PGDM 2019-21

Project Report
On
“Compare and contrast the PESTEL and Poter’s five
forces model of two sectors- Tourim and
E-commerce”
TEAM-3
Submited To: Submited By:
Mr. Atul Arora Narayani
Rishikesh Raj Singh
Isha Gupta
Abhishek srivastava
Divyansh
Sristi sudhi pandey
 E-COMMERCE
The E-commerce emerged firstly in the year of 1960’s when
the transfer of data started over the internet and the
organizations started using the technology named Electronic
Data Interchange, that is, EDI where the files or documents
has started to transfer through internet for the business
purpose. From the year 1990, online shopping business started
and went on the thirteen sky since then, as it has lowered the
burden of time and distance from the shoulder of the buyer,
with time after the smartphones came into our hands, buying
became the concept of just a single click where you can
purchase your desired product sitting anytime and anywhere,
just need of the internet connection is there like a thread. And
now you can visit the virtual Online Shopping Store and can
browse millions of product online on the screen of your
smartphone.
E-commerce refers to commercial transactions of goods or
services conducted over the internet. Over the past several
years, e-commerce has rapidly evolved to become a
combination of online and offline retail that is vertically
integrated. You can find numerous e-commerce companies
selling various types of products and services.
Some of the major players in the e-commerce industry, such
as Amazon, Alibaba, and eBay, are well known by the public
and own a large proportion of the market share. These
companies sell products of various brands, while other
companies, such as Zalando and ASOS, also offer products
their own brands. With an ever-increasing level of
marketplace competition, there is more and more overlap of
the kinds of goods and services retailers provide. For
example, while still primarily a gateway for third-party
sellers, Amazon is increasingly developing and marketing its
own brand of products.
The Business to Consumer(B2C): In this kind of e-commerce,
the business sells their products to the customers or
consumers through online web portals, where you search for
your desired product, scroll them, add them to the cart and
then buy it through online fund transaction method like with
the use of credit/debit card or net banking. The best example
of this is Amazon, Flipkart.
The Consumer to Business(C2B): The process of selling and
purchase of items or products through consumers to the
business via the internet, for example, the paid survey
regarding any product of any company.
The Business to Business(B2B): The buying and selling of
goods or products over the internet between the two
businesses or company. The best example for this is the
company which provides hosting services to the websites of
other companies, like, GO Daddy, which sells the domain and
other hosting services to the other companies.
The Consumer to Consumer(C2C): When over the internet
you sell a product which you need no longer to the needy one
it is Consumer to Consumer e-Commerce. The perfect
example of this is OLX.
 PESTEL ANALYSIS
Political factors:
The political and regulatory challenges before the e-
businesses have kept rising. The growth of Ecommerce in EU
has also been challenged by political factors. EU has kept
targeting technology giants from US. Google and Amazon
have already been targeted by EU. Such issues can be a threat
to the growth of ecommerce in Europe and it is why several
sources predict that the growth rate of ecommerce in Europe
is going to be low. Political stability in most regions of the
world leads to economic stability.

Economic factors:
Economic factors are directly related to business and their
effect is also direct on business revenue and profits. During
the period of recession, spending had decreased. People had
adopted cost cutting measures as the level of economic
activity and employment had gone down.. Higher economic
activity means faster growth and higher revenue for the
Ecommerce industry whereas lower economic activity means
just its opposite. In this way, economic factors can have a
direct and deep impact in the ecommerce industry.

Social factors:
 Changing trends can also have an impact on businesses. The
growing use of mobile technology has affected ecommerce. In
most societies the mobile technology has been very popular
and a larger number of people worldwide are now using
mobile gadgets for shopping and other purposes.

Technological:
Industry relies heavily on technology. Everything is based on
technology in e-retail from sales to customer service. All the
ecommerce brands are in a race to be technologically ahead of
their competitors. From Amazon to E-bay and Flipkart, every
brand is investing a lot in technology to find faster growth.
The reason that Amazon is ahead of the others is because it is
technologically ahead of the others. It has managed its
customer experience so well that its popularity is very high.

Environmental:
While the direct environmental impact of this industry is very
low and nearly zero, it still focuses heavily on sustainability.
From sustainable packaging to waste reduction and renewable
energy there are several areas where the e-retailers can invest
in sustainability. Amazon has invested in renewable energy to
gain freedom from the use of non-renewable energy
resources.

Legal:
Legal compliance is just as important for the businesses
globally. Any tussle with the law can be a costly affair and
even the e-retail brands can become a target unless they take
care of compliance. It is why the big E-retail brands have
separate teams to take care of the legal issues. Non
compliance can result in financial losses as well as loss of
image and reputation. From labor laws to sustainability laws,
there are several areas where the e-retail brands have to be
careful regarding compliance. Moreover, these laws differ
from nation to nation and market to market and compliance in
every area is important. So, in case of the companies
operating internationally law can lead to major pressures and
an increase in operational costs.
POTER’S FIVE FORCES MODEL
 TOURISM INDUSTRY

The tourism industry, as part of the service sector, has become

an important source of income for many regions and even for
entire countries
There are three basic forms of tourism
1.Domestic tourism refers to activities of a visitor within their
country of residence and outside of their home (e.g. a Indian
visiting other parts of India).
2.Inbound tourism refers to the activities of a visitor from
outside of country of residence (e.g. a Spaniard visiting
Britain).
3.Outbound tourism refers to the activities of a resident visitor
outside of their country of residence (e.g. a Indian visiting an
overseas country).
'Tourism product' covers a number of different categories
including:

 Accommodation, i.e. hotels, bed & breakfasts, guest

houses, self-catering/serviced apartments, camping,
caravanning and home stay
 Hospitality, i.e. food and beverage serving services, e.g.
pubs, restaurants, cafes, private dining for
groups/conferences
  Transport services, e.g. rail, road, water, air networks and
rental
 Guided tours and tourist guides
 Travel agencies and other reservation services, including
tour operators and destination management companies
(see travel trade section)
 Cultural services, e.g. museums, attractions
 Sports and recreational activities
 Retail

Tourism has evolved faster than ever before as the modern

traveller is now caring more about their carbon footprint and
their travelling needs. For businesses, the emerging tourism
trends are extremely important in order to remain relevant in
this fast-changing industry.
 PESTEL ANALYSIS
Political
 Open borders-Thanks to many governments’ decisions to
open up borders to foreigners, it’s easier than ever to
travel to new countries. In many cases a visa of some sort
is necessary; however, the process of applying for a visa
has been expedited in many countries, in part thanks to
the use of technology.

 Government stability-Political stability is a major factor

in the success of tourist destinations. Travelers are
naturally curious to visit all corners of the world, and
they can only really be swayed by the threat of danger.

 Tax incentives- In many countries, tourists are able to

claim a tax refund on products purchased during their
trip upon departure.

Economic
 Rising disposable incomes-As the world economy grows,
individuals are able to earn more and more. With living
expenses growing nowhere near as quickly, many of the
world’s citizens have more money to spend than ever
before.

 Sharing economy-The sharing economy is the name

given to the business trend whereby individuals
 exchange goods and services directly with one another
using facilitating services such as Uber and Airbnb.

Social
 Social pressures-There’s no doubt about it: travel is
fashionable. With the rise of social media, individuals
now have a constant, online presence, and they want to
use that to impress.

 Racial acceptance-Another positive Sociocultural factor

for the tourism industry is that of racial acceptance.
Individuals from around the world are increasingly
accepting of those of other races and religions.

Technological
 Better transport- Buses, trains, and planes are also more
comfortable than previously, and feature new amenities
such as WiFi connectivity or charging ports.

Legal
 Easies to Access Visa-Gaining a Visa was a time
consuming and lengthy legal process. But now applying
for and receiving a Visa is accessible to almost everyone
around the world.
 Tourist Loans-Many banks now provide loans for
tourism purposes. These loans are highly helpful to the
everyday person in being able to tour internationally.

Environmental
 Transport pollution-Perhaps the biggest environmental
factor influencing the tourism industry is the pollution
created by transportation mediums such as buses, trains,
and — more so than others — airplanes.

 Tourist negligence-. In some cases, tourists may be less

respectful of a destination than of their hometown,
causing them to litter and/or contaminate.
 POTER’S FIVE FORCES MODEL
Industry Rivalry : Highly Fragmented Industry with Intense
Rivalry – Highly Fragmented Industry.
 Organized players would barely have 15-20% of the
marketplace
 Most of organized players are present in metros & mini-
metros
 Large disposable incomes in towns like Lucknow,
Jaipur, Coimbatore etc. serviced by family run
unorganized players – Industry rivalry is intense but not
cut throat
 Rivalry Intense because of low switching costs, low
levels of product differentiation, perishability of
products diversity of rivals
 Rivalry is not cut throat since exit barriers are not high,
fixed costs are not high, market growth is good

Threat of Substitutes: Low Threat of Substitutes, as travel

moves up the list of household priorities
 Lot of Possible Substitutes , Threat of Substitution low ◦
India is witnessing a growth of discretionary spend as %
of income
 from 30% in 2005 to around 70% by 2025. Travel ,
being a discretionary spend poised to gain.
 Travel has moved up the list of household spending
priorities
 Education & Recreation will occupy 9% share of wallet
in 2025 as compared to 5% now.
Buyer Power: While buyers are fragmented, their diminishing
brand loyalty and ability to switch (for most products) gives
them reasonable buying power
 Buyers are fragmented
 Diverse retail buyer and corporate buyer profiles.
 Buyers can directly buy from suppliers (hotels, airlines
etc)
 Luxury segment is brand conscious to and willing to
pay a premium for great experience and service quality
Supplier Power: Supplier usually sell commodity products .
Concentration & ability to sell direct gives power to suppliers
like airlines.
 Forward integration by suppliers like airlines selling
direct
 Attempts by suppliers to sell packages and complex
itineraries not very successful
 While suppliers concentrated in some areas like
domestic airlines, there is widespread fragmentation in
hotels, tour operators, car rentals etc.
 There is no significant cost to switch suppliers and
products like airlines, car etc. are fairly commoditized
 Travel agency cannot typically buyout suppliers like
airlines
Barriers to Entry & Exit : While entry and exit barriers are
low, difficult to build scale because of lack of ready
distribution channels
 Government regulation of direct FDI in retail restricts
entry of foreign retailers
 There are low level of proprietary travel knowledge and
asset specificity. This makes it relatively easier for new
 players to enter industry and does not provoke very
aggressive rivalry from existing players
 Low minimum efficient level allow entry of small
startups, however significant scale is necessary to
negotiate profitable deals
 Due to a fragmented market , travel agencies do not
have access to ready distribution channels ◦ Online
channel is growing at a rapid rate but is primarily selling
air and rail.
 CONCLUSION
E-commerce is bringing new business opportunities to the
global travel and tourism industry. Tourism-related
institutions and Internet companies are joining to tap the
potential market created by e-commerce. This paper is an
historical analysis of penetration of e-commerce in the travel
and tourism industry. The analysis identifies a number of
consistent customer experience across different channels,
among airlines, and involving both international and domestic
travel in emerging economies with limited internet access. It
is argued, from this analysis, that there area number of
emerging new technologies such as mobile devices and global
positioning systems which need to be taken into account and
effects systematically assessed.