How has WRI's use of technology transformed the BYIT market? Using Porter's Five Forces Model assess the extent to which WRI has altered the BYIT market?
WRI has been maintained its market competitiveness by consistently developing and utilizing technology and R&D. As the primary target market of WRI, consumers in BYIT have been frequently and significantly influenced by the development of world technology, including consumers travelling habits, travelling expectation, transportation choices, accommodation expectation, as well as related services expectation. Personally speaking, the power of WRI's use of technology is not strong enough so far to essentially alter the BYIT market. However, the changes in the BYIT market caused by the world Information System development coupled with the successful redevelopment of the Backpack Online software and the hostelworld.com and other related websites afforded WRI a dominant position in this market. On the other hand, WRI's use of technology in the BYIT market also causes series of changes in this market.
The threat of entry
Before the Backpack Online software was introduced, the BYIT market experienced the GDS software period: the pre-internet travel booking system with a high cost of installing and using cost making it unsuitable for both BYIT products providers and travel companies. At the old stage, the threat of entry was extremely high. GDS and other systems software were time-consuming and labour-intensive for individual hostel to proceed customer orders. High cost to set up the systems and the less-developed information processing technology brought barriers for new entries to compete in. After the introducing of the WRI's advanced operating platform required less labour and time costs, travel companies and hostels have less difficulties, suffer less cost, more importantly enjoy more benefits from using the new software WRI brought. This has reduced difficulty for new entries to enter the market and compete with others. Again, this is also benefited by the world's technology and information system management development, which allowed the dissemination of information technology among companies.
The threat of substitutes
It is difficult to 100% accurately indentify if the threat of substitute for this travelling based service has been increased or decreased because of the unpredictable of the technology development. However, before the invention of the Backpack software, the use of email and or operating system were IT based, which is the very beginning stage of the IS (Information System) development. On the other hand, Backpack system is more IS based, which is more advanced and mature comparing to IT. Nowadays, our most advanced operating platform are still IS based, which we are still exploring and utilizing. From this perspective, the threat of substitutes of this travel service has been reduced as well.
The power of buyers
Personally speaking, not only in the BYIT market, but also in many other industries, the power of buyers have been increased in different scales due to the fierce competition level and other reasons. From BYIT market, in the old GDS days, high cost seriously limited the number of services providers, which brought few choices to the customer. As a result, the power of buyers were very limited and low. Nowadays, companies are granting customer more power to increase their competitive edges. The common of the basic technology allowed more competitors entering in the market, which provides customer more choices to choose their preferred service providers. Also, the customer loyalty nowadays is also not that hard to maintain because companies are consistently improving their service level and adding more customer values in these services.
The power of suppliers
The suppliers in BYIT market are those BYIT products providers and hostels, which used to use the pre-internet systems or are currently using the advanced systems. In the old days, again, through the less developed online booking system, suppliers had very little power to attract business: unlike nowadays, on the new operating platform, suppliers are able to provide more information like pictures, videos, customer reviews, and etc. to attract travellers. This also provides the suppliers the opportunities to improve their competitiveness in order to receive more business. As a result, the power of suppliers have also increased.
Competitive rivalry
Absolutely, the competitive rivalry has been increased greatly in this market. The industry growth rate has dramatically increased even though the recent economy has slowed down the increasing trend in this market in a small scale. Not only more new entries are continuing entering the market, but also the existing companies are continuously increasing their service quality level.
Conclusion
By analyzing the five force models before and after WRI entering the BYIT market, the BYIT market used to be more like a oligopolistic industry: just a few companies and suppliers were able to afford the high cost. Today, BYIT is more like a oligopolistic, transferring into a hypercompetitive industry. Even though competition is increasing, due to the high profit turnovers, more companies are attempting to share the market and gain some profits. The one thing we must remember is the development direction of BYIT market is still determined by the world technology development, which also has the ability to influence the consumer in different ways.