Trivago
In 2016, trivago’s field of business could be described as hotel-related online marketing and distribution. The firm provided a two-sided, online meta-search platform that connected travelers seeking hotel accommodations with more than 200 booking sites and 1.3 million hotels. With 1.4 billion visits and 487 million qualified referrals1 in 2016, trivago was the largest hotel meta-search platform in the world. What differentiated trivago’s business model from that of online travel agents (OTAs) was its value proposition as an independent information provider. trivago did not sell hotel rooms. Instead, it organized large amounts of hotel-related information from multiple sources to offer the optimal basis for making a booking decision. Thus, trivago helped users convert their initial interest into a clear, specific booking intention, thereby fulfilling their personal needs.
The following points are to guide a review and discussion of some important concepts.
• Describe trivago’s corporate-level strategy and discuss the advantages and disadvantages of the company’s matrix organizational structure. Does the organizational design effectively support the needs of trivago’s corporate-level strategy?
• How does the management innovation activity at trivago facilitate achievement of the company’s corporate objectives? What recommendations would you make to improve either the design or implementation of the company’s management innovation efforts?
• Using a balanced scorecard framework, outline the financial and strategic organizational controls used by trivago to drive management behavior and firm performance. Are the corporate criteria balanced? Are they yielding desired outcomes for the company?
Analyzing Trivago's Strategy and Operations
Based on the information provided, let's explore Trivago's strategy and operations:
Corporate-Level Strategy and Organizational Structure:
Strategy: Trivago appears to follow a growth strategy focused on expanding its user base and market reach. This implies attracting more travelers and facilitating more qualified referrals to booking sites.
Organizational Structure: The matrix structure with functional (technology, marketing, etc.) and regional/product focus allows for dedicated expertise while catering to specific market needs.
Advantages of Matrix Structure:
- Expertise Integration:Combines functional and product/regional knowledge.
- Flexibility:Adapts to market changes and diverse needs.
- Decision-Making:Fosters collaborative decision-making between functions and regions.
- Complexity:Potential for power struggles and conflicting priorities.
- Communication:Requires clear communication and coordination between teams.
- Accountability:Difficulty in pinpointing individual responsibility.
- Enhancing User Experience:Continuously improving platform features and information relevance.
- Optimizing Business Model:Identifying new value propositions and revenue streams.
- Addressing Market Challenges:Staying ahead of competition and evolving user needs.
- Metrics Tracking:Develop metrics to measure the impact of specific innovation initiatives.
- Open Innovation:Encourage wider external collaboration with startups and researchers.
- Internal Communication:Clearly disseminate insights gained from innovation activities to relevant teams.
- Revenue growth
- User acquisition costs
- Profitability
- Brand awareness
- User satisfaction
- Number of qualified referrals
- Innovation metrics (e.g., number of patents, adoption rate of new features)