Strategic Analysis and Management Report: TripAdvisor Case Study

This report provides a detailed strategic management analysis of TripAdvisor, a leading online travel service provider. It begins with an executive summary and introduction, outlining the company's corporate objectives, which include increasing profitability and ranking among the top travel service providers. The report then delves into external analysis using PEST and Porter's Five Forces models to assess political, economic, social, and technological factors, as well as competitive dynamics. Internal analysis includes a resource audit, identifying unique and basic resources, and examining core competencies like customer service and innovation. The report discusses TripAdvisor's competitive strategy, positioning it within Bowman's Strategic Clock as a differentiator. Key market segments are identified, and practices to sustain competitive advantage are discussed. Finally, the report includes a conclusion and references, with illustrations of key models like the Ansoff Matrix and Bowman's Strategic Clock, offering a comprehensive overview of TripAdvisor's strategic management approach. The report also touches upon the Ansoff matrix for future growth strategies.

STRATEGIC
MANAGEMENT
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TABLE OF CONTENTS
1. Executive summary......................................................................................................................3
Introduction......................................................................................................................................4
TASK 1............................................................................................................................................4
2 Corporate objective...................................................................................................................4
3 External analysis.......................................................................................................................4
4 Internal analysis........................................................................................................................7
5 Basis of competitive strategy....................................................................................................8
6 Strategic choice.......................................................................................................................10
7 Strategy evaluation.................................................................................................................11
8 Conclusion..............................................................................................................................12
References......................................................................................................................................13
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Illustration Index
Illustration 1: Porters five force model ...........................................................................................7
Illustration 2: Bowman's strategic clock........................................................................................11
Illustration 3: Ansoff matrix model...............................................................................................12
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1. EXECUTIVE SUMMARY
In modern era, strategic management is one of the most crucial and important factor
which contributes in organization growth and development. It is required by every business to
form appropriate and suitable strategies so that it can achieve its various short term and long term
goals as well as objectives. It has been found that companies are also also required to carry out
internal and external environmental analysis. Further based upon these analysis strategies and
action plan can be formed by organizations. Trip Advisor is an online travel service provider. In
order to survive in long run and achieve competitive advantage, the company analyses its current
position in market with the help of models such as Porter five forces. On the other hand, Ansoff
matrix model can be used in order to identify the best and most appropriate future growth
strategy. It is also required by the travel company to identify some of its core competencies so
that it can get aware about the factors using which it can get competitive advantage over other
companies. Other than this, company is also required to identify its major weakness and should
take corrective measures to overcome them.
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INTRODUCTION
Strategic management refers to constant procedure of developing, implementing and
monitoring the business plans. In addition to this aspect, it involves various factors that are
important for an organization to achieve its overall stated goals and objectives. With the help of
strategic management, a business organization can take effective decision and implement them to
gain fruitful outcomes. The present report highlights implication of strategic management within
Trip Advisor.
Trip Advisor is a travel company that is providing online services and giving reviews on
travel related material. It provides travel and tourism services across the globe to a wide range of
customers. In this report, various aspects of strategic management within Trip Advisor have been
detailed out.
TASK 1
2 Corporate objective
The corporate objectives of company reflect specific and realistic goals defined by the
firm to impact its strategic decision. They are mostly defined by the top level executive to
provide overall direction to business (Hill, Jones and Schilling, 2014). The objective of Trip
Advisor is to assist the customers in having an exciting and memorable travel experience.
Further, the financial objective of company is to increase the profitability of business up
to 10 % every year in order to maximize the income of its shareholders (Trip advisor, 2015). In
addition to this, company wants to be ranked among the top most firms that are providing travel
services within 1 year. The strategic objectives highlights the aim of company to provide reliable
reviews about various places, hotels etc. to its customers and to increase the use of its website in
different nations across the globe.
3 External analysis
3.1 Macroeconomic analysis
The external analysis is a process of evaluating various external factors to ascertain
different factors that can cause positive or negative impact on the performance of Trip Advisor.
External factors influence the strategic decisions of company therefore, it is important for the
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business enterprise to conduct external analysis (Hitt, Ireland and Hoskisson, 2012). In this
respect, firm can use PEST analysis the description of which is as follows: Political: Trip Advisor provides services to different nations therefore, it is important for
company to consider various political factors of different nations that can impact the
working of organization. Company has to pay licensing fees and other service charges to
the respective government of host country. Business enterprise is required to frame
business strategies by considering the policies made by different political parties of
country (Wheelen and Hunger, 2011). Economic factors: There are various economic factors that influence the purchasing
power of target customers and cause direct impact on the profitability of Trip Advisor.
For instance, the decrease in household income of UK will impact the working of
company. This is because; people will cut their expenditures in traveling which will
reduce the business of Trip Advisor. Social factors: There are different social aspects like lifestyle, cultural trends, tastes and
preferences of customers etc. that influence the working of company (Eden and
Ackermann, 2013). The increase in use of internet has caused positive impact on the
business of Trip Advisor. With this aspect, this has also increased the competition for
enterprise.
 Technological factors: The rapid up gradation of existing technology and emerging new
one is affecting the business of Trip Advisor. It has changed the working pattern of Trip
Advisor as clients want instant replies and reviews about their queries. Further, it is
increasing the requirement among customers that website should not take more than few
seconds to open up. Therefore, it is important for company to upgrade its technology with
the latest one in order to stay competitive.
3.2 Competitive Analysis
With the help of its competitive analysis, Trip Advisor can identify different competitive
advantages that the business enterprise possesses over its rivals. However, to determine the level
of competition within travel industry, the business enterprise can use Porter’s five forces model.
The description of this model is as follows:
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 Threat of substitute service: (Low) The threat of substitute service is low because
individuals cannot easily substitute the need of traveling with any other factor (Moutinho,
2011). However, there is possibility that if Trip Advisor increases the prices for its
services then customer may get attracted towards the rival’s product.
 Bargaining power of buyers: (High) The bargaining power of clients is high because
they can easily switch the services offered by Trip Advisor with the offerings of other
rivals. Thereafter, brand loyalty among customers is low which makes bargaining power
of customers high (Evans, Stonehouse and Campbell, 2012).
 Bargaining power of supplier: (High) The bargaining power of suppliers here refers to
services offered by airlines, hotels and other travel companies to Trip Advisor. These
suppliers help in increasing the business of company by providing attractive travel or
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Illustration 1: Porters five force model
(Source:Lee, Kim and Park, 2012)

accommodation packages to the clients of firm. The suppliers can directly provide
services to customers and this will impact the business of Trip Advisor. Threat of new entrant: (High) the threat of new entrant is high as it is an emerging
industry and profit margin is good in this sector which makes it more attractive. Further,
it does not require heavy initial investment which makes it easy for the new start-ups to
enter into industry.
 Industry rivalry: (Low-Moderate) There is no such intense rivalry among the existing
players in travel industry. There are no exit barriers and fixed cost is also low which
makes the rivalry low as well (Gustafson, 2012). There is less number of competitors of
Trip Advisor in which some of them are The Priceline Group Inc, Orbitz worldwide and
Home away Inc. This states that company is having low industry rivalry.
4 Internal analysis
4.1 Resource audit and difference between unique and basic resources
Resource audit refers to the critical analysis of the available resources within Trip
Advisior. However, company possess different resources such as tangible resources which
further includes financial and physical resources. Thereafter, business enterprise have intangible
resources like brand and culture value. In addition to this, it involves human resources which are
key asset for company (Shapiro and Varian, 2013). With the help of resource audit organization
can critically evaluate the working and benefit of each resource. Further, business enterprise can
estimate its future requirement of its resources. Thereafter, company can remove the non-
productivity resources from its business.
The difference between unique and basic resource is as follows:
 Unique resource: It represent those resources which help company in providing
competitive advantage over others (Wright, Paroutis and Blettner, 2013). It represent
those additional and unique resources that are possessed only by Trip Advisior. In this
respect, company possess competent technical staff that help company in designing
unique sites. The company have strong terms with the popular social networking site
Facebook. Trip Advisor operates 25 travel brands which help in increasing its business.
 Basic resource: It refers to ordinary resources that are easily available to every company
operating in travel industry (Tassabehji and Isherwood, 2014). Some of them are, labour
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and other staff, it also includes technical facilities etc. The company is required to make
proper use of its basic resource to achieve its business objectives effectively.
4.2 Functions of business and its core competencies
Trip Advisior is a online travel service provider and some of its major functions are
mentioned below as:
 Finance function- It is one of the most important function of the company and plays a
very significant role in growth and development. Further it main role is to keep the track
of all incomes and expenditures of business so that profit or loss can be determined (Hill,
Jones and Schilling, 2014). It takes care of management and allocation of all financial
resources.
 Sales function- It is also an important function of Trip Advisior as without sales, a
business’s cannot grow and expand in long run. In addition to this, sales target are
considered as one of the most important part of company's aim and objectives.
 Human resource function- This function is related with recruitment and selection of
people within organization. The human resource function of Trip Advisior deals with
various activities such as training of employees, their selection and promotion etc.
Core competencies- It can be defined as the unique trait or characteristic of a company which
assist in getting competitive advantage over other market players. In addition to this, some of the
major core competencies of Trip Advisior is its customer service, innovation and quality of
services. The company always try to understand the need and demand of people in market and
then try to deliver some innovative and unique products regarding the same (Evans, Stonehouse
and Campbell, 2012). Other than this, the company has taken care of the fact that quality is
maintained at every level. This encourages people in market to prefer and use services of Trip
Advisor over other market players.
5 Basis of competitive strategy
5.1 Bowman's strategic clock
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Bowman's strategic clock is a model which can be used to determine the position of
company in market place. It consist of eight major options which are linked with price and value.
It has been identified that Trip Advisior lies in Position 4 of the clock which is of differentiation.
Therefore, it can be stated that rather than choosing strategies of low or high cost, the travel
company has adopted the strategy of differentiation (what is strategic management, 2015). It offers
very high perceived value to its customers in order to gain competitive advantage. Its major core
competency is its innovations which helps in creating some unique and different type of travel
services which are not offered by any other market player. Due to high perceived value the price
charged by Trip Advisor for their travel services is also very high.
Key Market segment
Every business is required to determine its key market segment so that it can deliver
products and services according to them and survive in market. It has been observed that Trip
Advisior has targeted people which belong to age group of 21 to 40 years of age. Based on
incomes it target audience is individual's which falls in the category of middle and high income
group. Further the individuals are students, businessman and working people which are very
fond of traveling and discovering new places.
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Illustration 2: Bowman's strategic clock

Practices adopted by Trip Advisor to sustain competitive advantage and meet customer need
The company has adopted various practices in its overall operations in order to gain
competitive advantage. Further it try to introduce some new travel services at regular interval
which encourages people to use its services over its competitors. In order to meet customer
needs, the company takes review and feedback from its existing customers and other people in
market. Other than this, it also try to deliver services according to the same. The employees are
also encouraged to give their view and opinions regrading how the company can improve its
services and meet its customer needs.
6 Strategic choice
Ansoff matrix model:
The company can also used the 4 strategies available in the Ansoff matrix model as its
future growth strategy. The 4 strategies are mentioned below as:
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Illustration 3: Ansoff matrix model
(Source: Hussain and et. al., 2013)

 Market penetration- It is the strategy in which business try to sell existing products and
services in existing markets. Further strong marketing and promotion are carried out by
companies to penetrate the markets in effective manner. This strategy is also termed as
very less risky strategy as the products and services are already famous in market.
 Product development- In such kind of strategy new products are developed and sold by
businesses in existing market (Taylor, 2012). Other than this, sometimes modifications
are done in existing products. This strategy is used by companies to create more demand
and appeal of their products and services in market.
 Market development- As per this strategy existing products and services are sold to
some new markets. One of the main advantage of using such kind of strategy is that it
helps a company to find some new customers and expand its operations. New markets,
new products, new distribution channels and new customers are some of the main
characteristic of such kind of strategy (Hussain and et. al., 2013).
 Diversification- It is a strategy in which companies try to sell new products in new
markets. Further it is considered as one of the most risky strategy and the major risk
associated with this is that whether the new market will adopt and accept the new
products. One of the major problem associated with this strategy is that a company needs
to become aware about the need and preferences of people in new market which is
somewhat very difficult and costly.
7 Strategy evaluation
It can be stated that the strategy of market development is one of the most suitable
strategy for Trip Advisor. In order to grow and expand in future, the company can launch its
existing travel services in some new markets. This will help in finding new customers and
enhancing of existing customer base. Along with this, it will also assist in increasing the sales
and profitability of the travel company. This strategy can be termed as suitable, acceptable and
feasible. It is suitable because the company cannot opt for the strategy for diversification as it is
very risky (Taylor, 2012). On the other hand, it is has already adopted various marketing and
promotion techniques and there is very limited opportunities for growth in existing markets.
Thus, the strategy of market penetration will be also not suitable. At last, Trip advisory is already
innovative new services at regular interval so the strategy of product development is also not
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suitable. The company is a travel service provider which is already performing well in its
existing market thus, now it can easily enter new markets. With the help of strong marketing and
promotion, it will be easily able to find new customers for its services (Wheelen and Hunger,
2011). Thus, it can be stated that the strategy of market development is feasible. This strategy is
also acceptable because it will provide some new opportunities for growth and expansion to the
company.
8 Conclusion
From the above report it can be concluded that the power of buyer is very high for Trip
Advisor. One of the main drawback of this is that it is not easy for the brand to retain its
customers as they have a lot of options available with them. The supplier power and threat of
new entry is also very high which are some of the major strategic issues which has been faced by
Trip Advisor. Some of the major strengths of the travel company is its innovations, quality of
services and customer service. Thus, it can be concluded that using this strengths the company
can retain its customer for long run. It has been found that one of its major weakness is that it is
having limited opportunities for growth and expansion in its existing markets. Thus, using the
strategy for market development it can enhance its future opportunities. This will help in
increasing the customer base and market share of the company and will also assist in overcoming
the threat of new entrant.
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REFERENCES
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Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management.
Sage.
Evans, N., Stonehouse, G. and Campbell, D., 2012. Strategic management for travel and
tourism. Taylor and Francis.
Gustafson, P., 2012. Managing business travel: Developments and dilemmas in corporate travel
management. Tourism Management. 33(2). pp. 276-284.
Hill, C., Jones, G. and Schilling, M., 2014.Strategic management: theory: an integrated
approach. Cengage Learning.
Hitt, M., Ireland, R. D. and Hoskisson, R., 2012. Strategic management cases: competitiveness
and globalization. Cengage Learning.
Hussain, S. and et. al., 2013. ANSOFF Matrix, Environment, and Growth-An Interactive
Triangle. Management and Administrative Sciences Review. 2(2). pp. 196-206.
Lee, H., Kim, M. S. and Park, Y., 2012. An analytic network process approach to
operationalization of five forces model. Applied Mathematical Modelling. 36(4). pp.
1783-1795.
Moutinho, L., 2011. Strategic management in tourism. CABI.
Shapiro, C. and Varian, H. R., 2013.Information rules: a strategic guide to the network economy.
Harvard Business Press.
Spencer, A. J., Buhalis, D. and Moital, M., 2012. A hierarchical model of technology adoption
for small owner-managed travel firms: An organizational decision-making and
leadership perspective. Tourism Management. 33(5). pp. 1195-1208.
Tassabehji, R. and Isherwood, A., 2014. Management use of strategic tools for innovating during
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Taylor, E. C., 2012. Competitive Improvement Planning: Using Ansoff’s Matrix with Abell’s
Model to Inform the Strategic Management Process. Academy of Strategic Management.
10(1). pp. 21.
Wheelen, T. L. and Hunger, J. D., 2011. Concepts in strategic management and business policy.
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Wright, R. P., Paroutis, S. E. and Blettner, D. P., 2013. How useful are the strategic tools we
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Online
Trip advisor. 2015. [Online]. Available through: <http://www.tripadvisor.co.uk/PressCenter-c4-
Fact_Sheet.html>. [Accessed on 21st October 2015].
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