Introduction to Digital Economics - Essay Example

Running Head: Digital Economics Digital Economics Digital Economics Question 1: Evaluate the impact that Internet/mobile technologies have made on the business strategy and how can impact upon industry sector of both Zara and Expedia? Answer 1: Setting a business strategy is a more multifaceted task than simply managing a business. Strategies are generally long term, and sometimes they may even become a guiding and regulating force throughout an organisation. However, even long term strategies might have to be changed in order to adjust with the changing times. For example, business strategies prior to globalisation used to deal with a larger number of local issues. But after globalisation, business strategies are being reset or newly developed in order to explore the previously conservative or socialist countries and their markets. It is worthwhile to mention that Internet and mobile devices are two separate entities in this global environment of today. Internet is interconnecting the countries and cultures. On the other hand, mobile devices are providing ease of accessibility. Combining the two technologies is having a drastic effect on today’s business houses and their strategies. While developing a 21st century business strategy, strategists are now trying to focus on the nature and behaviour of target audiences or user groups. Today’s users or potential customers are far more agile, informed, and active across the social networks. Websites like Facebook, Top Ten Reviews, etc. have increased the scope of interaction between users and customers in a drastic manner. In such circumstances, a strategist must think in an innovative way, so that he/she can create a positive impression of his/her company all across the Internet. For example, a company can now develop its own app (a very concise form of software application). This kind of customised software utilities can be easily installed in mobile devices (e.g. a tab or a smartphone). Then, users can easily try or look into the commodities or facilities that are being provided by the company concerned. Besides, websites like Facebook allow business enterprises to create their dedicated pages for publicity. Now Zara is a big retailer of textile and fashion products, which appears to have diverted from the general course of Internet-based business application development and strategic adjustments. It does limited advertising and propaganda. This policy is maintained across the Internet too. Frequency of online advertisements is considerably controlled by Zara. However, this can be noted as a complex influence of Internet/mobile technologies. Since most of the fashion retailers are now overly emphasising on Internet and mobile technologies, Zara possibly wants to look different and reach its loyal customers rather through outlets instead of online stores. So Zara appears to be an exception in the fashion retailing industry, since other companies like Uniqlo in the same segment are highly dependent on both online and offline advertisements. This is the case with Expedia too, which operates in travel and tourism industry. Expedia not only depends on online and offline advertisements, but also its core operations are based on its travel website. Expedia’s business strategy continuously exploits old and new computing technologies since it is a primarily website based company. It not only provides online procurement facilities but also it helps in online bookings, reservations, etc. Question 2: Using both studies to illustrate key points, discuss a range of pricing issues/implications that are relevant with particular focus on how consumers might respond to price differences and how price discrimination can be achieved in an online environment. Answer 2: Zara is successful and currently it does not appear to be facing any strategic issues. However, Zara’s overall strategy depends on tactical pricing. Zara offers highly unique but low cost fashion collections. Since these products can be afforded by a large number of customers, Zara has sought to open a large number of stores as well. Zara’s international chain of retail stores practically exposes the company’s collections to the customers so that they can try the products at affordable prices. Expedia has a completely different policy. Expedia is mainly a travel website operating in the travel and tourism industry. Expedia must offer a large number of ticket reservation, hotel reservation, booking, and pricing options. However, the company has limited options in this regard. It cannot fix the prices of tickets for any airline service or ferry service. That means, if no airline company offers an inexpensive ticket for a given route, then Expedia too cannot allure potential customers by lowering or discounting any of the tickets available for that route. Expedia may strike only limited agreements with airlines, hotels, etc. to offer discounted prices. So Expedia has to disseminate proper and useful information about the tickets, hotel fairs, available discounts, etc. all the time. Consequently, it has to constantly gear up its available business channels and maintain its website flawlessly. If Expedia gives a slower price update, its competitors may allure the customers even within a short let up. But Zara has developed a fixed pricing policy. Zara believes in rapid production and lower prices. The company also aims at developing a widespread, complex, and international chain of numerous stores. The most probable pricing implication of this policy is that the company wants to create a group of its loyal customers. If a customer starts to favour a product line of the company, then he/she goes ahead to try more options as well. This happens because the customers can touch, feel, and smell the new apparels that appear in the Zara stores. In travel and tourism industry, pricing options may be less flexible. If hotel and travel expenses are raised for a certain holiday destination, then customers may altogether change their plans and start to look for newer, cheaper destinations. But Zara operates in fashion and textile industry. Here, strong sense of aesthetics and designing skills can be used to manufacture expensive, attractive, and hence, lucrative product lines. However, Zara’s attitude and approach towards online marketing and retailing cannot be fully justified. It can experiment with at least a portion of its stocks to go to online retailing. Only then the effects of online retailing in fashion and textile industry can be fully understood from Zara’s perspective. As far as Expedia is concerned, it will win more customers if it can make its website more efficient. Nevertheless, there are fewer options for quality checking in an online environment. Therefore, in a fully online environment, price competitions will remain the deciding factors and organisations offering lower prices will win more customers. Read More