Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?
In early 2003, an outbreak of SARS in Hong Kong led to a plunge in inbound travel to the city. Many local travel agencies started hosting below-cost inbound tours, dubbed "zero-fee tours", for mainland Chinese tourists. They make a profit by bringing these tourists to shop in designated retail outlets that charge them inflated prices but offer lucrative commissions to tour operators. Zero-fee tours first caught the public's attention in October 2006 when a group of tourists were abandoned at a pier because they spent too little while shopping. Then in June 2010, a tourist died of a heart attack after a heated argument with a tour guide over a shopping arrangement. Despite preventive measures implemented by the industry association, tourist complaints keep increasing and high-profile cases in which tour guides insult or even fight with tourists continue to happen. Trendy Travel Limited is a local travel agency that hosts regularly priced inbound tours. Facing strong market demand for zero-fee tours, it would like to understand the business model of zero-fee tours: what is the driving force, is it sustainable, and what are the impacts to the company and the entire industry? It also wants to determine how to position its inbound tour business in the short and long term.
Swot Analysis of "Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?" written by Wen Zhou, Penelope Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tours Inbound facing as an external strategic factors. Some of the topics covered in Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? case study are - Strategic Management Strategies, Competitive strategy, Marketing, Product development, Regulation and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? casestudy better are - – there is increasing trade war between United States & China, wage bills are increasing, technology disruption, cloud computing is disrupting traditional business models, geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs,
talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tours Inbound, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tours Inbound operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? can be done for the following purposes –
1. Strategic planning using facts provided in Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? case study
2. Improving business portfolio management of Tours Inbound
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tours Inbound
Strengths Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tours Inbound in Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? Harvard Business Review case study are -
Sustainable margins compare to other players in Sales & Marketing industry
– Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? firm has clearly differentiated products in the market place. This has enabled Tours Inbound to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Tours Inbound to invest into research and development (R&D) and innovation.
High brand equity
– Tours Inbound has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tours Inbound to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Tours Inbound has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Tours Inbound is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Tours Inbound has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- Tours Inbound is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Tours Inbound is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Tours Inbound has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tours Inbound has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Operational resilience
– The operational resilience strategy in the Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to recruit top talent
– Tours Inbound is one of the leading recruiters in the industry. Managers in the Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Tours Inbound is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Wen Zhou, Penelope Chan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Tours Inbound are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Superior customer experience
– The customer experience strategy of Tours Inbound in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? are -
Interest costs
– Compare to the competition, Tours Inbound has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?, in the dynamic environment Tours Inbound has struggled to respond to the nimble upstart competition. Tours Inbound has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Tours Inbound, firm in the HBR case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Tours Inbound has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?, it seems that the employees of Tours Inbound don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? can leverage the sales team experience to cultivate customer relationships as Tours Inbound is planning to shift buying processes online.
Lack of clear differentiation of Tours Inbound products
– To increase the profitability and margins on the products, Tours Inbound needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Tours Inbound has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? should strive to include more intangible value offerings along with its core products and services.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Tours Inbound supply chain. Even after few cautionary changes mentioned in the HBR case study - Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tours Inbound vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tours Inbound is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?, is just above the industry average. Tours Inbound needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Tours Inbound can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Tours Inbound can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Creating value in data economy
– The success of analytics program of Tours Inbound has opened avenues for new revenue streams for the organization in the industry. This can help Tours Inbound to build a more holistic ecosystem as suggested in the Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? case study. Tours Inbound can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Tours Inbound has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tours Inbound to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Tours Inbound can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Tours Inbound can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tours Inbound can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Tours Inbound in the consumer business. Now Tours Inbound can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tours Inbound is facing challenges because of the dominance of functional experts in the organization. Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tours Inbound to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Tours Inbound to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Tours Inbound can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tours Inbound can use these opportunities to build new business models that can help the communities that Tours Inbound operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Tours Inbound to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Leveraging digital technologies
– Tours Inbound can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? are -
Consumer confidence and its impact on Tours Inbound demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Tours Inbound is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Tours Inbound high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Tours Inbound needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole?, Tours Inbound may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Technology acceleration in Forth Industrial Revolution
– Tours Inbound has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Tours Inbound needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tours Inbound in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Tours Inbound needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Tours Inbound
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Tours Inbound.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Tours Inbound in the Sales & Marketing sector and impact the bottomline of the organization.
Environmental challenges
– Tours Inbound needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tours Inbound can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Zero-Fee Tours: An Irresistible Bargain or a Sinkhole? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Tours Inbound needs to make to build a sustainable competitive advantage.
