Marketing case study on TUI Travel: PESTEL and SWOT

INTRODUCTION

TUI illustrates one of the most amazing and successful strategic change of a firm, among the largest European companies. From 1997 to 2003, its management turned one of the oldest steel and mining conglomerates, known as Preussag, into TUI the undisputed European leader in the tourism industry – a fast growing but very volatile and competitive industry.

TUI is a world leading international leisure group which operates in 180 countries in the world and serve 30 million people. It headquarters in crawly near Gatwick airport in UK. It has 5000 employees and 146 aircraft. From the last ten years tourist industry growing at an annual pace of 4.1%, 2005 is the best year of the industry. In financial year 2009 TUI travel revenue is 13.9 billion. In order to become a European leader, the group embarked on a steady programme of major acquisitions while divesting the non-cour business. 1st January 2000 the Happing Touristic union was renamed “TUI Group” and jumped in the European market. Terriest attacks in New York (2001), BALI (2003) and Madrid (2004) can traumatic effect on international travel from 2000 to 2004. In 2005 tui took full control of leading Canadian container shipping line, and merged its container shipping division with it.

EXTERNAL ANALYSES

Factors that outside the organization which can affect the organization over all

These factors are

PESTEL

POLITICAL

All the rules and regulation which can be imposed government of the country where the organization can exit. What kind of facilities that the government can give the company to compete in the industry? Tax relief, in case of loss how much tax refund? Can government give the merger and acquisition when TUI can enter the other countries like Asian (china, India)?

Security problem is also face all over the world, just like terrorist attacks in New York IN 2001, in London bus blast can affect too much in the international economy and international tourist industry in 2000 to 2004. Because all word can connect with each other with as the global village that’s why company can’t face any problem to merge and acquisition with German companies, in UK , USA , India in china and other countries all over the world European counties, Asia pacific, American, Africa, middle east

Some government can impose heavy tax on companies that why it can create a problem with tui when they merge with them

ECONOMICAL

Currency exchange rates can also a big problem for tui when he can goes in the other countries. Difference between Pakistani currencies any UK and others same with the other countries.

In all over the world whole economy run on oil prices when they can fluctuated in can create a problem same situation with tui. Lower barrier to enter in the market can create a complex position in competition.

SOCIAL

Tui can give the customer holiday packages, online booking facilities

Brand is a unique thing that company can offer to its customers. It’s about the perception of the customer different brand for different countries. If we can follow the BCG matrix is can tell the good position of the company. All the other companies’ tui can also adopt the policy of going green

TECHNOLOGICAL

Tui can introduce on line facility for its customer to purchase ticket and any information that they need. In this way they can cut staff cost and intermediates. Your customer is only one click far away from you and anywhere else. Tui can launch TV programmes, save customer data base to keep in touch with the help of video conferencing.

In 2002 they can reengineering their work and decrease their fuel efficiency they can work on more productivity. Tui can also use EDS planning system for the cost efficiency.

Health problem is also face by the tourist industries. Even how WHO can’t impose any bane to go the countries in which swine flow is (HINI)

LEGAL

Different counties government can impose different kinds of rules and regulation regarding health and safety (Aviation Safety and Regulation). Some trade laws just like ban on merger and acquisition.

Different airport right for some carriers. If the government can want to monopoly he can’t give permission to the company to made air- port in a country. Company can take permission from the government

ENVIRONMENTAL

In German TUI AG can introduce environmental system according to ISO14001 in their head quarter. Both the management system like climate protection and biodiversity and in house system just like, wastage management, energy protection can give tui world-wide recognition to good environmental policy.

INDUSTRY STRUCTURE

When we can talk about industry structure of tui we mean industry life cycle or swot analyses of the company.

SWOT

Swot analysis can be used to just like other analytical tools like PESTL and porter five forces to analyses the internal and external position of the company

Strength and Weaknesses;

Strength is the internal factor of the tui travel which can use company to remove weakness. For this purpose company can use its fiancé department, it accounting, HR, marketing to improve weakness, the company can improve its weakness. Company can use its technological, strategies, distribution channel, its product quality, management to overcome the poor assess to distribution, low customer retention, weak brands, absence of important skills, etc.

Opportunities and threats;

Today is a word of competition, tui travel can have a too much threats for the externally, tui can have a opportunities to overcome the threats like technological advancement, new distribution channel, low taxes, liberalisation of geographic market, introduce new packages for the holiday, online ticketing facility, to overcome the technological advancement, change government policies, tax increase

Competitive analysis

Competitive analysis can help organization to think about the following things. Its main competitors are Thomas cook, My Travel group, Rewe Touristik.

1. Competitors past present and future history

2. Future investment criteria

3. Basic strategies

These can solve our different problems and answer the questions

What our competitors?

What are their objectives?

What’s their weakness and strength?

Porter five forces can also tell us about the competitors position these all include external factors

Threat of entry

Barriers to new entrance

Too much capital and resources are required.

70% share can be controlled by 10 leaders

Brand loyalty can also be problem for new entrance.

Economy of scale should be high

Substitutes

In airline industry there is no substitute. People can use other ways but nothing is better than air jet. Company can offer different seasonal offer for the customer

Bargaining power of suppliers

If the company have low share in the market then supplier power is also to be high. Four market leaders cover more than 50 present markets there is threat of backward integration. Its show only supplier moderate barging power.

Bargaining power of buyers

Emergence of internet and online there is low switching cost of buyers. Companies have fewer substitutes limit the barging power of buyers

Competitive rivalries

Moderate level of competition exists in industry. Fix cost also to be high favour the company. And there is 8% market share between two companies (Thomas cook 13% and tui 21%). Due to these reasons there is low chance of competition.

Resource and capabilities

Companies have some internal resources and some external resources

Financial resources

Tangible resources

Includes the company air jets, busses, premises that they can hire, production plant which can work for production of goods.

Intangible resources

The resources which we can’t see directly, its include tui brand company can has near about 200 brand in which include

Tui Thomson

Novellas frontiers

Tui Deutschland

The moorings

Tui ark

Marmara

Fritidsresor

Late rooms.com

Turchese

Hayes Jarvis

Air tours

Etc. These are the main brand which can be offered by the company for its loyal customers.

Technological

Company can introduce on line booking system for the convenience of its customers, and minimize cost. Well known logo “smile ”to represent a number of companies in which UK tour operator Thomson Holiday. TUI has a 80 tour operator and 155 aircraft around the Europe. Tui have a number of big hotel, ships people can purchase ticket online anywhere from the world.

Human resources

Culture and vision

We are a leading world travel group we have a strong value in and culture in the eyes of our loyal customers. We always keep in mind our customers expectation and the time which they can spend with us. We want to do something new every day. We can look the opportunities which can be helpful for our customer and make value add for them

External resources and capabilities

Alliance with partners

Company can also alliance with Air Berlin seal and tui CEO says we are very happy to deal with German company in this way we can reach the German market and give excellent performance and we despite the recent uncertainty.

Distribution

Our choice is to provide customer holiday option for meet their expectations we also know the dynamics of the industry. Customer can purchase on line tickets from our tour operators in anywhere in the world.

Porter value chain

Firm infrastructure

Tui can have a big structure it can add value at every aspect, like its marketing department, finance department, R&D department and all other can add value

Technology development

Tui can introduce new air craft’s, busses, and accommodation and on line ticket facility for its customers.

Research and development

To compete in the industry company can increase its product line. Tui can introduce new packages on holiday, on special occasion at crimes on Easter give extra facilities to its customers and charge them more

Supporting activities

Receive customer and security check is an important thing then company can luggage handling facility for its customer

In flight service like dinner, lunch, drinking and other faculties like newspaper, internet etc.

Marketing sale and booking facility all over the world direct or online from their retail shops or online use of net.

Profit margin which the company can take to spent on these actives and money they can earn

VA=sales revenue – purchase on profit and loss A/C – depreciation

Company structure

Company can have 200+ brands and product for wide variety of differentiated and flexible travel experience for fulfil expectations of their customers. Company strategic goals is to increase shareholder expectation

Company want to

Leading International Leisure Travel Company.

Capitalized market £2.5 billion.

More than 50000 colleges operating across 6 countries.

Strategy synopries

Strategy is a well planned series of action. Tui strategy is to create superior share holder value by being the world leading leisure travel group providing customers with the choice of differnetiated and good experience

For achieveing this purpose company can set four areas in which they can focuse

Product and content

Distribution and brand

People and operational effectiveness

Growth and capital allocation

Product and content

Attention on the customer and change booking rates

Earlier Booking trend

Different product to our competitors and unique in the marketplace

People and operational effectiveness

Our employess are our asset

Business model that can react to chage demand

Yeild management systemand development of sophisticated capacity

Increase profit margin up 30 basis points from 2.9% to 3.2%

Integration progressing well with total synergies upgraded to £200m

Distribution and brands

Good relationship with the customer

Keep in mind customer choice

Highly trusted brands that provide value and quality

Growth and capital allocation

11 niche high growth businesses in specialist sectors

Progressing in growth plans well in Russia &CIS

Increase return on invested capital to 9.2%

Consolidation with Canadian market through proposed strategic venture with sun wing

Company challenges

Tui industry activates are shows that the company can contributes 11% of GDP and its exports are 12%. Fifty worlds least develop countries rely largely on this activity for economic development and in this way and tourist spending shows that tourist spending reaches the bad position.

UN world tourism organization estimates that this industry emits around five present global carbon emissions of which 2 present are aviation and the remainder are mostly for transport and accommodation. We can display our part in reducing carbon wastage, protect biodiversity and limit the water we can use directly and other indirect way to save biodiversity as this forms an integral part of our product when our customer are holiday they can experience.

These all are the hurdles which the tui travel can face. Our policy in this situation is this to avail social economic and environment benefits and make travel experience more comfortable and minimal environmental impact, respect the culture and people of destinations can gain more and more benefits

To achieve these goals we know that we are alone, but we alone lead the travel industry throughout. For this purpose we can take following steps.

Business decisions should be sustainable development.

Sustainability impact on our day to day operation should be minimize

Change the holiday options which can’t meet our requirements

For attracting more customer take customers experience what they want from them.

Made new brands and new techniques in industry revolution and set a benchmark it there is no competitive

To avoid negative impact put something back into environment.

Use our influence for the development.

Give customer more incentive and relaxation for attract more and more customers.

We should support our supply chain for the purpose of minimizing effects.

Strategic choice

By strategic choice we mean which strategy tui use to become a most successful in all over the world? What is there policy? What techniques which they can use? What are their suppliers? How the company can grow in international industry? What is their growth rate, what is their price policy? What is their market policy? What is their strength? What their weakness? What their strength? What are the opportunities that the company can avail to become a successful in the industry?

To evaluate these questions we can use following techniques and models

Ansoff matrix

Market penetration

Market penetration we mean existing product in existing market. If the company can introduce package in the existing market he should be penetrate the market he should start form the bottom level just cover its cost and not make too much profit. For the purpose of consolidation tui should use this policy in market to compete in industry. Companies can penetrate the market into the

Following three ways

Gaining competitive customers

Improve product and service quality

Attracting nonusers or the customer who use other company product or services

Product development

If the company can introduce new product in same market he can spend too much on advertisement. He should launch specific location oriented packages, just like buy one get one free. Company can introduce low cost operation and packages, if he can introduce high cost less chance of success. Companies can use this technique to for

Utilization of excess production capacity

To increase its product line to stay in the market

Exploit new technology

Increase overall market share

Market development

Tui should be concentration on Russia, India, and china and make important to always show its own presence in the market. This strategy should go toward following two concepts

Business to business

In which company can sale its ticket to their franchise and their agents can sale product or introduce new packages to the customer. It has low headache to the company

Business to customer

If the company direct connect with the customer online and sell their product just like tui international for the purpose of given tickets, online ticket confirmation, updates, take customer bio data etc.

Diversification

If the company can introduce new product in new market, what is policy? What is the position of our competitors? What are their weaknesses? Can company use their weakness to make himself strength?

Diversification may be related or unrelated. Diversification may be backward, forward and horizontal integration

Backward integration when the tui can extends its activities towards its input such as suppliers of raw materials

Horizontal integration when a company turn into business related to its activities

International strategy of company

Tui can serve over 30 million customers all over the world and work in 180 countries of the world. Company turnover is near about 80million Euros per year. To set long term strategy first choice holidays join tui in July 2001 and in 2002. Tui is a founding member of toi.

As a specialist in emerging markets sectors is an international portfolio of travel business, company can focus on specific segment or geographical sector or country. Sector includes 40 business operation form North America, Europe and recently emerging markets in Russia and Ukraine. Company can also focus on student education tours and trips to the Far East, Africa or Australia. Company to selling brands include mostravel, turchese and Hayes &Jarvis.

Joint venture in Russia with CIS made tui profitable and give a chance to a company to work with their local companies.

Advantages of joint ventures and alliances

Tui travel can share any kind of risk with other companies.

Government can give the company relaxation to entry

Company can have a more resources and these resources can open new wind in the mind of thinkers

Company can’t face any problem in licensing

There are some disadvantages of joint adventure

Make good relationship with foreign partner.

Too much limited ability to coordinating activities in other countries

Due to these limitations company some time face a loss

General strategies of tui Travel

Cost leadership

Company can work at lower cost and broad target in all over the world. Environment can affect the company policy just like Iceland problem in all over the world flight, company can bear loss, what company can do to sustain

Example

To maintain its cost standard PIA (Pakistan international airline) can fly more flight to cover its cost

We should keep in mind that cost leadership is minimizing cost to the organization to deliver the product or service. What the customer can pay it is different issue.

Differentiation

The way by which tui travel can differentiate product or service to gain the competitive advantage. For this purpose company need exact information of industry.

Company should need

Ability to deliver high quality product or service.

Research and development

Attractive sale and marketing staff to all over the world

Focus strategy

By which a tui travel focus on niche market where there is advance and luxury hotel for loyal people, business class in air jets, excellent pick and drop facility to airport to hotel etc.

On the basis of these strategies company can’t set its prices or goals lot of other models like PESTEL, BCG, and ANSOFF MATRIX can be helpful for the company to make their decision.

If the company low cost strategy is attractive to attract more and more customer it is successful. But there is lot of other factors like porter five forces how can company remove hurdles which he can face

Strategy in action

We can discuss the process which company can follow, organizing resources, changing and which strategy is company can use.

Company structure

Tui can registered in London stock exchange and it formed 2007 by the merge of first choice holiday PLC tourism division

Company main aim is to create superior shareholder value, and the company aim is to get maxim profit to merge and requisition

What the company want to do

Lead international leisure Travel Company.

2 200+ products and brands company can have.

3 2.5 billion Market capitalisations$

4 Company can have 3500 retail shops and 146 aircrafts in Europe.

5 More than 50000 worker can work in 6 continents in all over the world.

Company main aim is to make profit and employee number. For this purpose company can give different packages to customer.

Change in strategy

Change in climate is known as a greatest environmental challenge facing in all over the world and it is important issue for the tui international. As we know carbon emission can effect on green housing and put important part in global warmth.

June 2009 tui travel complete carbon disclosure project regarding their planning to carbon management.

Adaption change

Tui travel can change his strategy according to situation of economy. For made any kind of change company can ask himself following questions

Can there acceptable demand and conditions?

Can it give sustainable competitive advantage?

Does it have a good strategic fit?

Does it avert threats and take opportunities?

Does it meet stakeholder expectations?

It consists with core competencies and strategic capabilities?

Kinds of change

Adaption change

If tui travel can change his policy according to see current situation of stakeholders. For example company can introduce new package in holidays, in Easter, in Crismis festival.

Evolution change

Sometime tui travel can give packages to customer just like free insurance, free transport to their own restaurants etc.

Revolution change

Due to any reason just like volcano ash in Iceland can create a problem in all over the world especially in Europe. All over the world flights for UK is disturbed.

Some companies fly extra flights to recover this loss. This can create a big history in life of airline industry.

Reconstruction change

If the change can around the current situation, tui travel can change its policy day by day.

Conclusion/Recommendation

Tui travel can have a good understanding of internal and external issues; these things can help him to face the stakeholders of the company. Its targets and ambitions formed on the basis of an inclusive process and do address its material issues

In his sustainable development Report Company can have describe its targets, visions, missions, associated polices its board level commitment to achieve its goals.

Solution of sustainable development challenges Tui travel can perform as a role model and made a long term policy.

Tui travel focus on embedding and implementing its sustainable development policy and associated ambitious targets.

Tui travel should be less management focus and more on stakeholders to determine their overall impacts to see their strength and weakness.

Tui travel formalise its external stakeholder engagement process to better capture and report specific outcome of their stake holders and find solutions to its sustainable development challenges.