In: Economics
why does a hub and spoke networks make the revenue management process more complicated ?
A hub and spoke network is a management philosophy is which big companies have decentralized businesses activities with one main office/headquarter forming the hub while other divisions connected through the main office.
Explanation:
The other divisions are referred to as spokes. The reason why revenue management becomes complicated is that, functions are not integrated since each division (spoke) has its autonomy and only connects with the main office but no other units. This leads to different reporting on performance of the units as they operate independent of other units' knowledge thus presenting different sets on information. Revenue management becomes complicated since each spoke controls separate costa centers and revenue centers as well. This can only be solved where each representative on the spokes is lifted to a hub for harmonized planning and reporting such that each division /spoke is aware of the counterpart's activities.