The travel service industry is made up of a very complex web of different relationships in between various suppliers, destination marketing organisations, tourism products, travel agents and tour operator (Phalusuk et al. 2018). It is one of the fastest developing industry in the contemporary world. The travel service providing business comprise of functions and business which help people with planning and reserving the components of the experience of the visitors. There are several travel agencies in United Kingdom that focus on the areas like travel, travel review, restaurant review, booking sites and attractions. One of such companies, although a self-made business, is Trip Go. The main aim of this business is to make it easier for its customers who are planning for tours, travels and trips for getting relevant information which would make the whole trip easier, safe and smooth to plan.
This report shall elaborate on discussing the business model concept of this company by means of a business model canvas that consist of nine categories. Furthermore, it shall assess and analyse the market along with its competitive environment in which the business would operate by means of Porter’s five forces and PESTLE tool. With the same, the paper shall also shed light on the advantages and the disadvantages of the business model that have been used for Trip Go. It will also highlight the future opportunities and the risks present for the business and would identify the key success factors for its success in the market environment (KPIs).
It is to note that TripGo would follow the B2C business model for its business operation. This is due to the fact that its customers shall be buying the services from the company for their own personal needs. The very first thing that supports and indicates this claim is that most of the website content is in relation to the topics such as guides, vacation rentals etc. However, the business model of the company has been explained below:
Areas |
Activities |
Expenses |
Selling and marketing of the business products and services (Direct costs) |
Online advertisement/ Offline advertisement and public relations/ Affiliate program commissions, promotion |
$756 million |
Indirect Costs |
Salaries, benefits, commissions, stock based compensation costs for the sales, customer and sales support |
$202 million |
Technology and content |
Costs of revenue, Salaries for the purpose of staff designing and website/application developing |
$213 million |
Total cost |
$1171 million |
2.2.1. PESTLE Analysis
The political, Economic, Social, Technological, Legal and Environmental factors that would affect the business of TripGo in UK market are mentioned below:
Political |
Economic |
Social |
§ Favoured partners for trading § Taxation § Work week regulations in the internet information providers § Pricing regulations § Anti-trust laws § Wage legislation- overtime and minimum wage (Hammer and Plugor 2016) § Inefficient bureaucracy § Promotion of the service industry |
§ Growing GDP § Cash based UK economy (Montgomerie and Budenbender 2015) § Growth and development in the service industry § Inflation and interest rates § Productivity and labour cost in the UK economy § Discretionary income § Rate of unemployment § Efficiency of the UK financial markets § Rates of exchange and the stability of the currency of the host country |
§ Growing population § Rate of literacy § Leisure interests § Attitudes of the customers towards health and environmental consciousness § Power and class structure in the UK society |
Technological |
Legal |
Environmental |
§ Educated to operate online economic exchanges by the technology pioneers § Digitally engaged population |
§ Data protection law § Health and safety law § Employment law (Bennett and Raab 2017) § E-commerce and consumer protection law § Discrimination law § Intellectual property law |
§ Climate change § Weather § Attitudes of the customers towards renewable energy § Water and air pollution regulations |
2.2.2. Porter’s five forces
Porter’s five forces is one of the most efficient framework for analysing the forces that shapes the competition of a business within an industry (E. Dobbs 2014). Analysis of the five forces that are could influence the company are mentioned below:
Strengths |
Weaknesses |
Opportunities |
Threats |
§ Easy to use § Good position § The website offers to choose from three different languages- English, French and Dutch. § Skilled agents |
§ New in the market § Perception of clients that the reviews are fake § Expensive |
§ Increasing demand § Attracting other partners § New markets § Growing rates § Acquiring global reach |
§ High competition from reputable companies like Tripadvisor, Bing, Expedia, Orbitz etc. § Travel disruptions § Market volatility § Regulations of government |
As it is already mentioned that the Business Model that would be used by TripGo is that of the Agency business model. However, like any other business model, the Agency Business model, too, have its own advantages and disadvantages. They are mentioned below:
Advantages: The main advantages of using agency business model is that the owner of the business would not have to pay the salary for the workers working under the name of the company, the expenditure of cars or another offices of sales (DaSilva and Trkman 2014). With the same, by making use of agents to sell the product is very beneficial. This is because these agents are very easy to be recruited as compared to the other experienced sales executives who have specialist skills and knowledge. Furthermore, making use of agents could be cost-effective for reaching varieties of markets (Macaulay 2018). Moreover, there are some markets, including the international markets that are very difficult to be divided without any experience, knowledge and contacts of the locals.
Disadvantages: The main disadvantage of this business model is that sometimes, it could be very difficult to manage and control the activities of the agents as well as to ensure that they are working hard in behalf of the business owner (Rai and Henry 2016). There might be several agents who might not sell the products and services in the way that the business owner do not like. Also, several agents could sell the products to the customers who would undermine the product integrity. All these are some of the significant disadvantages of agency business model. This is because, here, the owner has no control over the agents and the clients. Even, these agents could be entitled to termination and compensation of the contract if they rupture or breach the agreement.
As per Kritikos, Plexousakis and Woitsch (2017), performance indicator or business metrics are very important for any company for knowing and assessing its business’s health. Trip Go would be a completely web-based company and therefore, the below mentioned metrics would be of the most importance:
3. Conclusion
Hence from the above analysis it is to state that the Trip Go would be built on some main points such as- focusing on the booking activities, differentiating by providing prices across the mobile application and other websites and heavily spending on the advertising. It would follow the agency business model as it would help the business owner to lead the business effectively without any burden of salary payment and monitoring. However, there are several factors that are working as some operating challenges for Trip Go in United Kingdom. There are some political and legal barriers like inefficient bureaucracy and political disagreement that could influence successful operation of the business in the market. Notwithstanding this fact, Trip Go possess several strengths that could help it in gaining more competitive advantage from its competitors and they include efficient and easy to use websites and skilled agents develop the business.
References:
Anzalota, J. and Schneider, A., 2018. Computer based system for evaluating options in an eclectic array of product and service attributes in the travel services industry. U.S. Patent Application 15/417,762.
Bennett, C.J. and Raab, C.D., 2017. The governance of privacy: Policy instruments in global perspective. Routledge.
DaSilva, C.M. and Trkman, P., 2014. Business model: What it is and what it is not. Long range planning, 47(6), pp.379-389.
Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Hammer, N. and Plugor, R., 2016. Near?sourcing UK apparel: value chain restructuring, productivity and the informal economy. Industrial Relations Journal, 47(5-6), pp.402-416.
Kritikos, K., Plexousakis, D. and Woitsch, R., 2017. Towards Semantic KPI Measurement. In CLOSER (pp. 63-74).
Macaulay, S., 2018. Non-contractual relations in business: A preliminary study. In The Law and Society Canon (pp. 155-167). Routledge.
Montgomerie, J. and Büdenbender, M., 2015. Round the houses: Homeownership and failures of asset-based welfare in the United Kingdom. New Political Economy, 20(3), pp.386-405.
Phalusuk, C., Blut, M., Schoefer, K. and Ness, M., 2018, July. SERVICE FAILURES WITHIN SERVICE DELIVERY NETWORKS: A QUALITATIVE STUDY IN TRAVEL AND TOURSIM INDUSTRY. In 2018 Global Marketing Conference at Tokyo (pp. 604-605).
Rai, V. and Henry, A.D., 2016. Agent-based modelling of consumer energy choices. Nature Climate Change, 6(6), p.556.
Tukker, A., 2015. Product services for a resource-efficient and circular economy–a review. Journal of cleaner production, 97, pp.76-91.
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