one page of opinion

BACKGROUND and HISTORY

Online travel world has been around for well over twenty years, with the first starting in the mid-1990s. The idea of online travel allowed a person to search and buy at the click of a button. In 1994 a company based in Palo Alto named ITN was the first to book an online airline ticket, with a flight from San Francisco to Las Vegas. The following year Microsoft, which is one of the most prestigious technology companies began their journey into the online travel services with a company called Expedia.

In 1996, a small section of Microsoft launched an online travel booking site called Expedia.com. This website gave consumers a radical new way to book travel. Rich Barton was a former Microsoft executive and was the founder and CEO of Expedia.com as well as Zillow.com and Glassdoor.com. A few years later, Expedia spun off from Microsoft and becoming a publicly traded company on the NASDAQ under the symbol EXPE. Expedia became and has remained the world’s leading online travel company. Their first acquisitions came about in 2000, when the purchased Travelscape.com and VacationSpot.com. They had also acquired a few more travel companies and in 2002 InterActiveCorp (IAC) acquired a controlling interest in Expedia. Currently Expedia Group is the parent company to a global portfolio of leading consumer brands. The company primarily operates in the United States; however, they have tremendous global presence. It is headquarters in Bellevue, Washington with offices throughout the Americas, Europe, and Asia-Pacific regions. It has over 22,000 employees across it global network of brands. Through Expedia, users can do most things by themselves, from exploring potential destinations to developing a complete itinerary and making the necessary reservations. The services and functions can be described in the following categories: Reservations (main revenue-generating source that provides booking facilities for airlines, hotels, and cars), Vacation and Cruise Packages (for example resort, family, and skiing packages), My Travel (user creates his/her personalized page and itinerary), Places to Go and Interest & Activities (browse page for comprehensive destination information such as tourist spots,

ANALYSIS VIA PORTER’S FIVE FORCES MODEL )

Threat of New Entrants: Moderate	· Expedia’s reputation is well-known in the industry and makes it harder for new upcoming travel agencies to enter the online travel agency market. · Entry’s increased because digital and Internet-based technologies lower barriers. (Dess, Eisner & McNamara, 2016) · Industry doesn’t require much experience to enter the online travel agency market. · Expedia is consistent with updating and redefining their database and this makes it difficult for new firms to compete against especially since Expedia is well established within the industry.
Bargaining Power of Buyers: High	· Consumers will want to use other firms that offers the same services as Expedia because of lower prices. · Uses incremental innovation by partnering with different companies to increase the services Expedia has to offer. · Expedia offers lower prices than their competitors. · Consumers want to purchase the best at a reasonable price for airfare, transportation and accommodations.
Bargaining Power of Suppliers: High	· Supply chain is built up by their suppliers which are the airlines and hotels. · Airlines power to sell their fares directly to consumers for a lower price Expedia offers. · Hotels often lose against the power of Expedia because the room cost are inexpensive than the ones offered directly from the hotel. · Using a pricing strategy called pricing discrimination that charges customers different prices for the same product or service. (n.a, n.d)
Threat of Substitutes: Low	· Airlines and Hotels striving to bring consumers directly to their website to purchase. · Other organizations that offer accommodations to rent housing. · Prices become flexible by other competitors.
Intensity of Competitive Rivalry: High	· Price wars among all competitors that shares the market in the industry. · The competition may cause prices to lower and may cause a decrease in profitability within the industry. · The online travel market would witness growth due to rising disposable incomes in the masses within the emerging regions, easy comparison of travel options, and others. (n.a., 2017)

STRATEGY USED ()

Expedia is a third party booking services that offers flexibility and affordable to their customers. These are some reasons that customers will rather book with Expedia instead of booking directly with the airline. Expedia uses the Differentiation Strategy. They offer perks such as rewards, customers are able to use multiple airlines in one trip. Customers are able to get package deals. These type of services are why customers choose Expedia, and makes them successful. More customers would rather use a third party to book their trips because of the flexibility and variety I think that many business can use the differentiation strategy and provide services that make their customers want to stay. Business can use the differentiation strategy if they are unique and want to be different from the rest, this will also make them stand out from the rest. This strategy is affected by the life cycle in the industry because at the beginning of the cycle the company needs to inform their customers and build their good reputation. The company need to establish their brand. As the services or product starts gaining publicity and creating their brand the company is able to offer more deals and they grow.

Specific STRATEGY#1 Related Diversification

Related Diversification refers to the general idea of pooling power to gain the benefits of all the the related firms/participants. This can be achieved through market power, through pooling negotiated power, or through vertical integration. Using market power to achieve related diversification can be done by coordination with other firms and supply control or restriction. Expedia has many firms it coordinates with to reduce the investment costs. All of the airlines, hotels, shuttle services, and other travel related firms that work with Expedia give the company more leverage in the market, thus more market power. Pooling negotiating power involves the bargaining position between the suppliers and customers. Expedia has many different firms with different names and websites, but since they all fall under the parent company of Expedia Group, they hold higher bargaining power with suppliers collectively than any one of them would on their own.

Specific STRATEGY#2

Portfolio Management

Expedia strive to provide travelers with the best set of resources to serve their needs by leveraging their three critical assets: their brand portfolio, their technology and commitment to continuous innovation, and their global reach and breadth of product offering. Through their portfolio of travel brands, they seek to appeal to the broadest possible range of travelers, suppliers, and advertisers with their collection of leading brands.

Vertical Integration

Expedia has also established a tradition of technology innovation from their inception as a division of Microsoft to their many mobile apps available. As far as global reach is concerned, their brands operate both in North America and internationally.

Value Chain Analysis

Expedia intends to continue investing in and growing their international points of sale where they find large travel markets and rapid growth of online commerce. As you can tell from the above mentioned business strategy, Expedia is very clear and consistent with their long term goals. They have a very profound understanding of the environment by owning or having something to do with many of the travel sites used today. They are very effective with their appraisal of resources and implement that very effectively.

Resource view of Firm and Competitive Advantage

Expedia’s strategy with its competitors is to offer more business tools and data mining options along with reports than other bigger brands. They are keeping an eye on​ ​technology and trying to stay ahead of the curve in regards to competitors. Expedia is pushing ahead of its competitors by focusing on data mining, analytics, packaging, and mobile technology for suppliers as well as customers. Expedia has a long-term vision beyond the quarterly reports and is looking for the next big idea in consumer technology behavior but in the meantime, they are aware that they could be performing better on social media.

Life cycle strategy

Expedia’s life cycle strategy has to do with the manner in which its evolution in the global airline industry affects its competitive forces. Its maturity in the business has placed Expedia above its competitors. In that regard, its strategy with its competitors, customers, and suppliers is to deploy its resources within its environment and satisfy the firm's long term goals.

References

Our Mission is to Revolutionize Travel Through the Power of Technology . (2017). Retrieved from http://www.expediainc.com/about/mission-vision-values/

Reuters, T. (2017). “Expedia Inc (EXPE.C) Company Profile. Retrieved from Reuters.www.reuters.com/finance/stocks/companyProfile/EXPE.C.

Medina, K. (2017). new tools from expedia mirror hotel brand offerings.” Retrieved from http://www.hotelmanagement.net/revenue-management/glimpse-inside-expedia-s-futureproduct-launches

Choose six specific strategies from this list.

Ensuring Coherence in Strategic Direction (pages 23–28)

Value Chain Analysis (pages 76–88)

Resource View of Firm (pages 88–96)

Industry Life Cycle Strategies (pages 167–173)

Portfolio Management and the BCG Matrix (pages 192–194)

Turnaround Strategies (pages 173–174)

Vertical Integration (pages 188–190)

Strategic Alliances and Joint Ventures (pages 240–241)

Related Diversification (pages 187–190)

Achieving Competitive Advantage (pages 229–238)

Entry Mode (pages 238–241)

Entrepreneurial Strategy (pages 260–265)

Creating Ambidextrous Organization Designs (pages 339–340)

Leadership (pages 350–367)

Apply them in detail to the organization. Be sure to think strategically and show the results clearly. Use the strategy as a sub-header for each section so it is clear what is being applied. (90 points)

OPINION

What do you think of this case study? Describe what you believe are the lessons learned from this case. (10 points)