Yelp is simply an online business directory used in connecting local people having great local businesses. Yelp works with small and middle companies in a bid to develop connections and mechanisms of finding things in an easier manner for the consumers. This plan only means that Yelp is more than prepared to implement all the customer feedbacks.
Launching Yelp reservation is a case that represents an existing negotiation in a multi-party setting among the Yelp, two startups and the current partner open table in the online restaurant reservation industry. Yelp reservation is more of entrepreneurship in the online industry (Luca, Michael, Mohan, and Patrick, 2015). Yelp has a new offering that helps the end users to synthesize and filter results of the restaurants using reservations and other local options of delivery. The launching and startup of the online restaurant reservation were due to the market demand by the media conglomerate InterActive Corp (IAC) for the Rezbook buyer. Based on popularity, it is a growing program that already was included in well-established competition with Urbanspoon for the review of the restaurant dominance. The choice of Yelp contemplates an entrance into the reservation space having a positive deviation in consolidating its site aiming at improving the hungry diner’s consumer experience.
Yelp was first established in San Francisco, California in 2004 with Jeremy Stopple man as its founder. The Company has seen itself develop hosts, markets known as Yelp.com as well as introducing mobile apps that publish reviews as done by consumers about the local businesses. Its efforts to establish a strong command has seen Yelp acquiring SeatMe, which is an online reservation platform as well as Eat24 that offers delivery of food. To its consumers.
Yelp, being a platform equipped with Yelp sites and applications, have seen further expansions into the European market establishing an elaborate communication network which as a result, have made it easier to create enormous traffic of close to 100 million customers, some who look for restaurant reservations.
With suggestions that the Square, known to be the mobile means of payment in the company would close the year 2013 with revenues close to $100 million, Yelp only had two choices to choose from. Firstly, it was in the best interest of the company to get itself involved in taking a round venture in financing as well as providing grounds for independent growth track gained through a small time frame. The other choice was to sell to a bigger company, its stake, something that was perceived to cause a lot of headache to the company concerning negotiation. In spite of all these, Yelp had to make a choice, hence opted for a merger with SeatMe in coming up with mobile app-enabled services, a choice it became convinced, would see it survive the looming high costs.
Notably, Yelp is one of the most popular directory brands in the world, in fact, the leading online platform in the United States and boasts of its establishments in over 30 different countries. Moreover, Yelp still continues to rock as over 150 million users engaging in the platform on a monthly basis. Its popularity is thought to increase robustly due to customer review platforms upon which customers write their reviews.
Yelp gave its financial report detailing its earnings for the Q4 FY16 as being in the range between $154 and $157 million. This was a representation of 31% growth range if its comparison with the Q4 FY15 was anything to go by. The stock of Yelp was found to have fallen out of favor as investors, as well as prices of goods and services, were also on the decline by half in past few months. This daunting result is thought to be as a result of the failure of the stakeholders to come up with means and ways of achieving Street estimates as rounded by analysts. With the current signups, it is estimated that the stock value at Yelp rests at $30.29 with the company operating in geographies that enable it to access close to 76 million surrounding businesses. Currently, the company commands its base in a 130 billion local advertisement business market. Open Table, just like Yelp, is an online restaurant that offers its service in real time. The company boasts of providing online reservations to over 31000 restaurants globally, and hosts about 15 million diners monthly. The company was established by one Chuck Templeton in 1998. The company began its full operations in the year 1999 expanding to over 30,000 restaurants in the US and other major international cities. On June 2014, Open Table announced its decision to sell out or be acquired by the Priceline Group, after agreeing on personal terms with the group.
Yelp has achieved much as far as the acquisition of SeatMe as well as Rezbook is concerned. It appears that Rezbook is more complete were it to be compared with SeatMe. SeatMe has close to 120 restaurants in its network, and these are spread all over the world, despite lacking the mobile app used in sending ads.
Notably, SeatMe is a competitor with the RezBook. Open Table is way bigger than SeatMe, commanding a customer base of 28,000 all over the world. Besides, SeatMe is relatively cheaper than RezBook.
What is the best cost structure used by the three products: RezBook, SeatMe, and Open Table? Explain. What are the risks associated with each of these options?
Organizations incur costs so that they may be able to produce services as well as goods and support for the production in question. Costs are simply the relative proportions that are either variable or of fixed nature and which are incurred by a business. The Products RezBook, Open Table, and SeatMe all operate under more or less similar scenarios of cost structures. OpenTable operates by lowering the costs of its services in an attempt to curb competition and attract more clientele in its base. RezBook on its end proves to be a bit expensive as it imposes setup charges and costs on its clients and a monthly fee of systems per restaurant. It thus goes without saying that SeatMe sails slightly below the ranks of OpenTable and Rezbook. Besides, RezBook’s products are quite improved.
As to whether Yelp’s strategy of the use of IT, working inward, working outward, or working across? Explain.
Notably, Yelp’s strategy of using it seems to serve it inwardly. In inward business setup, the strategy works from business to employee. This focuses on the use of the internet to benefit the business processes. The fundamental e-business approach of reaching customers is through the use of the internet.
Information technology is playing a very strategic and imperative role at Yelp. This is because, being an online based marketing platform, and it solely relies on technological innovations such as mobile applications and other programs to reach out to customers who are also based on the internet. As such, IT plays a very a strategic role in ensuring that the Company realizes huge sales at any given time.
The five forces model as designed by Michael E Porter in a bid to help companies and businesses assess the nature of business competitiveness so as to develop corporate strategies has proved worthwhile. The five force models include threats of new entrants, the bargaining power of suppliers, the perceived threats of substitutes, competitive rivalry as well as bargaining power of buyers. These forces tend to define and shape the kind of competition that will exist apart from identifying where combined power can be introduced so as to increase the profitability potential.
The relevance of these five forces to online marketing such as that of Yelp is that they help in influencing the approach a company uses to reach out to its customers, just like Yelp that has invested so much in IT to sell its ads to different parts of the world reaching its multimillion users within a twinkle of an eye.
If Ghaffary wished to join the restaurant reservation space, it would be imperative to acquire RezBook based on the profile it has attained so far. Besides, Rezbook works on a platform of simplicity and as such, tends to appeal to the majority of customers. This will ensure that Yelp gets a big customer base within a short period.
Making a merger with OpenTable as another option to entering reservation business is rather suicidal in so far as business survival is concerned. This is pegged on the fact that OpenTable is known for its high prices, and this has led to customers opting for cheaper places to purchase their products.
SeatMe had two options to choose from based on the idea that the company was bound to sink. With suggestions that the Square, known to be the mobile means of payment in the company would close the year 2013 with revenues close to $100 million, it became apparent that this was inevitable. This idea ate too much into Ghaffary to properly execute the anticipated change with haste.
The restaurant reservation platform space seems to have been oversaturated. This is because there are plenty of competitors in the market, all targeting a localized customer base.
Yelp’s move in considering the new motion was very appropriate as he needed to carry out an evaluation of the whole process, putting into consideration, the strategic factors, streamlined technologies as well as blending with the consumers and advertisers.
References
Aaker, D. A. (2008). Strategic market management. John Wiley & Sons.
Kapferer, J. N. (2012). The new strategic brand management: Advanced insights and strategic thinking. Kogan page publishers.
