Evaluation of ICT's Role and Impact in the Tourism Sector

This essay critically reviews key theories of technological innovation, including Schumpeter's theory and Porter's Five Forces model, and examines their application within the tourism sector. It explores the impact of Information and Communication Technology (ICT) on the tourism industry, discussing technological development and its influence on competitiveness. The assignment analyzes the changing structure of the travel and tourism sector due to ICT, highlighting how technology provides competitive advantages to organizations. The essay also covers the integration of ICT, the value chain model, and discusses disintermediation and re-intermediation in the context of tourism. The essay concludes with an evaluation of the increasing competitiveness within the tourism sector driven by technological advancements and the impact on customer satisfaction.

Individual Essay

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1.0) Introduction.....................................................................................................................1
2.0 Critical Review of Key Theories of Technological Innovation.......................................2
3.0 Technological Development and Tourism.......................................................................6
4.0 Discussion of Key Concepts.............................................................................................7
5.0 Critical Evaluation of the Competitiveness of the Tourism Industry...............................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Information and communication technology is basically that technology which provides
easy reach to information through use of telecommunication. This technology is similar tof
information technology but the main focus of this technology is on communication technology
(ict, 2019). The following assignment is also based on the use of Information and
Communication Technology and its implementation in the Tourism Sector and also the
evaluation of role of ICT in providing shape to the Hospitality Industry. The assignment will
start with making critical review of theories of technological innovation along with value chain
model, disintermediation and re-intermediation. In addition to this, the critical discussion of the
changing nature of the tourism industry will also be discussed. Further, the assignment will
discuss about identification and explanation of change in the structure of travel and tourism
sector due to Information and Communication Technology. Lastly, the discussion of increasing
competitiveness in the tourism sector due to the technology will given into light.
MAIN BODY
1.0) Introduction
Technology is defined as the application of scientific knowledge in practical life of
human beings with the aim of changing or manipulating the human environment. In today's
world, with the increasing competitiveness, technology is playing an important role in providing
competitive advantage to the organisations dealing in Tourism Sector (Rzayev and Suleymanov,
2018). Not only in the Tourism Sector but also there are different areas in which the use of
technology is done in order to make the work simple and easy to complete for the betterment and
easiness in performing the work. ICT (Information and Communication Technology) is the
integration of the information, processing, and communication technologies which is impacting
continuously on the lifestyles of individuals dealing in an environment such as the impact on
learning processes, working ways and social life of people (Саидов, 2018).
It consists mainly of study, design, advance, advance development, accomplishment and
mostly computer hardware and software application. Earlier, this application was used for the
electronic computers and for other computer hardware but with the passing of time and
innovation in the technology, the use of ICT also diversified to various fields and with the help
of this, it has been made possible for the ICT to make this much development in the Tourism
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Sector. As compared from the earlier times, the responsibilities of Technology have increased
from the development of electronic computers to data management, networking, database,
software design, computer hardware and many more (Rao, 2018).
2.0 Critical Review of Key Theories of Technological Innovation
Schumpeter’s Theory of Technological Evolution:
The following theory explains that process of production in an organisation is done with
the combination of material and immaterial productive forces in the organisation (Holmström,
2018). In this theory, the rate of growth of output increases with the increase in rate of growth of
productive factors, rate of growth of technology and the rate of growth of investment friendly
socio cultural environment (Schumpeter, 2017). On the very basis, there are two components
explained by Schumpeter which are “growth component” and “development component”.
The following statement regarding the technology is true as with the help of technology it
is possible to ensure the economical development of the economy. The figure shows that with the
passing of time, technology developed, it reduced human efforts, time and cost. It becomes
possible to get more work done in lesser time with efficiency and accuracy (Keklik, 2018).
Hence, the reduced human efforts and increased production with low cost of production
impacted upon the profits and revenues of businessmen and hence, the statement is proved to be
true as technology impacts positively on the economic development (Fagerberg, 2018).
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The following diagram illustrates about the development of Social Semantic Web which
is related to development of social interactions on the web and provides human beings with
useful information increasing the number of participants of people (Bertola and Patti, 2016).
With the help of Semantics of Social Information, it has been possible for the people to make
their interaction with different people across the globe. With the help of technology, the
development of many social apps such as Face book, Twitter and many social media apps have
been developed and this has made people to connect with each other. For example, in today's
world, tour operator companies shares pictures and videos of the services provided by them to
their customers with public in order to attract more customers. Additionally, the development in
the technology with the additional features provided also helps in increasing the craze of these
apps and increased their use (Guinard and Trifa, 2016). In this way with the help of social media
the interaction in between people has been increased and technology has impacted positively on
the development and social interconnectedness of people in the world.
The Theory of Competitive Advantage suggests that if choices are made dependent on
the upper hand at all levels – national, corporate, nearby, and personal level, then everybody will
remain in ideal situation (Noe and et. al., 2017). Basically expressed, it is just requesting ideal
usage of assets and the globalization of assembling and administrations over the world as though
we lived in a borderless world. Surprisingly, we are not living in a borderless world as there are
legislators, controls and restrictions that qualify the region of nations and lawmakers;
subsequently the issues encompassing the loss of employments due to off shoring and utilization
of protectionist measures (Chatterjee and Sahasranamam, 2018).
Competitive Advantage can be defined as the benefit which the organisation do have over
their competitors due to some quality and specialisation which provides the company with many
more benefits such as in customer increment, sales increment and many more (Whalen and et.
al., 2016).
Critical Analysis:
On the one hand, as it increases, the rate of growth and also the output rate which is
production of the organisation, while on the other hand, there are also several bad points due to
which the impact of this model had also been made negatively such as the innovations which are
financed by banks credit and this assumption may not right always as mostly the banks provides
short term loans and innovation processes require more long term loans. Another assumption
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which is related to cyclical process is also wrong because economic development is the
continuous change not the cyclical one. On the basis of these statements, the use of following
analysis needs much care to get implemented in the process of organisation and to get positively
results from the working of organisation.
Porter’s Five Forces Model
The following analysis can be defined as the tool which is used in order to know
about the shape of the industry including the strengths and weaknesses as well as the
competitiveness in the industry which helps the organisation to formulate good strategies in
relation to the situation (Grivas and et. al., 2018). This model makes use of five forces in
order to determine the industry’s attractiveness and profitability level of the firm. The
description of these forces is provided as under:
Industry Rivalry: the number of competitors present in the target market and there
capacity to undermine or influence operation of an organisation is the reflection of industry
rivalry. As the number of contenders increases the market share of each organisation
reduces subsequently. Purchaser or customers are always in search of organisation that offer
similar or better quality product at lower price in the same market (Chim-Miki and Batista-
Canino, 2018). If there are less competitors or contenders in the target market then
organisation can charge high prices and can set terms of arrangement which are more
beneficial for them as customers are not having much options, therefore to fulfil there needs
they have to buy that product even at high prices thus provide more profitability and
opportunity to organisation.
Bargaining Power of Suppliers: this shows the power and control of suppliers over prices
or expenses of different source provided by them. It is influenced or affected by number of
suppliers available in the market and how much it cost to an organisation to get shift from
one provider to other (Glasgow, 2018). If only few suppliers are there in the market and an
organisation is highly dependent on them, they will drive up the expenses on information
and push the organisation to flow its terms of agreement. On the contrary if number of
suppliers for information technology is high then the demand of each supplier will be less
and thus they will have less barging power, which is always beneficial of an organisation as
it gets required sources at lower prices (Kasim, Haracic and Haracic, 2018).
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Threat of New Entrants- performance and earning capacity of an organisation is also
effected by the influence power of new contenders coming or entering into the market. If it
is easy for other organisation to enter a target market i.e. less requirement of cash and time
to start that particular business, this scenario will fundamentally debilitate the performance
of organisation (Leisen, Steffen and Weber, 2019). An environment which provides
obstruction and does not allow easy entry of new contestants provide better opportunity and
more profitability to existing firms in the market, as it will reduce the risk of new
competition (Barba-Sanchez, Calderón-Milán and Atienza-Sahuquillo, 2018).
Bargaining Power of Customers: it refer to the power of clients that are the most
important component of any organisation. It depends on the number of client or purchaser
an organisation have and how rich or noteworthy they are. It is also influenced by the
capacity of organisation to attract and cater more clients for its information source or
services (Išoraitė, 2018). A few number of clients or customer will increase there barging
power and they always remain in dominant position, as because of low number of customer
base organisation will give more value to its customer and try to fulfil all needs and
requirement through providing better arrangement.
Threat of Substitutes: substitute goods are those which can be put to use in place of item or
product in which organisation is dealing. Availability of easy substitute goods always
provide a threat to organisation profitability as risk of reduction in number of clients is
increased (Sales and et. al., 2018). An organisation that provides or deals in product or
services not having any close substitute is always have more capacity to charge higher
prices from its clients and customers are not having much options to shift on other product.
Thus less number of close substitutes means higher profit and more chances of success
(Ariffin and Sahid, 2018).
Critical Analysis:
The following analysis is very helpful in knowing about the competitiveness in an
industry and provides the organisation with every detail that could help in the increasing the
growth opportunities and profitability level of the company. Whilst, on the other hand, it
also do lacks in some situations because the business environment is not stable, instead it is
dynamic due to which changes occurs in the business and this makes the model not suitable
as it will provide wrong and irrelevant results to the companies. Along with this the
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capabilities of organisations also changes with time which impacts upon the outcomes of
this analysis such as the circumstances in which organisation is dealing, individual
capabilities and the overall business environment.
3.0 Technological Development and Tourism
With the upgradation in the technology, the use in the Tourism Sector of technology have
increased much significantly as with the help of technology, it has been possible for the
organisations to provide their customers with better experiences and also with better services that
impacts positively on their satisfaction level (Moutinho and Vargas-Sanchez, 2018). In the
services industry the main focus on the services and the satisfaction level of the customers. For
example the innovations such as the online booking, online reviews, facilities provided in the
organisation are also provided on the official website and on the mobile application of the
organisations in the tourism sector (Moutinho and Vargas-Sanchez, 2018). With the help of this,
it makes easy for the customers to increase their reach to the services of the companies.
Additionally, it also provides the customers to put their queries in front of the company and get
instant solution to their questions. With the help of this technological innovation, the tourism
industry has developed at much faster rate and has also increased the level of competition in this
industry which has increased the choices for customers and also increment in the advancement of
technology in this sector. In this way, the technology came into existence in this sector and
impacted positively on the working of the organisations (Benckendorff, Xiang and Sheldon,
2019).
However, there are also some innovations in the technology which may come into future in
the companies operating in this industry such as the artificial intelligence which will also be a
part of this industry and will contribute in the growth and development of this industry as well.
In UK, this industry has great contribution in the development of the UK’s Economy
(Tussyadiah Jung and tom Dieck, 2018). There are many services provided in the Tourism
Industry and with the help of this, it will be possible to make increment in the number of
customers and the number of organisations in this industry. With the help of this, it will be
possible to make the development of the organisations and also in the GDP of the economy for
the betterment and growth of the country as well (Li and et. al., 2017). The main reason behind
the implementation of technology in the working of the tourism industry is related to the
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increment in the satisfaction level of the customers and to create good brand image and loyalty of
customers towards the products and services of the company.
4.0 Discussion of Key Concepts
The discussion of the key concepts in the technological advancements in the tourism
industry is also very important. It will be explained with the help of various models and theories
presented as under:
Value Chain Model:
A value chain is a plan of action that depicts the full scope of exercises expected to make
an item or administration (Liou and et. al., 2016). For organizations that produce merchandise, a
worth chain contains the means that include carrying an item from origination to dispersion, and
everything in the middle of, for example, securing crude materials, fabricating capacities, and
advertising exercises. There are also two main components of this tools which are provided as
under:
Primary Activities: These are the main activities of the organisation and work for adding value
to the products and services of the company. It also helps in achieving competitive advantage for
the company with the help of their resources, products and services.
Secondary Activities: These are the supporting activities which helps the primary activities of
an organisation in order to make sure about their proper and timely completion. As it helps the
primary activities in their completion so these are also an important part of an organisation.
Critical Analysis:
This analysis provides the companies with many benefits such as fast and quick delivery
of services to the customers but this could only be possible in case employees do not interact
much with each other which is not possible. It is so because in case they are not able and willing
to change their status and to share information with each other than it will not be possible to
establish proper coordination and cooperation in between employees for the betterment of the
organisation. Due to these reasons, this model is not applied much in the working of
organisations.
Disintermediation + Re-Intermediation
There are many intermediaries in the chain of the tour operator organisation which
provides their customers with different types of services for their satisfaction and with the help
of these services, the use of intermediaries such as the brokers are done for making an increment
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in the number of customers of the organisation (Schumacher, Erol and Sihn, 2016). It is done at
the time of making any new business as the new business makes their customers with the help of
brokers and once the business is setup. The business reduces the use of brokers because of their
increased goodwill and brand image of the company as they want to contact their customers at
their own to prevent the customers from being fraud by the brokers. So the organisation makes
use of brokers and mediators very carefully at the time of providing their services.
5.0 Critical Evaluation of the Competitiveness of the Tourism Industry
In today’s world, the tourism industry is of great importance and relevance to the people. It
is because it provides the customers with a number of good experiences and services which
provides them with satisfaction. In addition to this, there are also some other reasons of using the
services provided in the Tourism Industry such as the recreational purposes, enjoyment,
educational purposes, research and many more which is also an important part of the satisfaction
of the customers. Artificial Intelligence is the greatest example of this innovation in technology
which provides the organisations with competitive advantage as with the help of this it makes
easier for the customers and companies to get solution to their queries and reduces cost for the
company respectively (McComb, Boyd and Boluk, 2017). Online websites and online booking
systems are also important part of this industry providing competitiveness to the companies as
such it makes easier for the companies to increase their reach to the products and services of the
company. For example, in the Tourism Industry, companies such as Thomas Cook have their
online presence and they solve the queries of their customers there, accept bookings, cancel
bookings, provides information about tours and many more things. In this way, services are
provided to customers and competitiveness with the help of technology had increased.
On the other hand, there are also some problems and issues created by this technology as
due to some technical errors, the customers may come across a number of issues which reduces
their satisfaction level and impacts negatively on their interest reducing the number of customers
of the company. It also increases the cost of operations for the company because for the proper
functioning of all the technical equipments it is important to make proper updation of these
software increasing the operating cost for the company. For example, in case of issues faced by
customers in making their tour booked due to low connection or some technical issue, it will
impact upon the customers experiences in negative way.
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CONCLUSION
From the above assignment, it has been concluded that tourism industry plays major roles in
the growth and development of the country. Additionally, it is also related to technology which is
very important part of this sector providing competitive advantage not only to the company but
also to the economies of the world as increasing their GDP. Organisations should work upon
reducing the negative consequences of technology so that they could have the opportunities to
make proper growth and development of their business. Lastly, it is also concluded that the
application of different models and tools will also provide the companies with information about
the market and industry conditions.
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