Deliverable: 1 written group report, the maximum length of the report is 4,500 words, excluding cover sheet, executive summary, contents page and references. In addition you are permitted to have up to 5 pages of appendices. Your appendices are to be comprised of tables, figures, charts and diagrams only.
You are required to conduct an analysis and construct strategic recommendations for your company – IKEA (Subsidiary of Dairy Farm int’l holdings).
A key outcome with this report is to ensure that you are able to construct plausible strategies grounded on solid research, thorough analysis and logical argument, all presented them in a report that is persuasive and clear.
A past assignment has been attached for your reference.
Key Report Criteria:
· Page numbers-in correct sequential order
· Headings and heading hierarchy-Use a logical format for headings and sub-headings ensuring hierarchy is distinguishable. (i.e.: main headings are larger than subheadings).
· Spacing-one and a half spacing
· Font size 12, APA or Chicago referencing style.
· Quotes- not to exceed a maximum of 10% of the word content of the report.
· Appendices must be relevant to your argument and must be presented in the sequence in which they are referred to in text.
· Third person-your reports are all written in the third person i.e. you use expressions such as ‘the’ or ‘this report’ or ‘the researcher(s)’ and not ‘I’, ‘we’ or ‘me’.
Required format for major case reports:
1. Executive summary
3. Current Company Financial Situation
a. Past performance assessment
b. How strong is the company financially? What can it do or not do?
4. External analysis:
a. identify trends, opportunities and threats
b. If necessary define the scope of (a): e.g. Asia only or B2Bonly
5. Internal analysis;
a. Identify the capabilities behind the competencies that create value
b. Will this endure into the future?
6. Issue/Problem definition:
a. What issue are you trying to resolve?;
b. Given this issue what goal(s)/objective(s) must be set?
7. From (6), briefly describe alternative strategies that resolve the issue
a. For each alternative, consider the SAVED components
i. Staging: what will be the firm’s speed and sequence of moves?
ii. Arenas: where will the firm be active?
iii. Vehicles: how will the firm get there?
iv. Economic logic: how will the firm obtain returns?
v. Differentiators: how will the firm win in the marketplace?
8. Selection of alternative. Describe the SAVED components in more detail
a. How is your chosen option superior to the rejected alternatives? How will the weaknesses of the chosen option not be strategically detrimental or how can they be overcome?
9. Implementation: Outline:
a. how the corporate value chain will need to change;
b. given these changes, list 3 key measures that will help you determine if strategy implementation is on track;
c. Environmental and social impact of strategic recommendations and mitigation strategies: consider, where relevant,
i. Carbon footprint along the entire value chain (e.g. food miles)
ii. environmentaldegradation and habitat destruction
iii. cradle-to-cradle/cradle-to-grave recycling
iv. labour conditions, supplier relationships and market power
a. E.g. Ratio analysis (place conclusions stemming from this analysis in your main body)
b. Tabulate your Porter’s analysis, SWOT, TOWS, PEST
c. Others as appropriate
Report marking guide:
PT_BUS 349B MANAGEMENT Report Asiatravel.com
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Executive Summary – Asiatravel.com
Asiatravel provides a one-stop service for consumers to search and purchase travel related services online, ranging from accommodation to transportation to packaged tours. After carrying out PEST analysis, growth of the online travel market is expected. Highly influenced by technology, much of travel planning and booking will be managed online, indicating that OTAs will remain a key participant within the tourism market. Porter’s five forces revealed that the OTA industry has stabilized and gain strong market share. Although the threat of entry and intensity of rivalry is high, the industry is still favourable for Asiatravel to continue its operation. SWOT revealed that Asiatravel’s strength and opportunities outnumber internal weaknesses and external threats. The mature Asiatravel can target new growing markets with higher disposable income while its large portfolio of products and services like instant confirmation and multi-currency payments adds value to customer’s experience.
Asiatravel’s target market generally include all travellers, focusing on the Gen Y and Z consumers capabilities of exploiting both the supply and demands of the value chain. Its reputable brand awarded them the best OTAs for 5 years in a row and has a strong position within the industry. Its diverse portfolio of product offerings also contributes to Asiatravel’s competency. Within the Value Network, Asiatravel’s key activities are service provisioning of linking customers and tourism suppliers as well as infrastructure operations. The e-business faces several challenges of being impersonal and Asiatravel has received several negative reviews in the online community, impacting its reputation. Damaged reputation and perceived security risks decreases consumer’s trust and intentions of online purchases. A lack of content marketing is detrimental to Asiatravel’s brand and its dealings with the consumers saw a decline in revenue, suggesting a need to focus back on consumer-based sales to improve its financial situation. Alternatives includes enhancing customer service, website and mobile application (app) improvements, implementation of Blockchain and to increase marketing efforts.
PT_TOU 323B PROJECT CHARTER AND PLAN CAMPERVANLODGE
The service differentiation strategy was selected to increase competitive advantage as consumers become more selective with online purchases. Firms with first-rate services often experience stronger loyalty from customers and often improves firm’s reputation. As services with human contact yields favourable customer inferences it is important to focus on customer service differentiation which also partly addresses the problem of engaging consumer’s trust. Implementation outline includes a long-term strategy of improving customer service and employee development to provide quality service on pre-trip guidance, on-trip follow ups and post-trip feedback. The introduction of an online chat function would also enhance efficient interactions. This alternative would affect the value network’s infrastructure operations to include the chat feature and maintenance of network system. Also, the Human Resource Management will become a key component in Asiatravel’s value chain to provide customer service trainings
Table of Contents 1 Introduction 1 2 Current Situation 2 2.1 Performance Assessment 2 2.2 Financial Situation 2 3 External Analysis 3 3.1 PEST 3 3.1.1 Political 3 3.1.2 Economical 3 3.1.3 Social 3 3.1.4 Technological 4 3.2 Porters 4 3.2.1 Industry Definition 4 3.2.2 Threat of New Entry – High 4 3.2.3 Intensity of Rivalry – High 5 3.2.4 Bargaining Power of Buyer – Moderate 5 3.2.5 Bargaining Power of Supplier – Moderate 5 3.2.6 Closeness of Substitutes – Moderate 6 3.3 SWOT 6 3.3.1 Strengths 6 3.3.2 Weaknesses 6 3.3.3 Opportunities 7 3.3.4 Threats 7 4 Internal Analysis 8 4.1 Values 8 4.2 Competencies 9 4.3 Key Activities of Value Chain 9 4.3.1 Service Provisioning 9 4.3.2 Network Operations 10 5 Problem Analysis 11 5.1 Lack of Customer Service and Human Interface 11 5.2 Securing Consumers’ Trust 11 5.3 Lack of Content Marketing 12 6 Development of Alternatives 13 6.1 Differentiation by Service Excellence 13 6.2 Improve Website and App Design 14 6.3 Increase Marketing Efforts 14 7 Selection of Alternatives – Differentiation by Excellent Service 15 7.1 Justification 15 7.2 SAVED 16 7.2.1 Staging 16 7.2.2 Arena 16 7.2.3 Vehicle 16 7.2.4 Economic Logic 16 7.2.5 Differentiators 16 8 Implementation Outline 17 8.1 Implementation 17 8.2 Changes to Value Network 17 8.2.1 Infrastructure Operations 17 8.2.2 Human Resource Management – Supporting activity to a Key activity 18 9 Environmental Sustainability 18 9.1 Impact 18 9.2 Action Plan 18 10 Conclusion 19 11 References 20 12 Appendices 25
Tourism growth has been remarkable in both domestic and international markets. The sector, albeit vulnerable to environmental changes, are resilient to economic and political adversities. Tourism industry comprises of interdependent subsets of primary services such as accommodation and secondary services of restaurants and retailers. It is a dynamic industry that includes a wide array of products (Evans, 2015). Its dynamism resulted from the rapid evolution of technology and consumer’s increasing literacy (Roger-Monzo, Marti-Sanchez & Guijarro-Garcia, 2015). Internet has impacted the travel industry, providing a new level of convenience towards planning and purchasing online. Consumers can compare, inquire and buy features, catapulting the online markets into high competition (Clemons, Hann & Hitt, 2002). Intermediaries must constantly increase its values and observe environmental trends to enhance tendencies of online bookings (Amaro & Duarte, 2015).
Asiatravel.com Holdings Ltd (“Asiatravel”) is an online platform that engages in sales of travel products. The Singapore-based company operates across 19 international offices, through the main offerings of Hotels, Flights, Tours and Packages (figure 1). Asiatravel also provides added services of instant confirmation and accepts various currencies to facilitate convenience, awarding them the Best Online Travel Agent (OTA) Award. The wholesale channel for corporate sales was successfully launched with the implementation of growth and corporate strategies. (Annual Report, 2016). Its B2B2C (business to business to consumer) platform as part of the benefits’ program for staffs was launched in 2015 in several regions such as Singapore and Thailand, catering to over 1.2 million corporate staff. In 2016, the concept was introduced to Indonesia and Vietnam (Asiatravel.com pushes corporate, 2016).
The following section analyses Asiatravel’s current performance and financial situation, followed by the external environment analysis of PEST, Porter’s five forces and SWOT. Internal analysis of Asiatravel’s values and competencies will be done before identifying Asiatravel’s problems. After developing several alternatives, it is decided that service differentiation is to be implemented with a section explaining SAVED strategies. An outline of implementation and changes to the value network will be explored and the report will end with an environmental analysis and conclusion.
Outbound tourism from China had a phenomenal growth of 53% in 2015 with USD$125 billion spending, making the Chinese market the highest spending source in travel and tourism. China will continue to rake in high revenue growth rates in following years and Asiatravel will continue to develop its China operations (Annual Report, 2016). A SGD$10 million convertible note agreement to finance bulk purchases of travel products would strengthen product competitiveness and is expected to be completed by 2017 (Asiatravel.com, 2017). While Asiatravel has successfully established its B2B concept, its B2C channel were neglected. As tourism continues to grow, Asiatravel should leverage on the growing consumer industry.
In 2016, Asiatravel and its subsidiary (the “Group” – figure 2) survived through intense competition with a growth of 14.8% in revenue. However, gross profit dropped (figure 3) as they were compelled to reduce its profit margin (Annual Report, 2016).
By September 2017, there was a revenue decrease of 11.1% as compared to 2016 (figure 4). The Group’s core product of hotel reservations sharply declined by 53.2%, however the loss was offset by its B2B business with a growth of 52.1% (Asiatravel.com, 2017). Its market share price as of 16th November 2017 is at SGD$0.067 and has been relatively stable for the past six months (figure 5) (Yahoo, 2017). Despite so, the Group has a lower net asset and a decreased cash balance (Asiatravel.com, 2017). A firm must be profitable to survive (Koumparoulis, 2013), the tumble of its finances indicates a need to implement strategies and improve its financial situations.
Tourism industries generally adopt the Convention of Tourism Ethics that covers obligations of all stakeholders towards being a responsible sector (UNWTO, 2017). The travel service sector is highly susceptible to external events such as political instability or terrorist attacks that are beyond organisations’ control. For example, attacks of September 11 decreased the American travel economy (Evans, 2015). Political decisions affect the economy’s currency, for example, the government’s decision to remain or exit the European Union reshapes its exchange rates (Koumparoulis, 2013).
Economic conditions affect organisations’ capital availability and influence consumer demands. An organisation’s selection of strategies depends on demands that prevail within growth conditions. A depressed economy threatens firms while government spending improves the resilience of capital markets (Koumparoulis, 2013). The labour market is a major component of an economy, and the tourism industry creates jobs and offers opportunities of higher income positions (Tourism industry gaining, 2017). Inflation, income levels and taxes directly alter the ability pay for travel services (Evans, 2015).
OTAs must be aware of demographic changes that influence consumer demands. Opportunities for differentiation are emerging (Koumparoulis, 2013) as travellers are becoming more knowledgeable and selective in products and services (Ghosh, 2017). OTAs should exploit consumer’s use of e-payments and develop strategies to entice the older populations who do not comprehend the use of the internet (Lee, Loke & Tan, 2013; Koumparoulis, 2013). Tourists are evidently conscientious about health and safety. As seen in India, travel agents have received tour cancellation requests due to air pollution (D’Cruze, 2017). OTAs must monitor trends and demands of destinations to increase online sales.
Consumers are reliant on technology in travel planning (Dubey, 2017) as internet give consumers the ability to make comparisons among travel products (Clemons et al, 2002). Technology could provide innovative,efficient and effective services to consumers, increasing OTAs’ competitive advantage. The increasing trend of e-commerce reveals that consumers are becoming more familiar with and embracing e-payments (Koumparoulis, 2013). However, new products could create new markets. Asiatravel who targets the mass market, will need to compete with other OTAs who target newly emerging independent travellers (Huang, 2017), potentially rendering the existing products undesirable.
According to Leiper (1975), the tourist industry includes organisations and facilities that serves tourists’ demands. The tourism marketing segment facilitates communication withinthe system and provide information for tourists. Travel agencies, promotion offices, tour wholesalers and travel writers are part of tourism marketing sector (Leiper, 1975). Asiatravel who specializes in delivering real-time information and travel products through Web services (Dogac et al., 2004), can be further defined as part of the Online Travel Agents (OTA) industry.
As a point of contact in linking tourism suppliers’ product and tourists, OTAs enables customers to search and purchase appropriate services and fares which are then booked and ticketed by Asiatravel (Clemons et al., 2002). These intermediaries provide benefits of reduced transaction costs, increased volume discounts, and eradicates the coordination mechanisms from other channels (Xiang, Wang, O’Leary & Fesenmaier 2015).
New entrants increase competitive pricing and limits the potential profit of an industry. The Internet has bridged the barrier of entry and reduced the gap between consumers and tourism network. Also, various transaction costs easily eliminated or reduced (Xiang et al., 2015). The online system involves less financial risks, leading to a high threat of new entrants (Evans, 2015). However, Asiatravel has the demand-side benefits of scale as buyers trust reputable companies hence limiting the customer’s inclination to buy from new firms (Porter, 2008).
OTAs are often in price competitions that hinges on their ability to offer higher value at reduced costs. They are also preoccupied in non-price competitions of advertising and branding to increase market share. Competitors such as Expedia, Booking.com and Zuji are large, reputable and have considerable market dominance which increases the rivalry. The mature market of OTAs and homogeneity of products also means competition is intense, but the exit barriers are relatively low, easing the intensity of rivalry (Evans, 2015). Consumers in traditional businesses often receive average product and services resulting from high switching costs. However, with e-businesses, consumers can easily switch between companies that offer more values (Kim, Nam & Stimpert, 2004).
On the demand side, consumers are introduced to a global market with low transaction costs and unlimited product offering (Díaz, Martín-Consuegra & Esteban, 2015). The vast number of suppliers within the industry inflates buyer’s choice and ability to compare products, raising the bargaining power of buyers. However, OTAs cater to independent travellers who buy in small quantities resulting in limited bargaining power (Evans, 2015). The wide availability of suppliers also results in low prices across the network, further reducing buyer’s ability to negotiate down prices. Additionally, it is not feasible to purchase independent features separately as it often leads to higher prices (Hill, Jones & Schilling, 2016).
Suppliers’ revenues are not dependent on the OTAs, allowing suppliers to bargain. Nonetheless, the power is reduced as products are rather homogeneous (Porter, 2008). OTAs gain massive market share and access distant consumers easily, which makes them attractive to suppliers. In turn, suppliers are willing to pay more to gain access to larger networks and hence increasing OTAs’ returns to scale (Díaz et al., 2015). Moreover, low switching costs and organisations buying in relatively massive quantities further reduces suppliers’ power (Evans, 2015).
OTAs operate in a time-based environment where consumers favour instantaneous and valid information (Buhalis & Zoge, 2007). The reliance on technology and accessibility has directed consumers to online booking services, while traditional travel agencies see a decrease in sales. The Internet dominates pre-travel planning and provision of information (Xiang et al., 2015) that are more convenient and efficient. Switching costs in the traditional markets for consumers are typically of monetary value and is replaced by new type of costs in the digital world. These new costs include efficiency and convenience for the consumers (Clemons et al., 2002). In the speed-based context, consumers have disincentive to switch to substitutes like Chan Brothers, CTC Travel and Trafalgar US.
The Internet is a low cost and wide-reaching medium. Asiatravel maintains a strong customer base by providing instant confirmation, multi-currency channels and a wide range of products. As a mature company with international experience, Asiatravel can expand operations easily and successfully as seen with its China operations. It was also awarded best OTA in Asia Pacific again in 2017 (Travel agency, 2017), increasing its competitive edge. Consumers demand customization in travel experiences (Travel and hospitality, 2017) that Asiatravel can provide.
Despite the wide array of products, the features are similar among competitors’. It is difficult for consumers to differentiate product and services, thus creating the problem of attracting and retaining customers. Asiatravel reduced its advertising efforts which could have also reduced its market presence and the company expenses for staff wages had increased as China operations began (Asiatravel, 2017). As an intermediary, Asiatravel firm collects commission from tourism suppliers as consumers purchase a product (Clemons et al., 2002), resulting in minimal profit margins.
Asiatravel may partner with other OTAs to increase market share and reduce competitions. Expedia partnered with Travelocity in 2014 to counter the intense market (Partnering with Travelocity, 2014) and has since acquired it. Consolidation allows organisations to increase profits from consumer sales and reduces suppliers’ bargaining power (Tuttle, 2015). Branding strategies may be created to target travellers with more disposable income or leisure time. Specific markets are growing, providing Asiatravel the opportunity to target Muslim travellers (Young Muslims to drive, 2017) and elderly citizens who have the financial freedom and time (Sathyendran, 2017). Technology creates new products that can cater to new markets (Huang, 2017), hence Asiatravel can adopt technologies that can analyse and monitor booking trends to adapt to customer behaviours and target niche markets (Travel and hospitality, 2017).
Competitors offering similar services are constantly emerging, reducing Asiatravel’s market share and profitability. Asiatravel must overcome competition from companies beyond the OTA industry like TripAdvisor and Travelzoo who offers hotel booking. Asiatravel is also vulnerable to cyber-attacks and general safety which could affect consumer demands. Consumer preferences are constantly changing that compels OTAs to react quickly. (Travel and hospitality, 2017). With the extensive choices of available OTAs, it is also difficult to attract and maintain customer loyalty.
Asiatravel seeks to provide a one-stop service to travellers seeking cost savings, convenience and reliability (About Asiatravel.com, 2015). Its product offering caters to all tourists, but focuses on Generation Ys and Zs. As Gen Y moves into a new life stage as assertive traveller, they demand personalised travel packages and unique benefits, all accessed using modern technology. The generation is impatient, crave instant gratification and actionable information, hence OTAs who cannot provide the appropriate content will be abandoned (White, 2017).
The Gen Z born between 1990s to 2010s will account for 40% of consumers worldwide by 2020. Although they appreciate digital connectivity and multi-task across several platforms, Gen Zs have a short attention span that OTAs need to consider in creating marketing contents. Travel companies will also need to create inspiring videos as Gen Z watches more videos online than other age groups. Like the Gen Ys, they are also cautious with money (The new Gen, 2017).
Both the Gen Y and Z rely on social media and digital platforms for travel decisions and will be highly affected by word-of-mouth reviews. Personalized campaigns will relate better with these generations and service approaches should be simple, clear, honest and sincere (Willmore, 2017). Asiatravel also serve B2B market, targeting large companies as part of staff benefits’ program where employees enjoy discounted rates (Annual Report, 2016).
Unlike traditional agencies who focus only on the demand or supply of the value chain, Asiatravel is unique as strength of supply and demand are combined as they perform duties of a retail agent and as in-bound/out-bound wholesalers. The acquisition and provision of travel products creates a convenient approach, adding values for consumers.
Being a publicly listed company helped establish a strong position within the industry (About Asiatravel.com, 2015). Its brand is profoundly present on online search engines, and reviewed across multiple websites. Asiatravel also won the TTG’s Best OTA award for five consecutive year (Travel agency award, 2017), emphasising its brand as a proficiency.
Asiatravel’s strongest competency is its huge international productportfolio (Annual Report, 2016). The company provides additional appreciable features such as late check-outs, 24/7 call-centre and best price guarantees. Its products for the B2B sector are remarkably customisable to suit group travel (About Asiatravel.com, 2015).
Structure of the Value Network (VN) is more fluid and suitable for e-businesses comparing to the traditional value chain. In VN, three factors are equally important for values to be exchanged. Firstly, goods, services and revenue element, next, the knowledge factor and lastly the intangible benefits (figure 6) (Allee, 2000).
Asiatravel’s service platform creates a link between travellers and tourism suppliers, easing the consumer’s need to search across multiple sites to obtain best cost-saving deals. Its operational process begins as information from the customer is collected and submitted to Computer Reservations System (CRS) which searches for availability. The results are then presented to the customer for selection. After payment, OTA processes the booking, receives a commission and provides ticketing documents (Clemons, et al., 2002). The service to link users creates value and once the activity is completed, the link ends (Stabell & Fjeldstad, 1998). OTAs facilitates the sharing of information and services. In exchange, economic benefits are received along with intangible benefits such as customer loyalty (Allee, 2000).
Information infrastructure must be capable to constantly serve consumers. The network capacity should cover geographical boundaries and sustain fast synchronization of multiple activities (Stabell & Fjeldstad, 1998). The element of knowledge supports the service value chain. As OTAs depends on the exchange of knowledge and information, it is important that Asiatravel has a structure that can deliver these data (Allee, 2000). The network should also be eminently secure as privacy and security risks curtail customers’ intention towards online purchases (Sahney, Ghosh, & Shrivastava, 2013).
In relation to online purchases, consumers have raised concerns of credibility, poor web design and a lack of personalized services.The web has allowed price and products comparison, and consumers who prefer to be in control of a more flexible and personalised travel program, select the most suitable holiday (Xiang et al., 2015). Asiatravel is at a disadvantage as they offer commodified all-inclusive packages to individual travellers and customisation to groups only (About AsiaTravel.com, 2015). E-services are often impersonal (Roger-Monzo et al., 2015), and warmer public interaction can meet expectations, build relationship and foster trust (Kindström, 2010). Although traditional agencies are more expensive and inconvenient, they provide the human touch and personalised service, raising questions about maintaining quality service in the e-environment (Kaynama & Black, 2000).
Gen Ys are satisfied with text messages and email communications but Gen Zs prefer more human contact and face-to-face interaction (Willmore, 2017). Customers can submit an enquiry online and contact details of Asiatravel are easily found online. Its app lacks contact details or means of speaking to an agent, highlighting the absence of customer service. Negative reviews on various sites broached on Asiatravel’s inferior services (MouthShut.com, 2017) that impacts reputation and consumer’s trust (Jøsang, Ismail, & Boyd, 2007).
People are more prone to purchasing online if higher trust is perceived in online shopping. Hence, trust plays a vital role as consumers hesitate upon uncertainties and risks. When consumers trust the organisation, OTAs can attract and maintain long-term relationships while reducing worries in online transactions. As part of the digital world, OTAs are vulnerable to internet security issues. Privacy and security are factors towards customers’ hesitation to buy online where customer’s personal data can be misused by third parties (Sahney et al., 2013). The reluctance of releasing personal information due to fear of hackers and viruses remains an obstacle (Rayman-Bacchus & Molina, 2001). Other factors towards a willingness to buy online is consumers’ perception of potential risks or loss compared to buying offline and the firm’s reputation (Amaro & Duarte, 2015).
In 2017, Asiatravel’s performance declined by 11.1%. It could be attributed to the reduction in marketing efforts (Asiatravel.com, 2017). Despite receiving multiple best OTA awards, Asiatravel is not ranked within the list of top Travel Website (figure 7) (Top websites ranking, 2017), proving that Asiatravel lacks marketing power and does not project its product branding in the market. Asiatravel must improve its branding in the B2C business to target the Gen Y and Z consumers.
Adopting a focused differentiation strategy, Asiatravel can provide clients with impeccable services and customize its products to suit travellers’ needs (Hill et al., 2016). Developing differentiation and personalised strategies are imperative to improving service quality in professional assistance (Díaz et al., 2015). Other than providing reliable information, customers demand for flexibility, user-friendliness and individualized services with numerous destination, entertainment and serviceoptions (Ayazlar, 2014). Remarkable services and specialized products adds value to traveller’s experience, resulting in higher value-loyalty retention that positively impacts online purchases (Silva & Gonçalves, 2016).
Improvements in management boosts quality performance which satisfy buyers and ultimately enhances competitive advantage (Molina-Azorín, Tarí, Pereira-Moliner, Lopez-Gamero & Pertusa-Ortega, 2015). Employee empowerment cultivates a commitment to deliver Asiatravel’s brand values and perform efficiently with positive customer interactions (Kumar & Pansari 2016). Workers’ behaviour, attitude and commitment to superior service can affect customer’s perception of service quality and judge the service encounter positively or negatively (Kaynama & Black, 2000). Staffs can be motivated to present excellent customer service by reinforcing employee-organisation activities within dimensions of employee satisfaction, performance and rewards (Kumar & Pansari 2016).
SAVED: In the next 2 years, Asiatravel will compete in the OTA industry with fully customisable travel products based on customer’s preference. Chat services will be employed to provide immediate responses and Asiatravel will train and develop employees’ service skills in international offices to provide impeccable services in creating the holiday experience. Employee programs developed by Human Resources will ensure appropriate rewardsare implemented to motivate employees towards a right attitude in achieving sales target and ensure profitability.
A reliable website design in terms of structure, content, usability and efficient navigation attracts customers. Website design that is efficient and easy to handle, enhances the possibility of repeat purchases. The display of the company logo, up-to-date product and service information, third party certifications play a role in invoking trust. Consumers’ perceptions of websites affect their trust in companies and drives them to buy online. Guarantee of online data privacy and security also strengthens consumers’ trust (Sahney et al., 2013). OTAs may utilize Blockchain technology to improve cyber defences, prevent fraudulent activities and detect data tampering based on its characteristics of immutability, transparency, data encryption and operational resilience (Piscini, Dalton & Kehoe, 2017).
SAVED: In the next 1 year, Asiatravel will upgrade its website and app features to be aesthetically pleasing, easy to use and engaging to effectively attract and retain international travellers shopping online. The marketing team will continue to improve Asiatravel’s website with client feedbacks and the Information Technology department will constantly monitor security risks to minimize security threats. Asiatravel will implement Blockchain when the technology is ready.
To remain competitive, Asiatravel.com should invest in content marketing with social media as its marketing platform. With strong marketing power, Asiatravel can build its brand, increase profit and sales conversions. To reach out to the tech-savvy Gen Xs and Ys, Asiatravel should advertise on social media such as Facebook and Instagram (LaReau, 2013). Asiatravel should also invest in traditional marketing on public facilities as billions of passengers travel daily on public transports (Saghapour, Moridpour & Thompson, 2016). Asiatravel reduced advertisement and promotion efforts that affected its B2C revenue, hence to increase profitability, Asiatravel needs to increase publicity effort for consumers once again.
SAVED: Within a year, Asiatravel will enhance and revamp its marketing strategy, creating more awareness in Asia-Pacific to increase revenue and better reputation. The promotional efforts will begin with customer engagements in social media platforms and creating brand awareness by advertising on public spaces
Within the operational process, customer’s search criteria are submitted to the CRS to obtain a range of available services and pay the CRS for each request but only collects an earning when customer purchases the service. As only 1% to 5% of these users makes a booking, OTAs must increase the probability of purchase to maximize profits and a key strategy is service differentiation (Clemons et al., 2002). Differentiation can establish an advantage for e-businesses. where customer service differentiation emphasizes on convenience, security and efficiency (Kim et al., 2004). The pursuit of excellent service attains a subtle but impactful form of competitive advantage in satisfying customer expectations which is extremely important (Kaynama & Black, 2000).
As consumers are increasingly knowledgeable, they are becoming more selective with online purchases. Customers demand personalised and closer relations with providers (Kaynama & Black, 2000) and long-term relationships foster stronger brand devotion and profitability as nurturing loyalty costs less than attracting new clienteles (Silva &Gonçalves, 2016). Promotional efforts and increasing margin are also easier with loyal customers. Quality service also impacts organisational productivity through reduced costs associated with correcting errors (Kaynama & Black, 2000). Additionally, outstanding service improves firm’s reputation that determines trust. Reputation are based on community reviews and is a measure of the organisation’s trustworthiness (Jøsang et al., 2007). Customer ratings impact strongly on other consumer’s evaluation and purchase decisions, and negative impact often have lasting impacts. Thus, employees should learn to respond in a timely manner (Sparks, So & Bradley, 2016).
As services with human contact yields favourable customer inferences (Sparks et al., 2016) it is important to focus on service differentiation that also boosts trust.
The focus on improving service with increased customer interactions and employee development will span over three years for all offices where Asiatravel will not expand its operations geographically to focus on promoting personalised offerings and devote on employees’ growth.
Focusing across global boundaries, Asiatravel will compete in the OTA industry to sustain a large portfolio of travel products that are fully customisable and flexible according to customer’s preference with impeccable service. Asiatravel will use social media platforms to engage Gen Y and Z consumers and spread brand awareness.
Through internal developments, employees will undergo training and coaching to provide services and respond to disputes or problems. Asiatravel would encourage additional courses to ensure the staffs are up-to-date. Human resources programs will ensure an appropriate quality of work-life with rewards to motivate employees towards an ideal attitude and profitability. Internal and external communications will be improved to provide employees with necessary resources to efficiently assist customers.
Training and development will be carried out internally with no additional costs from external coaches. The increased in customer service would enhance Asiatravel’s reputation and consumers’ trust that would raise the sales conversion rate. Offering in-demand products and providing of unmatchable services means Asiatravel can charge higher prices for premium experiences.
With in-depth market research on customers’ needs, Asiatravel will provide relevant travel products with exceptional services to interact with customers in a timely fashion. The superior services from pre-trip planning to post-trip evaluations will drastically improve its reputation and become a top choice for consumers.
A long-term strategy in the period of three years will focus to provide continuous training for employees especially those that interact with customers frequently. Trainings in interpersonal communication will enhance customer experience that consumers appreciate. When consumers receive excellence service, positive word of mouth will spread, achieving internal goals of customer attraction and loyalty retention (Berman, 2016). The differentiation strategy will involve distinguishing Asiatravel from its rivals by offering services that are beyond customers’ expectation (Hill et al., 2017). Concurrently, when staffs receive pleasant feedbacks for their quality service, it will increase pride and motivate employees to work harder (Forsyth, 2006). Quality management and employee engagement should be implemented as a quality culture and with genuine support of management (Molina-Azorín et al., 2015).
Changes to service provisioning includes pre-trip guidance, on-trip follow-ups and post-trip feedback acquisition. Asiatravel’s app and website are to be enhanced with supporting features that enables easy accessibility, providing 24/7 user-friendly online chat support functions. The chat feature offers real-time responses to customer’s queries and requests for personalised itineraries. Reminder services by text or on the app, facilitates tracking of itinerary with information such as pick-up time and place to help consumers manage their schedule. Feedbacks and complains are followed up efficiently with appropriate responses, and collated for further improvements.
To include the chat function, changes to the network system and databases are necessary. Existing Integrated Management System enabling smooth connectivity needs to be maintained frequently to ensure a fast network infrastructure and provide information to both employees and consumers. This enhances customer’s experience which is also important, as quality service involve reducing friction in customer experience.
The HR activity will become a key component in Asiatravel’s value chain in providing trainings or workshops to update employees with the latest industry knowledge and customer service skills. Employee reward programs involving key performance indicators to reward pro-active employees whose performance exceeds beyond expectation (Parmenter, 2015).
Asiatravel’s impact on the environment is lesser comparing to traditional companies. Online setting eliminates consumers’ need to travel to offices and associated carbon footprints. However, Internet surfing do contribute to carbon emissions as data centres, housing numerous servers, requires considerable energy to function (Oakley, 2017). Furthermore, the tourism industry contributes to pollution and many environmental problems (Corradi, 2017) hence, Asiatravel must implement minuscule plans within the organization to mitigate climate change.
Organizations like Google are adopting sustainability approach to reduce their environmental impacts. For example, Google provides biodiesel buses for staff and employees are encouraged to car-pool and use bio-degradable products to reduce carbon emissions (Diggelen, 2011). Asiatravel should adopt similar environmental practices of reuse, reduce and recycle to ensure efficient use of resources and encourage saving electricity and water.
In the competitive industry of OTAs, speed and flexibility are required, or else consumers will abandon the site and purchase elsewhere. Often, customer dissatisfaction and declining service quality dissuades consumers from buying. While trust and security can reinforce likelihood of purchase, service differentiation will provide superior performance towards attracting and retaining customers. Asiatravel will need to provide a comprehensive customer service with increased human interface to mitigate negative reviews and enhance its reputation.
Success depends on building a vibrant network of trusted relationships that could facilitate the exchange of values. Fostering loyalty requires lower costs hence resulting in sustainable profits and is an important strategy. Asiatravel’s ability to adapt and respond to changing consumer demands are significant towards being profitable.
Asiatravel also need to focus on employee developments. Disengaged employees will not attend to consumers’ needs and could impact negatively on the firm’s brand and productivity. For Asiatravel to successfully sustain its competitive advantage, differentiation strategies must be implemented in augmenting its service quality to provide personalised interactions and customisable products.
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Figure 1 – Asiatravel provides three core products of Flight, Hotel and Tour service a lot with secondary activities. Its multi-currency payment and instant confirmation adds value towards customer satisfaction.
Source: Annual Report (2016)
Figure 2 – Asiatravel and its subsidiary makes up ‘the Group’.
Source: Annual Report (2016)
Figure 3 – A decrease in profit margin was seen in 2016 as Asiatravel competes in the intense environment and were forced to reduce mark-ups.
Source: adapted from Barrons (2017)
Figure 4 –Revenue decrease of 11.1% as compared to 2016.
Source: adapted from Asiatravel.com (2017)
Figure 5 – Constant market share prices suggest Asiatravel is relative stable as a mature organisation.
Source: adapted from Yahoo (2017)
Figure 6 –A Value Network facilitates the exchange of values between consumers and firms. OTAs provides goods and services, knowledge in the form of information and intangible benefits to receive economic benefits, knowledge and other intangible benefits from customers.
Source: Allee (2000)
Figure 7 – List of top travel websites. Asiatravel is not ranked in the top 50, illustrating its lack of content marketing power.
Figure 8 – Summary of SWOT.
· Internet is low-cost and wide-reaching
· Provision of instant booking and multi-currency payment
· Large portfolio of product
· Mature company with international experience
· Strong brand
· Capable in providing in personalized travel packages
· Homogenous product offering
· Low budget on advertising and promotions
· High expenses on headcount
· Small profit margin
· Partnership with competitors
· Consolidation strategies
· Travellers have higher disposable income and leisure time
· Target growing market e.g. Muslim travellers and senior travellers
· Target niche markets
· Technology that analyses booking trends and customer behaviours
· Emerging competitors within and beyond the industry
· Cyber-attacks and general safety
· Changing consumer demands
· Customer loyalty
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