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Tui head to operator environmental analysis

TUI was proven in 1997 and has grown to be one of the primary tour providers in Europe. They have got dished up around more than 30 million customers annually with a presence in around 180 countries. TUI started off as a transportation and commercial company but diversified to focus only on tourism, transport and logistics. They have got an enormous network of 3500 travel organizations, 285 hotels in 28 countries, 7 airlines, 10 cruise liners, and 79 travel operators. They have been unchallenged for the majority of the decade but global environmental troubles have earned its talk about of problems.

Environmental Analysis

Strengths

The biggest strength of TUI is the actual fact that it is one of the biggest travel groupings in Europe. They may have an enormous footprint rendering it possible for them to gain access to the market also to sell their products to a sizable cross section of the population. Also, they are in a position to maximise on their brands by making them work together with each other. In addition they do not have any dire financial problems as they sold off one with their major property. TUI is also popular for its high quality customer services. Their huge network consists of a large mix of tour providers, airlines, hotels, cruise lines, travel companies and retail stores. There's a whole lot of brand recognition for their brand names such as TUI, RIU, Thomson Airways, 1-2 Fly. This has helped them a good deal as people know about it and there is a great deal of good trust for these brands.

Weaknesses

One of the weaknesses of TUI is the fact that this has a very higher level of arrears it has to maintain which is (net debts/equity 2002E: 169%). This sets a whole lot of pressure about them to generate gains so that they can service their debt. There is also to contend with less margin of revenue as there is a whole lot of competition within the marketplace and they have no choice but to offer the best bargains to everyone at the expense of a lesser margin. The company also suffered from losses in 2008 because of the recession and other financial problems which created a major dent in travel deals. It is not feasible for those to sustain themselves for long when there is an enormous drop in income.

Opportunities

There are good deal of of opportunities to allow them to capitalise on looking at emerging marketplaces in India and China which will give them chance of development. The Indian and Chinese economies are growing very rapidly and there are people over there with money to spare on leisure activities. It would be a good idea to set up shop over there. They are able to also check out other business opportunities by looking at possible acquisitions or mergers with others.

Threats

There remain a great deal of threats which can affect the business due to the recession. The recession may have eased somewhat but then it includes still affected how consumers buy products. If customers are small fisted with the wallets then it can affect the bottom line of the company for a while. Addititionally there is the danger that customers looking for personal savings can opt for cheaper plans including the rail or bus for brief trips and not to rely on airlines. This can also cause a major dent in their income. The amount of money keeping drive will also influence them as there are customers who want for budget deals rather than looking for expensive deals with 4-5 star hotels in them.

ENVIRONMENTAL ANALYSIS WITH THE TOURISM INDUSTRY

POLITICAL:

The air travel industry has had to keep a whole lot of high costs ever since 9/11 and 7/7 occurred since the federal government has refused to tolerate the complete cost of security. This demand has been passed on to the consumer since the flight has refused to take the whole responsibility. There is a whole lot of high security due to this reason and immigration laws and regulations have been tightened up as well as not to allow unscrupulous elements in. It has also led to some vacation spots being off the list for a few travellers as they are unable to get any insurance for that one destination. This has a great deal of results for TUI as they also own a few airlines. The Tourism industry is also afflicted by the fact that not all destinations are steady. There can be any sort of political instability in those places which can also have an effect on tourism in that country. Also, they are troubled by the actual fact that there may be a different tax music group for different countries. Some countries duty more while some provide benefits so that their tourism industry may benefit in the longer run.

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ECONOMICAL

The recession is one of the factors which make a difference the Tourism industry gravely. It has recently stated businesses such as Goldline, XL leisure group and many more. Several companies rely on a low margin of profit and if there is insufficient to bypass then your smaller players go under while the bigger ones also undergo heavy losses. Which means that once the recession gets over only the big strong ones can capitalise on the ability and gain clients. There are also factors such as oil prices which can also have an impact on how consumers make their travel ideas. Airlines always add a surcharge whenever there is an upsurge in oil prices. This may make it a bit expensive for the buyer to travel as well. The recession has also lead to a fluctuation in the exchange rate of countries. The current Euro currency crisis made it quite weak against the pound and US dollar recently though it has made a sizeable number of increases. Tourism is in a way that tourists will go in huge numbers to areas with a weaker exchange rate as they can have more because of their money. For instance when the pound was at 1=$2 us dollars there was an enormous influx of United kingdom Tourists in the US to benefit from the weaker dollar.

SOCIOCULTURAL

People are always seeking to move up the ladder and find ways of making changes in their lives. There were a significant quantity of changes in the manner people carry out their lifestyle nowadays. The internet has brought about a revolution in how people can go about and travel as they can utilize it to find the best packages to match them. Companies such as TUI have websites which allow consumers to modify their travel programs. People are very conscious of recognise the business they choose when they are on christmas as brands matter a lot. A good brand name can ensure a good holiday break to them. However only those companies which have always provided great results in the past are the ones which can meet the needs of the clients. There is something known as brand loyalty which can promise that type of experience.

TECHNOLOGICAL

Due to technological innovations a great deal of work has been automated. People are counting on the internet for a lot of stuff. The internet has lead to a boom in the number of sales being conducted as people are capable of doing a lot from your home. Consumers have been able to book a sizable number of vacations online as it's quite easy to achieve that. The numbers show an upward style ever since scheduling getaways online became popular. That is a double edged sword for big companies such as TUI because similarly they can be rid of excess personnel and depends on the internet for bookings etc but then the same model can be employed by other competition with lower reserves thus increasing competition.

ENVIRONMENTAL

There are a number of environmental problems from the tourism industry. Factors like the environment have lead to the inexperienced culture. People are now always discussing their carbon foot print which is because of pollution. The UK government taken down ideas for another runway at Heathrow due to pollution and the fact that it could contribute to noise pollution. The federal government has also imposed a green tax to offset the consequences of carbon emissions. There are also health factors which make a difference tourism such as SARS (in the first part of the earlier decade) which led to a huge drop in flights to the Southeast and more recently the Swine Flu pandemic. These are why tourism can be damaged in certain areas.

LEGAL

There are always some sort of problems from the Tourism/Air travel industry as it is governed by certain regulations. There's always the need to have a permit of some sort for one thing or the other. All companies know about the legal repercussions if they take action which is against the rules.

PORTER'S FIVE FORCES ANALYSIS

POTENTIAL ENTRANTS:

It is challenging for new entrants to enter into this field as TUI plus some of the other giants curently have a huge stake on the market. Gleam high cost associated with coming into the market as it needs a great deal of capital and the costs associated with it. Folks are also familiar with TUI and its own brands. This is one reason why it's not easy for new companies to enter into this field.

SUBSTITUTES:

It can be an obvious fact that folks will never give up on leisure activities as they want an escape from your home at times. There are cheaper means of saving cash such as activities at homes, local trips to town, video games but then it can't ever replace travel. Which means that there will always be some demand for travel plans. Overall it means there's a low threat of substitutes.

SUPPLIERS:

The suppliers will be the ones who can either keep a lot of vitality over the marketplace or they are the ones who are able to be dictated to by the customers. However in the truth of the Tourism industry they do not have a lot of a hold on the market as almost all of them already have a huge occurrence within the marketplace and curently have a whole lot of clout of their own as they get access to a whole lot of products they might need i. e. TUI already has some hotels, airlines and their own travel companies so they do want need to take the support of others. The only real chances of bargaining ability are when there are some hotels or airlines that are not area of the group and TUI must straighten out some travel package deal with them.

BUYERS:

There aren't many substitutes on the market and the actual fact that price difference between products is too low to make a major difference. Customers have the ability to choose their products online via the internet but it won't make a big difference. Hence the reason why the buying ability of customers is quite low.

Competition

TUI does not have to contend with much competition on the market as the sole other big name out there is Thomas Cook and a number of smaller providers. However since TUI has a huge share of the market there exists less competition within the market.

MAINTAINING LEADERSHIP

It has been mentioned earlier that TUI is the biggest tour company in European countries as it includes a huge show of the marketplace. They have had the opportunity to make a difference with the value and comfort them offer their clientele. This is the reason why they have been able to be together with the market for so long. They have a huge presence in a large volume of countries and they are also able to serve millions of customers every year. One of the primary reasons why they have been successful is the actual fact that they are they have a huge existence in the market. They have interests in everything which is linked to tourism i. e. hotels, airlines, tour operators, retail retailers, cruise liners, etc. They could pass on value throughout their own interests and this is an added benefits as they don't really have to give business to any other company as the money goes right back within the organization. They offer their own resource and can simply fulfil the demand as well. There is also all the channels of gaining usage of their customer bottom part may it be online or through the brick or mortar store format as not everyone loves to buy their plans online. One of their strongest factors is the fact that they have also been in a position to get support off their share holders who've allowed them flexibility. The customer service and excellent businesses is a notch above their challengers. Also, they are more economically solvent than a few of the other operators who recently proceeded to go bust due to the monetary downturn. TUI also has a very diverse portfolio of services which permit them to achieve a feeling of differentiation. Given that they can provide all these services they get repeat customers, have the ability to attain their uniqueness and can build upon their brand.

TUI has been able to provide value for the money as it strikes the right balance between profits and the needs of its customers. Also, they are able to adjust to drastic changes in the market by changing themselves as they have the experience to do that. They also are able to achieve more market of scale since they are their own suppliers.

FUTURE IMPLICATIONS FOR TUI

The ANSOFF matrix can be utilized to find out what way TUI may take in order to further develop itself.

Diversification

TUI can diversify by looking towards the rail, bus and ferry sector. There's a great deal of potential in that sector mainly because of the simple fact that there will be people who want to spend less by deciding on a cheaper setting of travel. They are able to start their own services to capitalise on that and gain a share of that pie as their key setting of transportation is airlines accompanied by luxury cruises.

Market Penetration

TUI gets the biggest market share in the whole area plus a huge presence in the Western european Market. They know that it will not be easy for new competitors to enter into the frame but they have to keep tapping the other edges of the marketplace. They need to contend with the actual fact that other websites can offer the same bargains without establishing shop. They are able to enhance their market located further online so that they can gain more income.

 

PRODUCT DEVELOPMENT

TUI has a lot of packages which are developed for specific locations. They can do a whole lot by looking for new spots because of its customers to give them a fresh taste. They are able to also create some budget packages for its customers so that they have more options if they're struggling to choose from the expensive options.

Opportunities

TUI gets the biggest presence in the market and they have been able to market their product well. It is smart to move on to other markets in order that they do not stagnate. They have got pretty much cornered the marketplace in Europe and need to discover a new one. They can certainly capitalise on the Indian and Chinese language markets due to the fact they have great economies and they have a whole lot of men and women with disposable income over there. They are able to find new income within those market segments as the situation boosts in the other marketplaces.

TUI has to also look at other factors which make a difference them including the proven fact that oil prices keep fluctuating. They need to buy oil prices at a lesser price now by hedging their wagers but then there is no guarantee if the purchase price will go down or stay up in the foreseeable future. Maybe it's a safe wager if the costs go up in the foreseeable future. This can end up being a risk but it won't be as big of your risk as buying oil at more costly prices. For example if indeed they buy oil at 75 dollars a barrel and it goes back to 65 they will have paid more however, not lost much.

They also need to face the probability that airlines may be taxed more for the green tax in the foreseeable future in order to offset carbon emissions. They already are taxed a lot currently and there are also possible measures in the foreseeable future where the number of flights will be capped to be able to reduce pollution.

USES AND LIMITATIONS OF TOOLS USED

This statement has used a number of tools to create an analysis. It could not be practical to do it without the use of the various tools. There are however some constraints as it pertains to the various tools getting used.

PESTEL

PESTEL is a great tool as it we can analyse the macro environment and get a better knowledge of the industry and its own environment. Each one of these factors allow us to start to see the future risks. PESTEL also we can check out the key factors which make a difference the strategy of an organization as well. They are really taken to the forefront and can be seen.

However it is just an understanding of the whole situation and will not provide any alternatives. It also does not allow us to evaluate the amount of the problem. It is also not possible to analyse the complete macro environment because there are limitless possibilities.

PORTER'S FIVE FORCES

Porters Five Pushes allows us to know very well what drives competitive behaviour and the causes of it. It is a bit more descriptive and can certainly identify the reasons behind competitive behaviour. Additionally, it may check the advantages and drawbacks of the industry by analysing its profitability and competitiveness range. It is also used to determine the feasibility of the industry and understand the basics behind it.

The only problem with it's the fact that the environment is obviously changing and it can never be used for a long-term analysis. In addition, it does not take the industry into segments and considers them to be a whole. It is flawed as it generally does not look at HR, culture and the management skills of an organization.

SWOT ANALYSIS

The SWOT evaluation is to the idea and targets the talents, weaknesses, opportunities and threats of any business. It takes into account both internal and exterior aspects of the business enterprise. It really is a great decision making tool and also comprehends which items of the business to take into account. In addition, it addresses the main element issues and recognizes the relevant information.

Despite all the strengths of the model it'll still ignore some of the critical indicators of the business. It does not provide any solution to conditioning the business.

ANSOFF MATRIX

The ANSOFF matrix allows the business enterprise to look at its best options in various cases. This also allows those to explore how they may increase as a company.

It is a bit limited as it only takes into account the actual fact it only talks about growth and show rather than other factors. In addition, it uses a growth matrix to analyse the businesses which is not sufficient.

CONCLUSION

TUI still needs to a do a whole lot to capitalise on its current position. They are able to make hay while the sun shines and gain as much customers as they can. If indeed they diversify and start catering to people with limited incomes they can gain a complete new market. They just need to play their credit cards right plus they can grow a great deal.

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