Livingstontravels.com

MA-Thesis / Master von Hernán Camps

Abstract:

The use of electronic and other mechanized methods to exchange business transactions and other information through interconnected computers is not just a technological change but also a fundamental shift in mindset and in the way of doing business today.

There are great new opportunities for the e-business, which have not yet been explored. Technology supports while does not limit the amount of opportunities but allows a whole new set of competitive advantages in a global scenario where some of the rules of the game have change, even though, the most basic principles of business remain the same.

There is potential for acting globally with the support of the communications technologies. Additionally, the reduction of regulatory barriers in most of the countries stretches the limits of e-commerce around the world. However, there are still barriers such as the paying mechanisms, currencies or the fiscal and legal issues.

Even though the amount of opportunities that technology provides to the market place is surprising, there is no technology that can help with out a clear idea of the business objectives to be achieved on the net.

Both tourism and Web based Electronic Commerce are growing and changing rapidly. Two hundred and thirty percent increased in online holiday sales over 1997. Travel is currently the most purchased product online having surpassed computer equipment. In 1999 US$5 billion was spent at travel web sites. Research indicates this figure will increase six times to US$30 billion in 2001. Given these opportunities in the market place, this project will set the tools to stimulate the creating process, to test the idea and to work out its implications.

Livingstontravels.com aims to be a niche player among the online travel agencies focusing mainly on satisfying the needs of young travelers with an interest and respect towards other cultures and resorts around the world. Therefore, Livingstontravels.com will not only handle reservations but it will also offer some other bundled services which will help to understand better the visited country and establish contact with the native people through the web site virtual community before starting the trip.

Table of Contents:

	SECTION 1: OVERVIEW	1
1.	INTRODUCTION: WORLDWIDE INTERNET TRAVEL PORTAL	2
2.	PROBLEM FORMULATION	3
3.	METHODOLOGY	5
	SECTION 2: INDUSTRY ANALYSIS	9
4.	DEFINITION OF THE INDUSTRY	10
4.1	VIRTUAL COMMUNITY INDUSTRY VS ONLINE TRAVEL INDUSTRY	10
4.2	WHO IS THE CLIENT?	11
4.3	TRAVELERS MOTIVATION AND NEEDS	11
4.4	THE HOLIDAY PROCESS	12
4.5	HOW ARE THE NECESSITIES COVERED ONLINE; TRHOUGH WHICH FUNCTIONS AND TECHNOLOGIES	13
5.	EXOGENOUS FORCES AFFECTING THE INDUSTRY	14
5.1	MACROECONOMICS VARIABLES	14
5.1.1	Political	14
5.1.2	Economic Environment and its Relation to Consumption	14
5.1.3	Demographic Variables	16
5.2	E-CUSTOMER PREFERENCES	18
5.3	TECHNOLOGY	18
6.	ENDOGENOUS FORCES: PORTER’S FIVE FORCES DRIVING INDUSTRY COMPETITION	21
6.1	THREAT OF ENTRY	21
6.2	PRESSURE FROM SUBSTITUTE PRODUCTS/POSSIBILITIES TO ENTER OTHER SEGMENTS OF SERVICE EXPANDING THE CAKE	22
6.3	BARGAINING POWER OF BUYERS	23
6.4	BARGAINING POWER OF SUPPLIERS	24
6.4.1	Carriers	24
6.4.2	Lodging	27
6.4.3	Car Rental Firms	27
6.4.4	Global Distribution Systems (GDS)	29
6.4.5	Food Services, Attractions & Entertainment, Resorts	33
6.5	INTENSITY OF RIVALRY AMONG EXISTING COMPETITORS	33
6.5.1	Description of Main Competitors and their Strategies vs. their Profitability	33
6.5.2	Travel Agencies	34
6.5.3	Wholesalers	35
6.5.4	Tour Operators	35
6.5.5	Specialty Intermediaries	36
6.5.6	Virtual Communities	36
6.5.7	Benchmark and Strategic Group Maps	37
7.	CONCLUSION—FORCES AFFECTING THE INDUSTRY	44
8.	TRENDS AND FUTURE SCENARIOS	48
8.1	USERS BROADCAST	48
8.2	WHO WILL PROBABLY MAKE THE NEXT FUTURE CHANGES AND WHICH ONES WILL THOSE BE	51
8.2.1	The Future Role of Travel Agents	51
8.2.2	New Distribution Channels	52
8.3	FUTURE SCENARIOS	53
9.	OPPORTUNITIES AND THREATS, WEAKNESSES AND STRENGTHS OF WORLDWIDE INTERNET TRAVEL WITHIN THE INDUSTRY	56
9.1	STRENGTHS	56
9.2	WEAKNESSES	56
9.3	OPPORTUNITIES	56
9.4	THREATS	58
	SECTION 3: BUSINESS STRATEGY	59
10.	CORPORATE STRATEGY	60
10.1	VISION OF THE FIRM	60
10.2	MISSION OF THE FIRM	60
10.3	OBJECTIVES OF THE FIRM	60
10.4	STRATEGIC POSITIONING—GENERIC COMPETITIVE STRATEGY	61
10.5	COMPETITION VS COOPERATION AND NETWORKING	63
10.6	CREATION OF NEW ASSETS FOR FUTURE STRATEGIES	65
10.7	HOW TO ERODE OR IMITATE COMPETITORS COMPETITIVE ADVANTAGES	65
10.8	POOL OF FUTURE STRATEGIES	66
10.8.1	Informediary Strategy:	66
10.8.2	Bundling Strategy	68
11.	FUNCTIONAL STRATEGY	70
11.1	MARKETING STRATEGY	70
11.2	HUMAN RESOURCE STRATEGY	72
11.3	FINANCIAL STRATEGY	72
12.	OPERATIVE STRATEGY	73
12.1	SERVICE ANALYSIS	73
12.2	ELECTION OF TARGET COUNTRIES	76
12.3	DISTRIBUTION CHANNEL	77
12.4	POTENTIAL PARTNERS	78
	SECTION 3: CORPORATE ARCHITECTURE	80
13.	CORPORATE ARCHITECTURE	81
13.1	VALUE CHAIN ANALYSIS	81
13.2	RBV OF THE FIRM ANALYSIS	82
13.2.1	Capabilities	82
13.2.2	Resources	83
13.2.3	Core Competencies	84
14.	TECHNOLOGICAL ARCHITECTURE	85
14.1	PRESENTATION MODULE	85
14.2	APPLICATION MODULE	86
14.3	DATA BASE MODULE	86
14.4	PAYMENT SYSTEM	86
	SECTION 4: IMPLEMENTATION OF THE STRATEGY	87
15.	HOW, WHERE, WHEN AND HOW MUCH TO INVEST (A BUDGET)	88
16.	FINANCIAL ANALYSIS	90
17.	CORPORATE STRUCTURE	93
	APPENDIX I: THE HOLIDAY PROCESS	94
17.1.1	Planning	94
17.1.2	Purchasing	94
17.1.3	Pricing	94
17.1.4	Marketing	95
17.1.5	Providing	96
17.1.6	Support processes	96
	APPENDIX II: IT TENDENCIES	97
	APPENDIX III: MAIN TRAVEL AGENCIES	105
	BIBLIOGRAPHY	120