ROSENBLUTH INTERNATIONAL: COMPETING IN THE DIGITAL ECONOMY
DACODA (Discount Analysis Containing Optimal Decision Algorithms)
Thisis a patented yield-management system that enables travel managers todecipher complex airline pricing and identify the most favorable airline con-tracts. Use of this system optimizes a client corporation’s travel savings.
Global Distribution Network
This network electronically links the corporatelocations and enables instant access to any traveler’s itinerary, personal travelpreferences, or corporate travel policy.
This proprietary back-office application provides Rosenbluth’sclients with consolidated, global data to enable them to negotiate betterprices with airlines, hotels, car rental companies, and other travel providers.
Using its IT innovations, Rosenbluth grew from sales of $40 million in 1979 toover $5 billion in 2002. Today, the company has physical ofﬁces in 57 countriesand employs over 4,700 associates. The company not only survived the threatsof elimination but has become the third-largest travel management company inthe world and a leader in customer service, travel technology, and integratedinformation management.
Compiled from Clemons and Hann (1999) and from information at
LESSONS LEARNED FROM THIS CASE
This opening case is a vivid example of a company that has achieved competi-tive advantage in the digital era by using IT. Rosenbluth’s experience illustratesthe following points:
It is sometimes necessary to completely change business models and strate-gies to succeed in the digital economy.
Web-based IT enables companies to gain competitive advantage and to sur-vive in the face of serious corporate threat.
Global competition is not just about price and quality; it is about service as well.
IT may require a large investment over a long period of time.
Extensive networked computing infrastructure is necessary to support alarge global system.
Web-based applications can be used to provide superb customer service.
It is necessary to patent innovative systems to assure competitive advantage.Otherwise, competitors will copy the systems, and the advantage willdisappear.The most important lesson learned from this case is the double-sided poten-tial of the Internet: It can become a threat to an entire industry, yet it can also be an extremely important tool for gaining strategic advantage for an innovativecompany. As a matter of fact, many executives who until 1998 were cynicalabout the strategic advantages of IT have completely reversed their attitudes.They are seeing the potential of Web-based systems to provide competitiveadvantage to organizations, and Web-based opportunities and risks are nowattracting universal attention in executive boardrooms.
Business strategy and technology marketing
A medtech company had developed a powerful stabilization technology in the context of a medical device program. They were considering to market this platform technology independently but were unsure about market need and size and fit with their current business model.
FHR Consult analyzed the technology, IP situation and competitive landscape. During several strategy discussions it became quickly clear that the technology platform has an enormous potential also beyond the medtech world and that there will likely be an increasing market demand. FHR Consult helped to prepare marketing materials and to organize participation at conferences and trade shows. We also actively marketed the technology offerings with an initial focus on our industry network.
The technology offerings were well received in the medtech and pharma markets and FHR Consult helped to close several customer agreements. Based on that success, the Company decided to adjust their business model and focus on the technology platform. This resulted in a significant revenue increase and also two successful financing rounds.