Internet Travel Market Strategy for Small Companies

Introduction

The travel industry is currently undergoing several changes due to the introduction and increased use of internet technologies. These technologies have created numerous opportunities that have made the industry more attractive for small companies. For a small company considering entry into the internet travel market, various strategy routes can be used when developing a corporate and global strategy. The most appropriate strategy for such a company is the prescriptive strategy route, because it supports strategic planning — an important aspect for every business. This approach enables the firm to develop its objectives, goals, and intended strategies through analysis of the business environment and the organization's resources.

As an established internet provider, a small company can use learning-based, survival-based, and network-based strategies to increase its market presence. In this scenario, the firm should not consider the uncertainty-based strategy route because of its minimal regard for 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, particularly on customer buying patterns and the role of traditional travel agents.

The Internet Travel Market

As the modern business environment is characterized by rapid technological advancements, these developments have continued to transform the way business is conducted. One major example of this impact is that internet technology is transforming the US$100 billion global market for travel booking. For much of the previous five decades, many travelers relied on independent travel agencies to book tickets and accommodation for both domestic and international 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 by allowing linkages in travel services to occur at the level of individual customers. While the process is not yet complete, online independent booking has been made possible by internet technology, effectively eliminating traditional travel agencies from the value chain. However, the primary concern remains which strategic route is most appropriate when designing a strategy, particularly for smaller travel companies.

Currently, internet travel service providers can be divided into three major categories: primary providers, online travel agencies, and metasearch travel websites. Primary providers include the main airlines, hotel chains, rail companies, and car rental firms. These providers can be time-consuming to find online, especially when searching for information about availability, special deals, and prices. Online travel agencies, by contrast, are firms that offer a variety of travel services and are primarily driven by a specialist sector. Metasearch travel websites are comparatively newer firms that use complex search engine technology to find and compare all available prices. Because of their differing natures, the profits from online operations depend on the specific category of firm, with each having varying profit margins and sources.

Appropriate Strategy for a Small Company Entering the Market

As independent travel grows, independent travelers — including young travelers with limited time and money, and retired individuals with more time and money — are increasingly likely to turn to the internet. Independent travelers already account for a large portion of internet travel bookings. Given that the internet travel booking market has grown substantially, it has become difficult to obtain a complete view of the various services and booking agencies available. This difficulty is compounded by the ongoing change and development occurring within the market.

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 low, smaller companies must consider multiple factors in their efforts to build a travel website. Establishing and maintaining the website alone is not sufficient; real success depends on attracting enough customers to generate adequate business and profits.

When considering how to enter the internet travel market, a small company needs to choose the most appropriate strategy. There are various strategic routes available, such as prescriptive strategy processes and emergent strategy processes (Lynch, n.d.). Prescriptive strategy processes are those in which the objective is defined in advance and the key elements are developed before the strategy is implemented. This process begins with an evaluation of the external environment and the company's resources, followed by the development of the organization's objectives. Strategic options are then developed to accomplish the established goals, and at least one option is selected and implemented.

The emergent strategy process, on the other hand, does not have fixed objectives. The entire process is experimental, with varying possible results depending on how issues develop. The emergent strategy process is an approach in which the final objective is uncertain and whose elements are designed as the strategy proceeds. While its initial stages may resemble those of the prescriptive strategy — including environmental and resource analysis — it quickly becomes a learning, circular, and experimental process. Each of these strategies produces different outcomes depending on the nature of the company and its operating environment. Moreover, each strategy is grounded in unique strategic theories, though both are ultimately aimed at supporting a firm's strategic management.

For a small company moving into the internet travel market, the prescriptive strategy route appears to be the most appropriate approach. It is a suitable method for strategic management because objectives are determined in advance and the key elements of the plan are established before the process begins. This enables the firm to analyze its resources and business environment, make informed decisions, and take actions that facilitate effective market entry and strengthen its competitive advantage. An additional reason for the approach's suitability is that it provides a centrally controlled direction for all business initiatives.

Since there are different categories of companies in the internet travel market, it is important for a new firm — especially a small company — to critically examine the business environment and its own resources in order to identify an appropriate market position. As this industry is large and continues to grow, small companies cannot afford to enter the market without clearly defined goals and established objectives. This level of planning can only be achieved through the use of a classic prescriptive strategy route.

Many smaller companies have been drawn to market opportunities in internet travel because of significant advantages associated with this type of business. Three major advantages stand out. First, the fixed operational costs in the initial stages are relatively low. Compared to other businesses, smaller companies in this market do not need to secure expensive office premises or costly advertising arrangements. Second, this type of business allows a company to benefit greatly from the wide, global reach of the internet, enabling it to attract clients from beyond national boundaries. Third, internet businesses offer the ease of monitoring all business activities continuously — including packaging, pricing changes, and service offerings — through analysis of traffic flows.