QUESTION /ANSWERS

Q.1 what are the core components of priceline.coms business model
A business model describes how an organization creates, delivers and captures value. With this in mind the core components of Priceline’s business model are based around their pioneered and patented reverse auction pricing model which is a unique offering within the travel market place. This innovative model allows consumers to purchase travel services at a discounted prices by trading off brand and features. They are also used revenue model that means How will you earn money generate profile and produce a superior return on invested capital as the Priceline do. Priceline receives its revenue based on the difference between the “Name your own price” amount entered by the customer and the amount charged by the service provider such as the airline. They also use a more traditional travel agency model offering a list of prices the customer can choose from and in this case Priceline receives a commission/agents fee
Q.2 Do you think Priceline will ultimately succeed or fail and why?
Yes the Priceline will succeed because it has the sustainable business model which allows them to succeed them in long-term During Priceline’s early start up days they experimented with variations of its business model by offering groceries and gasoline, which initially had negative impacts on profitability. However Priceline’s management were able to adapt and focus their model so that it started producing significant returns. This is evident by the fact that Priceline improved from a $1 billion loss to a profit of over $10 million between the years of 1999 to 2003. Since 2003 Priceline has continued to be profitable and grow, increasing its stock price over 27 times from its lowest to slightly under $200 USD in 2010 and is now sporting a market valuation of $8.8 billion. Priceline’s revenues are