Cendant and Ebookers
...o compete? The aim is to understand what is the strategy developed by Cendant to compete on the holiday market on a one hand with the direct airlines and on another hand with the other cybermediators. Cendant’s strategy is focus on five main points: - The diversification of its activities: (Cendant’s official web site) Cendant isn’t focus only on the holiday market. As it was shown with the scheme about SBUs, Cendant is also focused on financial and real estate services. For instance it owns one of the most important franchises of real estate, Century 21. This strategy to diversify its activities permit to Cendant to reduce the impacts of a crisis on one segment. If there is a crisis on the holiday market, which is a very sensible market (terrorism, economic crisis…) Cendant has the possibility to equilibrate its accounts. (The package holiday market: a case study) - Innovations it is important for Cendant to anticipate the needs of its customers. In term of innovations we can underlines the innovations of products, of services for customers, of technologies… Ebookers is an Internet platform to book holidays, so it is important to innovate in order to involve quickly this platform: easiness, better presentation, more links on providers… - A large scope of products: to compete on a one hand with airlines which have decided to create their own GDS (Global Distribution System), and to another and with the other big cybermediators (Sabre, IAC, Amadeus…) which have acquired the main GDS on the American and European markets, Cendant has developed a large scope of products. It is important for Cendant to give the choice between many destinations for example. In order to differentiate of its competitors they try to offer more and original destinations or holidays. - Lower costs: to compete with the other cybermediators who have approximately the same products the better means to develop a competitive advantage is to propose a lower price to the customer. - Vertical integration: it is the main point used by Cendant to acquire more shares of market. The aim of this strategy is to have the products and the means to distribute them. These last years Cendant has developed his travel segments thanks to many important acquisitions: Galileo, Cheaptickets, Orbitz, Ebookers… These GDS permit to Cendant to distribute its products of other segments (hotels and cottages of the Hospitality segment, cars of the vehicle segments…) Porter’s generic strategies: Competitive advantage Lower cost Differentiation Competitive scope Broad target Cost leadership Differentiation Narrow target Cost focus Differentiation focus Cendant is focused on a broad target because it proposes its services to everybody: tourists, business, individuals, families… but it uses the both strategies of lower cost and differentiation to involve its competitive positioning. To compete with the GDS of the airlines the better strategy is the differentiation because they propose a limited scope of products but at very low prices. Nevertheless to compete with the other cybermediators like Expedia, Travelocity or Opodo who have many similar offers the better strategy is to try to realise a cost leadership. Stakeholders Who are the stakeholders for Cendant? (Cendant’s official web site) What are the levels of power and interest of Cendant’s Stakeholders? Level of interest - + - Power + Minimal Effort Keep informed Unions and employees Suppliers Keep satisfied Governments Financial community Key players Owners and decision makers Customers Competitors Who are the key actors in the acquisition of Ebookers by Cendant? In the case of the acquisition of Ebookers by Cendant, the key actors are the owners, decision makers, governments, customers and competitors: - Owners and Decisions Makers: They decide of the strategic impact of the acquisition and have did negotiations with Ebookers’ owners to arrive to a price: $404 millions - Governments: they have authorised the acquisition because they have considered it wasn’t a trust. - Customers: their needs determine Cendant’s choices. The European customers were not satisfied by Cendant’s offers before the acquisition of Ebookers. - Competitors: the competitors like Expedia (IAC) offers a better choice for example on the European market. Expedia has the leadership within these countries. It is one of the main causes which explain that Cendant has decided to acquire the GDS Ebookers, well implanted on this market, to compete with Expedia. What is Cendant’s corporate culture? (Cendant’s official web site, diversity) Cendant favours the integration of minorities “at all levels and all businesses”. In order to develop this plan, the decision makers have privileged partnerships with numerous associations: National Black MBA Association, National Society of Hispanic MBAs, National Minority Supplier Development Council, Women’s Business Enterprise National Council… This initiative for diversity is taken in account in different business areas: - Workforce - Supplier alliances - Multicultural Marketing - Community Relations/ Corporate Giving - Minority franchising. Cendant’s environment Cendant’s environment influences strategic decisions. Different characteristics can constitute key elements for Cendant’s decision but also for its competitors and the general business. These characteristics can be analyse under the PEST tool: Political: - antitrust policies: these policies have the capacity to slow down the expansion of big global companies like Cendant or its competitors. - exogenous constraints: terrorism, wars or political conflicts can scare or modify costumers’ behaviours. So the society might adapt its strategy to these new elements. (e.g. 11th September terrorism, Asian tidal wave,…have limited the growth of tourism) Economic - segmentation of the market: there are two distinct markets, the American and the European markets. Cendant have to consider the different characteristics of the both segments. Customers’ behaviours and needs differ in function of the segments. - economic trends: the economic general situation influences customers’ behaviours. It is important for the companies to well interpret the economic tools (GNP, GDP…). If the economic tools are in a positive trends, it can signify it financially easier for customer to have money for the leisure (e.g. to travel). Social - behaviours: the evolution of customers’ tastes have a great importance for the enterprises. Few years ago, one of the most fashionable destination of travellers was “Costa Brava”. Today this destination declines. Customers prefers more original destinations, so enterprises have to anticipate customers’ needs and to innovate to satisfy them. - labour trends: in Europe particularly, many countries have reduced the labour time and increased the quantity of paid holidays. So, potential customers have more time for leisure. Technological - new ways of communication: As noticed before, the development of the ways of communication has modify the structure of the business. Internet, particularly, has been a major shift. - Technological advances: they can influence both customers and enterprises’ behaviours. The enterprises try to use more efficient and economical means to satisfy customers. The development of the new A380 Airbus is a good example because this airplane will permit to airline companies to do travel more people at the same time. It will be a means for these companies to reduce its costs. On another hand, technological advances influence customers’ needs because they wan...