BUSINESS STRATEGY

Tourism Industry from 2000 to 2009 and TUI



Table of Contents

Introduction1

Question 11

Tourism industry1

PESTEL2

Political2

Economical2

Sociocultural4

Technological4

Environmental5

Legal6

Porter's Five Forces6

Potential Entrants6

Substitutes7

Supplies7

Buyers7

Competitive Rivalry8

Question 28

Strategic Capability and Competitive advantage of TUI8

Cost Leadership9

Differentiation Strategy9

Focus Strategy10

Resource Based View11

Tangible Assets11

Logistics11

Marketing and Sales12

Services12

Procurement12

Intangibles13

Technology13

Human Resource13

Reputation14

Ansoff Matrix14

Question315

References17

Tourism Industry from 2000 to 2009 and TUI

Introduction

The biggest tour operator of Europe TUI Travel Plc. has expanded phenomenally in the ten years. The company offers a diverse variety of tour packages mainly through its travel agents. Initially, the company was engaged in offering standard packages in very limited destinations; however, with the passage of time, the company has expanded in new markets, with more strategic partnership, acquisitions, mergers, and joint ventures. This paper discusses the strategic aspect of TUI, and its competitive advantage with respect to its competitors. This paper presents how the company has engaged in tourism industry after shifting from coal and oil business and successfully managed to grab the lion's share.

Question 1

Tourism industry

The tourism industry generated US$5474 billion of economic activity in the year 2008. This figure represents the 9.4% of the GDP and accounts for 7.6% of the total jobs, that is, 219.8 million jobs (Johnson, Scholes, and Wnittington, 2011: 563-568).

The twentieth century particularly the second half of it, is marked by constant growth of tourism industry. However, there have been some bumps in the industry like in the year 2001-03, with a series of attacks in New, York, Bali, and Djerba. A good way to analyze the external environment is to conduct the PESTEL analysis. It gives a 360-degree view of the external environment. The framework categorizes the factors in the environment into economical, political, social, technological, and legal. It helps in understanding the drivers of change which are external to the firm (Johnson et al., 2005).

PESTEL

Political

The political situation is directly related to all the external forces of the external and internal environment. These forces create multiple effects as the complex web of relationships influence many aspects simultaneously. The terrorists attacks like in 2001 and onward simply result in tighter security measures and immigration laws (Hirsch,2009) (Weissinger, 2003). Travel insures seizes to be valid if Foreign and Commonwealth Office (FCO) put some destinations off-limits due to the terrorist's attacks or adverse political reasons. Prolonged terrorism can develop a psychological fear in the tourists and will affect the tourist perception (Sónmez, 1998: 416-120).

Frequent change of government regimes, protests, and instable political situation adversely affects the tourism industry. Instable political situation affects the country and its neighboring country's tourism as well (Sónmez, 1998: 420-424).

Tourism is seen as a stimulus to growth in some economies. Countries earn large revenues from taxes on tourism. To promote tourism, the government offers subsidies, tax advantages and like to attract tourists in their country (MENAFN, 2009) (ndTax, 2009).

Economical

One thing that is not debated is the role of exchange rates in the tourism. Gallego et al. (2007: 1-16) discuss the effects of exchange rates on statistical backgrounds and concludes that, fixity arrangement in tourism is found to have encouraging effect on ...