4. Bargaining power of buyers
AT & T Monnakgotla Travel and Tours customers can be categorised into three types with each type having a different degree of bargaining power. Type one would be Fully Independent Travellers often referred to as FIT, they book travel services without going to an intermediary, in this case the intermediary would be AT & T. FIT’s possess very little bargaining power and margins are considerably higher versus consolidated customers. What AT ; T loses in Margins to consolidators, it usually gains back in volumes. When an intermediary consolidates the individual customer base, the bargaining
5. Threat of new entrants
The threat of new entry in the travel industry in Botswana is moderate because of several variables. AT ; T Monnakgotla Travel and Tours has three lines of business that are intertwined. Firstly, the company operates a travel agency with four offices spread out across the country as a one stop travel shop. Secondly AT ; T operates an international passenger bus services which transports clients and parcels from Gaborone to Windhoek, Gaborone to Johannesburg daily; and Francistown to Lusaka. Finally, the company operates a travel and tours service to all parts of the world. The threat of new entry will be examined from different points looking at the complexity of the business.
The big draw to AT ; T Monnakgotla Travel and Tours is the fact that is has a widespread coverage of destinations both local, regional and international, unfortunately these destinations are non-rivalrous and therefore anyone has access to them, this makes the threat of new entry high. One of the variable worth examining is the relatively high capital investment needed to enter the industry which decreases the threat of new entry into the market. As earlier mentioned AT ; T is an IATA accredited agency which gives it authority to sell flight tickets to all destinations around the world, this very same accreditation is quite expensive to acquire with a minimum application fee of about BWP 14,500.00, International Air Transportation Association (IATA) requires a travel agency to abide by certain rules and have sufficient funds on hand to process air-tickets on behalf of airlines, this therefore limits the threat of new entry.
Other variables that require examination are product differentiation, brand identification and quality of service. These factors decrease the threat of new entry, AT ; T is a reputable big name in the travel industry, one which customers are more comfortable dealing with because of its long existence in the market. A further variable to consider is economies of scale, which decreases the threat of entry; the higher the volume of customers a firm service, the greater the economies of scale and therefore the greater the firm’s ability to negotiate with suppliers, Hotels, attractions, restaurants and transportation give better rates to a higher volume of customers and therefore works as a cost advantage to be larger.