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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.
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.
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.
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).
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 Miles, 2006).
In the similar manner, there is also a presence of external stakeholders who constantly interact with Touristik Union International. These have also got a crucial role to play in overall working of organization. It is only on account of consumers that Touristik Union International has been able to reach closer to position of becoming a market leader (Cakmak, Dales and Vidal, 2007). In the same manner, government is also regarded as another stakeholder. Its role is to make sure that Touristik Union International pays taxes on time (Hill and Jones, 2010). They also pose the power and authority to ensure that there is strict adherence to rules and regulations (Harvey, 2007). They play the role to evaluate decisions that have been taken by companies and put force on them in order to remove or even change it (Armstrong and Baron, 2007). In the similar manner, there is also a presence of varied Pressure groups like Greenpeace which have a role to investigate issues related to pollution that is likely to be created by Touristik Union International This influence seems to be important but not extremely significant for the company (Cohen, McDaniels and Qualters, 2005).
Marketing audit is usually done to judge present conditions of market so as to assess the impact of overall marketing campaign. It is essential in case of Touristik Union International which is working in an extremely volatile environment and is prone to changes (Culliton, 2008). It is crucial for keeping a check on quality, performance as well as production activities going on within organization (Ettouzani, Yates and Mena, 2012). Hence the need is to carry out marketing activities in a proper manner. Here, the process of marketing audit is as follows;
Internal analysis: It is inclusive of studying the internal sources of company so as to get an idea about operational overview. It is a necessity as internal working of any firm puts an impact on marketing process (Kotler and Armstrong, 2005). The step involves for finding out overall location of company, number of employees, sales and revenue figures as well as management. The analysis of these factors will play a crucial role to undertake decisions and formulate marketing strategies in comparison to competitors.
Goals and objectives: Here, the requirement is to set an overall marketing as well as company goal and objectives (Layton, 2011). These would aid in provision of clear direction for working of TUI and avoid confusing in minds of management and employees (Banerjee, 2009). These are also crucial for external stakeholders of Touristik Union International as they would make the firm aware about future directions to be undertaken.
Identify the targeted market: After gaining of internal company information, goals and objectives, the nest step is to make an identification of target market. It can be carried out by assessing the needs and requirements of target clients (Mohan and Krishnaswamy, 2006).
Construction of marketing plans: All the above mentioned information will act as a major basis for formulating marketing plan. It is a necessity to make management of firm aware about how to formulate marketing strategy. Till now the company has carried out a check on goals and objective, target and current market (Kitchen, 2013). Now the need is to develop new marketing plan in order to fill in existing loopholes. These would be inclusive of defining a marketing mix, segmentation and positioning as per requirement of target market (Sejin and Stole, 2012).
Implementation: Last step involves for implementation where there would be use of communication plan, training and development, use of promotional strategies and revising the existing ones (Sikdar and Vel, 2010).
Identification of errors: Marketing audit helps firms to identify errors and gaps followed by easy rectification as and when the need arises (Cohen, McDaniels and Qualters, 2005).
Revised strategies: It is only by carrying out an overall marketing audit there can be revision in existing strategies related to marketing (Smith, 2006). For example, if firm identifies a need for creation of new and revised strategies then only it can take preventive measures to achieve a desired outcome and set up a direction for the same.
Strong base: Marketing audit would assist Touristik Union International for setting up a strong marketing base. This will assist in uncovering of inefficiency and recharging of campaigns (Vargo and Lusch, 2004).
Touristik Union International can make usage of varied marketing audit tools for causing an overall increase in profitability of company through clients. This can be done by using past sales figures followed by a thorough analysis to measure overall profitability level achieved by a consumer (Ettouzani, Yates and Mena, 2012). It is only with the help of sales analysis that company will in a position to assess the trend exhibited by a product or service offering. However, the past figures related to sales can only be used for indicative purpose (Wood, 2009). Too much dependency on them may cause creation of a troublesome situation for organizations. In the similar manner, there can be a use of another approach known as lifetime customer value (Waarden, Benavent and Castéran, 2013). It will assist in identification of overall customer relationship value exhibited by Touristik Union International.
Unique Selling Point of Touristik Union International is the provision of a broad range of service offering to a wide variety of consumers. This has helped the firm and gaining a substantial edge over competitors like Thomas cook, first choice holidays and my travel group. This has been done by provision of a diversified range f services like travel agencies, airlines, cruise amongst others. The major reason is that the firm has offered products related to travel and tourism for each and every income group (Armstrong and Baron, 2007). There is a presence of single component service in form of car rental or flight. There is also a provision of broad range of destinations that provides a good choice for travelers. It has further made itself specialized in organizing tours for Chinese consumers to Germany or offering of incoming tourist tours to consumers. There is further a presence of offerings meant for every income class. It ranges from cheap package travel with 1 to 2 flights (Baron, Harris and Elliott, 2005). Increasing the overall usage of technology like internet has been quite helpful for company as the firm has been in a better position to organize resources and use them in an optimal manner. These technological advances have aided the firm in gaining of profit maximization.
Touristik Union International as a market leader in tourism has made sure to maintain quality and flexibility of its employees. Most of the employees are a part of those companies that have been acquired by Touristik Union International. Hence, they are quite interested in maintain the jobs and thus provide for quality in their overall work (Cohen, McDaniels and Qualters, 2005). Moreover, there is also a presence of open and inclusive leadership style at TUI., Senior management beam have emphasized on the importance of voicing employee opinion and making sure for their wide engagement so as to lead towards overall business success. To make sure that employees have an understanding about the bigger picture, the areas if business believe in holding up big conversation (Cakmak, Dales and Vidal, 2007). It thus provides for increased opportunities to employee as well as employers to discuss the role of delivering strategy, thinking through, working as a team amongst others. It is only by introducing these set of conversations that businesses have been able to create a more open as well as evolving culture.
Similarly in terms of culture, the organization has provided for much variation in it. This has happened as there has been an incorporation of varied working styles followed by organization in account of acquisitions. Hence, the managerial tram of Touristik Union International has worked hard to make it as much work friendly as can be possibility (Baron, Harris and Elliott, 2005). It has adopted the gimmicks of task culture where there is a presence of multidisciplinary and flexible teams. Varied approaches have been followed by management of TUI after subsequent mergers and acquisitions of companies. The managerial team has worked hard to consolidate overall perks of its employees that work in Touristik Union International. The HR team concentrated on carrying out benefits of integration, harmonization of the terms and conditions meant for all the employees. These were inclusive of upgrading the pensions, providing fleet facility, distribution of childcare vouchers and travel discounts and revising the annual leave conditions (Friedman and Miles, 2006). For example, in the area of fleet arrangements, there has been provision of company car for employees who wish to drive to company (Cakmak, Dales and Vidal, 2007). On the other hand, senior staff members have been receiving cash allowances. In the similar manner, in the area of new annual leave entitlements, there has been a provision of 25 days' annual leave irrespective of employee grade. This would be increased to 28 days after employees complete five years' service (Sullivian, 2009).
In the area of operations, the form has segregated its business into many sectors. These are inclusive of Mainstream, Accommodation & Destinations, Specialist & Activity. The firm has also shown a global presence in Europe, Asia, North America, Australia and even Latin America. It is regarded as a truly international business with a presence of more than 220 brands (Armstrong and Baron, 2007). It has been following the principles of strategic planning to coordinate activities within its hotel portfolio with tour operators and other companies. Its only on account of Centralized coordination in operational area that the firm has been able to achieve a completive edge. The operational departments working within Touristik Union International have been adhering with the principles of financial and controlling instruments in order to make sure that there is an optimal use of resources. It would lead to an overall contribution towards economic success that exists within the firms (Cohen, McDaniels and Qualters, 2005). The company ha further ensured to make use of cutting edge technologies and processes to adhere with existing standards of quality. This has led to production of higher level on consumer satisfaction at a fairly optimal cost. In the same manner, there s a consultation session with individual hotel companies and partners while making of plans related to marketing and sales strategies for Touristik Union International group. It ensures for maximum amount of flexibility and strict adaptation to market conditions.
TUI is well aware that there is a need to deliver quality product and service offering to travelers. Hence it believes in voicing the overall opinions given by the clients. It happens by supporting principles of employee engagement and maintains quality services.
Tourism industry has been growing in leaps and bounds but has also experience a phenomenal growth. Managing a touring company is not easy one due to unpredicted nature of travelers, high switching costs, low bargain power, increase in competitors amongst others (Baron, Harris and Elliott, 2005). In this regard, a study was conducted on working of TUI which is a German based multinational tourism company. TUI had laid varied objectives related to becoming a leading leisure company, global player, providing explicit leisure and holiday experience and maintaining sustainable invalorisation of biological diversity to conserve natural foundations of tourism industry (Friedman and Miles, 2006). There has been a use of varied methods to attain the objectives. These are in form of employee focus, diversifying of business, Branding, Quality service offering and maintaining Ecological sustainability (Armstrong and Baron, 2007). There is also a presence of varied stakeholders like Employees, suppliers and regulatory bodies that have played a crucial role in long term survival (Cohen, McDaniels and Qualters, 2005).
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