Business organizations today face a more complex and competitive environment than ever before. As trade barriers crumble and less developed countries enter the competitive marketplace, firms now confront a greater number of competitors able to introduce new products and services faster and cheaper than ever before. The ever-expanding capabilities of information communication technologies (ICT) with the associated reduction in investment costs allow capital and information to flow almost instantly throughout many parts of the world. Furthermore, as consumers have become more discriminating and demanding, product life cycles have been shortened, forcing firms to contract time to commercialization and provide higher levels of customer service and customized products. Consequently, most industries and firms have entered into a ”hyper-competitive” marketplace characterized by an increase in competition, uncertainty and complexity.
In this business environment, innovation of organizational processes and products is a major business challenge and critical for firm success. One area of innovation that has been the focus of significant discussion is ICT adoption (Hjalager, 2010). Innovative information technologies have the capacity to impact organizational structure, firm strategy, communication exchange, operational procedures, buyer- supplier relationships and bargaining power (Auramo et al. 2005). ICT may also increase organizational productivity, flexibility, and competitiveness and stimulate the development of interorganizational networks (Cagliano et al. 2005).
Information systems have become so pervasive that they are now considered to be a requirement for doing business in today’s competitive marketplace. Supply chain management is recognized as an important area for ICT innovation and investment (Auramo et al. 2005; Cagliano et al. 2005). Better information exchange between supply chain partners, perhaps the key advantage of an integrated supply chain, provides more up-to-date information and allows for more accurate inventory responses to changes in demand and thus more appropriate inventory levels throughout the supply chain (Patterson et al. 2003). Successful supply chain management requires effective management of strategic alliances as well as extensive data management capabilities and advanced interorganizational information systems to enable greater information exchange (Hjalager 2010; Auramo et al. 2005). ICT provide the capabilities to transfer more accurate and up-to-date information resulting in better visibility of demand and inventory throughout the supply chain. Therefore, it can be concluded that ICT is the most important factor to logistics and supply chain management improvement.
ICT play a critical role for the competitiveness of tourism organizations as well as for the entire industry as a whole (WTO, 2010). As information is the life-blood of the travel industry, effective use of ICTs is pivotal. Hence, “a whole system of ICTs is being rapidly diffused throughout the tourism sector and no player will escape its impacts”(Buhalis and Law, 2008). Unlike durable goods, intangible tourism services cannot be physically displayed or inspected at the point of sale before purchasing. They are bought before the time of their use and away from the place of consumption. Hence they depend exclusively upon representations and descriptions, provided by the travel trade for their ability to attract consumers. Timely and accurate information, relevant to consumers’ needs, is often the key to satisfaction of tourist demand. Therefore, ICTs provide the information backbone that facilitates tourism. The revolution of ICTs has profound implications for the management of the tourism sector, mainly by enabling efficient co-operation within the sector and by offering tools for globalization (Deepthi, 2008). The rapid development of both supply and demand makes ICTs an imperative partner and thus they increasingly play a more critical role in tourism marketing, distribution, promotion and co-ordination.
Technological progress in the recent decades has made tourisms organizations across the globe more innovative than even before. The three important innovations, which have redefined the organizational structure of world truism industry, are Computer Reservation System (CRS), Global Distribution System (GDS) and Internet (Buhalis and Law, 2008; European E-Business Market Watch, 2003). GDS refers to the network connection integrating the automated booking systems of different organizations which enables the user to access it through the intermediation of a travel agency. The supply of services is presently concentrated with four global suppliers owned by airline companies namely Sabre, Amadeus, Galileo International and Worldspan. The functioning of these companies depends upon a network of agreements with local partners which ensures access to travel agencies all over the world. Important features include:
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The advantages and evolution of CRS and Internet are well known. Internet strategy has provided all players in the sector an easy access to the end user (Connor and Murphy, 2004; Deepthi, 2008). Direct communication with the clients, which is facilitated by the Internet, has made the sector more effective and efficient. For instance, following figures demonstrates the transformation in the tourism sector. Figure 2.16 (a) presents the traditional value chain while Figure 2.16 (b) represents the Internet based value chains. They represent the changing face of tourism in recent years. As such, the overall structure of the sector has been transformed ever since Internet has been the essential communication tool for the tourism sector. Several new developments can be noted as below:
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