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WeWork is a global office space provider that mainly caters to freelancers and small startups. Its venues — known as “coworking spaces” — are a relatively novel concept, featuring a handful of individuals all working separately in the same shared space. The unique business model seems solid in principle, but where does WeWork really stand from a business analysis perspective? We hope to find out in this complete PESTLE analysis of WeWork.

Political

We couldn’t find any Political factors influencing WeWork.

Economic

Here are the three crucial Economic factors working in WeWork’s favor:

Growing gig economy

The gig economy is the growing market for temporary workers hired for small jobs. While some of the common employment opportunities associated with the gig economy — such as being an Uber or Lyft driver — require a physical presence, many do not. In fact, the size of the online gig economy is mind-blowing, with thousands of new positions created for talented individuals every day. The result is a growing number of individuals performing odd jobs as freelancers, and needing a quiet space in which to work. Naturally, this is a good thing for WeWork’s business model.

Work from home positions

Although remote work is often associated with temporary employment, the number of permanent work positions with the option to work from home is also increasing dramatically. Some modern-day companies don’t require a physical presence at all, despite easily falling under the umbrella of full-time work. Many individuals who work for these companies may also be looking for office spaces in which they can focus on their work, and WeWork could be their solution.

Disposable income

Broadly speaking, the world’s citizens are getting richer and richer every year. Especially in developed countries, the amount of disposable income citizens have is higher than ever. While a lack of spare cash may have previously been an obstacle for freelancers considering their own office space, that lack of cash is slowly disappearing. As new, wealthy freelancers consider splurging on a workspace for themselves, they may well consider coworking spaces like WeWork.

Sociocultural

Here’s a Sociocultural factor helping WeWork:

Social interaction

The idea of working from home, through the internet, is a pretty new idea. With the growing prevalence of remote work, many have quickly realized that freelancing can be a pretty lonely job. While some freelancers can deal with the loneliness, others choose to schedule their days to minimize time alone or work from public places such as coffee shops or parks. Of course, coworking spaces are a fantastic choice for remote workers looking for somewhere a little more lively to work.

Technological

Technological advances are also in WeWork’s favor:

Portable computers

Previously, working remotely was impossible due to the lack of portable computers. Now, with the rise of powerful laptops and multifunctional smartphones, freelancers have more options than ever for working via the internet. What’s more, access to these technologies is cheaper than ever. The result is a growing number of remote workers who can finally pick up their work and leave home, easily allowing them to work in new venues such as coworking spaces.

Remote work tooling

Thanks to improvements in tooling, it’s easier than ever to work on the same projects as a distributed team. With tools such as Google Docs, Trello, and Slack, remote workers can collaborate with each other as if they were in the same room. This makes remote work a lot more feasible, and ultimately benefits coworking spaces like WeWork.

Legal

There are a couple of questionable Legal matters surrounding WeWork:

Legality of subletting

WeWork uses a simple business model where customers can pay to rent a private office, shared office, or desk space for the month. In all three cases, WeWork’s business model would be classified as “subletting” if they themselves rented the premises — which they do in the form of long term leases. While this is legal in many jurisdictions, it is indeed illegal to sublet in others. However, it’s likely that WeWork can find loopholes to get around these laws in countries where that would be needed; otherwise, they can simply buy up all their office spaces.

Liability issues

Another legal issue for WeWork is that of liability. In a shared working space, there could definitely be some scenarios which would fall into grey areas of liability law. For example, if a customer plugged in faulty electronics — causing the office to catch fire — or if a customer dropped coffee on another’s electronic device, there might be some uncertainty as to who would be responsible (especially in circumstances where WeWork is partially at fault, such as if they have broken electric sockets or wobbly tables). As usual, these issues can be solved with a big wallet and clever lawyers.

Environmental

Finally, WeWork is doing its bit for the environment:

Lower heating requirements

From an environmental perspective, it’s definitely worth taking into account that sharing a working space — as in WeWork’s business model — can save on some costs. While there might be marginal savings in the amount of electricity used to light the building, a more considerable saving is that of heating. By encouraging individuals to work in the same, heated space, WeWork stops dozens of tiny offices around that same city from needing to be heated. This saves on heating resources in the same way public transport saves on gas.

Final Thoughts for this PESTLE Analysis of WeWork

All in all, WeWork’s business model is clearly aligned with major shifts in Economic, Sociocultural, and Technological factors. As more and more of us are able to take our work wherever we go — thanks to technological advances and the growing prevalence of remote work — we want to be social as we do so. While there are a few Legal matters that complicate things for WeWork, they shouldn’t be too difficult to iron out. And finally, WeWork is probably impacting the environment in a positive way, by encouraging us to use the same shared space which they can heat and light for a lower resource cost.

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