Based on this definition, strategy is about planning ahead and to achieve an objective, however it does indicate that strategy as a process. According to Integers (1978) strategy is “a pattern in stream of decision”. Integers definition of strategy indicates that strategy is a process or system build overtime in contrast with McKeon. Strategy are varies in nature depends on different perspective as analyzed by expert in each study. This is in line with (Integers, Alsatian, and Lempel, 1998) study in their book of Strategy Safari which divides strategy in 10 school of thoughts. Three out of these schools are perspectives and 7 are descriptive in nature.
Prescriptive strategy are neat and normally to meet long term objective and affect whole company. Prescriptive is tent to involve design, planning and positioning. This report will focus on positioning school as prescriptive strategy to form a suitable strategy for Expedite as an existing company, however multiple school of strategy is needed to be combined to form a better strategy. Culture School needs to be taken into consideration to create a strategy beyond cultural paradigm. Expedite as online travel agency is well known for selling flight ticket and hotel booking can break the cultural paradigm by providing medical packages for customer.
External Analyticities Analysis of Tourism Antidisestablishmentarianism is a very important industry it is 5th largest industry in I-J, supports 3 million Jobs, and contributes to E 127 billion GAP per year. In addition, tourism industry is also a source of foreign exchange from overseas visitors (visitation. Org, 2013). Globally, tourism creates US $5,490. 4 billion economic activity and it is 10. 4 % of total GAP. In Malaysia itself tourism is seventh largest contributor to Malaysian economy, it is second largest foreign exchange earner after manufactured goods (thetas. Com. My, 2014). Politically are certain political factors that affecting tourism industry throughout the world.
Issue of safety concern and terrorism has affect tourism industry such as 9/11 in united state, Bali bombing in Indonesia, and 1996 Manchester bombing (MUM, 2014). 9/1 1 tragedy has create significant change in airport security and also U. S immigration, strict rules and regulation has been imposed. Malaysian Airline flight IMHO has been shot down in Ukraine after in the same year MUMMY reported lost contact and yet to be found. Expedite as an online travel company need to take into consideration and perform preemptive action regarding these matters. Oscillations of online business have also encouraged companies to try to sell their product and services online.
This has result in wider and bigger market for company in tourism industry such as hotel, airline, and tour provider. Customer also will be able to have wide range of product ND service to choose from, In addition, customer will be able to see previous customer experience on review section. In Europe, there are trends towards peer to peer travel where European is looking for cheaper option for their trip as Europe struggle with low GAP growth (marketwise. Com 2014). In America, travel industry is targeting BANKS (Professional Aunts No Kids) who spent billions on traveling. In U. S over 42% women aged 1 5 to 44% with no children’s as of 2010(marketwise. Com 2014).
Technological Rapid development of new technologies such as the usage of Smartened, android, ND tablets has increase the number of online transaction. Travel agency online and conventional has to take into consideration of selling its products and service via mobile by creating APS for these devices. Technology also helps to improve ticketing system, advertisement, and Customer relationship management system. Porter’s Five Forces Moderate of new integrity capital investment is required in order to enter online travel agency business especially to cover worldwide market. Financial support is needed for marketing department in order to create a huge network globally with coal vendors and suppliers include hotel, tour provider, airlines, and car rental.
Good relationship with all the vendors and suppliers can’t be formed overnight. Advance system is also needed to maintain and run the business to be used internally, with vendors, as well as to be access directly by customer. Expedite has an advantage as a company which originally formed by Microsoft, hence to have a advance system to support its operation. Therefore Online travel agency has low threat of new entry. Buyer Power Customer tent to have strong buyer power, this is due to different companies offering he same product online. One hotel normally affiliated with a number of online travel agency to market its product from their own website.
Travel forum such as trip advisors nowadays are acting as independent portal for travelers to check for review, especially hotel, restaurants and other places to visit. Trip advisor itself provides metastases for visitors to compare prices for one hotel offered by different online travel agencies (transistor. Com, 2014). Customer tent to decide based on price of the product and they can easily switch brand due to this consideration. Subcontinents ravel agency is tent to have low substitutes with no major direct substitutes. Product and services offered by the company such as hotel accommodation and transportation are normally difficult to be substitute with other product.
In addition, online travel agency offering wide range of product such as different types of hotel accommodation starting from hostel/backpackers to five star hotel and resort. Transportation offered by Expedite includes cruise, car rental, flight and more. Bargaining Power of Superstructure are few numbers of well known online travel agency compared to companies operating in other industries. Only few companies as wide network with wide range of products and services such as Expedite. Therefore, bargaining power for suppliers is considered as weak compared to online travel agency. Some hotel might depend on Expedite for its sales especially from different countries or region.
By having a contract or affiliation with Expedite, sales derived not only from one brand under Expedite such as Hotels. Mom but also conventional travel agency using Expedite network under TAP (Travel Agency Affiliate Program) (Expedite Inc, 2014). Rivalry/comprehensibility’s is considered to be relatively high in travel industry especially online travel agency. Companies can be seen competing online intensively, each company advertised its product from different website to increase sales. In addition, these companies also take efforts managing search engine marketing to increase traffic to their website from major search engine such as Google. Few large online travel agency competing trough ‘price war’ by trying to sell their product as cheap as possible. These companies also features best price guarantee to attract customer.
Barriers to Entertainers to entry for travel company tent to be low especially online travel agency by operating online. There is little legal issue for online business such as licensing compared to conventional business. By operating online it is easier for a company operating from one country to reach other countries and big market. Porter’s five forces model has assisted company to provide useful insight on different factors affecting travel industry. Online travel agency is dynamic in nature and therefore difficult to predict. This is a complex industry that is difficult to determine the nature of each factor. Factors such as buyer power and competition are disadvantage for the company and therefore new strategy development is needed.
Internal Multimillionaires based vacationing to Fay (1984), competitive advantage is anything that favorably distinguishes a firm or its products from those of its competitors. In order to transform resources into sustainable competitive advantage it is important to find resources which are heterogeneous in nature and not perfectly mobile. Resources based view allows company to identify core competencies in order to understand how these resources and capabilities transform into source of competitive advantage. Resources can be defined as inputs that enable an organization to carry out its activities. These resources are divided into tangible and intangible resources.
Tangible resources refer to physical assets posses by the company. Tangible resources for Expedite can be categorized as physical resources, human resources and financial resources. Intangible resources consist of technological/intellectual resources and reputation. Technological resources for Expedite include their online network system which created both for end users such as from their website and also system used by their employees and affiliate network. Expedite was started by Microsoft as software intensive technology company. This yester are well established and consist of wide range of valuable information related to product and vendors or suppliers and has been maintained overtime.
This is also considered as an intellectual resource of the company due to its copyrights derived from technological resources. The reputation off company is a valuable intangible asset. Expedite has a reputation as one of the world largest Travel Company with an extensive portfolio featuring some of the world’s leading online travel brands. Competencies can be defined as the attributes that firms require in order to be able to compete in marketplace. In order to be able to compete in online travel industry, Expedite must possess knowledge Information Technology. Without this knowledge Expedite will not be able to develop and maintain their online booking system.
Barney (1991) defines competitive advantage as the implementation of a value creating strategy which is not simultaneously being implemented by any current or potential competitors; whereas sustainable competitive advantage is viewed as an implementation of a value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to plicate the benefits of this strategy. Expedite need both resources and capabilities to create competitive advantage, they need human resources and also their capabilities of creating a valuable system to run the business. There are two key assumptions about competitive landscape of resources and capabilities which are resource heterogeneity and imperfect resource mobility.
Different companies has different bundle of resources and resources also stick into an organization thus difficult to transfer to other company. Expedite reputation as a leading travel company cannot be transferred to other company. BRIO stands for Valuable, Rare, (costly to) Imitate, and Organized. Resources and capabilities that are matching these criteria will be more likely to transform into sustainable competitive advantage. Expedite has wide range of products derived from extensive network of hotels and airlines and other booking services offered by the company help them to achieve economies of scale. In addition Expedite operating as online travel agency selling its products through internet without having to incur cost to run physical store.
These two factors allow Expedite to produce and offered its products at lowest possible costs. Nowadays, online business is quite common and therefore the resources to run online business are more likely in common. However, Expedite as a well established travel company has reputation as largest travel company as mentioned earlier and also has some exclusive right that can be obtain by other company. One of the exclusive rights is exclusive third party online distribution rights to sell Eurasia flight ticket, Expedite and Eurasia has established a Joint venture which is first partnership of its kind globally between a low cost carrier and an online travel agency (Expedite, 2011).
Barriers are needed for a firm to protect its resources and capabilities, 3 common barriers that Expedite has in hand are path dependency, causal ambiguity, and social complexity. Expedite has built an extensive network with vendors and suppliers all over the world and maintaining good relationship overtime. There are more than 260,000 booklet properties, 400 airlines, and 7000 activities offered by Expedite. (Expediting. Com, 2014). Len order to create its massive network, Expedite has progress down a unique decision path overtime that lead to certain creation of unique resources and capabilities which is very difficult to obtain by other firms.
These resources and capabilities also has causal ambiguity, it is easy to see how Expedite communicate and manage its relationship with customers however it is difficult for other companies to obtain resources such as internal system and how Expedite manage and communicate with its vendors and suppliers trough their network. This is also creates social complexity barrier whereas resources resides in the complex relationship between system department, employees, mentioned vendors and suppliers, even outsourced departments (Call Center). SOOT Enlightenment’s Expedite is well known as one of a leading travel company and world largest online ravel agency. Furthermore, now Expedite has wide range of products offered and affiliated with many vendors and companies.
There are more than 260,000 booklet properties, 400 airlines, and 7000 activities offered by Expedite. (Expediting. Com, 2014). Operating as E-business or online business has allow Expedite to reach huge global market. As long as someone has access to internet from any country in the world, they can purchase products from Expedite. In addition, by operating online Expedite can reach economies of scale much easier compared to conventional travel agent. Expedite has been able to prevent cost of operating physical store. One of the Strength of the company especially in the region is to be the first online travel agent to create Joint venture with LLC airline (Eurasia).
This has allowed them to provide lower price for package booking compare to other travel agency. Wonderfulness’s, credit card is the only available method of payment for Expedite. Online transaction barrier is one of the weaknesses that company is challenging especially in Southeast Asia or other developing countries. Problem with security such as fraud and legal issue regarding online transaction in these countries has slow down the development of online business. Many have afraid to purchase online due to fraud issue and no real action taken by the government. Expedite have to adopt new method of payment besides credit card especially in Southeast Asia or developing region.
Another issue is that some of the customers prefer to have face to face interaction with travel consultant before decided to purchase a product or service, Expedite as online travel agency do not offer this. In order to compete with conventional travel agent which allow customer to interact directly with them, Expedite need to improve their customer interaction both online. Expedite may need to increase customization / tailored offer or solution and create more interactive customer experience when visiting their website. Many of the company today outsourced their business process to cut cost and also to be able to operate globally more efficiently. However issues raise such poor customer service.
En of the ways is to choose the correct BOP when outsourcing is needed and maintain strict quality assurance with call calibration with call center counterparts. Opportunities Trends of online shopping keep increasing every year, in 2012 total sales derived from E-commerce was $ 225. 50 billion in U. S alone. It is expected to reach $ 434. 20 billion sales (interpretative. Com, 2014). While in China, sales growth of E-commerce is at 65% in 2013 which is higher growth rate compared to North America. The number of credit card transaction in U. S grew at annual rate of 7. 6 percent, rising from 21 billion in 2009 to 26. 2 billion in 2012 (Federal reserve system, 2013). A new middle class is emerging in rapidly developing economies.
These countries are enjoying significant economic growth, which is resulting in the creation of a middle class who now choose to travel by air to replace long distance bus. Airline in Brazil are selling ticket in subway station and at kiosk at low end retails chain to target middle class. In Uganda and Kenya, airline affiliate with mobile payment service company to allow customer without bank account to purchase air ticket (airlessness. Com, 2014). Increasing trends of E-commerce, credit card transaction and growing numbers of young professional with the recent dotcom boom create opportunities for Expedite to expand into new product or service in online business. Expedite might create a travel portal similar to Trip Advisor using current resources ND capabilities in tourism and online business industry.
Expedite might also enter a new industry within tourism industry such as medical tourism. Threats In 2014 there are few fatal flight incidents which might affect travel industry. Beside question were raised related to airline safety, there was also issue of terrorism and war such as IMHO shot down by in Ukraine and Delta Airline cancelled its flight to Tell Aviva (Bushman, 2014). FAA has discouraged Airlines to flight on certain countries in conflict due to safety issues. One of Expedites major competitors in travel agency for Hotel is Goad. Goad does not outsource its customer service to BOP and hence it is easier for them to communicate to its front liners.
It would be easier to maintain same standard and also to implement new process or policy compared to outsourced company. In addition, Expedite need to create new method of payment beside credit card so that they won’t lose any of the market shares to other company. It is also important to take a preemptive action to improve Expedites customer service to compete with conventional travel agency which provides face to face interaction with customers. Strategic Copperplate’s Controverter (1984) suggest that there are energetic strategies that can be applied in any industry and organization which are cost leadership, differentiation, cost focus and differentiation focus. A company can choose any of these strategies in order to achieve competitive advantage.
According to Porter, failure to develop one of these strategies is a firm that is stuck in the middle. There are risks and disadvantages for each of these strategies and therefore it is dangerous for a company to develop only one strategy. In order to maintain cost leadership it requires continuous capital investment to maintain cost advantage, many focusing solely on cost leadership also discourage innovation to adopt changes in product requirements. Company focusing solely on differentiation can be easily imitated by other companies and therefore the value of perceived differentiation decreases. In industry such as online travel agency, the needs for differentiation falls and most of the companies competing on price alone.
Company need to develop new strategy which combines more than one generic strategies and creating a new market. Blue Ocean Blue Ocean Strategy is synchronized approach of cost leadership and differentiation which is varying from Porter’s generic. Aim of BOSS is to create new market space instead of competing in current market. BOSS provides systematic processes for new and existing business in order to achieve Blue Ocean Strategy. BOSS strategy is also suitable for existing market in tourism industry such as online travel agency which has intense competition especially price war among few large businesses. The six paths framework is one of the frameworks of BOSS that can be use to reconstruct market boundaries.
The first path is industry, red ocean for Online travel agency focuses on rivals within industry, while blue ocean look at alternative industry. In this case, Expedite as online travel agency should create new industry which is medical tourism. Blue Ocean Strategy also looks across strategic group within industry, hospital currently is not company which currently depends on travel company. Expedite should create agreement with hospital for exclusive rights as third party to sell hospital service to customer. Thirdly, BOSS also redefines the industry buyer group. Expedite need to be aware of new trend and obtain new group of customer traveling for medical tourism. Market size based on approximately 11 million cross border patients is USED 38.
55 billion, paying average USED 3500 – 5000 per visit this includes accommodation, transport and medical related costs. Estimated 1. 200. 000 Americans will travel outside U. S for medical care in 2014 this year (patientsbeyondborders. Com, 2014). Medical tourism is growing market as the world population is aging at rates beyond the availability of quality medical resources. Estimated medical tourism market is growing at rate of 15% – 25% globally (patientsbeyondborders. Com, 2014). Scope of product or service offering in blue ocean company are tent to look across complementary product and service offerings. Expedite should implement a strategy which is not only providing new product and service but also increasing sales for existing products.
By entering medical tourism industry, Expedite acting as third party to sell medical package such as cosmetic surgery in Thailand, cancer treatment in Guanos, and heart transplant in Malaysia. At the same time Expedite will offer accommodation, transportation, and other related activities as a package with lower prices compared to purchase it separately. Blue Ocean Company rethinks the functional-emotional orientation of its industry. Expedite might look into possibilities to enhance emotional orientation which can stimulate new demand such as to provide quality healthcare service cross borders instead of Just selling tickets and hotel reservation. Red ocean company tent to adapt to external trends as they occur while blue ocean companies contributes to shape external trends overtime.
By entering medical tourism industry, Expedite will automatically participate in shaping new trend such as trend for people in Indonesia to travel to Malaysia for cheaper and quality medical services. By creating this market, Expedite will be able to obtain new customer which be less likely to purchase services from online travel agent before. Due to their strong demand in quality healthcare services abroad and convenience offered by Expedite for hassle free package services which have never existed before. By creating new market space making competition irrelevant, Expedite might need to create an agreement with hospital and other medical institution to have exclusive right to sell medical package for at least certain period of time.
Competitor will enter the market however Expedite will have first mover advantage such as brand recognition as the first in the industry and also path dependency capabilities formed by unique sets of decisions taken overtime. Managerial Constipated as a well established online travel agency has resources and capabilities needed to enter medical tourism market. In terms of Human Capital, same division that has successfully obtained vendors and suppliers to affiliate with Expedite will be more likely to be successful to negotiate with hospital and other healthcare institution. Expedite may need to acquire new skills related to medical industry might include training and recruitment of experienced employee. In order to create economies of scale, Expedite may keep the current online system, customer service and other departments.
Expedite need to update their system to include new inventory and to ensure sufficient training and briefing to current employees. Another advantage of using the same system is that it would be easier to integrate with other products such as hotels and flight booking to be offered as a package. This system also allows affiliates such as conventional travel agent under TAP to sell medical package from Expedite similar to hotel and flight bookings and earn commissions. In terms of Marketing, Expedite may need to create another brand focusing on medical tourism as they have successfully create other entities such as Hotels. Com specializing in Hotels booking only. Integrated Marketing Communication is a good approach for Expedite to implement this strategy.
MIMIC define as “a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time. ” (mimic. Vow. Deed, n. D). Advertising is a very important tool of MIMIC to be organized continuously to introduce this new service and industry at initial stage, persuade prospect customer to try and purchase medical package trough Expedite, and also to create an image in customer’s mind about this new brand as the iris and specialized in this industry. Public relation should also be integrated in this campaign with the same benefit as advertising, however public relation can be used for other benefits.
PR is effective to promote goodwill such as to introduce a company with the purpose of connecting people to quality healthcare services affordable. PR is also useful for lobbying such as with Government, United Nation, Nags, and other relevant entities. Expedite should also take into consideration other tools such as sales promotion, direct marketing, event, personal selling and sponsorship. All these tools must be integrated with the same goals and objective using the same tagging, motto, color, and attributes and other elements to be effective. Management of compartmenting and adoption of new resources and capabilities is needed by Expedite to implement this new strategy, however it does not require an incremental change.
Linen’s change management model might not be completely relevant for this strategy since current system and process is still in use. According to Cotter’s (1995) there are 8 steps to implement change successfully and relevant to this business. Before implementing change, creating urgency and create vision are very important at initial stage. This can be put as simply to know why they would do it. In this case Expedite can inform employees about intense competition as a threat and also about opportunities opened up for company and employee itself. This can’t be missed as people who do things without purpose might get denominated and result in poor performance.