Technological and Economic Factors Affecting Business Environment - Essay Example

This paper will investigate the changing business environment of the travel industry over the last five years. It will further examine the technological and economic factors that affect the airline industry in UK. Technological Factor The first business in travel and tourism to embrace technological innovation is the airlines industry (Buhalis, 2004, p.1). Dale, et al. (2006, p.4) indicated in his book the early technology adopted by the air travel. Viewdata system was the first technology that connects “tour operators and travel agencies via terminals.

” It grants travel agents to book flights based on the preferences of their customers. In the 1950s, they develop the Computer Reservation System (CRS) to make direct bookings via the system. With the development of Global Distribution System (GDS), travel agents across the globe can access the available flight and seats for travellers. The timeline of technological innovation of the airline industry shows of their early improvements. Therefore, by the year 2005, the airline industry has developed its own booking system to gain competitive advantage.

Capoccitti, et al. (2010) indicate the operations improvement of the airline industry by using technology in managing the CO2 emission. The concern of stakeholders, which affects UK travellers, is on reducing the gases that harm the earth’s atmosphere. . Currently, the travellers can utilise their mobile phone to check-in via the internet, which adds customers’ experience (Boyle, 2011). Hence, innovation and technological advancement are critical to the viability of the airline industry in the new global business environment.

Impact of Technology The development of technology increases the competition among the airlines industry because it changes the processing method, the information dissemination, and communication process. With the evolution of technology, the business environment is rapidly changing, which tightens competition. According to Khosrowpour (2003, p.237), airline companies compete with travel agents to obtain a high market share because they refer other airline companies with available flight to customers.

Furthermore, Doganis (2006, p.197) states that information technology aids companies in their distribution system and revenue management. The effective forecasting method of most companies is due to the improvement of technology, which allows them to predict sales based on the available seats. Hence, it stimulates other companies to adopt technology because it benefits both customers and companies. Moreover, the demand of customers changes. They want fast and accessible service, which motivates companies to improve services.

Aside from accessibility, technology is essential for companies that cut cost or expenses. Economic Factor According to the Civil Aviation Authority (2008, pp.1-6), the decline of the traffic growth in UK commenced in the year 2005. This was affected by the 2001 bombings in the United States that instilled fear for most travellers. The security was stabilised to guarantee the safety of leisure and business travellers. Furthermore,