Opportunities And Challenges Of Internet For Global Business Management
Many writers have referred to the potential opportunities and challenges the Internet presents for managing a business’s marketing, communications, finance, or human resources functions. The increased global access of the Internet can result in new areas of business as well as increased revenues from current business activities. There have also been discussions about the issue of organisational ‘size’ and other established variables of organisational design being less relevant in this new digital economy as the basis of supply-chain management is moving towards extensive outsourcing and collaborations. Indeed, details of suppliers, their products and pricing information (e.g. catalogues, posting of offers and bids) are available in many web-based trading portals, leading to claims by certain scholars that the web is ‘a communications platform without boundaries’.
Imagine you have just been appointed onto the board of an organisation as the Director of Strategic Technology Management. The board has tasked you to review the group’s international technology strategy and to develop a comprehensive plan for the company to take advantage of the digital age.
Using an organisation with which you are familiar, develop a commercially viable and coherently written strategic technology plan.
Globalization has emerged as the platform for businesses to offer their services to customers from across the planet. In facilitating and making globalization a possibility, internet has played a very crucial role. The following report evaluates the opportunities as well as challenges which Internet presents for businesses to manage their global operations and offer new areas of business as well as increased revenues from their existing operations. In an attempt to do so, the report evaluates the latest through managerial position of Director of Strategic Technology Management at a COMPANY which I am offered. It comprises of a strategic evaluation of the existing technologies which the business has been using and the SWOT analysis of their existing profile. With a view of existing infrastructure and needs for expansion and increased efficiency the report offers a set of plans for future growth in the business.
During analysis of the effect of internet in the global markets and small businesses it is important to note that internet offers information along with commerce. With the effect of instant information it has made it a powerful tool and comes with the ability of reaching customers from across the world. However, there are certain needs which have to be well scrutinized to understand whether or not their online presence and its expansion could be a right move.
1. Product Development: Previously, businesses used to exchange information by the use of telephone, television or the print forms. Although, the bigger businesses had the access to newer technologies, smaller business had to hunt for information on their own (Cape Gemini n.d.). With internet it would allow the small business to access information about new product developments and technological advancements which could enable them to improve their products and compete with even bigger organizations.
2. Information Exchange: The manner in which small businesses exchange information has changed drastically as internet has become quite popular. Previously businesses did not have the resource for arranging large meetings with developers or suppliers which would need air travel as well as accommodation expenses. With facilities like email, video conferencing and exchange of documents collaboration with developers as well as vendors from across the world has become inexpensive and offers a wide option for exchange of the required information (White House 2012).
Existing Policies and Strategies of Flybe
3. Marketing: Marketing is another significant area which Internet facilitates. It has made marketing cost effective and enhanced the ability of any organization to reach a global audience at a very cost effective manner. A company can use its corporate website as a marketing resource for the company which is accessible to people from across the world. Social Networking websites on the other hand serve as a great platform for interacting and promoting products to millions of potential clients at no extra costs (EY n.d.).
4. Monitoring: Internet has also played a key role in aiding monitoring the business from virtually anywhere possible. On a trip outside the main operating area of the business, the owner now has the option to stay in touch in a real-time contact with their office by the use of inline chat or emails to exchange and get processed. This has added to the flexibility and freedom for pursuing business opportunities while still maintaining the control over the business.
With these areas in mind, as a Director of Strategic Technology Management of Flybe I propose the idea of strengthening the IT infrastructure and making the collaboration of carrying the business from other nations in an attempt to take advantage of the digital age and expand its operations beyond UK (We Forum 2014).
The following is an evaluation of the existing policies and strategies which Flybe as an airline company based in UK adopts as a part of utilizing the digital innovation to facilitate its business operations. It includes the SWOT analysis of the company and is followed by a recommended plan for improving the overall strategic technology management within the company (Business Model Community 2010).
Being the largest European airline, Flybe presently has outsourced its customer call center functions to Sitel which is a leading global business process outsourcing provider. This association integrates the existing customer service team which allows the customers to get a premier UK based call center. The reason to outsource this division is to enhance the standards of offering high standard services (Flybe n.d.). This has aided the company to offer an advanced level of customer care services and retain the skills of the current workforce. Flybe partners with Maxymiser which serves as a partner for offering unified customer experience optimization for developing a long term strategy for improving customer experience across digital channels. This plan had worked quite well to help the airline transform its customer engagement. The partnership also helped in optimizing the mobile channels and bringing a greater personalization into customer engagement for the company.
Presently over 80% of the bookings which the airline gets is by the use of online bookings which makes itmore than important to optimize the channels of online business for improving customer experience and building consideration for increasing the conversion rate of a customer. The brand objectives of the airline is communicating with the message of being a regional airline and sowing the seeds for people to consider that Flybe offers a viable alternative in comparison to road and rail. The optimization of the campaigns with Maxymiser is the heart of their efforts and is largely focused in improving the conversion rates by enhancing customer experiences. The collaboration of the airline has developed a roadmap for campaigns across the desktop sites and has a clear focus for improving conversions (Exeter 2010). An example of success with this tieup is the early campaigns which examined seat availability messaging at the 1st step of booking funnel. The campaign had generated huge revenues for the company where they tested key business hypothesis which would offer an addition of urgency messaging and highlight to the customers when seat availability would go low and in turn make a customer more likely to purchase. It helped in improving customer experience as the company did not focus on sending urgency messaging where customers while making a purchase might get a message while they reach the checkout. Hence, the company offered information in advance to motivate the customers to make quick buying decisions (Arrow ECS n.d.).
Digital technology has been a part of the company’s regular operations. Internet marketing as well as social media profiles of the company offer customers a lot of information about the offers and services. Using the digital channels the company offers customers an option to book their tickets online or through any internet enabled gadgets. Collaborations and introduction of new technologies has been a consistent policy which gets reviewed at the company from time to time. However, in order to grow and reduce costs, the company would still need to adopt several new age innovations to improve their operations and customer service (EMC 2011).
1. With experience of over 25 years, Flybe is known to be an innovative & quality service provider at low prices.
2. Being a regional airline in UK has helped it to avoid intense competition and achieve a high spontaneous brand recall
3. Has a highly credible and socially committed image in UK (Embraer Commercial Aviation 2011).
4. Has a very young fleet which has ensured that the company has reduced its costs of operations and offer a faster turnaround.
5. Has a very unique scheme for earning through advertisements which is pretty difficult to emulate.
1. Having a shorter flight length has been a factor when it comes to average fares.
2. Its business model can become blurred over time with more competition and consolidation within the industry.
3. Low load factor of only 68% despite having a small fleet capacity.
4. Despite having an innovative nature, the ancillary revenue is pretty small and stands at 5%.
5. Dependence on a very few suppliers of aircrafts is a risky proposition when it comes to problems from the suppliers ends (EM TEQ 2010).
1. As the airline practices region-based model which is not like LCC, it has the opportunity to expand its operations to the other European nations.
2. The number of business class travelers in the coming years is expected to increase due to the increased entrepreneurial activities.
3. Acquisition of BA connect has made it venture into new additional routes.
4. IPO has the potential to open up new avenues for mergers and acquisitions (Swiss 2012).
5. The withdrawal of traditional airlines from less traffic routes can be another opportunity to expand.
1. Terrorism and catastrophic loss could result in lesser air travel and further loss of infrastructural support.
2. Imitation of offering some frill features which are offered by the traditional airlines could be detrimental for the company.
3. Flybe has a direct competition with the price of the railways, it makes it vulnerable for demand and supply conditions in the passenger market.
4. Cost cutting techniques by most of the popular airlines in the competitive routes might affect passenger volumes in the maturing markets (Aircraft Commerce 2005).
5. Increase in the fuel costs as well as environmental taxes may lead to increase in fares which could trigger industry’s latent price elasticity of demand.
1. Increase in digital travelers: 2014 has been yet another year which saw a revolution in the field of digital innovation. Over 1 billion people have Facebook accounts and over 200 million tweets are sent over Twitter every day. As per estimates 9 out of every 10 online leisure passenger has high speed internet access at their homes (Evoke 2013). Moreover, the world’s airline passengers are mostly the online citizens which empowered by extensive adoption of various customer technology devices. Passengers are expected to spend more time on internet in future which would be much more than watching a TV. This means the future offers airlines a virtually new domain to fight out competition and make their digital services highly advanced. Therefore, marketers at Flybe would need to pull its socks and enhance their digital innovation and its associated services (Red Hat Grid n.d.).
2. Flexible booking options: It is only when a customer has complex set of experiences when the traveler likes to switch over to offline modes. The future would see more customers book their tickets and holidays using the online channels and the number of customers through smartphone or other internet enabled devices is set to increase. Customers prefer to get regular updates regarding their travel bookings, flight status, and other related information through the company. No longer a customer would like to search for relevant information but would be pleased to get information at times when they need them the most. Thus Flybe would need to further enhance its customer services and increase the level of customer centric approach. It would be more like the customer would find it as easy as buying a coffee.
3. Price Wars: There would be two kinds of customers which would be the leisure travelers and the business executives. Both the segments would be further classified as low cost and high end customers. However, the future would largely be dominated by the costs a customer pays and the service he gets.
4. A new breed of customers: With the transformation which has been in place and the increased use of digital innovation, there is expected to be a new breed of customers in future. These passengers would range between the age of 22 to 35 and be named as the Generation Y. The passengers of this group would be more likely to be graduates or a part of an organization. They would be having disposable income which they are expected to use in increased travel opportunities. Being a sizable audience which would be about 34% in UK the focus would shift towards Baby Boomers or the Gen Y. These customers are the ones who would have a lifetime for buying tickets ahead of them. They are the generation which can be regarded to be one of the 1sts to grow with internet integrated technologies around their live. Be it using high speed internet, laptops, smartphones, etc. they would be expert in almost all the latest technologies (IATA 2013).
5. Airline distribution and eCommerce strategies: As mentioned the Gen Y would make the airlines to have a mobile 1st strategy which would be visible to its audience. They believe would now shift to the aspect that answers to virtually any query or service is available to them with the endless digital content which is available to them. The digital innovation has gone so far that in absence of a particular thing which they require, they would be well equipped to create such a platform to serve to their needs. eCommerce would boom and customers are more likely to buy anything and everything online despite having the access to buy them offline. Airline and holiday booking services are among the largely booked services. OTAs would be a vital element for airline choices, reputation of lower fares as well as contemporary marketing images. Airlines would need to anticipate that they would need to work aggressively for changing the younger audience behaviors and earn their channel of loyalty.
The following section proposes the implementation of various processes in an attempt of improving the digital innovation and use of technology at Flybe.
Flybe would need to integrate new elements of technologically advanced systems in both its operations and customer management. The key constituents for the same would be:
1. Ability for various distribution components like inventory and sales which should be extracted by the reservations/ PSS cores and run in an independent manner.
2. Ability of passing cookies and tokens for identifying traveler by third party distribution systems among the airlines and its intermediaries (Cape Gemini n.d.).
3. Ability of implementing comprehensive software which would support dynamic pricing or faring approach which would reduce the need for the airlines to file fares.
4. Use APIs for linking disparities in the reservation systems for extracting and assembling ad hoc itinerary and fare options like combination of a network airline and a LCC in between The Future of Airline Distribution.
5. Integrate advanced ERP and CRM business database and solutions by the use of Oracle or Concur which would allow the enterprises for tracking corporate travel spending at different level (EY 2014).
The dimension for distribution is way different from what the conventional systems of selling products was used by airlines before. Flybe would need to utilize third party channels for enabling airlines for distributing their products and replace the conventional form of distribution by channel-based and value creating commerce. The distribution team of the airline would be a part of the commerce department and would be likely to be the part of the marketing team as well. The focus would now shift from pushing the products towards identification and choosing of relevant commerce channels as well as technologies which the airline needs to strategically and cost effectively generate revenue. Airline commerce would also not ignore the legacy and look to businesses outside the airline industry as a part of inspiration and ideas (Business Model Community 2009).
For instance, search engines are aware of the data about what users search for and view, their respective locations and the platforms they are using. Similarly, companies like Amazon has all the data of its customers which includes addresses, transaction histories, forms of payments used, etc. Another key derivation which the company can use is from the social networks which allows people to share ideas, information and opinions. Flybe should make an effort to transform the way in which the needs to travelers are catered to. Travelers would be provided the same degree of flexibility, responsiveness and control when the play, shop and book their flights. Basically the airline commerce would incorporate experiential elements in its commercial platforms which would include the ones which belong to third parties which would enable them to effectively deliver a great selling experience to the passengers (Surrey 2003).
A common proverb which says Google would do everything but fly your aircraft. The company would need to start focusing on its online promotions and particularly focus on getting better rankings on Google. Google as we know participates in almost each and every aspect of the airline distribution, eCommerce and marketing. Even the Google Chrome browser is the most widely used web browser in the world today. It offers metasearch by Google Flight Search and owns the ITA software. ITA software as we know sells airline pricing and reservations software. The company also offers a large range of social media platforms like Google+, Picasa and YouTube. Moreover, Google Maps and Google Earth also help the travelers plan as well as navigate through their destinations which includes the famous Google Goggles for the airports. Therefore, it would be wise to invest in technologies and systems which pleases the search engine giant. A lot of business i.e. bookings would be dependent on the rankings which the airline gets over the search engine. It would enable the airline to build a linking platform among the airline and the customer (Amadeus n.d.).
Flybe would need to evolve its commerce platform which would support extensive fare as well as product transparency, dynamic pricing, rich basic as well as ancillary product merchandising and retailing. The advanced system would add the ability of reliably as well as securely processing massive volumes of shopping sessions. This would be largely seem to be a value creation hub which would represent the evolutionary pivot from the GDS approach. The airline would be using the new generation of airline commerce technology infrastructure for powering airline CRS host systems. It would further facilitate in reduction of speed and lengthy as well as costly distribution of conversion (Europa n.d.).
The coming age would be more dominated by the use of technologically advanced customers who would rely on services which add ease to their needs. Flybe being one of the leading airlines in Europe, would need to enhance its strategies for including digital innovation as a part of their regular business. The company has been aware of the needs which is evident from the policies and collaborations which they have done in the past. In the coming years the competition and the ways of in which the competitors would be using technology to keep ahead of the others would also revolutionize.
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