BSB119 T W 7

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Queensland University of Technology
Management and Human Resources

1 BSB119 – GLOBAL BUSINESS TUTORIAL 7: GOING INTERNATIONAL Refer to website Specialises in last minute accommodation Industry leader – share price has dropped recently. 1. How has maintained its competitive advantage in the marketplace? (6 Marks)  First mover advantage – no one had tried to do this before. In the US, big players such as Expedia, operate a merchant model where the companies buy the hotel rooms at wholesale and then market them up and sell at retail prices. This is quite an unyielding model and involves a great deal of investment. You may or may not sell the asset.  You establish brand, image and you are the competitor everyone has to overtake. First person to make a connection with suppliers and resources. First to take on government agencies and departments – gain imperative market knowledge.  Innovation – simple and easy model  Economies of scale – more clients they get the more economies of scale. Eg Ebay. It becomes cheaper to maintain each client. Therefore, more profitable.  Low cost model  “What we do is concentrate on doing one thing really ...”  “We approached it from a very low cost model. Everything we do we try and do very efficiently, internally. And we work on a very slim margin with the suppliers ... what’s really turned out is the barrier to entry gets very high once you start to dominate a market”  Building trust – credible brand  Brand awareness  Minimal investment – no inventories  Slim profit margins  Created a very hard model to follow – it’s difficult to take on (similar to ebay)  Hard to take them on competitively cause they do it very well 2. Why would choose New Zealand as their first international market when there are potentially more lucrative markets in North America, Western Europe or China? Backup your answer with relevant IB theory (8 Marks)  NZ has all the factors of going international – different laws (banking), tax and regulations (different levels of government), exchange rate  However, it is culturally and geographically close to Aust  NZ and Aus understand each other – similar to habits  Less risky  Allowed them to go international without taking on a huge and unknown market  Start with a small market and grow  Once they did this, they were then able to spread to other nations. 3. Identify the key differences between a merchant model and a commission-based model. Which model is likely to succeed in the online accommodation market? Why? (4 marks)  In north Ame
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