Travel Industry Is Currently Undergoing Several Changes Case Study
- Length: 10 pages
- Sources: 5
- Subject: Business
- Type: Case Study
- Paper: #246552
Excerpt from Case Study :
travel industry is currently undergoing several changes because of the introduction and increased use of internet technologies. These technologies have provided several opportunities in this industry that have made it more attractive for small companies because of the numerous advantages associated with these developments. For a small company considering entry into the internet for market travel, there are various strategy routes that can be used for developing corporate and global strategy for all business operations. The most appropriate strategy for such a company is the prescriptive strategy route because its helps in strategic planning, which is an important aspect for every company or business. This approach enables the firm to develop its objectives, goals, and intended strategies to business operations through analysis of the environment and the organization's resources.
As an established internet provider, the small company can used learning-based, survival-based, and network-based strategies to increase its presence in the market. In this scenario, the firm should not consider using uncertainty-based strategy route because of its minimal regard of the value of strategic planning. Nonetheless, companies in the travel industry should consider adopting the Internet because of its expected impact on the future of travel, especially on customer buying patterns and the future of travel agents.
Market for Internet Travel:
As the modern society and business environment is characterized with rapid technological advancements, these developments have continued to transform the way business is conducted. One of the major examples of the impact of these developments on business operations is that Internet technology is transforming the U.S.$100 billion global market for travel booking. For much of the previous five decades, many travelers have basically used independent travel agencies to book their tickets and accommodation for nationwide and global travel. The widespread use of these agencies originated from their possession of relevant contacts and networks with airlines, hotels, car hire agencies, rail operators, and other firms involved in providing travel services. In the past ten years, internet technology has revolutionized this market because it has allowed linkages in travel services to occur at the level of individual customers. While it's not yet complete, online independent booking has been brought by Internet technology as travel agencies have been eliminated from the value chain. However, the main concern is regarding the most appropriate strategic route to use when designing a strategy, particularly for smaller travel companies.
Appropriate Strategy for a Small Company Entering the Internet Travel Market:
As independent travel is growing, independent travelers are more likely to be attracted to and choose to use the Internet. Such travelers basically include young travelers with limited time and money and retired independents with more time and money. However, independent travelers account for a huge portion of Internet travel booking. Given that the Internet travel booking market has continued to grow to an extent that it's currently large, it's quite difficult to obtain a complete view of the various services and booking agencies that are available. This difficulty is also associated with the ongoing change and development of the market and industry.
Currently, internet travel service providers can be divided into three major categories i.e. primary providers, online travel agencies, and metasearch travel websites. The primary providers include the main airlines, hotel chains, rail companies, and car rental firms. These providers are time-consuming to find on the internet, especially on information about their availability, special deals, and prices. On the contrary, online travel agencies are firms that provide a variety of travel services and primarily driven by a specialist sector. Metasearch travel websites are the seemingly new firms that use complex search engine technology to find all the available prices and compare them. As a result of their differing nature, the profits from online business operations depend on the specific nature and category of the firm. Each of these internet travel company categories has varying profit margins and sources because of the differing operating environments.
In the past few years, numerous questions have been raised regarding internet travel opportunities for small companies. While the cost of establishing and maintaining a new internet travel website is relatively small, smaller companies need to consider various factors in their efforts to establish travel websites. This is primarily because establishing and maintaining the website is not the only major factor to internet travel strategy since real success depends on attracting enough customers in order to generate enough business and profits.
When considering the opportunities to move into the market for internet travel, a small company needs to choose the most appropriate strategy to use. There are various strategic routes that can be used by a small firm when developing a plan to enter the internet market such as prescriptive strategy processes and emergent strategy processes (Lynch, n.d.). Prescriptive strategy processes are those in which the objective is designed in advance and elements developed before the strategy is implemented. This process begins with an evaluation of the external environment and the company's resources which is followed by the development of the organization's objectives. This process is followed by the development of strategic options to accomplish the established goals where at least one of the options are chosen and implemented.
On the other hand, the emergent strategy process route does not have similar fixed objectives since the entire process is experimental with varying possible results based on the development of issues. The emergent strategy process is an initiative in which the final objective is not certain and whose elements are designed as the strategy proceeds. While the initial stages of this route may be the same as those of the prescriptive strategy i.e. environmental and resources analysis, it becomes a learning, circular, and experimental strategy. Each of these strategies produces different outcomes in companies where they are used depending on the nature of the company and business. Moreover, every strategy is based on unique strategy theories though they are geared towards a firm's strategic management.
For a small company moving into the market for internet travel, prescriptive strategy route forward seems to be the most appropriate strategy. Its suitable approach to strategic management for a small company because the objectives are determined in advance and the main elements of the goal is also established before the commencement of the process. This enables such firms to analyze its resources and business environment as well as make decisions and take actions that would provide an effective market entry that promote its competitive advantage. The other reason for the suitability of the approach for small companies entering the market for internet travel is that it provides a centrally controlled approach towards all business initiatives.
Since there are different categories of companies in the internet travel market, it's important for a new firm, especially small companies, to critically examine the business environment and its resources in order to identify an appropriate business position. As a result, these companies need to adopt a centrally controlled approach through the use of a strategy route that promotes such approach. As this industry is large and continues to grow constantly, small companies cannot take chances to enter into the market without clearly defined goals and established objectives. This mechanism can only be accomplished through the use of a classic prescriptive strategy route towards the company's strategic management.
Many smaller companies have been considering market opportunities in internet travel because of major advantages associated with this kind of business. The three major advantages of this business to small companies include the fact that fixed operational costs in the initial stages of the business are relatively small. As compared to other businesses, smaller companies in this market do not have to seek for expensive office premises and expensive advertising arrangements. Secondly, this kind of business enables a company to benefit greatly from the wide and global reach of the Internet. As a result, the companies can find enough clients easily through providing its services beyond national boundaries. The other advantage is the ease to monitor all business activities constantly by examining various aspects of the operations such as packaging, changes in pricing, and services that reflect traffic flows.
Unsuitable Strategy Routes for a Small Company:
As previously mentioned, there are other strategy routes that can be used by an organization or company in strategic management decisions. While the prescriptive approach to strategic management has some shortcomings, there are other strategy routes that are not suitable for a small company such as the emergent strategy processes. An emergent strategy can basically be described as a pattern of actions that develop in a firm over time in the lack or despite of specific mission and goals ("Emergent Strategy," n.d.).
While it's also known as realized strategy, emergent strategy routes and processes are different from the prescriptive strategy because they are not intended strategy. This strategy develops as intentions collide with and embraces the changing reality in the business environment. In some cases, the emergent strategy route has been described as a set of behaviors and actions that are constant over time and…