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Innovation and Entrepreneurship assignment is based on identifying innovative ideas in the industry of travel and tourism, where the customers are highly affected by availing the services and product of this industry. In addition, the innovative idea can enhance the business development along with the productivity of this industry, moreover, after adopting the innovative ideas within the chosen industry, the positive changes that might face the industry and its respective customers that has been discussed in this report.
Description of innovative business concept along with its value proposition
Travel and tourism are one of the largest services industries across the globe, the major objective of this sector is for developing and promoting tourism and bringing people from every culture to let them know about the other culture. Innovation can play an important role in letting people of different culture knowing about other one's culture. Either bringing innovation to a business can lead the businessperson to the top position in the market or the same innovation can decline the businessperson (Drucker, 2014). In addition, the best industry for bringing innovation and for seeing the best results is the travel and tourism. There are various areas in the travel industry, where the innovations can be brought up for enhancing the business ideas; such area can be the booking process of hotel or transportation. Furthermore, the travel and tourism industry has a huge craze amongst the public, who often loves to travel. Therefore, the innovative business concept within this industry can be associated with developing an application, where the customers can book the accommodation, ticket for flight or train along with every facility offered by this industry. This innovative idea, an application needs to provide a secure platform, where the customers can make their payment by sitting at their home or by sitting anywhere across the world. The value proposition for this industry can be increased by adopting the innovative idea based on developing an application (Tidd, J., & Bessant, 2015). This proposition is important because the innovative ideas will definitely contribute in convincing the people for using the services of this industry.
According toCrumpton,(2012), innovation within the travel and tourism business can directly possess impact over the mind of the customers, this is one of the industries, where, the demands made by the customers are never fallen down. Therefore, developing an app could make a great contribution to growing the business of this industry. It can be stated that as people of nowadays like to go through the most convenient way, and application is one of those ways, this makes the life of the people easy. Moreover, today world of living and business partially or somewhere completely have linked up with the world of technology, therefore, this innovation can change the way of living and the way of doing business as well.
Preparing a business plan that can present the new business venture
The travel and tourism business deals with the tour packages, booking process for both transportation and accommodation, moreover this industry offers experience to their tourist as a product (Onetti, Zucchella, Jones & McDougall-Covin, 2012). In addition to the products and services offered by the chosen industry is sort of entertainment, knowledge about different cultures, which provides full satisfaction to their valuable customers, as a result, this satisfaction further satisfies the same industry and ultimately they achieve their target because making the customer satisfied is the major goal for this industry. Attraction is the major components of products, offered by the tourism sector.
The value proposition of this industry is the promise of value, services, or products that are to be delivered, acknowledged and communicated. In addition, the value proposition for this industry can refer to a belief from their customer based on how the benefits or values can be delivered, acquired and experienced (McLuskie, P., & McLuskie, 2017). Therefore, by developing the application of industry can give a belief to their customers that they are on the right way of booking, paying and enjoying the services because booking can be made in an easy way only by clicking on few tabs, this can save the precious time of their customer. On the other hand, paying online is the most crucial thing on which not every customer wants to rely. Therefore, for making it reliable, the application developer needs to use the most secured software through which hacking or any illegal actions cannot be taken place.
The location of this industry needs to be every, where attractions are there. The location for doing business in the UK, and the destinations for the tourist are U.S, Thailand, Germany, Hong Kong, Spain, and India (Trimi & Berbegal-Mirabent, 2012).
Travel and tourism are one of those industries, which have a huge number of competitors internationally or nationally. In addition to the competitors of this industry, the competitiveness based on this industry has become a hot topic and even the most important and crucial themes for the research in the field of business and economics. Possessing a competitive advantage can be the key success for those members belonging to this industry, on which systematic and critical reviews have been done. It is better to analyze the competitiveness of this industry by reviewing this industry with the help of Porter’s five forces model.
The first component of this model is the threat of new entrants, which contributes in decreasing the profitability of the existing business. There are various factors among all; economies of scale, network effect, customer loyalty and access to the distribution channel play an important role for getting a competitive advantage (Johnson, Whittington, Scholes, Angwin & Regnér, 2013).
The second element, threat substitutes have again various factors, which contribute in retaining the competitiveness amongst the competitors of this industry such as availability of close switch, for example, information technology can replace the use of landline phones, the train can be replaced by airplanes or ships. These all are the basic products or components of this industry.
Bargaining power of the customer: This component does not often affect the industry, even this industry contributes to bargaining. It can be understood in this way that, this industry often gives the discount on the packages to their customers. This industry can take the measures for reducing the buyer power such as implementing the loyalty program for their customer (Courvisanos & Mackenzie, 2013).
Second last component of this model, bargaining power of the supplier, plays a vital role for making or breaking any business, as this industry has suppliers such as travel and tour agents, air, taxi and bus rental services, therefore, they do not need to bother if the suppliers deny working with this industry (Kerr, 2013). They have the lot of options of switching their suppliers, as they have a strength of distribution channel.
The most intensive component of this model is industry rivalry, which every industry needs to face; moreover, there are few factors that enhance the competitiveness within the chosen industry such as competition between an offline and online companies, degree of transparency, sustainable competitive advantage via innovation and effective competitive strategy are there (Galindo & Méndez, 2014). Bringing innovation to this industry especially converting an offline business into an online business by developing own application can give a great competition to the rivalry company.
The target market of this industry is the customers or the non-users of this industry, who need to be associated with the chosen industry. The target market of this industry is based on the segmentation of the market, which is the main practice in the field of marketing that assist while identifying a distinct group of consumers (Audretsch & Link, 2012). In addition to target the market, this industry needs to segment their customers based on their age, gender, interest, preferences and somewhere geographic location also matters while targeting the market or the customers. Therefore, in accordance with this industry, they need to make a motive of targeting the consumers based on their interest, preferences, and income as well. It is due to gender and age does not any role while making a trip or tour, making a package of the tour depends on the interest and income.
Market size of this industry is the number of consumers, which the industry has targeted. This industry has the largest industries amongst all, where the number of consumers is the highest one. If the UK market is considered for identifying the number of consumers, then according to UK tourism statistics, 2017, all visitors including Day, is approx. 1,525 million.
The marketing strategy of this company is composed of five tactics, which have helped to build a successful strategy for marketing in 2016. Those tactics are finding the visitors before they get arrived, supporting the local visitor centers with the dashboard, training, and planning for the negative travelers, using social data for better understanding the out-of-market visitors and at last doubling down on the application, Instagram (Soriano & Huarng, 2013). Moreover, these tactics enhance the repeat visitation.
Setting pricing for the tourism industry is a strong mix of financial analysis and marketing strategy. The pricing strategy of this industry is about fixing the rack rates, seasonal pricing, last minute pricing, discounting, commissions and package deals. The pricing strategy needs to based on season and region. The strategy of price needs to differ for every season, for example, the company offering day trips for visiting wineries within the local area, the company is probably competing with more than three or four tour companies, which offer the same type of destinations as products.
Marketing communication plays an important role in promoting the products and services amongst the people, who want to associate with this industry. Best promotional activities can be made over the internet by advertising their industry there (Nathan & Lee, 2013). Advertising is the best tool for promoting and marketing used within the implementations of the marketing campaigns. Marketing communications such as tourism reviews and articles, advertorials, websites and brochures, media relations and tourism and convention boards can be used for promoting the products along with the industry.
The management team includes the founders of this industry are passionate about all the activities, that can promote along with the offer within the market. The risk management style can reflect the participation of the shareholders/directors. The industry intends to the respect its community including treating all the employees well. This management team engages experienced staffs as well as undergoing a training course from the reputable institution (Maclean, Harvey & Gordon, 2013). The experience of managing director in the government and public commercial transportation can assist in establishing a good network.
- Resources Required:The resources required for bringing an innovative idea within the business of the chosen industry, such as capital for hiring a software developer, costs for developing the application. Other resources can be variable costs such as opening a back-end office.
- Setting up cost:For developing an application, the estimated cost can be approx. 60 billion dollar and the developing an IT team along with back-end team can be approximately 120 billion dollar.
- Financial Forecast:Forecasting based on cash flow is an important aspect because if the chosen industry can run out of cash then innovation can be brought up within the hotel and tourism sector. This industry is not able for obtaining the new finance, and then it can become an insolvent party or business.
- Break-even Analysis:For conducting a break-even analysis, the industry needs to take their fixed costs, divided by the price, minus the variable cost. Through this formula, the number of units that need to be sold out, can be determined, the industry needs to sell for breaking even. The industry can accurately forecast their costs along with sales by conducting a break even analysis, which is a matter based on simple math.
Identification of Risk
The identified risks for this industry are based on security and safety, security/physical risks to the staffs, risks due to the issues of the health, for example, water and food safety, to the clients and staffs. Some risks are associated with the environment, for example, can the event or any tour damage the local ecology, risks to the local culture, the impact of culture can be possessed over a huge number of visitors having a local culture (Franz, Hochgerner & Howaldt, 2012). Risks to the reputation of business are related to one's locale, industry, and company. There is a connection between the risk management and good customer service. A good management based on risk can begin with the services of good customers.
Risk Management Strategy
Risk management plan for this industry involves various steps such as ensuring the safety of the employees and customers, providing a secure system for communicating with the other persons within the destination and facility (?ledzik, 2013). In addition, supplying resources need to be there for supporting recovery operation and response as well, including procedures for returning to the normal activities of business after any disaster operation, security based on buildings, equipment and facilities from an effect of the disaster. Moreover, the contribution of the trained liaison personnel to the management of disaster's agencies should be given to the risk management team (Chandra, Y., & Leenders, 2012).
This industry has several milestones early on:
1. Completion of the business plan
2. Setting up a back-end office
3. Developing the application
4. Developing a training program
5. Completion of the first trip
Setting up a back-end office
Developing an application
Developing a training program
Completion of 1st trip
Marketing and HR
- This assignment is based on presenting the innovative ideas within the travel and tourism industry, which is the largest industry amongst all.
- The industry has been adopted an innovative business idea by developing an application
- Financial, marketing strategy including the pricing strategy of this industry have been discussed
- Risk assessment along with risk management team has been created and discussed in this presentation
Innovative business concept
- Converting offline business to online business
- Developing an application
- Providing training to their developers and staffs (Fox, 2014)
- Advertising the new application over the internet
Bringing an innovation in the chosen industry can enhance the business and productivity as well. In addition, the development of an application positively affects the business strategy and the customers. It is because this world of business including living style is a dependable factor a world technology. This application can help the customers for leading an easy life without any hesitation.
Advantages of innovation
- It enhances the customer’s satisfaction
- It makes the lives of the customer an easy one
- It increases the craze and interest in booking amongst the customer
- Innovative technologies along with business models have revolutionized the tourism and hospitality industry (Landes, Mokyr & Baumol, 2012)
- This change contributes to growth and productivity of all the SMEs in the developed countries running high demand for tourism
Innovation needs to be brought up in the hospitality industry because it increases the demand of having tour packages amongst the people, who love to travel the world. Making the customers satisfied with the development of the application as an innovation can also make the company satisfied because it enhances the popularity and craze amongst the people of both the in-bound country and out-bound country.
- Listing the physical features including the factors of the destination
- Identifying the features along with the benefits, which are unique to the products and services (Qian, 2013)
- Limiting the products and services
- Defining the target market
Value proposition includes a belief, which the customers do need to have for making a relationship with the company. In addition, the value proposition includes icons, infrastructure, climate, services, and geography. This value can help the industry for achieving the competitive advantage that further analyses the performance of the company as well as for the country.
Importance of value proposition
- This value contributes to saving the money and time both
- It makes the industry easier for understanding their target audience
- It can establish the foundation, on which the marketing along with sales activities need to be built (Landes, Mokyr & Baumol, 2012)
- The value proposition can provide employees with a consistent including cohesive way for talking about the company’s on-going strategy
There are many ways of defining a value proposition however it can come down to tell the people that what has been offered to them by their chosen company along with the key benefits. The value proposition often helps the company or the industry for building a faith within the mind of people, so that they can enjoy their products and services throughout their lives.
Competitor industry analysis (Using Porter's Five Forces)
Sahut & Peris-Ortiz(2014) has stated that this model has five components through which analysis of competition within the chosen industry can be done; here are five components of Five Porter’s Five Forces:
- Threat of the new entrants
- Threat of the substitutes
- Bargaining power of the customers
- Bargaining power of the suppliers
- Industry Rivalry
This model is often used for analyzing the competition of business by drawing from the economics of industrial organization for driving five forces, which can determine the intensity of the competitiveness. Therefore, for attracting the new customers can increase the profitability of the industry and can contribute to the economic condition of that country.
Marketing Strategy of travel and tourism industry
- Making partnership for maximizing the marketing dollars and for achieving the target audience
- Trade show can provide the destination with an access to every tourism and travel supplier within the region
- Making an effective advertising plan for promoting the business
- Sponsorships having the sponsored events along with giveaways, which tie in with the destination
Marketing strategy plays an important role in promoting the products and services of travel and tourism industry amongst the customers. In addition, marketing strategy involves sales promotional activities and within the promotional activities, an advertisement plays a vital role in making a market reputation in the competitive market situation.
- Identifying the hazards
- Analyzing the outcome of the hazards
- Managing team involving team risk assessment members (Landes, Mokyr & Baumol, 2012)
- Framing a model for assessing and mitigating the risk
Putting the assessment of risk within the practice, the manager needs to set out all the actions that need to be identified and helps to mitigate the risks. The manager needs to adopt the generic assessment of risk. Moreover, for managing a risk assessment team, it is required to include the highly qualified candidates who can identify and mitigate the issues or risks.
- The innovation can contribute in success and growth of this industry
- The customers can easily be satisfied by this innovative idea
- Innovative idea as developing an application can enhance the craze and interest amongst the customers.
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2. Chandra, Y., & Leenders, M. A. (2012). U
3. Courvisanos, J., & Mackenzie, S. (2013). Innovation and Entrepreneurship. Encyclopedia of Creativity, Invention, Innovation and Entrepreneurship, 933-943.
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5. Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
6. Fox, S. (2014). Third Wave Do-It-Yourself (DIY): Potential for prosumption, innovation, and entrepreneurship by local populations in regions without industrial manufacturing infrastructure. Technology in Society, 39, 18-30.
7. Franz, H. W., Hochgerner, J., & Howaldt, J. (Eds.). (2012). Challenge social innovation: potentials for business, social entrepreneurship, welfare and civil society. Springer Science & Business Media.