ACCA Strategic Professional · Strategic Business Leader · Competitive forces
Norfield Hotels, a chain with many small independent rooms-booking customers, sells most rooms through two large online travel platforms which now insist on lower commission-adjusted rates and displaying rival hotels alongside. Which strategic response best reduces the platforms' power as intermediaries?
Building a direct booking channel with loyalty benefits is best, because it reduces Norfield's dependence on the two platforms. With its own route to customers, it gains a credible alternative and negotiating leverage, which weakens the intermediaries' bargaining power over commissions and display terms.
- ABuild a direct booking channel with loyalty benefits to reduce reliance on the platformsCorrect
- BAccept the platforms' terms to protect volume
- CRaise room prices on the platforms only
- DAdd more hotels to the platforms' listings
Explanation
The platforms hold power because they control access to customers. Developing direct channels and loyalty reduces dependence and creates a credible alternative, weakening their leverage. Accepting terms or listing more hotels increases dependence.
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