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Expedia’s capacities and competencies for improvement of its product and service quality

Hausarbeit 2017 11 Seiten

Touristik / Tourismus


Table of Contents

Executive summary

1.0 Introduction

2.0 Main body
2.1 Problems, being faced by Expedia Inc
2.2 How can Expedia deal with the situation? Assessment of whether Expedia has the right capabilities and competences to improve the quality.
2.3 Impact of Kaizen and ISO on Expedia

3.0 Conclusions

4.0 References list

Executive summary

Service quality and effective quality management are both concepts that can and improve company’s overall performance not only in the market, but also in front of the company’s competitors via the creation of competitive advantage. Understanding that and applying it at the real business sector is a prerequisite for any contemporary company. Within this framework, the present report outlines several problems being faced by Expedia Inc. It also examines whether Expedia has the right capabilities and competences to improve the quality it offers to its consumers. One of the ways of coping with the issues in question is the implementation of techniques such as Kaizen and ISO that in turn enable the company to perform service recovery via small steps, performed every day.

1.0 Introduction

The contemporary literature of the subject of service quality suggests that in the provision of a particular service a company has two options: either to fulfill the needs of its customers or not to fulfill them (Johnson et all, 2012). It is argued that as a consequence of that fact, the hidden benefit for a service guarantee is customer feedback, or said in short now customers have a reason and motivation to talk to the company instead of just to their friends (Johnson et all, 2012). This is particularly true since hospitality sector is generally posing some challenges. Simply put, the companies operating in it must provide exceptional quality (Fitzsimmons J and Fitzsimmons M, 2010). Hence, good opportunities exist for companies that aspire to improve their quality management effectiveness and in this way to improve their overall business performance (Haksever et all, 2000).

This report emphasizes the problems in the service quality, being experienced by the online booking site Expedia, as well as assesses its capabilities and core competences to overcome them. Its basic aim is to show the fact high service quality performance produces measurable benefits in profit, cost-savings and market share (Parasuraman et all, 2012). Furthermore, the influence of the techniques of Kaizen and ISO on the quality management of the company has been shown and some proposals for their application have been made.

2.0 Main body

Task one

2.1 Problems, being faced by Expedia Inc

In its essence the concept of service from customer perspective is regarded as the customer's experience with the service provided, their collaboration with it, approach to it and reaction to it, which in turn results in outcomes such as "products", gains, judgements and intentions (Johnson et all, 2012). On the other hand, seen from the perspective of quality, the service is regarded as the production of an essentially intangible benefit, either in its own right or as a significant element of a tangible product, which through some form of exchange, satisfies an identified need (Johnson et all, 2012). Following Parasuraman et all (2012) high service quality performance produces measurable benefits in profit, cost-savings and market share. As a result companies have placed service quality at the top of the list of strategic priorities (Parasuraman et all, 2012). Hence, in Expedia's case, the quality being judged by the user not the producer (Johnson et all, 2012) suffers from the following issues:

1. Insufficient quality, provided by the company to the users of the online platform. Talking about quality of the services provided the web site of Tripadvisor shows us one really unpleasant situation; namely, lots of customers are complaining of the reliability of the company and of its inability to supply its users with the services as promised. Unfortunately the examples related to this fact are numerous and they vary from flights being rerouted without further notice to misguiding adverts about transfers and so on (Tripadvisor, 2017). In addition some remarks about the quality of the customer care are also being present. However, it is not only the deficiency of responsiveness on part of Expedia Inc staff, but also its inability to provide the help necessary swiftly. Therefore, staff related problems are also being experienced by the company.

2. Absence of competent employees. In general, the other part of the negative customer reviews on the web site of Tripadvisor reveals the unpleasant truth regarding the staff of the company. Large proportion of them have created the feeling that the customers' best interest in not their priority. However, in this way the company's ability to build trust and create confidence on part of its consumers is also suffering. Moreover, the lack of assurance adds negatives to the company's current situation (Blackmon et all, 2013). Understanding the problem and providing employees with the training necessary will increase the satisfactory levels within the consumers via enhancement of the levels of empathy on part of the company. Following Johnson et all (2012) the ability to provide help necessary swiftly and in professional manner will largely contribute to the increase in the customers' satisfaction levels. In this regard the sensitivity training should be employed, namely Expedia's employees should be sensitized to the various needs of the waiting customers (Jones and Dent, 1994).

3. Lack of adoption of innovative ideas and practices. The technology investments and acquisitions are all ways that the companies in general and Expedia in particular could enhance the way their current operations are being performed (Brown et all, 2012). Seen from the web site of Tripadvisor is the fact that the company is mismanaging its quality by providing no refund, or even relevant to its position customer care. The innovative tools in the software packages will allow the company to develop efficient and effective operations with regard to the consumer (Brown et all, 2012); namely, efficiency is regarded as the provision of quality service by using the smallest input of resources possible (Brown et all, 2012). Expedia Inc must provide quality customer service that comes from combination of effectiveness and efficiency within the company. Moreover, the smart management of resources, operations and staff might lead to high levels of value (Brown et all, 2012).

In contrast to the customers' reviews the business of the company is booming, its profits are constantly augmenting, its gross booking rate has risen with 14% as well as the revenue has jumped with the relevant 15%. With this knowledge in mind, the ability to better access the capabilities of Expedia to improve the quality of the services offered is still a matter of utmost concern.

Task two

2.2 How can Expedia deal with the situation? Assessment of whether Expedia has the right capabilities and competences to improve the quality.

The substantial performance of Expedia Inc in the first quarter of 2017 gives clear indications that the company has the resources to improve the quality of the services it offers, or talking about dimensions of service quality, its reliability. Simply put, after that Expedia will be able to perform the services it offers in the most accurate manner (Fitzsimmons et all, 2014). As a matter of fact the huge revenues that the company receives are due not only to the diversification of its portfolio by investigating sectors such as railways, hotel, rental car and vacation packages in Asia, Europe and USA (Schwarzbaum and Ezra, 2017), but also to the several alliances (the most famous with Ctrip); the company is also building up its search engines Trivago, Viator and Orbitz (Forbes, 2016).

It is not only the growth outlook of the company that as a whole has been positive, it is also the growing share of listings bookable online, generating in turn incremental transactional fees (Derrick and Jayson, 2017). In addition the free cash flow in tremendous amounts (Derrick and Jayson, 2017) provides the company with a level of support in case of pullback in shares; the market valuation of the company is also high which in turn puts the company in favorable position.

Simply put, Expedia's capabilities are the source of the firm's core competences; as a consequence the core competences of the company are the basis for its competitive advantages in the marketplace (Johnson et all, 2012). As part of the company's capabilities its financial resources are substantial enough to ensure the process of effective quality management. According to Derrick and Jayson (2017) the analysists from Citi recommend investors to buy shares of Expedia Inc. As it was stated in the lines above the human resources, especially in the part related to the organizational routine, was a problem. So, the quality dimension of responsiveness will be achieved. As it was previously stated by Stranjancevic and Bulatovic (2015) the factor that mostly influences the satisfaction of customers is concerned with the kindness of staff, its professionalism and promptness of service; simply put, all of them are being lacking in major part of Expedia's staff at the present moment. Later, but not last the innovation resources of the company, or its capacity to innovate has been strongly enhanced by the free cash flow of $1.5 billion on top of its $3 billion in cash and equivalents (Derrick and Jayson, 2012).

In order to achieve the right competences, Expedia Inc needs to eliminate its currently experienced problems and here comes the quality dimension of the assurance, or simply put the potential on part of the company to show trust and responsibility (Fitzsimmons et all, 2014). For example, the effective customer care will be transformed into a source of competitive advantage for the company over its rivals (Johnson et all, 2012).

Nonetheless, in order to improve the quality, being provided by the company to the users of the online platform Expedia has the full capacities to conduct a profound market research, being able to supply the company's management with answers to the following questions:

- How end users of the platform have defined their expectations for the company? From personal experience, from advertising or a friend of them have recommended Expedia? This is the fourth dimension of the service quality, or namely the empathy, projected in the company's ability to be helpful and feel sympathy for the customers' needs (Fitzsimmons et all, 2014).

- What is the actual delivery of service and where does the drawback lie? The reasons could be various starting from bad employee selection, insufficient training or pure lack of ability to cooperate within the team? The tangibles as the fifth dimensions of service quality (Fitzsimmons et all, 2015) also play significant part here as they relate to the physical facilities used by the company and the facilitation of goods, new customer relationship management system need to be used, for example.

Task three

2.3 Impact of Kaizen and ISO on Expedia

The continuous improvement, so inherent to Kaizen will definitely be of great benefit to Expedia. Even though it is not impossible, the Kaizen technique will also increase the engagement of the employees of the company into the working process, leading in this way to improvements in the customer care (Dyer, 2016). Examining this question also outlines the fact that working together Expedia's staff will achieve big results, being accumulated within the prospect of small changes in time (Kaizen, 2017). In brief, the transformation of the corporative culture of Expedia will concern in far more extent the emotional growth of the company, than its technical maturity (Kaizen, 2017). So far in Expedia Inc there exists a discrepancy between customer's expectations and current process. In reality what could be done is the following:

- Explanation of what Kaizen really is and why Expedia needs it (Kaizen, 2017);
- How everyone, everywhere can carry out Kaizen everyday (Kaizen, 2017);
- The role of the leaders in turning Kaizen culture into competitive advantage (Kaizen, 2017 (Kaizen, 2017);

In practice, the idea of nurturing the company's employees could be performed via:

1. Establishment of a suggestion system (proposal box), where the employees could post their suggestions about what should and could be improved. In reality, most of the suggestions that have great economic impact on the company's activity come from groups.
2. Organizing rapid improvement events for structurally searching for the root causes of particular problems and eliminating them. The most important thing here is that the group also receives multifunctional cross training and is also taught communication skills, decision making and working in team in order to use each other's knowledge and experience.



ISBN (eBook)
ISBN (Buch)
539 KB
Institution / Hochschule
Anglia Ruskin University
Expedia problems customers improvement Kaizen ISO 9001




Titel: Expedia’s capacities and competencies for improvement of its product and service quality