Strategic Analysis of Bahwan Travel Agency - Case Study Example

BAHWAN TRAVEL GROUP Student’s name Code & Course Professor’s name University City Da Bahwan Travel Group 1.0 Background The Bahwan Travel Group is a leading group consolidated under the Suhail Group (Holding) LLC. As a subsidiary of the largest travel, the agency handles over 100, 000 travelers typified by a diverse set of requirements. The company’s success has been overseen by proficient manpower, infrastructure and effective management approach in handling its customers. The agency was established over four decades and has significantly grown in the dynamic tourism market. The company functions as a General Service Agency for Airlines such as Cathay Pacific, Rolay Brunei, Thai Airways, Saudi, Air France among others. Given its extensive network of operation, the company dominates over 25 percent of the travel market in the Sultanate of Oman region. The Agency’s market position offers an ideal competitive arena ensuring a robust negotiation capability with different players in the market. The company’s strategic approach addresses all pertinent issues of management such that it suits its competitive advantage over rival agencies. As a travel agent, Bahwan Travel Group offers domestic and international package tours, reservation, air tickets and hotel booking. Its current strategic management aims at suiting the company’s needs against changes in the dynamic tourism environment. Hence, this approach has favorably increased its clientele base. 2.0 Trends A sustained and improved growth of Oman’s tourism is projected to rising interest, in favor of the economic conditions that fuels improved connectivity and disposable income. An unprecedented 1.1 million tourists have visited the Sultanate, up by 7.89 % of the previous year (Oxford Business Group, 2014). Oman is expanding at a speed that seeks to accommodate therising number of visitors by developing new hotels and infrastructure development. Nevertheless, skill shortage hampers the development of these initiatives. Future Trend Oman’s vision 2020 consolidates the delivery of $ 1 billion of its revenue, compounded by a new marketing strategy that mobilizes the private and foreign sector. As such, Oman seeks to develop and promote adventure tourism (Blanke, 2013). Presently, the World Economic Forums asserts that Oman’s travel and tourism industry is worth about $ 2.12 billion in 2012 and is subject to a 5.2 % growth between 2013 and 2022 (Blanke, 2013). The unprecedented growth in tourism is facilitated by the raft of projects and the development of the country’s aviation sector (Arabian Travel Market, 2014). 3.0 PESTLE 3.1 Environment The Oman’s operators and developers are increasingly responding to the traveler’s perception of being environmentally aware. Recent environmental issues in the region regarding waste, water, and power have a drastic impact on the success of the hotel region and projects (Oxford Business Group, 2014). Thus, the travelers have become increasingly aware of environmental issues and seek to obtain ‘standards’ offering guides to most suitable location as witnessed by the Green Globe model (GreenGlobe, 2014). As such, Green Globe is a global benchmarking improvement systems approved for the travel and tourism (GreenGlobe, 2014). 3.2 Political Evidently, Oman’s tourism has made a significant impact on its economy given its $ 2.5 billion contribution in 2013. According to the World Travel and Tourism Council, it projected a 3 percent of gross domestic product. In 2013, the Omani government sanctioned the development of 54 new hotels for 2014 aimed at increasing the number of rooms available to almost 3200, representing a 12.3 % year-on-year increase (Oxford Business Group, 2014). As such, Oman has increasingly raised its awareness in tourism related development. An improvement of Oman’s transport infrastructure and connectivity has played a vital role in the improvement of tourism. These have improved the access of the vast untapped geographical regions of mountains, deserts and 3400 kilometers of coastline. Evidently, the upgrades of the country’s airports coupled with the creation of new facilities in the regional hub has improved the accessibility (Oxford Business Group, 2014). For instance, such improvement has created direct flights to Salalah and Muscat. To cater for the increased travelers, a new $ 1.8 billion passenger terminal has been constructed at Muscat International Airport increasing its capacity to 12 million passengers (Arabian Travel Market, 2014). 3.3 Legal The only regulation that governs the travel agencies is the need to register with the department of Foreign Affairsthat issues certificates. The agents are expected to abide by set rules. 3.4 Technology Presently, the world is faced with an unprecedented surge in technological advancement. The globalization of information,technological convergence and better access has created a new scientific paradigm (Grundy, 2006).As opposed to the traditional travel agent, Bahwan Travel Group hasenhanced its customer experience through creation of online booking. It has not only eased transaction but also improved the effectiveness of their services. Evidently, the tourism industry is coupled by a global basis of a low proportion fixed cost to the total cost and low capital cost. There are considerable economies of scale present in the tourism industry. The big draw of the Oman for most visitors is its accessibility to the natural beauty of the region. However, nature is significantly non-rivalrous and non-exclusive goods, hence a high threat of entry. It is comparatively easier for rivalries to set up shop in the Oman region. 4.2 Supplier Bargaining Power The bargaining power is exceedingly low to moderate. The travel industry consists of entry level employees that depend on gratuities for a large share of their wages (Johnsons, 2008). Evidently, the bargaining power of tourist attraction is exceedingly low exceptin cases when the suppliers can claim the rights of the goods. Consequently, since many travelers rely on commercial transportation to access different destinations, the transporters are the suppliers. Tour bus companies, airlines and rail service workmen can strike hence hampering the nosiness. 4.3 Customer’s Bargaining Power Fluctuations of consumer needs couple the tourism industry. An increase in competition from other agents may compel the visitors to change their preference. The more volume the agent receives, the more the company’s bargaining power. 4.4 Threat of Substitute A segment of Oman tourism destinations can be easily substituted. The internet has facilitated information where the clients are finding and booking directly to the hotels and destinations (Grundy, 2006). Convenience is an imperative motivating factor for the travelers (Johnsons, 2008). Hence, the threat for substitute is exceedingly high. 4.5 Rivalry among competitors The tourism industry is faced by increased competition from different competitors. The competition levels in these regions has increased distributions levels with respect to regional, highly fragmented and geographical markets (Bahwan Travel Group, 2014). There are three major competitors in the Oman region. With respect to the value proposition model the present competitive strategy of the three main competitors is; i. Zahara: Product leadership (Complementary products and services) ii. Mezoon: Customer intimacy (Excellent Customer Service and Support) iii. Kingdom Travel: Operational Excellence (Online purchase and payment of the ticket). 5.0 Internal Analysis In alleviating this threat the Bahwan Travel Group has incorporated backward integrate and purchase of car higher within the region, hence facilitate ease of access. Such integrations have improved the convenience of operations and tour in different locations. Bahwan Travel Group can consolidate the bookings and group them according to destinations. Its booking is structured in such a manner that they can effectively group the planned visits to increase its bargaining power. The customers can negotiate with Bahwan Travel Group for lower rates. However, standard rates have been set by the company in meeting different customer needs. The Bahwan Travel Group has sustained its competitive advantage given its dominance, brand and leadership in the market. As opposed to rival companies, Bahwan Travel Group has offered a variety of international destinations for the customers. Some of the rivals include Destination Oman, Kingdom Travel, Zahara Travels, Mezoon Travels and Marmul Travels among others. Nonetheless, the company has attempted to reduce the threat of substitute across different areas. Bahwan Travel Group has been able to offer direct booking to hotels in proffered locations (Bahwan Travel Group, 2014). The resource is rare given that other rival companies have not integrated such strategies in their bookings. The ease of access of information has been implemented in creating a one stop shop where the clients can book for hotels, tickets, and tours. It has furthered in offering destinations to other region of the world such as Africa, Europe, Australia, and Americas. Bahwan Travel Group relies on the perceived value of offering to their clientele. They offer online products and service for the clientele that range from all-inclusive destination. Therefore, the perceived value is inimitable. The business has been subjected to an evidenced rise in competition pressure, coupled by a shift in consumer preference. A company’s existing consumption pattern creates a natural formation of bundles of services offered by different entities (Barney, 2007). The resource-based view asserts that a firm earn supra-normal profits in the case that it has superior resources, and the resources are protected by isolated mechanisms (Acquaah, 2007). A relatively strict application has been enforced when seeking new partners. As such, the company’s resources can complement its competitive advantage. 6.0 Current Position and Future Strategy Over the three decades, the company has increasingly focused in achieving cost control and market differentiation throughout the market. Its facilitation was achieved through the adoption of a Hybrid strategy that consolidated the differentiation of cost control and differentiation (Bahwan Travel Group, 2014). Bahwan Travel Group has created an enhanced margin quality through the differentiation that ensured a unique travel experience for the customers enabling them to achieve brand loyalty and competitive advantage (Johnsons, 2008). Through the incorporation of a controlled distribution process the acquisition cost has been considerably reduced, hence achieving improved flexibility. It is important that Bahwan Travel Group search for new partners that can significantly change the development and success in the Oman region. Expanding its core tourism business will facilitate the creation of value throughout its practices. Given the expected expansion of tourist expansion from 1.1 million. The incineration of these strategies will significantly improve its competitive advantage in the region (Reisinger, 2009). Bahwan Travel Group has tailored deals in cheap pricing as a result of its established brands and the long chain of its tour operations. As a market leader, Bahwan Travel Group has created different packages that suite its consumers. Ranging from the booking of economic class to the tailored deals in different world destination, it has favorably addressed the needs of all the consumers. The products offered by Bahwan Travel Group necessitated for a multilateral interdependence between the business and tourism (Bahwan Travel Group, 2014). Evidently, such structures have supported its creation of co-operative structures that will effectively meet the growing demand. In this regard, the company has partnered with a number of charted airlines, hotels and favored destination in the provisioning of eased access to information to the client. In maintaining its sustained competitive advantage, the company has maintained a steady growing relationship with its partners. As such, the most important selection criteria used by the company in selecting its partners include quality, price, and personal familiarity. The company’s future strategic planning will proficiently address the future trends expected in the market shift. Its initiative addresses the key drivers important in enforcing the change process (Johnson, 2005). The company has significantly understood the drivers of change in the industry through the understanding consumer behavior, priorities, and lifestyle. Given the anticipated demographic shift, the company has changed its work pattern in facilitating sustainability. Reference List Acquaah, M.; Chi, T., 2007. A longitudinal analysis of the impact of firm resources and industry Characteristics on firm-specific profitability, Journal of Management and Governance, 11, 179-213. Arabian Travel Market, 2014. Oman tourism development marches on Available at . Barney, J., 1991. Firm resources and sustainable competitive advantage. Journal of Management, 17, 99-120. Bahwan Travel Group, 2014. Available at . Barney, J. B., Clark, D., 2007. Resource-Based Theory: Creating and Sustaining Competitive Advantage, Oxford: Oxford University Press. Blanke, J., 2013. Reducing Barriers to Economic Growth and Job Creation. The Travel & Tourism Competitiveness Report 2013. GreenGlobe, 2014. GreenGlobe Certification. Available at . Grundy, T., 2006. Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15, 213-229. Johnsons, G., Scholes, K. and Whittington, R., 2005. Exploring Corporate Strategy. 7th Edition. United Kingdom: Prentice Hall. Johnsons, G., Scholes, K. and Whittington, R., 2008. Exploring Corporate Strategy. 8th Edition. United Kingdom. Prentice Hall. Oxford Business Group, 2014. Oman’s tourism industry poised for boom Available at . Reisinger, Y., 2009. International Tourism. Cultures and Behavior. Elsevire Ltd. Read More