann had been able to maintain control of WeWork because the Class B and Class
C share he owned each had 20 votes to every one vote regular shareholders would get
for their Class A shares. He just simply raised more money and poured into the company
with an aim to push revenue growth that venture capital investors actually wanted.
Neumann directly took part in unprofessional behaviour and made poor decisions and
this leads Wework company to the verge of bankruptcy with massive debts of several
billion dollars.
3. Workers
Due to the poor management at WeWork, employees at specific departments do not get
clear instructions from their upper-management. This results in confusion at work,
which leads them to misunderstand things and follow the improper directions to get
work done. Besides, some managers who are in charge are not all qualified and lack
experience so they are not able to handle if work goes wrong, which means the
subordinates also do not receive proper training and they do not know where to start
when they’re given tasks. It takes much time back and forth to revise and feedback, this
will impact the whole process and fail to meet the deadlines.
Besides, the WeWork company is constantly changing with their policies or systems
and so on, however, there is little communication with the employees to keep track with
the adjustments within the company, they only hear it from social media posts or from
other team members. When employees are not fully announced to adapt to new changes,
it will affect their job performance.
In addition, employees at WeWork often have to work over-time, they are required to
answer work-related messages promptly or attend meetings even though they are not at
work. This leads to lack of work-life balance and makes them feel stressed and
overwhelmed with the workload. Eventually, they will lose their enthusiasm at work
and result in job dissatisfaction, where employees respond with neglected performance
or do their duties poorly rather than do their best and find ways to improve the situation.
4. Materials
According to the website “doanhnhan.vn” WeWork is a start- up company from the
USA. It earns money by renting real estate then recovering, restructuring and selling it
like co-working space. While WeWork typically leases for 15 years, the small company
or start-up business just rents it for only 1 month. As parent company We Company
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described “They offer their members a beautiful spatial system, an inclusive
textualization and the energy of a co-inspiration, all connected via their modern
infrastructure and technology. However, actually, they do not build up the work space
like protirement, technology elements are really lacklustre, leading to failure in
materials factor.
As far as material causes are concerned, there are various reasons which are related to
product or equipment such as damage on machinery devices like printer, scanner, etc…,
and substandard furniture like tables, chairs, room decoration, etc… and rare quality
checking. In addition to this, WeWork's customers segment are freelancers or start-up
and small businesses so they change their working environment constantly. If WeWork
rents the whole building to subdivide and remodel then leases it with a short-term
contract, will it ensure that the furniture and equipment are always valuable and
reasonable for the new tenant? With the number of people, who are considered potential
customers of WeWork, are decreasing progressively. Therefore, WeWork is able to
encounter unstable revenue thus also failing to maintain efficient quality in equipment’s
checking as well as the new and clean office. From above evidence, WeWork has not
managed and invested in the material causes, leading to a big failure in the company's
image and trustworthiness with their customers.
5. Fishbone diagram
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IV. SOLUTIONS
1. Environment
To overcome weak WI_FI security: WeWork can also set up a firewall to block Wi-Fi
scanning activities. Instead of depending on employees to use Wi-Fi securely, Wi-Fi
firewalls can disrupt non-compliant sessions to prevent disclosure of confidential data.
Instead of forcing customers to pay for Wi-Fi protection in WeWork rental buildings,
they should provide network protection for their office tenants for free. WeWork should
establish a team with the task of strengthening the information security of office tenants.
That can help their customers feel more secure and confident when renting a WeWork
office.
To overcome the noise in the common work area of WeWork: We think they should
check the quality of the whole building by contacting qualified engineers to come and
fix the problems customers are having with their facilities. Customer service should be
done thoroughly and quickly in order to build trust and good feelings from customers.
Ruthless competition in Co-working space industry: WeWork and its investors need
to calculate the market size of co-working space industry. Specifically, directors should
estimate how much profit they could potentially earn from a new business and decide
whether they should invest in it. Unless company predict the size of the market, they
could not know the type of person that service is best suited to, leading to reaching
potential customers less cost-effectively.
2. Management
Bad publicity: The US government should consider the leak in its policy and need to
fix it immediately so that other companies can't take advantage of it and profit like a
typical example is WeWork. In addition, stronger measures should be taken to prevent
the stock market asking price to be too high when they have not clearly announced the
profit budget. Don't be fooled by stockholders and keep yourself a "slow bomb".
No planning: The solution here is, Neumann needs to be strategic specifically about the
projects he needs to do in the long term. Renting group rooms for small startups or
famous actors is an initiative, but it is also necessary to ensure that the contract will be
completed no matter what and can solve the problems. Additional risks arise during the
rental process. For investors, they will need to hear the strategy clearly so that they can
confidently pour money into the company's project.
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No direct: Personally thinking, Neumann needs to investigate more about the needs of
today's consumers, what their trends are, and what types of customers are the main focus.
From there, to have a clearer view of the reality in today's life, life changes over time
and so do consumer needs. Whether the business grows well and profits are high, it is
directly proportional to the level of customer satisfaction.
Poor corporate governance: CEO Adam Neumann forced to be resigned for a new one
who had leadership skills to restructure the company. New executives should implement
policies that stimulate employees’s decisions and delegation. Moreover, executives
build a transparency culture through good communications between managers and
employees. This helps managers understand the insight of their workers, creating
consistency in tackling problems later.
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4. Equipment arrangement based on customer target
● In 2019, the amount of revenue had reduced, which led to WeWork loss to 904
million USD. Losses piled up, but WeWork continued to expand the scale of the
premises. Therefore, Wework should reduce the investment cost of the premises,
capital, focus on upgrading the available equipment in the office, and regularly
check the quality of products as well as update and maintain the equipment to
ensure that effective and productive working.
● Moreover, WeWork must spend a huge amount of money attracting customers
because the company operates by subleasing, thus the available materials are
really important factors and deserve consideration as a high advantage of the
corporation.
V. ACTION PLAN:
Based on problems defined from the case of WeWork, resulting in low profit and failing
in cost-optimal contribution, especially upcoming predicted bankruptcy, PDSA (Plan-
Do-Study-Act) cycle is analyzed to build up action plan for the company, in order to
supply a fulfilled framework for developing, testing and practicing improvements.
1. Plan:
Overall, managers of the co-working space should build up extreme and reliable trust
from their customers by glowing up brand’s image and high-qualified quality of
environment. Service is necessary to quality the demand of diverse visitors from
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millennials and GenZ, including students, office workers, business people, etc. Besides,
appropriate price for various categorized rooms is considered as good measurement to
attract types of customers, which contributes in high coming rates and profits.
Additionally, human resources need to be invested smartly. Company’s owner and
managers should inspire their employees in tasking as well as thoroughly training and
testing staffs’ behavior and attitude so as to gain them full mindset of working in service
industry.
2. Do:
The company should have deep insights from customers, in order to analyze their key
requirements of a working space. By mean of that, WeWork can conduct clear
comparisons between visitors’ demand and brand’s characteristics to improve the
weaknesses and develop strengths through external surveys and interviews on website.
Managers can also call for investments from event planners to have co-operating
workshops at WeWork, providing potential customers with free service experience
before landing their own meetings. Moreover, every group of customers need different
requests of business privacy, that extremely relating to project’s success and data
protection. For instance, students need quiet rooms for teamworking activities and
presentation slides working-on, while start-ups and business people are assumed to work
in rooms covered with seeing-resistance glass to guarantee information privacy and get
rid of leaking competitive data. Therefore, WeWork space is required to acquire various
designs according to mentioned aspects of demands.
Following failure data of WeWork having been millions of dollars in 2020, it is essential
to define the mistake much relying on untrained staffs. As a result, apologize should be
published along with improving plans in future. Training and coaching for staffs might
be organized periodically during the working process of each employee. They will be
taught about not only professional skills but also right attitude for service industry.
During coaching and working, they should be provided with all information and
instructions relevant to their asigned tasks. Indeed, they will also be trained how to
check up on equipments and facilities to make sure they work well, no data error and
provide users with best using experience. Rewards and progress recognition should be
awarded for well-done employees to motivate them in their career path.
About the idea of improving F&B menu, WeWork’s owner and managers should
conduct market research about their experience of renting rooms in this co-working
space. Finishing the survey, they will get an opportunity for receiving free or discount
vouchers for purchasing drinks and sweets at canteen. Average price of the list is in
medium range, as the purpose of this idea is for showing gratefulness, not for profits.
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Ingredients, definitely, are carefully chosen from reputative raw material farms with
quality certificates.
3. Study:
In this part, managers will keep track on instructed activities in the last step. In other
words, they need to strictly control the quality of process and note down if there exist
any problems during. Meanwhile, feedbacks and opinions from customers must also
continuingly be received to innovate better service. Results of marketing research and
surveys are necessary to be collected and analyzed the rate of returning from customers,
from that measuring the business’s rate of progress and productivity. In case the
approach is no good, managers try to figure out where are the reasons, whether they are
not appropriate. To conclude, in this studying part, WeWork keeps following the
planned process and solving arising mistakes or problems affecting overall quality of
space.
4. Act:
Lastly, quality of rooms must continuingly be checked and guaranteed high
qualifications to serve customers. Occasionally, there might exist promotions or
discounting programs on special events, such as Summer, Exam Seasons, etc., to gain
more attention from customers, which helps build key performance and reputation for
brand. Keeping in touch on social media platforms and website with customers will
build a strong relationship between brand and users, that helping sympathizing emotions
in circumstances of problems.
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Moreover, the rate of quality for a co-working space company is focused on various
aspects, including operation management, staffs’ level, facilities, etc. “One size doesn’t
fit all’, as cited by GrowthBusiness.co.uk (2020). As price for renting space in WeWork
is considered as moderately expensive in big cities, this is not a smart choice for
consumer groups as students and young people starting their business at first places.
Diversity is important, as it gets approach to various groups of customers. Moreover,
WeWork can diverse categories of events able to be organized in space; for example,
social meetings, entertaining spots with ping pong tables, etc. Collaboration between
professional workplace and open, friendly creativity needs to be mixed.
In the last conclusion, behavior is attached and strongly go along with the success of the
business. Neumann and his partners should change their thoughts towards employees
about the power of boss. Instead, eliminating fears and barriers among levels in
workplace can encourage improvements from internal sides to external surroundings.
Well-trained employees with fulfilled knowledge about their tasks and welcoming
attitude will are ideal goals that owner and managers should concentrate on in order to
achieve employees’ respect and help them feel that the company is worth their efforts.
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VII. REFERENCES:
1. https://cafebiz.vn/nhat-ky-6-tuan-len-voi-xuong-cho-cua-wework-tu-dinh-gia-ky-
luc-47-ty-usd-den-bo-vuc-pha-san-chong-vanh-20191001083130878.chn
2. https://zingnews.vn/cuu-ceo-wework-se-tro-thanh-ke-bi-cam-ghet-nhat-nuoc-my-
post1004583.html
3. https://www.theguardian.com/business/2019/dec/20/why-wework-went-wrong
4. https://nhaquanly.vn/thang-tram-cua-wework-a758.html
5. https://www.forbes.com/sites/maryjuetten/2019/12/17/lessons-learned-from-
wework/?sh=4eb6f6035f79
6. https://www.growthbusiness.co.uk/lessons-businesses-can-learn-from-weworks-
meltdown-2557411/
7. https://prezi.com/9h5tnku5gbv3/wework-analysis-of-company-
mechanics/?fallback=1
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TABLE OF CONTRIBUTION
GROUP 2
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