BSB119 – GLOBAL BUSINESS
TUTORIAL 7: GOING INTERNATIONAL
Refer to website wotif.com
Specialises in last minute accommodation
Industry leader – share price has dropped recently.
1. How has Wotif.com 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,
Hotels.com 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
Minimal investment – no inventories
Slim profit margins
Created a very hard model to follow – it’s difficult to take wotif.com on (similar to ebay)
Hard to take them on competitively cause they do it very well
2. Why would Wotif.com 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
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