Sell Direct Everywhere Case | My Assignment Tutor

TrekkSoft: Sell Direct EverywhereCaseAuthor: Author:Melanie Frick,Federico Lovison,Pamela Tschirky&Willem HulsinkOnline Pub Date: May 08, 2017 | Original Pub. Date: 2014Subject: Entrepreneurial Strategies, Global Entrepreneurship & Innovation, Globalization & BusinessLevel: | Type: Direct case | Length: 5248Copyright: © 2014 RSM Case Development Centre, Erasmus University. All rights reserved.Organization: Trekksoft | Organization size: MediumRegion: Global | State:Industry: Computer programming, consultancy and related activitiesOriginally Published in:Frick, M. , Lovison, F. , Tschirky, P. , & Hulsink, W. ( 2014). TrekkSoft: Sell direct everywhere. Rotterdam,Netherlands: Rotterdam School of Management, Erasmus University.Publisher: Rotterdam School of Management, Erasmus UniversityDOI: http://dx.doi.org/10.4135/9781526427618 | Online ISBN: 9781526427618© 2014 RSM Case Development Centre, Erasmus University. All rights reserved.This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussionor self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing hereinshall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal useonly within your university, and cannot be forwarded outside the university or used for other commercialpurposes. 2020 SAGE Publications Ltd. All Rights Reserved.The case studies on SAGE Business Cases are designed and optimized for online learning. Please refer tothe online version of this case to fully experience any video, data embeds, spreadsheets, slides, or otherresources that may be included.This content may only be distributed for use within National College of Ireland.http://dx.doi.org/10.4135/9781526427618SAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 2 of 11 TrekkSoft: Sell Direct EverywhereAbstractA shared passion for outdoor adventures drove three young men in Switzerland to foundTrekkSoft in 2010 – a company that offers an integrated software solution for online bookingsin the tour and adventure segment – with the ambition to become a dominant player worldwide.Despite serving customers from all over the world, TrekkSoft had only established onesubsidiary in the U.S. in the four years after its inception. In October 2014, the second financinground was approaching. The founders knew that further geographical expansion was crucial tosatisfy the investors’ high growth expectations, but internally they disagreed on which marketto target: Mexico or Australia? Although they always had a one-market-after-another approach,investors were pushing for faster expansion, which led to another question: Should …Case“Top nine of the hundred Best Swiss Startups: Congratulations gentlemen!” Jon Fauver, CEO of TrekkSoft – aprovider of integrated software solution for online bookings for tours and adventures – shouted when enteringthe office on this beautiful autumn morning in September 2014. He waved the latest issue of the leading Swissbusiness newspaper through the air. One of his co-founders plucked the paper from his hands and started toread out aloud.This huge success had to be celebrated. An exquisite dinner in one of the noble restaurants in Interlaken?Too fancy. A long night in one of the clubs in the Swiss capital Bern? Not their cup of tea. An adventurous dayin the beautiful nature of the Bernese Oberland where TrekkSoft head office was located? Yes!The sun was shining brightly. The air was warmer than usual for an autumn day in the Swiss mountains. Achallenging climbing tour to the Jungfraujoch, one of the 4000 meters peaks of the first World Natural Heritagesite in the Alps, would not only satisfy TrekkSoft’s founding team’s thirst for reaching the top but hopefully alsoclear their mind for one of the most important decisions in their young company’s history.TrekkSoft was preparing for another financing round that was supposed to close in November. Fauverhad to deliver a plan that satisfied the high growth expectation of possible future investors. He knew thatgeographical expansion was crucial for TrekkSoft. Traditionally, they followed a cautious internationalisationapproach. Despite serving customers from all over the world with their software solution, they had onlyestablished one subsidiary in the U.S. Now it was high time to actively tap an additional market through alocal affiliate.Fauver’s two co-founders, however, disagreed on the target markets – Australia or Mexico – but agreed uponthe strategy to focus on one region at a time. Conversely, Fauver concluded from previous talks with theinvestors that they would prefer a dual strategy and a high internationalisation speed to scale business quicklyin both markets simultaneously.When the gentlemen packed their backpacks, ropes and pickaxes for their mountain climbing tour, Fauverhoped the long way up to the top of the Jungfraujoch would provide him with answers to this dilemma.Adventure Enthusiasts – The EntrepreneursThe three members of the founding team of TrekkSoft shared a common background: On the one hand, theyall grew up in one of the most touristic regions in Switzerland, the Bernese Oberland. Its snow-covered Alps,deep blue lakes, picturesque towns and green valleys combined with a sophisticated touristic infrastructurewere cherished by guests from all over the world. This region was one of the first to offer touristic adventures,starting with climbing tours in the Jungfrau region in the early 19th century, culminating in today’s newadventure tourism such as river rafting or zip lining. On the other hand, all of the founders showed greatSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 3 of 11 TrekkSoft: Sell Direct Everywhereinterest in business and entrepreneurship at a very young age. They spent a lot of time brainstorming fornew business ideas, mostly connected to tourism. Thus, they decided to study business at one of the mostrenowned business schools in Europe, the University of St. Gallen. The entrepreneurial spirit and practiceoriented approach of the University of St. Gallen shaped their mind-set deeply and further convinced them tobelieve in their own ideas.Fauver was the CEO of TrekkSoft since the inception. Having accumulated over 20 years of experience inadventure tourism, he started to make a living from his passion for adventure travel and extreme sports whenhe guided tours in Nepal and worked as a river rafting and canyoning guide. In addition, Fauver was a boardmember of several tourism companies. One of the companies, Outdoor Interlaken, he founded with the help ofPhilippe Willi, later CFO and COO of TrekkSoft. Willi himself was a serial entrepreneur in the field of adventuretourism. They both they realised that the modern tourist not only wanted to go sightseeing in their chosendestination, but also sought to explore, discover and feel the region. The new paradigm in the tourism industrywas about creating experiences for the guest. Fauver and Willi’s company Outdoor Interlaken, based inWilli’s hometown and adventure mekka Interlaken, tackled this need through offering exciting and challengingadventures in the beautiful countryside of the Bernese Oberland.The bookings for their rafting, canyoning, zip lining and adventure tours increased rapidly as they earned areputation for offering challenging and entertaining adventures, keeping safety as their focal point.Despite the excitement about their initial success, however, they struggled with the drawbacks of a relativelyyoung, not fully mature industry. One day, they noticed their booking tool was not capable of handlingsuccessful influx of bookings. As a two-man-startup, they did not have the capacity to update the differentsystems manually, but the tool required a lot of manual work in order to transfer the data to linked systems(payment, capacity management, etc.). When they searched the market for an integrated software solutionto handle their bookings, they did not find anything that met their expectations. Disappointed by the lack ofsuitable software, they discussed the problem during a brainstorm session. The only conclusion the practicalminded founding team could reach was the following: If there is no suitable offer on the market, we will haveto build our own tool. This was the prelude to TrekkSoft.As the development of the tool required deep technical knowledge, they used their network to find anexperienced partner. At that time, Willi approached Valentin Binnendijk, a friend he knew from his studiesin St. Gallen. Binnendijk fit the role of CTO perfectly, as he worked as CTO and CPO of internet-basedstartups such as deindeal.ch. He co-founded the Swiss-based incubator STARTUPS.CH and also worked asa strategy consultant in Zurich. Binnendijk provided valuable combination, an elaborate network in the startupscene and deep technical knowledge. Immediately convinced by the idea and the market need, he joined theteam (see Appendix 1).Having gathered first-hand experience in adventure tourism on their own, the founders understood the needsfor the average tour and activity provider better than anyone else. They knew that Outdoor Interlaken was notthe only company in need of a capable solution: Based on this demand, the trio founded TrekkSoft in 2010.A Virtue of Necessity – The IdeaThe initial spark to found TrekkSoft was not the intention to build up a business with an online-bookingsoftware, but it was the need to find a suitable tool to sell Outdoor Interlaken’s products directly to the endcustomer via the online channel and handle their bookings in an integrated way. The founding team knewthat there was a lot of potential in internet-bookings via the Internet, as they had learned the hard way thatintermediates would charge high commissions for selling offers through their channels. At that time, hotelsand incoming tour operators, constituted the majority of their booking. It hurt the cash flow of the startupseverely as they had to share their profit with those intermediates.Available online-booking tools offered on the market had three major disadvantages:• First, they needed a considerable amount of manual time dedicated to integrating the data incomplementary systems such as capacity planning tools. As the number of bookings grew, FauverSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 4 of 11 TrekkSoft: Sell Direct Everywhereand Willi, limited to their own manpower, found it increasingly difficult to handle this manual effort thatkept them from doing what they should be doing: creating adventure experiences.• Second, the online-booking-tools charge high commissions. Operating on low margins, the smallcompany Outdoor Interlaken struggled to pay these sums.• Third, common solutions took up to 30 days to process the money to the adventure supplier. Forsmall companies cash flow is their most important fundament. Outdoor Interlaken sometimes faceddifficulties bypassing the time between their expenses and the delayed cash inflow because theyneeded to pay for expenses such as transportation or the tour guides themselves.Trekksoft founders’ idea was to provide a solution that eliminated these three mistakes and made not onlytheir life easier but also the one of other small- and mid-sized adventure and tour operators. Using TrekkSoft’sbooking and payment timeline, the client could book online through a secure integrated payment gateway.Within seven days after the credit card transaction, the adventure supplier will have funds deposited into anybank account worldwide in their choice of currency (see Appendix 2).Many of the suppliers connected to the founding team were not tech- or internet-affine. They were “outdoorguys” that wanted to spend as little time as possible handling administrative tasks. Thus, TrekkSoft made surethat the signup and installation for its software was as easy as opening a Facebook account.The suppliers paid a monthly subscription of $US 29 and an additional commission of 6% on their sales.When the registration was completed, the adventure supplier received an integrated solution that providedthem among other features with:• An integrated payment gateway with which the supplier could receive direct payment• A professional web-presence including a booking-optimized website with fully integrated socialmedia• A product and capacity management system with real time inventory• A mobile booking platform crucial for suppliers in emerging markets where smart phones are morecommon than computersA Hospitable Industry Environment – The MarketAt the time TrekkSoft was formed, the tours and adventure industry was the third biggest pillar in the tourismindustry after transportation and accommodation worldwide. One out of 11 jobs created was in the tourismindustry. In 2013, 1.087 million international tourist arrivals were registered with an expected increase to 1.8billion tourists for 2030. This equals an annual growth of 3.3%. International tourist receipts increased by USD81 billion from 2012 to 2013 to a total amount of $US 1159 billion 1 .Whereas transportation and accommodation were mature markets with price wars, the adventure tourism wasstill in its infancy and allows for filling diverse niche positions. This is exactly where TrekkSoft saw its chance:In the provision of a simple and suitable online tool for tour and activity operators worldwide.CustomersDemonstrating the size of the adventure and tour industry, Tripadvisor, one of the major travel websites, listedmore than 400.000 suppliers of tours and adventures which were all possible clients for TrekkSoft’s product.At that time, most of them did not yet have an automated online and mobile booking and payment solution.Many operators could not offer the possibility of online reservations and payments at all or could only offerit via email or third party providers. This led to a high uncertainty about their capacity and made planningdifficult because they were not able to get a quick overview of their current bookings.These companies consisted mostly of small to mid-sized businesses that were called low-tech in the sensethat they rarely had experience with such software offerings. This entailed high investments in a simplecustomer-centric approach (“as easy as setting up a facebook profile”) and educating their customers in theimplementation and utilization of the software. At the same time, TrekkSoft’s CTO Binnendijk pointed out theadvantages of this absence of technological affinity: “There is huge potential: Less than 40% of our targetSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 5 of 11 TrekkSoft: Sell Direct Everywheregroup offer online bookings, less than 15% have a mobile solution and 30% not even have a website.”The adventure industry operated mostly on low margins as there were low barriers to entry and competitionbetween the suppliers was high.CompetitorsThe market for tour and activities had a powerful reach worldwide, which was why the few competitors did notactively pitch against each other. The main competitors offering similar software could be narrowed down tothree players:• Rezgo mainly tackled the English-speaking market maintaining offices in the U.S., Canada, Australiaand the UK. This pioneer company was already established in 2007.• Rezdy, another main competitor, was an Australian-based company that also operated in the U.S.They had a high market penetration in Down Under.• A third successful software provider for online bookings was TourCMS that dominated the market inthe UK.The offerings of the competitors lacked diversity in their features and benefits making them rather similar. Williexplained: “The main difference will be made by the sales force. It’s about who can attract the most suppliers.Beyond that, only Rezdy and TrekkSoft have external funding which puts us in the fortunate situation to dopre-investments.”In spite of some features allowing for network effects such as the inclusion of partner offers on one’s website,the market could not be described as a “winner takes it all” market. All of the competitors were small andyoung firms aimed only at becoming dominant players in their specific region and sharing the whole cakewithout much interference so far.Swiss Cautiousness – Investors and FinancingThe founding team had a great idea and it was easy to convince people of the necessity of TrekkSoft’soffering. Unfortunately, a good idea was only half the battle: They needed money to improve their product andto finance expansion.The hardest struggle for TrekkSoft was to raise money for its seed-financing round in August 2013. The teamdeliberated on ways to attract investors. Fauver knew how important it was to attract business angels andventure capitalists. Thus, he suggested presenting TrekkSoft’s business idea at as many investor fairs andstartup events as possible. The return on this time-consuming investment of attending all the events wasinitially quite ambiguous. On the one side, it allowed the team to celebrate the approval of their business plan,with which they entered several startup summits as a finalist, such as the ICT Investors Day in Zurich and thePhoCusWright Travel Innovation Summit in Scottsdale, Arizona. On the other hand, the team had to cope withsetbacks as investors, especially American ones who assured Trekksoft that they were keen on the businessidea and but eventually would not invest. Through dealing with American investors, the team learned that onlywhen investors signed the term sheet, they would have the investors’ commitment – verbal commitment didnot amount to anything.Willi promoted an additional approach capitalizing on the network the founding team had built over the years.Willi himself started as an entrepreneur in the tourism industry at the age of 18. Throughout his variousentrepreneurial projects, he had the chance to meet and collaborate with well-established players of theSwiss tourism industry. Through contacts in his network he could attract “smart money” which is moneyfrom investors who not only bring cash into the startup but more importantly knowledge about the industryand international markets. With his passion, he could convince illustrious Swiss tourism experts, such asthe former CEOs of major Swiss travel companies. One of them was Armin Meier, former CEO of Kuoni,an international travels group that specialised in luxury and tailor-made travel offerings and realised over$US 5.5 million revenues in 2013 2 . The industry specialist and technology maven noted, “I am persuadedby TrekkSoft’s business model. Today, people want to travel individually. The standardised offer of travelSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 6 of 11 TrekkSoft: Sell Direct Everywhereorganizations is not sufficient anymore. New solutions are needed that offer independent tourists access tovarious leisure activities, tailor-made and worldwide 3 .”Also Binnendijk’s connections led to an important business angel: Adrian Locher, CEO of deindeal.ch, thebiggest group buying company in Switzerland. Technology was crucial for Locher’s business model and hecould not only provide them with money but also with insights to the newest trends related to software and IT.The only downside was that the team was so busy with their everyday tasks that they could not dedicate thedesired amount of time to investor relations to profit to the fullest from their knowledge.Having founded startup platforms, Binnendijk’s network embraced connections to venture capitalists.Together the founding team focused on attracting lead-investors, which are persons or institutions with a wellestablished reputation in the industry. “The trust of those investors signals security to future investors.” Theyachieved this goal when two Swiss venture capital funds started to invest in TrekkSoft.TrekkSoft was able to raise $US800.000 in the seed-financing round in spring 2013, $US1.6 million in thesecond financing round in February 2014 and in September 2014, was preparing for the third financing round(see Appendix 3).Hand in hand with the augmented capital resources through external financing, expectations and conditionsfrom investors were being set which needed to be satisfied. Key Performance Indicators (KPIs) in termsof transaction volumes and net commissions were established. Willi provided the investors with a monthlysummary of all KPIs: “We were lucky to meet the growth expectations of our investors. In 2014, the investorswere happy to see that all KPIs doubled.”Despite their efforts to internationalise and tap the U.S. market, TrekkSoft failed to attract international(“smart”) money. The investors remained of Swiss origin and funds did not increase exponentially as theydid at other tech startups. A contributing venture capitalist was a Swiss cantonal bank. These banks weregenerally known as cautious investors that preferred low investment risks compared to the chance of overproportional profits.Beginning the Journey – The Internationalisation PathThe narrow boundaries of their home market set natural barriers to expansion for TrekkSoft. As their productwas a software solution that could be used worldwide, the founding team sought possibilities for scaling theirbusiness model internationally at a very early stage. The question was not whether to go abroad but where togo first.The U.S. market seemed tempting for two reasons: First, the U.S. provided the largest market for theadventure industry. Its attractiveness was further amplified by the high spending potential of customers,Internet penetration that was close to 100% and the American leisure culture that created the notion ofadventure travel. Secondly, and more importantly, the founding team had well-established ties to the U.S. Williexplained: “We knew how much money and time it takes to establish a subsidiary in the U.S. For one of ourformer companies, we set up the legal requirements for this market. Our contacts were overabundant andreadily available. We could access a network including lawyers and trustees.”Concerning location, the team had two main criteria: the time zone and the availability of skilled labour,especially in terms of multilingualism. They wanted to offer an almost 24-hour services to their customerscovering the earlier hours with their Zurich presence and the later ones from their U.S. office. Additionally, acertain overlap of the office hours was needed in order to coordinate the tasks. TrekkSoft wanted to tackle thewhole world with their two offices, which was why the sales force had to be multilingual.There was one metropolis that covered these criteria best. As their decision became clear, Binnendijk turnedon a tune symbolic of their plan. Frank Sinatra smoothly sang the lyrics that became their own: “If we canmake it there, we will make it anywhere. It’s up to you: New York, New York.”The group’s contacts made light work of finding a suitable location. Thus in 2012, they opened their firstSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 7 of 11 TrekkSoft: Sell Direct Everywheresubsidiary in the city known as the Big Apple. Starting their operations in New York, Trekksoft benefittedfrom the more developed adventure market and the fact that U.S. activity suppliers were already using ITinfrastructure to do business. Moreover, they were accustomed to paying monthly subscription fees whereasthe Swiss suppliers preferred to pay a onetime purchase fee that was higher but allowed them to ownTrekksoft system. Trekksoft employed an American vice president of sales leading the New York office withdeep market knowledge who recruited his own sales team.Sales did not go smoothly as hoped, however. When the sales team first tried to call potential customers,they immediately recognized that the customers were repellent to cold calls – they were just overdosed. Theteam used a lot of resources for the calling but many calls stayed cold. For this reason, TrekkSoft switchedfrom an active customer approach to a passive one. Their sales efforts shifted from outbound direct marketingto an inbound online strategy. This new strategy was based on reacting on signups. The company engagedmainly in low-cost online marketing with search engine optimisation, social media, blog contributions and PR,and only pushed their efforts during the low season because in the high season, activity suppliers have otherthings to do than think about their booking solution.TrekkSoft did not have a clear country approach where one local office specializes in serving the local market.The U.S. and the Swiss office acted as one office with the whole world as its target. This approach allowedthem to flatten the demand curve as the U.S. and the Swiss market had varying seasonality.In 2014, Trekksoft’s customer base was relatively international: 40% of the signups came from Switzerland,30% from the U.S., 20% from Spanish speaking countries in South America and the rest from variouscountries all over the world (see Appendix 5). However, this inbound approach might have not exploitedtheir acquisition potential to the fullest as they could not completely focus on one region, collect deep andspecialized market knowledge for this market and become the dominant player there.A further challenge due to internationalisation was the virtual management of the team. The founders gainedpositive experiences in sourcing their software developers worldwide. CTO Binnendijk was able to manage ateam of IT experts based in Israel, Belarus and Switzerland. Fixed virtual team meetings, a highly structuredwork process and clear KPIs were the requirements for this virtual set up. However, they faced difficulties inmanaging the marketing and sales team in the U.S. as their performance could not be measured easily andvirtual communication led to misunderstandings when coordinating tasks.Although, TrekkSoft entered the U.S. in an early phase, it did not have subsequent internationalisationattempts. Also financing remained in cautious Swiss hands and their geographical presence did not gobeyond this second office in New York. As the next financing round was just around the corner and marketexpansion was crucial, the question arose if these patterns had to change.The Rise of the Hispanic Eagles – MexicoThis most populated Central American country covered 1.97 million square kilometers and had 118 millioninhabitants. The capital, Mexico City, was situated approximately 4023 km from New York from which had aone-hour time difference. Mexico was considered one of the emergent countries and it recorded a high GDPgrowth during last years compared to the rest of the world. With 23 million tourists visiting the country justin 2013, Mexico alone attracted almost as many international tourists as all other South American countriescombined and it generated a business $US 13 billion 4 .More than 450 beaches made up the Mexican coast overlooking the Pacific Ocean, the Gulf of Mexico, theGulf of California and the deep-blue Caribbean Sea and together with the cultural sites within the countrysideover 3,000 tours and 20,000 attractions could be found. The market of the providers of these activities inMexico was extremely fragmented and it was composed by thousands of small companies.Given the low level of Internet penetration of 41% in Mexico (see Appendix 4), only a few of the localcompanies operating in the tour and activity market had a proper website and almost none of them had areliable and user-friendly online booking platform. Although TrekkSoft could benefit from this huge potentialmarket, the low Internet penetration could generate difficulties in finding and reaching new potentialSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 8 of 11 TrekkSoft: Sell Direct Everywherecustomers. On the other hand, Internet networking had been developing at a rapid pace during the previousyears and thus, in the following years the Internet penetration index was expected to assume a valuesimilar to the most developed countries 5 . Moreover, while Mexico’s economy was growing fast, thepopulation did not dispose of a high income and therefore personal computers were not available to everyone.Nevertheless, technological development in the mobile sector allowed a great part of the population topossess smartphones. TrekkSoft could benefit from this situation as its mobile platform would have permittedall companies to manage their online business through their smartphones.Another possible problem for TrekkSoft while expanding in Mexico was the unstable political and legalsystem: a low reliability on legal institutions increased the risk involved with the payment transfer fromoperators to the company. Moreover, the high level of corruption present in the country represented an ulteriorrisk factor.However, entry into the Mexican market could be seen as a stepping-stone to the South American marketwhere they already generated signups (see Appendix 5). Willi believed that if they were able to successfullyenter South America, they could become the dominant player in the Spanish speaking area.Entering Surfer’s Paradise – AustraliaThe world’s largest island but smallest continent covers a total area of 7.69 million square kilometres and isdivided into six states and two territories. Australia registered 6.7 million visitor arrivals for the year endingin July 2014, which was 8.3% higher than the previous year. The World Tourism Organization reported thatAustralia was the 8th biggest spender on international tourism for the year 2013 6 .All over the country, tourists could experience about 2,010 tours and 10,600 attractions 7 . As in almost allcountries in the world, the tour and activity market was very fragmented with many small operators. Themajority of Australian tours (93%) and attractions (89%) companies had their own website. However, over90% of tour operators were still taking bookings manually via email booking requests and only 54% allowedcustomers to check availability and price of their products and services online. 40-50% instant confirmationbookings for tours and activities were offered from third parties like WOTIF, booknow or Stayz. Furthermore,at about 70% of all operators who offered instant confirmation bookings through their websites people couldmake online payments as well 8. The high amount of tour operators with their own website could be seen asa result of the above average Internet penetration of Australia which was 90% (see Appendix 4).Although it seemed like most of the tour operators already had set up a website, the Australian market had ahigh market potential in terms of online booking and payments. The main reasons for operators not integratingan online booking tool in their website were one, there was no such need as customers contact them by othermeans; two, the tour operator was too small, and three, the lack of technical expertise.Experiences with current customers showed that the switching costs for tour operators were rather low.The average amount of money spent by tourists was almost eight times higher in Australia than in Mexico.Therefore, it could be assumed that the prospective commission fees would be higher in Australia.In addition, Australia had a highly stable political system as well as a high judicial independency. SinceTrekkSoft operated as a kind of bank and paid the operators tour fees in advance, a high reliability of legalinstitutions was essential in order to reduce the risk of payment default. However, the software provider Rezdylocated in Australia had already a strong position in this market. So far, TrekkSoft could not register notablewebsite visits nor signups from Australia (see Appendix 5 and 6).Similar to Mexico representing a stepping-stone to the South American market, Australia could serve as anentry point to the Indonesian market, namely Bali, one of the biggest tourist centres in the world with manypotential customers.A Tour Guide Seeking for Guidance – Future strategyAfter a demanding six-hour climb, the team finally reached the peak. The overwhelming view of the beautifulSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 9 of 11 TrekkSoft: Sell Direct Everywherewhite peaks was a source of motivation. If they were able to conquer this mountain, what other obstaclescould possibly hinder them from their goals?Taking in the beauty of nature, Fauver was suddenly struck by reality. He raised the question to the otherco-founds: Which future path would lead TrekkSoft to the peak?Willi advised him to enter the Mexican market because it could be penetrated from the New York office(similar time zone as New York). It had higher tourist arrivals and more current signups coming from itsaccessible regions. Disagreeing, Binnendijk threw a snowball at him and pointed out the advantages ofentering Australia. There was a higher average income and Internet penetration rate. It provided a reliableinstitutional context such as law-enforcing institutions and higher income from commission fees due to higherprices for tours (see Table 1 ). Table 1 : Potential sales in target marketsMexicoAustraliaReceipts per international tourist per yearUS$600US$4.855Market estimation per yearUS$201.250.000US$172.287.000Estimation of total commissions per year 9US$12.075.000US$10.337.220 The investors were willing to commit another one to two million dollars but the growth conditions they set weredemanding and might involve the need of a dual entry strategy. Fauver wanted to present a plan that satisfiedthe investors’ high growth expectations but he was unsure of increasing the pace of the internationalisationtargeting both markets at the same time. This strategy would entail higher risk for the founders of losingcontrol over Trekksoft. Moreover, they already had problems to coordinate sales activities in the U.S. Twomore locations might overexert their managerial capabilities.Which strategy should Fauver pursue? Should TrekkSoft target both markets or just one? If just one, whichshould it be? Lastly, should TrekkSoft try to raise additional funds from existing Swiss investors or would it bemore beneficial to search for investors who had better knowledge and more connections in the target market?Notes1. UNTWO. (2014). UNTWO Tourism Highlights edition. Retrieved on 26 September, 2014 fromhttp://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf2. Kuoni. (2013). Kuoni Financial Report. Retrieved on 28 September, 2014 from http://www.kuoni.com/docs/kuoni_financial_report_2013_en_0.pdf3. Waltensperger, L.( 2013, 17.09.). Trekksoft: Abenteuer per Klick. Handelszeitung. Retrieved on September28, 2014 from http://www.handelszeitung.ch/unternehmen/trekksoft-abenteuer-klick-4952904. UNTWO. (2014). UNTWO Tourism Highlights edition. Retrieved on 1 October, 2014 fromhttp://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdf5. World bank. (2014). Data. Retrieved on 1 October, 2014 from http://data.woddrldbank.org/indicator/IT.NET.USER.P26. Tourism Australia. (2014). Media & Industry. Retrieved on 5 October, 2014 fromSAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 10 of 11 TrekkSoft: Sell Direct Everywherehttp://www.tourism.australia.com/statistics/arrivals.aspx7. Australia. (2014). Home. Retrieved on 5 October, 2014 from www.australia.com8. Mistillis & Gretzel (2013). Tourism Operators’ Digital Uptake – Benchmark Survey. Retrieved on 5 October,2014 from http://www.tra.gov.au/publications/publications-list-Tourism-Operators-Digital-Uptake-BenchmarkSurvey-2013-Research-Report.html9. UNTWO. (2014). UNTWO Tourism Highlights edition. Retrieved on 12 October, 2014 fromhttp://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_highlights14_en.pdfhttp://dx.doi.org/10.4135/9781526427618SAGE© 2014 RSM Case Development Centre, Erasmus University. All rightsreserved.SAGE Business CasesPage 11 of 11 TrekkSoft: Sell Direct Everywhere

QUALITY: 100% ORIGINAL PAPER – NO PLAGIARISM – CUSTOM PAPER

Leave a Reply

Your email address will not be published. Required fields are marked *