Thomas Cook collapses: Why and what happens now?

Dear experts, I need a coursework done please. I needed to choose a bankrupt company, which its mandatory to be within UK only. I have picked Thomas Cook. Please see the attached document and follow the clear instruction. Also the tutor want the analysis in the past 3 years. No pictures just graphs. microeconomic- use SWOT directors statement , profit, earnings before tax and investments pester-explain each letter, economic factors in relation to it macroeconomic employment law-minimum age according to age employment for reasons income Please check the assignment brief and follow the instruction. Also, very important, double check the turnitin to NOT appear your website. Add the cover page as well. thank you

Running Head: Economics
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Thomas Cook
ECONOMIC AND FINANCIAL MANAGEMENT
[/30/2020]
[Module Name & Code]
[Assessment Number]
[Student Number]
[Word Count]

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Executive Summary
The effective decision in the company can be taken through analyzing the economic market of
the country in which they are operating. As the market is very dynamic so there are many
contemporary issues that the companies faced. In this report, the company Thomas Cook has
taken which has collapsed due to their unstable market condition. If the company has properly
analyzed the micro and macro environment then the financial condition of the company can be
improved. The assignment relates to the economic and financial management of the company to
evaluate the performance of the Thomas Cook Company. In this report, the bankrupt company
has to be chosen in the UK so Thomas Cook has chased as it is the well-established company
which was the leading company in the UK and providing effective services globally. But due to
the increased liability of unpaid compensation, the company has decided to collapse in the year
2019.

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Contents
Introduction......................................................................................................................................3
Economic impact on business organization.....................................................................................3
Background of the chosen company................................................................................................5
Income Statement of last three years...............................................................................................5
Microeconomic impact on business organization............................................................................8
SWOT..........................................................................................................................................8
Macro-economic impact on business organization..........................................................................9
PESTEL.......................................................................................................................................9
Recommendations..........................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The business environments are very dynamic and there are many micro and macro-economic
factors that affect the business functioning. This report is about measuring the performance of
the organization that has failed in the economy of the country. The failure of the company can be
due to several factors such as due to change in political reasons, the economic conditions are not
favorable or many other factors (Ritzén and Sandström, 2017). In this report, the economic
theory will be applied and economic models will be evaluated such as PORTERS FIVE
FORCES, SWOT, PESTEL, etc. which helps in making certain decisions. In this report, the
positive and negative impact of these factors will be evaluated so that the economic performance
of the company can be evaluated.
Economic impact on business organization
There are many economic factors which affect the business organization such as due to the
interest rate, exchange rate, rate of inflation, demand and supply in the market, wage rate, etc. if
the economic conditions of the UK will be stable then the company expands to rise but if the
economic conditions are not good then it is expected that the position of the company will
decline. The interest rate in the UK and England are 0.75% which has risen from the previous
year so the economy has slowed down and it was impacting the companies. The inflation rate is
also high in the UK as it was 2.48% which was disrupting the business planning and even the
companies are making less investment. The economic growth has declined due to the rising
inflation and prices of the services and products rise in the market.

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Source: inflationdata.com
Due to the high GDP growth in the UK, the cost of doing the business also increases. The
company has borrowed the money to expand its business and it was affecting the economy. Due
to the inflation, the prices have raised in the market and due to this cost of living also expanded
(Berkowitz, et al., 2015). These results in affecting the hospitality companies as in increasing
inflation time the people used to not attain the hospitality services. Even the unemployment rate
was increasing in the market so the companies are getting the employees at lower rates to expand
their business.
The workers who are above the age of 25 in the UK are working with a wage rate of £8.21 per
hour averagely. The financial management of the companies was not effective as they are not
working relevantly with the economic conditions (Stephenson, 2014). The employment status is
changing, the liabilities and also increased for the companies which lead to the failure of the
companies. The bottom line of the companies has crossed and their unexpected expenses have
been increasing in the market which is the major reason behind the collapse of the companies.

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Background of the chosen company
Thomas cook is the tourism hospitality business that was originated in 1841 by Thomas Cook.
The company basically deals with products like Package holidays, foreign exchange, cruise lines,
passenger airlines, hotels and resorts, etc. the company also provides the services of hotels and
flights. Headquarter of the company was in London, United Kingdom (Hunter, et al., 2014). It is
the global British travel company which was collapsed and went into the liquidation. The
financial health of the company was not good so it was decided by Thomas Cook to collapse the
company in 2019.
Income Statement of last three years
By analyzing the income Statement of the last three years it was evaluated that the company has
incurred the profit in the year 2016 and 2017 but in the year 2018, the company Thomas Cook
has incurred the huge loss. The company has incurred the huge loss due to the foreign exchange
transactions and in the year 2019, they have to collapse the company to pay their debts. The cost
of providing the tourism services was enhanced and the personal expenses of also increasing. All
these expenses and cost has reduced the effectiveness of the company and it has to indulged with
the huge loss.

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Income Statement for the year 2016

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Income Statement for the year 2017

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Income Statement for the year 2018
Microeconomic impact on business organization
SWOT
Strength: The biggest strength for the company Thomas Cook was that it is the main portable
company in the UK and Europe. The company provides an extensive variety of facilities to its
customers and also gives affordable and accessible holiday packages to the customers. The

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company has a global presence and the services which are the biggest strength in giving the best
hotels, flights and resorts worldwide (Parutis, 2014).
Weakness: The brand presence of the company is limited and the competition in the market was
high so it was creating the issue in attaining the global market. The company was also not paying
compensation to the customers and they refused to pay statutory EU compensation (Medina and
Brian, 2015).
Source: BBC.com
Opportunity: The Company has a good reputation in the market and they have a global
presence worldwidely. The company can expand their business so that their share prices can be
boosted up (Mohan et al., 2014). The company Thomas Cook can digitalize its operations so that
effective penetration can be attained.
Threat: The major threat for the company is increasing competition in the market in the
hospitality industry and due to the price war their market share has been reduced. There was also

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the uncertainty in the airline sector and the liabilities of the company were also increasing as they
are not paying the compensation to the employees (Sloan, et al., 2014).
Macro-economic impact on business organization
PESTEL
Political: There are many trade barriers by the political parties which were preventing the
potential export. The income of the company was also getting affected as they have to pay high
taxes to the government. The political stability is there in the UK but due to the acts of
corruption also the performance of the company is getting affected (Pollard, 2018).
Social: The general public is more in the UK so the product offered by the Thomas Cook
Company is unable to promote the premium product. The company was losing its interest in the
target market as it were more relying on niche marketing. The company has raised concerns
related to health standards and provides effective services.
Economical: The profitability of the company was getting affected due to the high interest and
exchange rate in the economy. The company has an oligopoly market so it affects the company
to grow. The company is raising the capital ta the fair price so it was affecting the financial
market of the company (Munoz and Cohen, 2017). The company is getting a lower wage rate of
employees as the level of unemployment is high in the country.

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Source: centreforaviation.com
Technological: The company has adopted the new technology which helps the company in
monitoring its revenues and accessing its functions (Walton, 2010). The features and processes
of technology were copied by the other competitor's firms and it was affecting productivity of the
company.
Environmental: The Company deals in transportation facilities so the climate has a great impact
on the company. Due to the unexpected monsoon, the delivery date of the final products gets
impacted and a large amount of waste has to be faced (Doss, et al., 2013).
Legal: There are many ways which the company has adopted such as discrimination was, health
and safety were, etc. so it helps the company in following the ethical and social responsibility
and also providing the same opportunities for every religion and gender (Smith, et al., 2016).
Recommendations
The company Thomas Cook can analyses the dynamic environment effectively and can respond
to the changes on time. It was recommended that they pay compensation to the employees on
time so that their unpaid liability should not increase. Even the airlines were affecting the
company very much so they should make the proper plan and strategy to work effectively. The

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increasing competition was the major reason so the company should provide effective services
and products to its customers to grab the high market share (Brigham and Ehrhardt, 2013). The
company has done the poor mergers so they faced the problem with the Brexit so they should do
the merger by analyzing the other company's competitive strategy.
Conclusion
It has been evaluated that to analyses the micro and macro environment is essential for
expanding the business. In this report, the company Thomas Cook has collapsed its business as
their competition was increasing in the market so they were losing their market share and the
liability of unpaid compensation was higher. In this report, the SWOT and PESTEL of the
company have done through which it was evaluated that the company has provided good product
and hospitality services but after the merger with the other travel companies, they are not able to
manage the financial performance of the company.

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References
Berkowitz, P., Von Breska, E., Pieńkowski, J. and Rubianes, A.C., 2015. The impact of the
economic and financial crisis on the reform of Cohesion Policy 2008-2013. European
Commission.
Brigham, E.F. and Ehrhardt, M.C., 2013. Financial management: Theory & practice. Cengage
Learning.
Doss, D.A., Sumrall III, W.H., McElreath, D.H. and Jones, D.W., 2013. Economic and financial
analysis for criminal justice organizations. CRC Press.
Hall, C.M., Gössling, S. and Scott, D. eds., 2015. The Routledge handbook of tourism and
sustainability (Vol. 922). Abingdon: Routledge.
Hunter, F.R., 2014. Tourism and Empire: The Thomas Cook & Son Enterprise on the Nile,
1868–1914. Middle Eastern Studies, 40(5), pp.28-54.
Medina, L. and Brian, M., 2015. Architecture and Tourism Perception, Performance and Place.
Mohan, J., 2014. A United Kingdom?: economic, social and political geographies. Routledge.
Munoz, P. and Cohen, B., 2017. Mapping out the sharing economy: A configurational approach
to sharing business modeling. Technological Forecasting and Social Change, 125, pp.21-37.
Parutis, V., 2014. “Economic migrants” or “middling transnationals”? East European migrants’
experiences of work in the UK. International Migration, 52(1), pp.36-55.
Pollard, J.S., 2018. Brexit and the wider UK economy. Geoforum.
Ritzén, S. and Sandström, G.Ö., 2017. Barriers to the Circular Economy–integration of
perspectives and domains. Procedia Cirp, 64, pp.7-12.
Sloan, P., Legrand, W. and Simons-Kaufmann, C., 2014. A survey of social entrepreneurial
community-based hospitality and tourism initiatives in developing economies: a new business
approach for industry. Worldwide Hospitality and Tourism Themes, 6(1), pp.51-61.

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Smith, L., Rees, P. and Murray, N., 2016. Turning entrepreneurs into intrapreneurs: Thomas
Cook, a case-study. Tourism Management, 56, pp.191-204.
Stephenson, M.L., 2014. Deciphering ‘Islamic hospitality’: Developments, challenges and
opportunities. Tourism Management, 40, pp.155-164.
Walton, J.K., 2010. Thomas cook: Image and reality. Giants of tourism, pp.81-92.