Business Environment Analysis and Solutions

The assignment focuses on analyzing the various factors that constitute a business environment and their influence on a firm's performance. It requires students to identify key internal and external forces, assess their impact, and propose strategies to mitigate challenges and capitalize on opportunities within the given context (likely related to the Thomas Cook Group example). The analysis draws upon relevant theoretical frameworks and scholarly research in business strategy, ethics, and operations management.

BUSINESS
ENVIRONMENT

EXECUTIVE SUMMARY
This report tells about meaning of business environment and the factors that affect
business. It states that there are positive as well as negative impacts of these factors on business.
To provide growth to business, it is important to consider these constituents otherwise, it will be
difficult to operate its operations. To provide consumer satisfaction and increase profitability, it
is important to communicate the changes to employees which occur due to this.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Business operates in society. There are factors which hinder growth and development of
business (Buckley and Casson, 2010). Business environment means internal and external factors
associated with enterprise. There is change in business policies due to variation in these factors.
Internal factors include customers, employees, etc. (Al-Swidi and Al-Hosam, 2012). This report
is based on Thomas Cook PLC, a tour operator company. This name is very big in tour and
hospitality industry (Campling, 2012). This company is listed in British stock exchange and is a
part of FTSE 250 Index (Añón Higón and Driffield, 2011). In this report, structure of Thomas
Cook and its governance policy is discussed. Impacts and benefits of PESTLE and other external
forces are studied as well.
MAIN BODY
Q1 Structure of Thomas Cook, its management and its governance policies
About Thomas Cook
Thomas Cook is the second largest (Europe and UK) public limited company in
hospitality and tour industry. Thomas Cook has headquarter in London and its CEO is Peter
Fankhauser in 2007. This company came into existence by merger of Thomas Cook AG, Thomas
Cook & Son and My Travel Group PLC (Azma and Mostafapour, 2012). Airline services,
holiday packages, cruise services, hotels and motels are services provided by Thomas Cook.
Thomas Cook Retail, Thomas Cook airlines, Thomas Cook Airlines Balearics, Thomas Cook
Airlines Scandinavia, Condor, etc. are sister concern of Thomas Cook (Bear, Rahman and Post,
2010).
Thomas Cook has office at mainly five locations. They are UK, Central, Western and
Northern Europe and Germany (Bhaduri and Ha-Brookshire, 2011). This company has 97
aircrafts, 2926 stores, 32722 employees and millions of customers. This company sponsored
Olympic Games of London 2012.
History of Thomas Cook
After merger in 2007, Thomas Cook AG has 52% sharing, while MyTravel Group has
48% sharing in new association under name of Thomas Cook Group PLC (Cavalcante, Kesting
and Ulhøi, 2011). After this phase, Thomas Cook started growing its business in a positive

direction. They make strategies for achieving the goals and satisfaction of consumers which
impacts their profit (Chadee and Roxas, 2013).
 In 2008, they started their website Hotel4U.com. In 2008, they get licence to operate their
business in Middle East and Asia (Chen, Chiang and Storey, 2012).
 In 2009 they thought to launch an online program for Thomas Cook TV and hence signed
contract with Octopus Media organisation. This affects their growth in neagative way and
stakeholders feel that company became insolvent, so they sold their shares (Cho and Lee,
2011).
 In 2010-2011, they bought one Germany based company Oger Tours. Thomas Cook has
70% sharing on profit and Germany Company has 30% (Christopher and Holweg, 2011).
That year was not good for the growth of business, there were chances of closure of some
ventures of it.
 In 2012-2014, Harriet Green became CEO of this company (Dahan and et. al., 2010).
This company close down its Belgian Airlines.
Structure of Thomas Cook
Thomas Cook Company does not have many hierarchy, they believe in platform
organisation. This company provides various services so there are many departments such as
marketing, sales, hotels, airlines, etc. At first level there are members of boards such as CEO,
chairman, director (Dibrell, Craig and Hansen, 2011). At middle level there are CFO and
managing directors, mangers. In this level there are airlines, communication, creative, legal and
secretary, UK market and differentiate. At last level there are link of finance department with
CFO, Digital marketing and e-commerce with marketing department (Du Toit, 2013). Hence,
Thomas Cook sometimes works as functional structure when there are more crowd of visitors.
Governance Policy
Thomas Cook is a brand which operate in different locations. There is one non- executive
chairman. In panel of board of directors there are two executive directors, seven non-executive
directors and one chairperson. They are highly qualified and capable to motivate personnel in
achieving goals and objectives (Elliot, 2011). It is responsibility of governing body to monitor
activities which are performed by employees and to promote and appraise the performance of
workers. Changes in financial structure, approval of meeting reports, declaration and payment of
dividend and interest, etc. are function which is important task for organisation.

Relationship of Board of Directors With-
 Shareholders: There is important role of shareholders in organisation they are external
source of finance. In Thomas Cook organisation there are annual and supplements
meetings held, in which shareholders or their proxy are invited (Fatoki and Smit, 2011).
In these meetings discussions related to business affairs and declaration of dividend is
made. Income statements are also discussed, some emergency issues are also
communicated. It is important to create good relations with shareholders so that there
share value of Thomas Cook increase in stock (Hall 2011).
 Employees: Employees are person who are medium in accomplishing goals and
objective. BOD keep employees satisfied through monetary and monetary benefits
(Hallward-Driemeier and Pritchett, 2015). Directors of Thomas Cook keep environment
of organisation that in case of changes it is delivered to employees frequently and clearly.
If employees face any problem then they can also communicate to managers and provide
solutions. Thomas Cook provide chance to subordinates to provide their views this will
provide fresh and innovative ideas and that will apply to operations will make employees
motivated (Isik, Jones and Sidorova, 2011).
 Other Members of Society: Other members like government, creditors, debtors,
customers, etc. also plays important role in growth of business (Kaufman, Kraay and
Mastruzzi, 2011). Thomas Cook take borrowings from bank so it is important to pay off
debts at specified time, this will help in good image in market and get in future get
finance easily. Thomas Cook has to take care of their debtors to collect money timely and
in case of insolvent it must be properly mentioned in books of accounts as it will affect
their revenue (Kian Chong, Shafaghi and Leing Tan, 2011). Customer preference has to
be taken into considered to make high profits, it is important that at the time of trip or
provide best airlines services at affordable prices so that customer prefer to use services
of Thomas Cook (Kolk, 2016). Hence, this proves that manager of Thomas Cook frame
policies to create good relations with stakeholders.
Q2 Purpose of PESTLE analysis
External environment includes legal issues, economic sources, etc. Internal factors are in
control of management of company up-to an extent but external environment is not in control
and hence, top level management has to alter its plans and strategies (Asif and et. al.,

2011).PESTLE is not only provides growth to company, but it also benefits employees
performance. This is an effective tool to know what is happening in external market and
accordingly company will modify its plans and policies (Lee, Kao and Yang, 2014). In case of
change in technology there might be chance that training is required for new technique so it
improves employee’s skills and make them competent. Thomas cook deals in travel business
there is requirement to change plans as per need of customer. For e.g. If group of visitors has to
visit places in small duration then company has to modify its plans so they can satisfy need of
customer (Lee, Sohn and Ju, 2011).
In case customer want to visit some destination and there is political issues happening, in
this case it is important that management of Thomas Cook has to analyse all political issue and
then convey situation to consumer (Lee, Olson and Trimi, 2012). So, it is fruitful to have
knowledge about PESTLE factors so that top level management of Thomas cook to plan their
further business activities. In this case company can avoid major issues that can arise and crate
disturbance in operations (Leih, Linden and Teece, 2014).
It is advisable that this analysis must be on regular basis so change in environment can be
undertaken (Li, Lai and Wang, 2010). In case of change in decisions of management of
company, it will be deliver properly to lower level personnel, this helps in improving relations
within the organisation also (Li and et. al., 2011). If there is any petition pending in court then it
impacts on business image also, so there must be corrective measures taken to resolve them.
Employees are the main components which helps in achievement of goals so there must be
proper application of rules related to personnel.
Q3 Impact of PESTLE on operations of Thomas Cook
PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental.
These factors are not in control of management of Thomas Cook, so its alternative is reframe
policies of company and deliver it to employees so that they can apply in best way (Liu, Cao and
He, 2011). Merely framing policies are not sufficient there after effects must be considered. It
will be helpful in growth of company and it creates faith in mind of customer also that Thomas
Cook is delivering best services. Changes in these factor is important so that they can enhance
their goodwill in market What is business environment- Definition and factors, (2018). There are
many ups and down in business operation but there must be corrective measures taken to reduce
negative effect (López-Gamero, Molina-Azorín and Claver-Cortés, 2011).

 Political Factor- As there is change in government then there must be change in business
policies which is not in control of managers. Thomas Cook deals in Tour and travel
business so it is important to make changes as per change in government norms. It is
preferable that there must be political stability in country so that changes in policies are
less, it makes organisation to concentrate on other important activities. As change in rules
of government may make employees less energetic towards their work. According to
Low, Chen and Wu, (2011) if there are elections held in UK, then there is reduction in
prices of travels so company should also reduce their price and advertise in
newspapers,etc.
 Economic Factors- Finance is the blood for tour business. There must be expenses
related to transport, guide and accommodation of visitors (Mehandjiev and Grefen, eds.,
2010). So if there is increase in prices than profit for Thomas Cook, which may create
dissatisfaction in leaders and employees. There are many sources to opt financial
resources but there must be best option to be adopted. Thomas Cook can opt funds from
banks but bank which has lower interest rate has to be opted so that there is less burden of
interest and profits do not get much affected (Olawale and Garwe, 2010). If there is
increase in bank interest rate then organisation has to analyse other options such as share
capital, debenture, etc.
 Social Factors- These days there are changes taking place frequently. People preferences
change as per change in seasons, occasion, etc. (Onetti and et. al., 2012). Thomas Cook
must organise as per demand of customer such as destination wedding, vacations plans,
etc. if they stuck to some plans then their customer will switch to competitive firm.
Thomas Cook operates at different locations so it is important to know what the need of
society is where business operates (Palo and Tähtinen, 2011). It is not necessary that
different locations have same demand. In order to increase goodwill of organisation,
managers of Thomas Cook can plan different events happening in society, for e.g. they
sponsor Olympics. Caste, age group, family or friend group, etc. are factors which affects
the functions of tour business (Pikka, Iskanius and Page, 2011).
 Technological Factors- There is need of Upgraded technology in touring business. There
must be latest technology which is helpful in booking and solving queries of customer
(Ratten, 2011). Example- These days customer want high speed Wifi at every place and

there must be up-graduation in website of Thomas Cook if there is any query to visitor it
must be solved quickly (Reinhardt and Stavins, 2010). These days there are more trend
of e- cars, so to provide more satisfaction to customers Thomas Cook can outsource this
facility, this will help in reduction of cost and readily available service as per need
(Rosenberg, 2010).
 Legal Factors- There are many laws related to tour business related to customer security,
etc. it is important to say have knowledge about such laws and regulations and policies
must be farmed after considering such norms. Laws related to employee's, intellectual
right,etc (Rossi, Vrontis and Thrassou, 2012). There are various laws differ as per
location of business so management of concern branch has to take care of factors of legal
component. There are various acts such as equal wages act, non-discriminatory act,
consumer protection act, etc. it is important for organisation to follow them. In case of
modification in such laws then there must be change in strategies of Thomas Cook also
(Stainton, Johnson and Borodzicz, 2010).
 Environmental Factors- Tour business is not task, there are different weather conditions
in different countries (Teece, 2012). So, it is important to take care of all environmental
factors. Thomas Cook must be provide best telecommunication services so that there is
no communication hurdle among departments. These days environment is suffering from
the danger of global warming so there must be usage of such approach which are eco-
friendly, such as conversion of solar energy (Trevino and Nelson, 2016). Thomas Cook
performs CSR activities such as animal welfare, children education, etc. this will help
them to give back to society (Van Vuuren, Roberts-Lombard and Van Tonder, 2012).
There are many done in industry which pollutes the environment to reduce its effect this
organisation come with concept of carbon reduction. There are some people who want to
visit some destination but cannot afford their travelling expense due to their social
reasons then they provide assistance to them (Wack, 2017).
These are the main factors which affects negative as well as positive impact on business.
So it is important to apply on business operations. In this analysis manager can came to know
about what can happen in nearly future and they can take corrective measures to overcome them
(Welter and Smallbone, 2011). These days scope of travel business is increasing so with the help
of political factor company van know about existing competitors and who else can attack, so it

helps in generating awareness. There are different sources to perform task so there is important
role in creating services through most appropriate manner (Wirtz, Schilke and Ullrich, 2010).
This analysis will make Thomas Cook's services updated and hence get edge over competitors
and grab available opportunities. Business runs in society so it will help in up- gradation of
people residing in society, helps in uplifting living standards, removing unemployment Thomas
Group: Growing Industry, (2015).
Thomas Cook is a huge group which has research and development department that
keeps an eye on environment and tells the most appropriate manner to overcome negative results.
(Yayla and Hu, 2012). It is not necessary to adopt all the changes but to make business run in
long run and achievement of goals and objective it is necessary to modify policies (Zeng, Li and
Duan, 2012). Sometimes external environment and internal factors affects. E.g. in case of change
in technological changes employees does not prefer to learn new techniques and want to stuck to
want they learnt or they might have fear of job loss, in this case manager has to motivate and
deliver positive impact on their performance and skills (Zott, Amit and Massa, 2011).
CONCLUSION
From the above report, it can be concluded that it is important to take into consideration
all the factors of environment for smooth operations of business. There is a negative as well as
positive impact on business due to these factors. It is clear from the above discussion that
structure of organisation is also important for operations of business. It is important for top level
management to analyse the market and take corrective measures. Political factors definitely
affect the business and hence, manager has to take measures to reduce its negative impact. It is
important that environment within organisation must be good so that there is proper and flow of
communication between superior and subordinates. In case of change in policies of organisation,
to make it applied in the best manner, it must be delivered to subordinates. It is clear with the
above discussion that for growth of organisation, it is important to keep good relations with
stakeholders of company. Hence, it is clear that external forces promote the business in right
direction and it has a positive impact on organisation,s growth.

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Online
What is business environment- Definition and factors. 2018. [Online]. Available through:
<https://study.com/academy/lesson/what-is-business-environment-definition-factors-
quiz.html >.
Thomas Group: Growing Industry. 2015. [Online]. Available through:
<https://www.thomascookgroup.com/a-growing-industry/ >.