1. Rivalry Among Competing Firms

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Group A Session 3
Min Jung Kim Alissara Jayaphorn Jessica Ai-Chuan
Chou
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1. Rivalry Among Competing Firms

• STA travel is competing against many
  on-line/off-line travel agencies.
  Well-established on-line agencies such as
  expedia.com, hotels.com,cheaptickets.com are the
  main competitors although within the student
  travel agencies STA travel is the dominant
  company.
• The exit barrier for on-line travel agencies is
  low because of low initial investment. Thus, the
  competition between the .com travel agencies is
  intense.
• STA travel has over 20 web sites that enable
  visitors to book flights, hostels and rail or bus
  travel online or book appointments with in-store
  consultants, as well as access informative
  editorial on gap years, tours and destinations.
• STA travels success rests on three pillars a
  high profile in target markets, employees who
  provide peer-to-peer advice to customers and a
  product range that matches the price/performance
  expectations of its customers.

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• STA travel customers likely to visit other
  on-line travel agencies to compare.
• Compare to Expedia.com, hotels.com,
  cheaptickets.com, and easyjet.com statravelhas
  the lowest number of people visiting its website
  daily.

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2. Potential Entry of New Competitors

• STA travel is specialized in the student travel
  industry since 1979 and is recognized as a global
  brand in particular by its target customers. With
  a global distribution network, STA travel is
  today the largest specialist in the student and
  youth sector. STA travel employs some 2,400
  people in 17 countries, and works with
  franchisees and licensing partners in 73 further
  countries. Thus, new comers are to pay for the
  experience cost when competing against STA
  travel.
• A few of the on-line travel agencies are more
  favored by consumers and have gained a strong
  brand loyalty/brand recognition. However, STA
  travel is the largest student travel organization
  and the preferred travel company for over 6
  million people worldwide.
• STA travel has gained competitive advantages of
  strong relationships with vendors and proprietary
  know how, which result in lower average costs.
  Thus, it enjoys absolute cost advantages over new
  comers.

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• STA travel knows what students want and is
  dedicated to providing a quality travel
  experience to each and every customer. STA
  travels employees are young, dynamic and
  knowledgeable individuals who are passionate
  about travel.
• STA travel recognizes the need for convenience in
  a students busy life STA travel provides a
  combination of outlets suited toward students
  needs.
• Retail locations (http//www.STA
  travel.com/fine_a_branch.htm)
• 24-hour call center
• Online http//www.statravel.com/
  Interactive Social Community http//www.statravele
  rs.com/)

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• STA travel core products and services One-stop
  shop for every students travel needs.
• Student airfare The exclusive STA Travel Blue
  TicketTM provides students with competitive
  airfare pricing and unmatched flexibility and
  ease when booking their travel.
• Land product STA travel distributes over 1,500
  global land products making it clear and simple
  for students to plan their trip From
  accommodation, tours, work, study and volunteer
  programs.
• Discount cards The international Student
  Identity Card (ISIC) provides access to over
  35,000 international and domestic discounts
  including airfare, accommodation, tours,
  shopping, dining and entertainment with partners
  such as Target.com, Apple Store, Virgin Megastore
  and The Body Shop.
• Student travel loans Travel loans are made easy
  and accessible courtesy of MYRICHUNCLE, an
  innovator in student loans.

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• Travel insurance Insurance coverage is offered
  for trip, baggage, medical and accident
  protection as well as providing 24-hour worldwide
  emergency assistance.

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• International cell phones Provide students an
  easy and cost effective way of keeping in touch
  with friends and family while touring the world.

• Online visa application With its exclusive
  partnership with VisaHQ.com, STA travel customers
  now have access to timely, online visa
  application services at competitive rates. By
  logging onto http//statravel.visaheadquarters.com
  /visas.php, students can apply for new visas as
  needed by accessing their profile through a
  secure online account. This service reduces the
  average application time from 30 minutes to two
  minutes compared to other passport and visa
  services. Additionally, the online service allows
  STA Travel customers to track application status
  online 24/7 and receive real-time electronic
  updates.

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3. Potential Development of Substitute Products

• Travel industry is in a very competitive market
  in terms of the quality of service, price and
  variety of offerings.
• There is no potential substitute for travel
  agencies services. However, the market itself is
  extremely price-competitive thus, there is a
  very limited opportunity of raising prices for
  STA travel.

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4. Bargaining Power of Suppliers

• STA Travel depends solely on their wide base of
  powerful primary suppliers with 10,392 of
  airlines, hostels/ hotels, cruises, packages,
  activities and car rentals. (Ie Most popular
  used British Airways, discount on Eurostar.)
  sta.com
• - STA also offers many add-ons giving their
  clients special discount deals with suppliers
  like overstock.com, ASA (Academic Studies Abroad)
  and Virgin Megastore and TravelEx Currency
  Exchange. http//www.statravel.com/cps/rde/xchg/
  us_division_web_live/hs.xsl/Student-Specials.htm

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• STA also longstanding suppliers that give
  additional discounts to accommodate the STA
  client, such as discount railway tickets (Eurail
  Global Pass), discount phone cards, and the ISIC
  IYTC card that allows for global discounts.
  http//www.statravel.com/cps/rde/xchg/us_division
  _web_live/hs.xsl/discountcards.html
• - STA also have important secondary suppliers,
  the main two are the oil distributors that affect
  the prices of airline tickets, and their own STA
  workers, who nurture and expand their client
  base. www.findartices.com/p/articles/mi_m0EIN/is_
  2006_March_8/

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5. Bargaining Power of Consumers

• Internet business or E-commerce enables consumers
  knowledge to increase due to availability of
  pricing information known as price transparency.
• With an increasing number of travel sites
  claiming to have the lowest fares or hotel rates,
  consumers have learned that no one site
  consistently has the lowest prices. A research
  surveys shows that 90 percent of consumers search
  more than one site before booking a trip online.
• By operating large portion of its business
  online, STAs switching cost for buyers is
  relatively low. Consumers can compare STAs
  offerings with other online suppliers such as
  expedia.com, and cheaptickets.com to come up with
  the best purchase price.

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• 51 of STAs consumers are ages between 18-34
  (young adults)
• 45 of them consist of college students
• Young adults tend to have low brand loyalty, and
  brand equity.
• They tend to make their purchasing decisions
  mainly base on price.

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External Factor Evaluation (EFE) Matrix
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Internal Factor Evaluation (IFE) Matrix