Market Structure Of Tourism In Australia: Analysis Of Last 5 Years

Market Structure and Types of Market Structure

Question:

Discuss about the Market Structure of Tourism in Australia.

Market is a place where there are buyers and sellers dealing in economic or financial transaction at particular place in a point in time. These transactions depend on the economic variables like demand, supply, production, investments, consumption, purchasing power capacity, and income elasticity (Bianchi, Pike and Lings 2014). On addition, an economic transaction when carried out efficiently the economy is stable.

Standard quality in the business encourages more number of consumers, increase in consumers’ leads to more demand for the services one is getting. There will be more supply of the services in order to attain customers’ wants. This creates more production leading to increase in the investments and income of the seller. As a result, business earns profit. When business earns good profit, it decides to expand its line of productions across the country in order to increase the investment and to create good economic growth.

Tourism industry achieved success domestically as well as globally. When there are different types of market structure like monopoly, duopoly, perfect competition, and oligopoly. The tourism organization connects to 16 business industries that attract large customers of different types. Growth of the economy depends on the line and chain of production (Dolnicar, Lazarevski and Yanamandram 2013).

Referring to the topic, the purpose of the report is to discuss the market structure of tourism in Australia from last 5 years. Travel and tourist industry play a key role in influencing the market growth as well the country’s economy.travel industry contributed 3.0 percent of net production to the country’s economy in the year 2014 (Duval 2013). Australia indulges in customer-oriented market and developments in the industry sector that acts as a strong positive impact on the growth of the travel market and economy. Good investments in this industry can create job opportunities, more encouragement to the business and startups leads to increase in scale of production. 

Innovation and modern technology creates healthy global relations, export sector, and good competition spirit (Dwyer 2015). They created different ways of expanding their businesses in order to maximize sales and output. The motive of tourism industry is to increase in its investment sector by expanding the line of production and business across the globe.

The report also draws the strength and weakness and the possible threats of the industry. It also gives innovative and creative ways to increase the demand and encouragement in the growth of tourism industry. Additionally, there is brief summary on the impact of various economic, environmental, technological, social factors on the industry.

Performance of the Economy

Market structure and types of market structure a market is made of buyers and sellers who are engaged in economic exchange of goods and services with a motive to earn income. They exchange goods and services at a fixed place called market (Forsyth et al. 2014). A buyer is a customer or a consumer who purchases commodity and a seller is a person who sells product with a motive to earn income.

 The performance of the economy depends on the economic transactions and the economic variables like demand supply, production, cost, investment, quality of resources (Gretzel et al. 2015). Good quality service will create more demand for consumption due to which supply also increases. When demand and supply balances the economy said to be in equilibrium, means there is stability in the performance of the economy

A tourism market is a place of business where a customer comes to purchase tickets to travel at respective places may be for personal outings or for business purpose (Hall, Gossling and Scott 2015). There are different types of market structure like monopoly, duopoly and oligopoly. 

Monopoly – This type of market includes only one seller operating the entire business. Seller is the sole earner (Hallak, Brown and Lindsay 2012). There is no competition therefore seller charges high and different prices to different customers. There are great restrict for the new entrants in this type of market.

Therefore, monopoly in tourism market affects in both ways means single seller can rule the entire market whereas, in case of excess demand of consumers cannot  fulfilled by only seller. If demand not met, then there will not be sales leading to decline in the purchasing power, due to which income also declines. On the other side, a seller alone can influence the entire industry. There is no competitor in this kind of market, no threat of new entrant or rivalry.

Duopoly- It refers to two sellers two firms producing profit on the selling of different products. There is a tough competition between both the firms (Huang, Weiler and Assaker 2015).

There is dependency on each other as both have an individual aim to earn maximum profit by keeping joint venture relation. Duopoly market leads more competition and encouragement to business and customers. Price discrimination or price charging may be a big factor of concern in this market.

Oligopoly- There is large numbers of buyers and seller selling their products by competing with their rival firms in terms of customers, product quality, and scale of production (Lee, Hallak and Sardeshmukh 2016). Production and selling depends only advertisement factor.  There is complete awareness of the rival firm’s actions and outcomes.  

Factors Influencing the Tourism Industry

With this kind of market structure, there can be huge line of production with large customers and sellers (Layton   2015). There will not be any kind of uniformity because the scale of production is large. There will be more competition, due to which to make continuity in the growth rate, industry should create modern approaches, attractive plans and policies leading to more number of customers.

In the year 2014, the gross domestic product of 3.0 percent created a robust impact on the   growth in the economy (Law 2015). For many years, it maintained the good position and stability in the economy globally. There is a research program of tourism department named as tourism research Australia which is established with an aim to identify the performance structure of the tourism industry. Various factors influence the tourism industry is economic, environmental, social, technological, political and legal factors. Social factors also influences greatly to the tourism industry, as this is consumer-oriented market (Mao and Zhang 2014). Preferences, needs, demand of different consumers, their income and the living standards largely reflect the social factor.

Technology factor leads to use of modern technology and good resources can attract more customers. This factor depends largely on consumer demand and choices. Standard demands encourages for better services and quality products (Morrison 2013). It also affects the industry position, with good customer services; it opens doors for more buyers, leads to good image for the industry (Pham et al. 2015). Consumer always gives first priority to the quality of the product or services, and though it is largely dependent on consumer, therefore consumer satisfaction will create more output.

Environmental factor is one of the important factors in tourism industry. Impact of weather condition will vary the demand for the customers (Ruhanen, Whitford and McLennan 2015). Good weather will create more demand for travelling while bad weather will led to decline in the demand factor. If there are weather imbalances, then there will be problem in economic activity of this industry as no demand will lead to low sales and production will decline (Song, Dwyer and Cao 2012). Due to natural calamities also, there can be low growth in the industry.

With changing weather season’s demand of consumer changes and uncertainties in natural calamities possess a threat to the industry.  Due to low demand, the sales also went down.  Legal and political factor states that with political stability there can be good global relation with the trading partners. Political instability creates problems in the business stability (Thomas 2013). A peaceful negotiation leads to more encouragement to job opportunities, export sector. To increase scale of production, there should be good global relations and this can happen only when there are good government facilities. There must be new plans and policies for the betterment of the industry in order to maintain certain legal standards of the business. Business standards encourage for more consumers and proper legal rules helps to maintain business reputation (Tribe 2015).

Analysis of Tourism Industry in Australia from Last 5 years

Overall, there was a good growth and contribution of the tourism sector in the economy as well as in the country. Not only domestic relations but also global trade relations showed a positive impact on the economy and the gross domestic product.

With reference to economic factor, then tourism sector is one such industry that is always in great demand.  Whether it is business travel or else is personal and family travel, this business always gets customers. It also deals with the important global issues and trade agreements with partner countries. The tourism research report gives the analysis about the market performances, the demand and supply rate and the various ways for new policies and plans to promote the growth of the industry.

Due to global recession held in the year 2008, the market affected severely. Global recession affected the purchasing power of the consumer as tourism market based on consumer spending only. Recession affected the economic activities due to which consumers were not able to spend their money as a result investment sector declined, led the consumption level also down.

In 2015, Australia captured nearly 2,73,000 businesses that means nearly 12 to 13 percent business which shows the growth and scale  of production capacity of the country. In 2016, the rate of travelers was 8 percent. The success of Australia globally led the beginning to increase capital through it is newly setup tourism campaign.

The reason behind the success of the industry is the hard work and passion of state tourism department, Australian tourist department and the global territory. The previous trading countries were Europe, United States of America and United Kingdom that rose to many more countries in recent years (Vila, Darcy and  González 2015). Those are Japan, china, Singapore and Malaysia. The tourism department is planning to establish its network in the remaining countries as well. This happened because of innovative approaches and latest technology with being consumer friendly. 

The aim of this industry is to increase the investment pattern and to fulfill the demands of their customers. They reach out to their customers through electronic means of communication and advertisements in order to create sales and more expansion of their business. There are various tourist partners that are aviation sector, business, sector, airlines, distributing partners, non-travel industry, state and territory industry. 

Aviation sector includes Cooperation of relation between the aviation industry and the tourist department. There should be demand for the new routes and more flights. Bilateral restrictions should be less for the investment and immigration purposes. Collaborating with Business sector includes more encouragement to the Australia tourism industry for more profit and customers. In case of airlines, tourism sector includes 20-airline partner across the globe, few among them are china southern airlines, air china. It has a long-term goal setup with these 20 airlines for structured business growth with a spirit of mutual healthy cooperation.

Strengths, Weaknesses and Threats

A global relation creates more investments strategies. Tourism industry collaborated with 160 key distributing partners with an aim to create a perfect market strategy using economic variables like retailer, wholesaler, customer, commitment to fulfill the desired set target. Tourism industry also relates with non-travel industry like Samsung, Sony.  In the year 2015, it entered into a partnership with visa cross border campaign for increasing international holiday packages for the customers. Lastly, joining hands with state and territory industry will help to maintain regional and territory stability in the industry and across the globe

Conclusion

Tourism industry of Australia earned a strong profit and growth in the country as well as globally. Defining the market structure of tourism industry of Australia then it has made a strong position globally by using updated technology, electronic mode of communication. Use of electronic mode of communication it created more and more customers. With the use of advertisements, it created robust sales growth that led increment of the investments pattern. On addition with good government and legal factors, it maintained stability with its trading partners. 

Robust sales growth and fulfilling the required demands of the consumer mark the success of the Australia tourism industry worldwide. There was a good rate of growth in the production of the business that also created an increase in the gross domestic product of the country. It is a consumer-based market therefore with standard in quality and proper on time services without any delay created huge success and profit.

It has established well with few trading partner among few countries, further planning to expand and connect with the rest of the world.  Tourism industry is always encouraging and demanding as it leads to travelling, therefore customer satisfaction is the important factor in it. As Australia is planning to expand in Indonesia and the other parts of the world, it will give more success and profit to the business. Therefore, in sum Australia tourism industry had a strong and positive impact on the world economy.

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