BUSINESS ECONOMICS

Introduction

Harvey World Travel Limited (HWT) is a retail travel agency group and franchise business. The Company's distribution network includes over 550 retail outlets with 400 in Australia, 53 in New Zealand, 102 in Southern Africa and 1 outlet in Egypt and East Timor. The Group's main business focus is the leisure travel market. The company started its operations in 1951 in Cronulla, Sydney and during 1979 it had six family owned outlets. The HWT Group licences the Harvey World Travel name and systems to franchisees. As at June 2002, 70% of stores were franchised.

Various travel operations of Harvey group has been in distribution network, the Company is capitalising on the distribution capabilities made possible by the Internet. The site allows users to book airfares, accommodation and car rentals (both domestically and internationally).

The company operates in fiercely competitive travel industry where it faces more then 20 competitors. Its challenges is to retain its market share through its franchise network using internet, strategic alliances with Qantas, National Australian Bank, ANZ bank and Citibank.

Harvey

As it operates in Australia, New Zealand and South Africa it faces competition from Flight Centre, Jetset Group, American Express and UTAG mainly.

Various services offered by Harvey world travel is franchising, leisure travel distribution, foreign exchange bureaux, travel insurance and call centres.

The essay will focus on:

1. Market structure

2. Demand and elasticity

3. Product differentiation

4. Competitive advantages

5. Asset specificity, transaction and agency costs

6. Conclusion

Market Structure

The structure of the travel industry is monopolistic competitive in nature as the barrier to entry doe not exist. Harvey world travels competes in a fiercely competitive travel and tourism industry with more than 18 competitors. Flight centre, Travel land,

Jet group, UTAG are major rivals. Harvey world travel provides leisure travel, deals with...