The Internet Approach

The Internet- (or Web-) based economic model is staggeringly more efficient at the transaction cost level (Wigand & Benjamin, 1995). For example, the cost of processing an airline ticket through traditional approach is $8, but is only $1 through the Web. Similarly, other efficiencies can be derived from marketing and advertisements, online information processing with forms that are electronically linked to databases and online customer support (Hoffman et al., 1995). Elimination of middleman in the distribution channel (or disintermediation) also can have a big impact on the market efficiency (Michalski, 1995). Other efficiencies are generated due to less or no inventory, storage or real-estate space, larger customer base and 24x7 access at no additional cost (Steinfield & Whitten, 1999). Marketing on the Web can result in additional unit sales at very low unit cost. In addition to the lower cost, the Web also enables a higher level of customization to the needs of individual clients (Choi & Winston, 2000). Auto manufacturers, such as Ford and GM, are experimenting with custom-designed cars that can be delivered in less than two weeks to a customer's home (White, 1999). Thus, Web-enabling business processes is particularly attractive in the new economy where product lifecycles are short and efficient, while the market for products and services is global.

The Web allows organizations to expand their business reach. One of the key benefits of the Web is access to and from global markets (Economist, 1997). The Web eliminates several geographical barriers for a corporation that wants to conduct global commerce. Political, trade and cultural barriers may still make it difficult to take true advantage of the global business environment.

While traditional commerce relied on value-added networks (VANs) or private networks, which were expensive and provided limited connectivity (Pyle, 1996), the Web makes electronic commerce (e-commerce) cheaper with extensive global connectivity. Businesses have been able to produce goods anywhere and deliver electronically or physically via couriers (Steinfield & Whitten, 1999). This enables an organization the flexibility to expand into different product lines and markets quickly, with low investments. Secondly, 24x7 availability, better communication with customers and sharing of the organizational knowledgebase allows an organization to provide better customer service. This can translate to better customer retention rates, as well as repeat orders.

Finally, the rich interactive media and database technology of the Web allows for unconstrained awareness, visibility and opportunity for an organization to promote its products and services (Senn, 2000). This enhances organizations' ability to attract new customers, thereby increasing their overall markets and profitability. Despite the recent dot-com failures (Francis, 2000), e-commerce has made tremendous in-roads in traditional corporations. Forrester Research in their survey found 90% of the firms plan to conduct some e-commerce, business-to-consumer (B2C) or business-to-business (B2B), and predicts e-commerce transactions will rise to about $6.9 trillion by 2004. As a result, the travel industry has started to believe in the Internet because of its ability to attract and retain more customers, reduce sales and distribution overheads, and increase global access to markets with an expectation of an increase in sales revenues, and higher profits.

Given the information needs of potential customers and to spawn new business growth, the Internet has been identified as a potential weapon and can be utilized to accomplish the following competitive advantages for HA (for an example of how a customer experience changes after HA invests in the Web, please refer to Appendix B):

In Existing Markets

  • A website can help to expedite communication and also act as a marketing tool for HA, by creating a comprehensive customer database through which targeted promotional campaigns such as information newsletters, discounts, special deals, etc. are carried out.

  • An information portal—with relevant links to all the relevant government authorities (such as through an extranet provision with these government agencies), as well as useful adventure tips and links to other adventure-related information.

  • An online auction which brings sellers of used gear and buyers together as mountain/trekking gear is very expensive and usually outside the monetary reach of the "one-time adventure seeker." Alternatively HA can have a referral program with outdoor equipment manufacturers who would offer discounts to HA customers.

  • A chat room and discussion boards similar to the ones offered by Excite, Yahoo and Hotmail portals, to be used by adventure patrons and HA members to share their experience, selling second-hand gear, for group matching, etc. Discussion boards (such as the ones offered by Lonely Plant) can also be used to match like-minded groups with one another, and hence achieve the cost savings which are present in a group package (as compared to the high price individuals or couples pay, if they buy a package for less than three people).

  • An FAQ section could be created on the website to answer basic questions that customers have on relevant topics.

In New Markets

  • Target the 10,000+ foreign nationals (ex-pats and foreign workers) currently residing in Pakistan at virtually little or not cost.

  • A new and emerging trend among the smaller business companies, especially those in the software market, is on building the group dynamic spirit. This idea, which is borrowed from military training ideology, is being capitalized upon by both Harvard and Columbia universities, which offer corporate team-spirit-building courses by taking the study group to a rugged outdoor surrounding and making them work together to build a team spirit. NAP offered a perfect surrounding for this kind of adventure, and HA could design a special targeted package for this kind of team-building adventure[4] suited to the needs of domestic and international corporate sectors.

Website Development and Implementation Plan

It is anticipated that it would take HA at least three years to come up with funds and invest in the Web initiatives. As HA cannot afford a major investment at the onset of the project, it is proposed that the Internet investment should be done in a piece-meal fashion. A brief website development and implementation plan is as follows:

  • Registering for a domain name for the website in the USA for a dot-com (top-level) domain.

  • Creating a static website with links to relevant government agencies, bookstores, travel stores, etc.

  • Creating an e-commerce website (B2C) for customer reservations and trip planning activities.

  • Investing in back-end applications and a database, which is compatible with major Internet service providers (ISPs).

  • Purchasing server hardware and PCs (this should be bought from corporate auctions within the country due to cheaper prices as compared to the international market prices).

  • Accessing a secure Web server to transmit sensitive information via the 128-bit SSL encryption standard from the website.

  • Setting up a merchant account for processing customer payments via credit cards, and other electronic cash and checking options.

  • Developing a closed instant messaging or chat and discussion bulletin board for HA's clients and business partners.

  • Choosing an e-commerce platform, like Microsoft's Site server, to quickly build shopping carts, search engines and order fulfillment systems.

  • Choosing an automated booking system that can check for availability for tours and dates, and confirm a place to a potential customer.

  • Developing a data mining system to analyze the profitability of various tours that HA offers and their popularity.

  • Developing B2B extranets with relevant government agencies and other mountain gear vendors.

Website Implementation Issues

While implementing the website, HA's development team must select from among the various Web technologies. Although HTML is a standard protocol which works on all operating systems and browser platforms, several problems can occur in the implementation of dynamic HTML technologies. For example, the HA design team must decide very early whether their website will support both Netscape and Internet Explorer browsers. Also, what browser versions will be supported? The older versions of these browsers do not support the dynamic scripting languages such as VBScript and JavaScript. Finally, some of these scripting technologies work on Microsoft's Windows but not on Unix, Linux or Apple's Macintosh operating systems. With more emerging Web platforms such as PDA devices and wireless phones, it would be advisable for the HA team to select a minimum operating standard for their development.

One option for developing the website with minimal budget is for HA to introduce a new hiring program for Web programmers. Under this program, HA would use its existing network of clients and offer one free trip, with all expenses paid, to a group of programmers who will assist HA in the areas of Web design and development. This is done due to cost considerations, and inviting our customer ensures that the final website design and outlook is reflective of HA and its customers' passion for the outdoors. Another implementation option would be to syndicate the website development with one of the major travel websites like or, which provide syndicated content for small travel agencies that do not have the necessary resources.

Web Security Issues

The security in the Web environment is perhaps one of the most prominent concerns for businesses and customers alike. In this regard the proposed project in no way alters the payment policy that HA has adopted since its inception in the late '90s. As is the norm, the payment scheme will stay the same, with 50% of the tour price due at the beginning of the trip and 50% halfway through. HA, however, should still considering outsourcing it to or security organizations to increase customer confidence. It should further explore the in-vogue merchant accounts for accepting payments via credit card, e-Cash (like and Mohammed thinks that due to the e-payment method's popularity, 100% of similar business would be conducted through online payment systems by 2005.

Long-Term Considerations

Financial resources permitting, HA would like to incorporate the following features onto its website in addition to its current operations in the near future:

  • A strategic alliance with the Pakistan Tourist Development Corporation (PTDC) so as to have HA's Web link on the PTDC's Web page, which is generally the primary source of tourism information within Pakistan.

  • A comprehensive GIS system (database), with route and cost information, which allows customers to build their own trips by selecting the destinations (cities, mountain peaks, trails, etc.) they would like to visit. This obviously would require a very large capital investment. However, this vision of future adventure travel should be kept in mind when HA considers more IT strategic alternatives in the future.

  • Providing e-mail access at major check-in points to allow customers to stay in touch with their loved ones. Another option is the video SAT phones which can be bought second hand in domestic market at nominal prices. This equipment could be rented to customers to facilitate their needs. The provision for this equipment (three per year) has been allowed in the costs and benefits analysis section.

Costs and Benefits

Pre-Project Status (number of trips and customers are averages):

No. of Trips:



Heads per trip:



Profit Margin (PM)



Pre-Interest and tax Profit



Post-Project Status (assumes that number of trips double in the first year and the number stays the same for the next three years; also there is an increase in the PM as HA takes advantage of technology):

No. of Trips:



Heads per trip:



Profit Margin



Total PM



Profit from equipment sales



Less Annual Cost (estimated)


Equipment & Software



HR costs



Total Investment/year



Incremental benefit/year for next three years ({B+C} {A+D}) = $ 70,000
Net Present Value of project @ discount rate of 10% = $ 174,079
(70,000/1.10) + (70,000/{1.1002})+(70,000/{1.1003})

After understanding the details provided by Mohammed, Abdul Bari has to make final decision on whether HA should opt for a pure dot-com approach, closing its office in Islamabad and investing all the money on the Web environment. Or should HA opt for a "brick & click" model using the Web environment to supplement its existing offices? Abdul Bari would like to see business growth, more operational efficiencies and an increase in his profit margins. But, he has to work within the technology, business, regulatory and societal environment of a developing country. In addition, Bari and Mohammed have to consider the various website development, implementation and security issues in making their final decision.

[4]A company by the name of Adventure Tours Pakistan already offers this kind of adventure opportunity to the 1st Battalion 51st Highland Rangers of UK Army by taking a 25-member team every summer to a 23-day 105km Baltoro Glacier Trek.

Annals of Cases on Information Technology
SQL Tips & Techniques (Miscellaneous)
EAN: 2147483647
Year: 2005
Pages: 367 © 2008-2017.
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