Travel Reference
In-Depth Information
exploration is needed to determine what factors drive or deter these travel agents' engagement
in e-commerce. Suppliers attempting to compete internationally must manage their distribution
effectively. This effective management will involve claiming market shares while managing cost
and satisfying market share in order to retain and maintain control.
Establishing a presence in particular markets affects the bottom line of organizations. Suppliers
however must do cost benefi t analyses to ensure that benefi ts in dollars outweigh the cost of
gaining market access and distributing products. Many fi rms such as Google do this through
strategies that enable them to give away the product free of charge. Terpstra (1991) adds from a
marketing perspective that there are three distribution tasks: gaining entry into a foreign
market, serving many markets at the same time and establishing presence as an insider to each
market. It is not acceptable to assume that good products will sell themselves, neither is it
advisable to imagine that success today will carry forward into tomorrow (Christopher 1998).
On this basis organizations are seeking avenues through which to meet the needs of markets
while minimizing their distribution costs. With contemporary theorists (Woodward 2000; Smith
2007) arguing that distribution involves the dissemination of information, the means of booking
and purchasing, product bundling and packaging, researchers should no longer merely focus on
the distribution strategies of suppliers but pay more keen attention to other fi rms such as
intermediaries who must also make critical decisions about how they reach their markets and
transact business.
Reduced transaction cost and commission present a strong case for complete elimination
of travel intermediaries (Buhalis and Licata 2002). Hatton (2004) states that the reduction of
commissions paid and the competition provided by the Internet present uncertain operating
environments. In 2003, British Airways reduced agents' income in the UK to 1 per cent. What is
clear from these events is that organizations must do what is necessary to ensure profi tability; this
may either be done by fi nding new ways to increase revenues or by reducing costs, or a
combination of both. With infl ation, competition and rising oil prices, revenue increases in many
cases will only be marginal as cheaper prices may not be passed on to the consumers. Due to
high fuel costs and competition, the heavy focus is therefore on reducing cost especially those
related to distribution.
Pearce (2009) argues that suppliers and their location destinations must seek to develop more
effective distribution strategies. He further suggests that the tourism marketing literature has
taken a tier-by-tier approach rather than a network approach to understanding distribution
design, which has led to channel width considerations being poorly addressed. A network
approach, however, while useful in drawing attention to relationships between many players,
does not address the deeper operational concerns of specifi c players. Intermediaries do not
operate at either end of the supply chain therefore a look at their buying relationship with
suppliers is a critical element of the debate surrounding the strategies which they employ. The
concept of strategic purchasing is not a new one and theorists (Eames and Norkus 1988) have
long discussed relationships in business to business (B2B) transactions. They have in fact suggested
that business buyers should create a strategy that consists of four elements: self-analysis, vendor-
analysis, vendor-performance analysis and programme review. The purchaser must conduct
detailed research before entering into an agreement. This is vital as the stock or input purchased
from another business will affect the fi nal output of the buying company.
ICT strategy and adoption
ICT can change the structure of an industry and alter rules of competition (Porter and Millar
1985; Porter 2001). ICT can be used to create sustainable competitive advantage and provide
