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INTRODUCTION TO TUI
There has been a presence of national and international levels where Tourism and hospitality industry has been found to operate. Same is the case with Touristik Union International which is multinational travel and Tourism Company located in Germany (Armstrong and Baron, 2007). It is regarded as amongst the largest tourist firms in Europe that also owns many travel agencies, airlines, cruise, hotels and retail stores. The report has carried out an assessment of objective formulated by Touristik Union International and how it has tried to achieve them. It also analyzes the role and importance of various stakeholders for the German tourist company. This is followed by assessing the importance of conducting a market audit as well as varied tools for measuring overall customer profitability.
Evaluation of objectives of TUI
TUI Group is a German based company and is regarded as the largest tourism conglomerate in Europe. It unites around 3,600 travel agencies that work under a single umbrella. The company has laid down many strategic objectives that are as follows;
To be the leading leisure company in Europe.
To become a global player this is aspiring to market and brand leadership in tourism sector (Friedman and Miles, 2006).
To offer an explicit leisure and holiday experience to quality-conscious holiday-makers.
To provide for long-term sustainable invalorisation of biological diversity which are natural assets of holiday regions.
To conserve natural foundations of tourism industry.
Range of methods used to achieve the objectives
The company has made sure to use a wide range of methods so as to achieve the stipulated objectives.
Employee focus - The tourism group considers employees as its heart and soul and thus provided them with efficient work practices, good atmosphere. Even the corporate culture is based on the principles of mutual respect, team work, openness as well as a professional attitude (Our People, 2014). The management believes that employees are the ones who are in close contact with the consumers. Hence, if a good culture and development sessions is provided then only they would work towards providing a long lasting leisure and holiday experience to holiday makers. Hence, the management team of company has organized many employee development sessions. It offers seminar programs as well as training courses so as to aid the staff member in being responsible towards work and enhancing performance (Opportunities for personal development, 2014). Focus has also been given on the provision of practical and result based seminars so as to build in wide range of competency skills for employees. There is also an organization of wide ranged talent management activities. All this has been done in order to ensure that employees are competent enough to fulfill requirements of consumers. In the similar front, the firm has tried to provide for elements related to diversity at work place. This is done as TUI being a tourism group has to handle consumes who are from different nations (Diversity at TUI, 2014). Hence, workforce diversity is most likely to add towards more inflow of consumers in different nations.
Diversification – In order to attain the objective of being leading Leisure Company in Europe and a global player in tourism sector, TUI has ensured to diversify itself in three major sectors (Cohen, McDaniels and Qualters, 2005). These are in the areas of travel, Hotels & Resorts as well as cruises. These have further got a presence of many subdivisions. For example, TUI travel has diversified itself by functioning in areas like tour operators, accommodation and destination services as well as in specialists and activity (Baron, Harris and Elliott, 2005). In the travel company there is a provision of broad range products in form of yacht chartering, expeditions and trips for students. In the similar manner, TUI Hotels & Resorts is considered to be one of the largest holiday hotelier companies of Europe. The group has got a network of 232 hotels and 155,000 beds.
Branding – The firm as a part of its branding strategy has associated itself with one of the top most brands like Robinson, Grupotel, Dorfhotel among others (TUI Hotels & Resorts, 2014). It has also understood the concept that for any consumer hotel brands acts as a major decision maker while deciding on booking. This has also helped the group in winning over consumer loyalty (Friedman and Miles, 2006).
Quality service offering – The firm as a part of its objective to offer an explicit leisure and holiday experience to quality-conscious holiday-makers has focused n provision of quality services (Anheiser, 2011). It has considerately adhered with ongoing quality standards, maintained an excellent value ratio as part of its service philosophy.
Ecological sustainability – The company has given due emphasis on the concept of ecological sustainability. For this the firm has committed itself to maintain a responsible approach to nature and environment (Armstrong and Baron, 2007). For this the company has been following intensive dialogue sessions with the politicians, scientists, non-governmental organisations on matters related to climate protection and mobility. For this, TUI Deutschland also launched a climate calculator in the year 2008. It has been able to make consumers start giving voluntary donation in order to reduce the emission of carbon. The form has also ensured to follow proactive environmental policy which works to influence the decision making in destinations (Armstrong and Baron, 2007). TUI has further supported the model related to model related to activities in area of international environmental, landscape and nature protection. The overall model is aimed at assisting the local as well as regional efforts, provision of long term solution and identification of new strategies to support the concept of sustainable tourism development in holiday destinations.
Critical assessment of whether there has been successful accomplishment of goals
A critical assessment can also be carried out with respect to finding out that there has been an achievement of goals or not. It can be assessed by studying the financial performance of the company in the year 2013. There has been a reporting of €18.5bn turnover made by the group. In the similar manner, operational earnings have been found out to be €762m. The group profit has further amounted to €187m. Moreover, the employee headcount has been found to be of 74,400 employees. In spite of the success it has been found that the firm has failed to achieve the overall level related to economies of scales (Cakmak, Dales and Vidal, 2007). Hence it can be critically evaluated that more is required to be done so as to bring improvement in coordination and exchange of resources.
In the similar front, the strategy to diversify in varied sectors, has worked well for the company, at present TUI operates around 3,000 agencies in West Germany. However, it can be assessed that this strategy o diversification has added undue pressure on the group as increased focus is required to be given in all areas which may not go fruitful with the company in long run (Cohen, McDaniels and Qualters, 2005). Focusing on every business sector has put undue pressure where some areas are compromised in terms of quality (Baron, Harris and Elliott, 2005). The growth of TUI can further is also clear as there is an approximate presence of 3,500 travel agencies that are working under it. 79 your operates are also working in approximately 18 nations with a presence of over 120 aircraft. Along with this the group has maintained contact with 12 hotel brand in over 28 nations. Presently TUI enjoys the overall reputation as well as advantage of being a first player in a concentrated market setting of tourism industry (Cohen, McDaniels and Qualters, 2005). The company has also got a presence of well developed infrastructure where all functions are managed centrally or locally. It is on basis of the methods and strategies that have been employed by TUI that has allowed the company to produce varied products and services that are there to appeal to a large number of audiences.
A strategy is all about developing of long range plans so as to carry out effective management of environmental opportunities and threats that are in relation with strengths and weaknesses showcased by the company under study. Porter’s five force models can be regarded case one of the best tools for making a strategy (Baron, Harris and Elliott, 2005). As per many author, it is only by having an understanding of these forces that there can be overall determination of the profit potential showcased by a firm. Here, profit potential is measured in terms of long run return (Anheiser, 2011). It is with the help of this model that TUI can have an understanding about the primary forces that can be utilized for finding out the competitiveness within an industry followed by assessing what is the link between these forces (Friedman and Miles, 2006). The model tries to suggest that for the overall development of effective organizational strategies the management of TUI is required to have an understanding about the five forces as presented by porters that are utilized for finding out the level of competitiveness that exists within industry (Cakmak, Dales and Vidal, 2007). The factors are inclusive of New Entrants within the Industry, Substitute Products offerings, Supplier’s Ability in term of bargaining power, Competition level that exists within firms (Armstrong and Baron, 2007).
These forces can be used for formulation of strategies so that the company can be positioned in operating environment. Porters can basically be used for analyzing the overall environment in which TUI is working. This will further aid in devising plans for formulation of a unique and distinct brand (Cohen, McDaniel’s and Qualters, 2005). It is only by having an idea about power that is possessed by the suppliers, changes can be made in the manner by which TUI is dealing with them (Friedman and Miles, 2006). Having an assessment to low or high bargaining power possessed by suppliers there can be a change in manner by which raw materials as well as other facilities are being supplied. Strategies can be framed about how to increase the overall process of raw materials and other facilities (Cakmak, Dales and Vidal, 2007). Changes can also be made in the booking that is exhibited at partner hotels. Strategies can further be framed towards maintaining profitable and cost friendly relations with the suppliers. In the same way, it is only by having assessment about the Threat of new entrants there can be an understanding of how TUI can use it as an advantage for overall creation of entry barriers and establishing economies of scale (Baron, Harris and Elliott, 2005). It will further help in strategizing about how the negative impacts of barriers to entry can be avoided. On a positive front, strategies can be framed about the manner by which company can differentiate itself from competitors. It will further ensure to provide attractive product and service offerings followed by a greater choice in area of tourist destinations.
Other than this making use of Porter’s five force models also provides an understanding about Presence of intense rivalry that has been found to exist in tourism industry (Armstrong and Baron, 2007). Hence, it is the outcome of Porter’s five force models there can be an identification of opportunities and threats that are ought to be faced by firm in future. This is a key requirement to formulate strategies accordingly.
In order for companies to attain success, it is essential to consider market positioning and form strategies against competitors. There is presence of varied kinds of analysis that can be developed in order to help companies in external analysis (Anheiser, 2011). Macro level factors such as socio political trend, general economy etc have got a huge Impact on overall working of TUI. Hence, PSTEL analysis has been chosen for the same so as to affect the overall working of company. In the upcoming sections, there has been a discussion about the impacts that is likely to be faced by business as well as trading place on account of Political, Economic, Social, Technological, Environmental as well as Legal factors.
The deregulation that took place in case of tourism industry has made it easier for causing an increased competition for TUI on account of making it easier for new companies to make an easy entry. On a negative front, there is a presence of huge pressure from trade unions to cause a reduction in operational costs exhibited by tourism sector (Cohen, McDaniels and Qualters, 2005). Moreover, there is also a stringent presence of regulations in order to provide for overall safety to tourists. Economic factors in form of slump that occurred in overall economy there is a presence of time when growth has again started taking place in tourism sector (Cohen, McDaniels and Qualters, 2005). Hence, this market growth has also assisted in overall growth of TUI for developing activities and targeting of new client base (Baron, Harris and Elliott, 2005). The company has also managed itself well in the recent times of Euro zone crisis. It is good news for the firm as this further resulted in a substantial reduction of competitors thereby limiting the options available for travelers.
Other than this, has been a presence of an increasing social trend that has caused more number of tourists. In this regard, TUI was offering prepaid as well as pre planned holidays which have been convenient, secure and creation of value for clients who have a tendency to book everything in advance (Cakmak, Dales and Vidal, 2007). TUI has been found to be ahead of rivals by turning the airline group into one of the most preferred tour operator. This has happened by gaining a reputation of achieving success in tour operations and thereby becoming a leader in market (Armstrong and Baron, 2007). The company has also been able to offer wide range of product as well as service offering. These have been by provision of increased range of decisions and products provided to consumers. It is on account of Technological influences that TUI has been able to develop its online business. This has provided an increased opportunity to TUI to saturate in market and increasing its presence. This has provided the consumers with an easier access, saved time as well as given an opportunity to skip the fees of agency when holiday is booked (Armstrong and Baron, 2007). As reported that there is most likely to be an increase in the number of tourist, which would increase access to wide range of destinations that are provided by TUI (Cohen, McDaniels and Qualters, 2005). Hence, firm is more likely to face issues related to release of CO2 in air, destruction of natural resources among others. As per main strategy followed by TUI there has been a constant signing up of acquisitions. However, coming time may bring changes in laws and regulations where future restrictions are most likely to be imposed by Competition Commission. This would pose a negative impact on mergers and acquisitions thereby leading to gain of huge market share and putting an impact on smaller business ventures (Cohen, McDaniels and Qualters, 2005).
Role of various stakeholders in Touristik Union International
Stakeholders in case of TUI are inclusive of employees, managers, owners, shareholders which are internal to company. They have got a very crucial role to play for Touristik Union International (Harris, 2005).
Employees: These are the ones who are in close contact with consumers and fulfill needs and demands as per necessity (Forman, 2005). These are also essential for TUI. Without their contribution it is difficult to achieve overall goals and objectives as laid by company. Success of a firm is dependent on ho staff members working for Touristik Union International are able to fulfill duties and responsibilities (Anheiser, 2011). They are the major decision makers in firm who feel that they are more responsible towards profitability, sales and revenue generation of TUI (Henry, 2008).
Suppliers: Touristik Union International has been selling tourism related services on an international level. They have been developing varied kinds of services that are in form of holiday packages, airplane tickets, accommodation as well as to and for transport (Cohen, McDaniels and Qualters, 2005). Hence, TUI is required to collaborate with suppliers in the best possible accords. It should also try to develop a substantial power for influencing them. Here, the principal suppliers of TUI are inclusive of hotel owners and operators and aircraft suppliers.
Shareholders – These also form crucial internal stakeholders as TUI has made many kinds of investments and shareholders are expecting substantial returns on them. In this case, Touristik Union International has to ensure that an average amount is charged from supplier on account of high switching cost (Friedman and Mil