importance of links and relationships within theretail travel environment

934 words 4 pages
M1: Explain the importance of links and relationships within the retail travel environment.

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Horizontal Integration
• Why does it exist and why is it formed?
-Company’s merging together. 1 company taking over another. Financial reasons etc. Happens when a company owns or controls other businesses at the same level of the distribution chain
• How does Horizontal integration affect the organisations concerned? -Can be a risk. 1 company may lose identity. Job losses can occur. Staff may not like the change leading to demotivated employees. If one company fails it can affect both.
• How does Horizontal integration benefit the organisations concerned? -Can increase profitability. Staff can be trained to do more than one job. Bigger
customer
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• How do commission levels affect the organisations concerned?
-Affects the principals as it costs them money to pay commission. Can affect agents as they are limited/restricted to what they can sell and promote due to commission levels.
• How do commission levels benefit the organisations concerned?
-Benefits principles as when they offer commission their products and services get promoted and sold which should lead to higher sales volumes.
Benefits agents as they are the ones receiving the commission.
• How do commission levels benefit the customer?
-Benefits customer as commission enables them to book other organisations products and services through one organisation.

Agency Agreements
• Why do agency agreements exist and why are they formed?
-All business conducted by travel agents on behalf of principals (i.e. tour operators, coach companies, airlines etc) is strictly controlled by agency agreements. These are contracts that set out the obligations of each party to the agreement, the terms of the agreement and payment details
• Why do agency agreements affect the organisation concerned?
-Affects both organisations as they are tied in to agreements.
• Why do agency agreements benefit the organisations concerned? -Benefits both organisations as they have a contract so everyone knows where they stand.
• Why do agency agreements benefit the customer?
-Customers can be assured the money they are paying agents is going to the right place. It is

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