Quiz on Rosenbluth

Name: A S Hari Sreyas Duration: 20

minutes

Section: 2

Answer question 4 and any two from the other three

( question 4 carries 10 and the others, 5 points)

1. What did Rosenbluth do with its leisure travel business?

Rosenbluth needed to reconsider the continuation of leisure travel as a core part of his Business
Strategy which entailed altering strongly held beliefs and modifying strongly held beliefs.

The company responded with two strategies. First, it decided to get out of the leisure travel
business, instead becoming a purely corporate travel agency. Second, it decided to rebate customers
with the entire commission the agency receives and instead bill customers by service provided.
Rosenbluth charges fees, for example, for consultation on how to lower costs, for development of in-
house travel policies, for negotiating for their clients with travel providers, and for calls answered by
the company staff. To implement this second strategy, which completely changed the companys
business model, it was necessary to use several innovative information systems.

Rosenbluth uses a comprehensive Web-based business travel management solution that integrates
Web-based travel planning technology, policy and profile management tools, proprietary travel
management applications, and seamless front-line service/support. This browser-based service
allows corporate travelers to book reservations any time, anywherewithin corporate travel
policyin minutes. Three of the customer-facing tools that comprise this system are:

DACODA (Discount Analysis Containing Optimal Decision Algorithms). This is a patented yield-
management system that enables travel managers to decipher complex airline pricing and identify
the most favorable airline contracts. Use of this system optimizes a client corporations travel
savings

. Global Distribution Network. This network electronically links the corporate locations and enables
instant access to any travelers itinerary, personal travel preferences, or corporate travel policy.

iVISION. This proprietary back-office application provides Rosenbluths clients with consolidated,
global data to enable them to negotiate better prices with airlines, hotels, car rental companies, and
other travel providers.

2. Which strongly held beliefs of Rosenbluth needed to be reconsidered if it had to remain

competitive?

3. Name the system used by Rosenbluth that assured that its corporate clients received the lowest
fares.
4. Identify the nature of Porters competitive forces that Rosenbluth faced before its transformation.

Entry Barriers:

Economies of scale
Proprietary product differences
Brand identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
o Proprietary learning curve
o Access to necessary inputs
o Proprietary low-cost product design
Government policy
Expected retaliation

Determinants Rivalry

Industry growth
Fixed (or storage) costs/value added
Intermittent overcapacity
Product differences
Brand identity
Switching costs
Concentration and balance
Informational complexity
Diversity of competitors
Corporate stakes
Exit barriers

Determinants of Supplier Power

Differentiation of inputs
Switching costs of suppliers and firms in the industry
Presence of substitute inputs
Supplier concentration
Importance of volume to supplier
Cost relative to total purchases in the industry
Impact of inputs on cost or differentiation
Threat of forward integration relative to threat of
o backward integration by firms in the industry

Determinants Substitution Threat

Relative price/performance of substitutes

Switching costs
 o Buyer propensity to substitute

Determinants of Buyer Power

Bargaining Leverage

Buyer concentration versus firm concentration

Buyer volume
Buyer switching costs
o relative to firm
o switching costs
Buyer information
Ability to backward integrate
Substitute products
Pull-through

Price Sensitivity

Price total purchases

Product differences
Brand identity Impact on quality/ performance
Buyer profits Decision makers' Determinants of incentives