Strategic Management

STRATEGIC MANAGEMENT

2006

Strategic Management

Introduction

Strategic management is an innovative science . Despite the existing guides to formulate strategies that will create competitive advantages companies depend significantly to managerial creativity in finding market niche and filling it . Within this short we will evaluate past strategies of Expedia Corporation and assess existing opportunities regarding the corporate entry to a new line of business

Background

Expedia is known as a powerful player in the online travel business . In 2002 , the company reported a 66 million net income on revenue of

591 million . The numbers are predicted to rise sharply in 2003 . Even in very non-supportive market conditions , the company managed to increase gross sales by 75 compare to last year , placing the company in the number one seat of the online travel business with 5 billion revenue . The company was developed by Richard N . Barton , the person who was recognized for brilliant strategies that brought Expedia to the top of the market . Nevertheless , the CEO resigned on February 4 , 2002 , after a dispute with one of the owners of the company , leaving the company in the hands of his right hand officer , Eric C . Blachford (Mullaney , 2003 .Along with the resignation of the former CEO , Blachford stated that he would continue to expand the business the way Barton did . Not long after , the new CEO revealed his intention of entering the corporate travel business , in to expand the company which already `own ' the online travel business . This raises considerable question of whether the company is prepared to go head-to-head with competitors of both industries (Mullaney , 2003 Strategy

III .1 How have they done so far

In getting to the top of the ladder of the online travel business Expedia created revolutionary strategy that has never been performed by its competitors . The company started to `get creative ' by adding a new service in its travel products . The new service is hotel rooms . Instead of asking for commission , the company decided to by rooms with discount prices and then selling them to travel customers with considerable mark up . The strategy boosted Expedia 's earnings and allowed the company to cut airline prices for customers . Having the cheapest airline cost and an extra service , travel market were increasingly attracted toward Expedia (Mullaney , 2003

This strategy is taken because airlines who were using online travel agencies to get customers are cutting their fees and finally decided to launch their own internet services . Performing the new act , Expedia have a stronger bargain power toward airlines of the travel industry (Mullaney , 2003

According to the article , the company is also known for its ability to turn problems into business opportunities . When the planes hit the twin towers , travel agencies automatically sliced their spending to anticipate the drop in market activities . Nevertheless , Expedia take advantage of the market being `reset ' for travel businesses to increase marketing in to take away market share from other agencies . From the `dark times ' Expedia managed to exceed travelocity , its number...