Strategic Analysis and Recommendations for Booking.com (MGT3170)

This report provides a comprehensive strategic analysis of Booking.com, examining its external environment through PESTLE and Porter's Five Forces, as well as its internal environment using VRIO and value chain analysis. The report assesses Booking.com's strengths, weaknesses, opportunities, and threats, and includes a competitor analysis. It explores the company's business model, financial performance, and industry lifecycle stage. The report concludes with strategic recommendations, including marketing, product development, and competitive strategies, addressing strategic issues such as mergers and competitive dynamics, and proposing strategic options for future growth. This analysis aims to provide insights into Booking.com's current position and suggest potential strategies for sustained success in the competitive online travel industry.

BOOKING.COM

The company was established in 1996 in
Amsterdam. It is one of the largest travel
e-commerce company in the world.. The
mission of the company is to invest in
digital technology in order to make the
traveling easy. The company has different
websites and mobile application in the 40
languages. It connect the different
travellers with the world largest selection
of incredible places to stay. It have 17
years of experience with the 8000 of
employees in the 135 offices in the
worldwide (Booking..com, 2018)
ABOUT-
BOOKING.COM

Political
Different Government develop
the different rules and
regulation as per the economy
situation of the country.
The different policies has
developed by the government
in order to maintain the peace
such as agreement of legally
rent for the short period of
time.
Economical
It has been seen that 16.7
million users use the internet.
Consumers have high
purchasing power (Globig.,
2018)
PESTLE ANALYSIS-
BOOKING.COM

PESTLE ANALYSIS-
BOOKING.COM
Economical
 It earned 16.1billion euros in the year of 2015
 $48860 is GDP of the Netherland which makes
the country richest country in the world.
Social
 Trends and taste affect the demand of the
consumers.
 Online travel and tickets are the most popular
categories with the percentage of 38.96%.
 At the time of vacations, the demand is
increases.

PESTLE ANALYSIS-
BOOKING.COM
Technological
 Use internet to book the tickets
 Connect the travellers from the different corners of the
world through advance network system
 Use social media to promote the services
Legal
 It is registered under the board of Amsterdam,
Netherland.
 Civil code act was developed by the government in which
the company has to attach the chamber of commerce
number with the information.
Environmental
 The company faces less environmental issue


The threat of new entrants-
The company have low threat of new entrant just because of high capital required in
system infrastructure. There are limited company who access the GDS. GDS is
challenged by the GNEs.
Bargaining Power of Buyer
High bargaining power of buyer due to high competition in the market. Individual
consumers have the power to switch to new OTAs (Li, Huang, Song, Wang, and Wang,
2016).
Bargaining Power of Supplier
High Bargaining power of suppliers just because of high competition in the market.
Suppliers provide the unsold room for the guest. Small hotels have limited
infrastructure for the online booking.
The threat of competitors
The high threat of competitors due to large number of companies in the OTA market.
But there is limited companies who book the deals directly.
The threat of substitute
The company also has high threat of substitute because people can book their tickets
from travel agents, travel suppliers (Bell, and Rochford, 2016).
PORTER’S FIVE FORCES
FRAMEWORK

It has been seen that the
company is well popular and
stable in the terms of profit
and revenue. As per the
analysis, it can be said that
the company is at the maturity
level where the company is
stable in terms of profit, cash
and revenue.
On the evaluation of business,
it has been seen that the
company is operating under
the online industry. The online
booking industry can be
divided into the several
strategic group such as online
booking, Price and global
presence.
Strategic Group Model of
Booking.com
I N D U S T RY L I F E C YC L E S T R AT E G I C G R O U P M O D E L
MODELS
Boo
king
.com

It has been seen that with the developing technology, the
existing companies use different strategies and techniques to
expand the business at the international level. Tripadvisor,
Kayak and Airnib are the top competitors of the company.
Although, the company have less threat because there are
limited companies who can directly book their tickets (Owler,
2019) .
The company has high market share in the industry due to its
quality and experience. Airnib contains 65% during the Dubai
peak season which increase the high competition between the
competitors. Kayak also have the high market share in the
terms of prices of hotels. The company has to adopt the
strategy so that it can achieve success in the future.
COMPETITOR ANALYSIS-
BOOKING.COM

BUSINESS MODEL

The way in which the company is generating revenue
is called business model. Boooking.com follow the
appropriate structure of organisation in order to
achieve the success.
The company maintain the organisation structure in
the different segments such as key partners, key
activities, key resources, value proposition, customer
segments, customer relationship and many others in
order to achieve the success in the future.
The segments and organisation structure helps the
company to achieve the success in the future.
Relationship with the customer and maintaining of
asset are the main activity which helps to earn the
high revenue.
BUSINESS MODEL

• The company use
the new technology
as per the passage
of time. It is also a
reason of
increasing
• Expansion of the business
through mobile application.
Adding new features
Improve the quality with the
help of employees
• The main weakness
of the company is
Miscommunication
due to online
booking. It has
been seen that the
company also face
the issue of
negative review of
consumers
• Human resource is the
main asset of the
company. The company
also have large number of
year experience with the
high brand value. The
company have the quality
and reasonable price of
services of the company Strength Weakness
es
Threat
Opportuni
ty
RESOURCES CAPABILITIES-
BOOKING.COM

Value
The company uses the computers, laptops for
booking the tickets.
Reaction
The services provided by the company is available in the market with the
many of companies which reflect that the company can take the temporary
competitive advantage.
Imitability
The company uses the resources in different way in order to gain the
competitive advantage.
Organisation
The company follow the proper structure in which the organisation operate
their business (Management Mania, 2018).
VRIO

Support Activity
Firm Infrastructure: Electrical equipment's and the other technological equipment's are
the main asset of the company.
Human Resource Management: It appointed the technical department employee in
order to attain the success.
Technology Development: The company completely relied on technology as per its
nature of business. That is why, it adopt the new technology for providing the best
services.
Procurement; It support the primary activities of the company by developing the
relationship with the suppliers, consumers and the others. Company negotiate the
prices with the supplier in order to come at the best prices.
Primary Activity
Inbound Logistics: GTA, travel agents are the suppliers of the company from which the
company supply their services with their name.
Operations: The technical department and the websites designers are the employees
of the company which helps to provide the services to consumer.
Outbound Logistics: The company provide the services with the help of mobile
applications, and internet so that the large number of consumer take the advantage.
Marketing and Sales: The company provide the services to the consumer by internet. It
develop the bond with the customer by posting the pictures on social media.
Service: The distribution channel of the company helps to provide the services to the
consumer. The consumer can easily enjoy the services as with the effective channel
which helps to developed the bond with the consumers.
VALUE CHAIN MODEL

Financial Analysis 2017 2016
Liquidity ratio
1) Current ratio current assets
$
90,34,805.00 2.58
$
54,01,519.00 1.89
current liabilities
$
34,97,868.00
$
28,58,670.00
2) Quick ratio Quick assets
$
86,25,278.00 2.47
$
5,16,070.00 0.18
current liabilities
$
34,97,868.00
$
28,58,670.00
FINANCIAL ANALYSIS
Efficiency Ratio
4)
Receivables turnover
Ratio net sales
$
1,26,81,082.00
$
7.70
$
1,07,43,006.00 14.27
average total receivables
$
16,47,858.50
$
7,52,642.00
5) Fixed asset turnover net sales
$
1,26,81,082.00 11297.18
$
1,07,43,006.00 3639.85
average fixed assets
$
1,122.50
$
2,951.50

Profitability Ratios
6) Gross profit Ratio Gross Profit
$
1,24,30,545.00 98.02%
$
1,03,14,692.00 96.01%
Net Sales
$
1,26,81,082.00
$
1,07,43,006.00
6) Net profit Ratio Net Profit
$
972.84 0.01%
$
570.17 1.56%
Net Sales
$
1,26,81,082.00
$
1,03,14,692.00
7) Return on Equity
net icome after preference
dividends
$
972.84 4.84%
$
570.17 2.90%
average common stock holder's
equity
$
20,108.00
$
19,635.16
8) Return on Assets Net income
$
23,40,765.00 9.20%
$
21,34,987.00 10.76%
Total assets
$
2,54,51,263.00
$
1,98,38,973.00
FINANCIAL ANALYSIS

Solvency Ratio
3) debt ratio total Debt
$
1,41,87,702.00 0.56
$
99,90,293.00 0.50
total assets
$
2,54,51,263.00
$
1,98,38,973.00
3) debt to equity ratio total Debt
$
1,41,87,702.00 1.26
$
99,90,293.00 1.01
Total Equity
$
1,12,63,561.00
$
98,48,680.00
3) Equity ratio Total Equity
$
1,12,63,561.00 0.44
$
98,48,680.00 0.50
total assets
$
2,54,51,263.00
$
1,98,38,973.00
7) Earning Per share
net icome after preference
dividends
$
23,40,765.00 47776.56%
$
21,34,987.00 4313.89%
Weighted average outstanding
share
$
4,899.40
$
49,491.00
Return on captal
employed EBIT
$
43,98,322.00 20.03%
$
27,13,238.00 15.98%
Capital Employed
$
2,19,53,395.00
$
1,69,80,303.00
FINANCIAL ANALYSIS

As per the financial analysis, it has been seen that the
assets of the company is increases as compare to the last
year. In 2016, the asset rate is 1.8 but now it expanded with
2.58 which reflects that the company invest more in
purchasing new machinery. The net profit ratio of the
company is decreasing as compare to the 2017 which
reflects that the company is facing loss in the near future
with the same process.
Solvency ratio of the company is also increases which
reflects that the company borrows the large amount from
the banks. The liabilities of the company is increases so
that the debt ration id increases from 2016 to 2017. The
company debt is increases in terms of equity as well which
is also a debt (Booking Holding Inc, 2017).
FINANCIAL ANALYSIS

Marketing strategy
There are many companies enter
the market due to which the
demand of the consumer is
decreasing. The company has to
use the marketing strategies in
order to aware the consumers.
The company can use the social
media and the other applications
so that the brand value is
increases. The company also has
to develop the privacy feature of
complaints in which the
consumer can easily contact with
the consumers and easily solve
the issues. The privacy feature of
the complaints helps to reduce
the negative reviews of the
consumer on the public sites
(Wensley, 2016).
RECOMMENDATION-
BUSINESS STRATEGY

Product Development
Before adding the new features
the company provide the demo
to the consumer in order to
analyse the reaction of the
consumer. The company has to
merge with the other
companies so that it can
provide the quality of services
to the consumer. But before
merging, the company has to
analyse the market and internal
condition of the company (Doz,
2017).
Diversification
The company has the
opportunity to expand its
business into the new market
by using its different network
operation system. It has to
add the new features in their
services by targeting the new
consumer so that the brand
value of the company can
easily build the image and
target the new consumer.
RECOMMENDATION-
CORPORATE STRATEGIES

Ansoff Matrix Strategy
Market Development
The company has to expand the business into the new market with
the existing services. The company has to provide the services in
order to achieve the success in the future so that the company can
easily grab the high market share in the industry (Schawel, and
Billing, 2018).
Market Penetration
The company has to grow in the existing market with the existing services.
The company has to use its strength in order to improve the brand value
with the quality of services (Gurcaylilar-Yenidogan, and Aksoy, 2018).
RECOMMENDATION- COMPETITIVE
LEVEL STRATEGIES

Merger
The company faced the
issues by merging the
business with the Booking
online. The conflicts were
raised in the business due to
different ideas and concepts
of the companies. The
company has to acquired the
business instead of merging
the business for achieving
the success (Schaal, 2019).
Competitive dynamics
The company participated in the
competitive business
environment in order to achieve
the competitive advantage by
using the different competitive
strategy. The company faced the
issues due to high competition
in the market such as brand
loyalty and brand image. The
company also faces the loss due
to adopting the cost leadership
strategy (Phillips, Parker, and
Rushmer, 2017)
STRATEGIC ISSUES-
BOOKING.COM

Competitive dynamics
Cost leadership strategy is used by the company in order to
gain the competitive advantage. It faces heavy loss due to
providing the low cost services (Wheelen, Hunger, Hoffman,
and Bamford, 2017)
Diversification
The company adds new features to provide the differentiation
services. One negative review of the consumer causes fall down
the image of the brand.
Sometimes new features are not liked by the consumers and they
may post a negative review which may has a negative impact on
the growth of the company (Wehrmeyer, 2017).
STRATEGIC ISSUES-
BOOKING.COM

RECOMMENDATION
The company has high brand value in
the market which reflects that it
implements the strategy in an
appropriate manner. It is observed that
the company has well known strategies
but it is facing many strategic issues.
The company has the opportunity to
use the different strategies such as
Marketing strategy and Ansoff Matrix
strategy. But Market development is
the best strategy which can be used by
the company in order to grab the high
market share.

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