Influence of Macro Environment on Business Organization

This report examines the impact of macro environment on a business organization, using TUI Group as a case study. It discusses the political, economic, social, technological, environmental, and legal factors that affect the company. It also analyzes the micro environment and capabilities of TUI, using SWOT and VRIO analysis. Furthermore, it evaluates the competitive forces in the industry using Porter's Five Forces analysis. Finally, it explores the application of various concepts and models in strategic planning for TUI.

Hospitality Business
Strategy

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
PART A...........................................................................................................................................1
Examine the influence of macro environment over business organisation.................................1
Domination of micro environment and capabilities of firm........................................................3
Evaluation of competitive forces of company.............................................................................5
PART B...........................................................................................................................................6
Application of range of concepts and models, interpret and frame strategic planning...............6
CONCLUSION AND RECOMMONDATIONS............................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
A commerce approach indicates to the actions and determinations that an organisation
makes to reach its business objectives and target and are competitive in its business sector. It can
be those activities and plans that are framed and developed by business management of an
establishment to manage and control business and appropriate operations in competitive
atmosphere (Kandampully, Zhang and Jaakkola, 2018). This written report is supported to TUI
Group which is a British-German multinational travel and tourism sector organisation. This
company was incorporated in 1923 and is headquartered in Hannover and Berlin, Germany. This
document will be explaining about impact of external environment, micro environment and
capabilities of business venture. TUI Group has implemented Porter’s Five Forces analysis
concept to evaluate competitive forces and plan of action to deal with rivalry and improve
market position and advantages. Several conceptions and concepts and tactical preparation will
also describe in context of TUI Group.
MAIN BODY
PART A
Examine the influence of macro environment over business organisation
PESTEL Analysis
This analysis defines a framework of macro-environmental components utilised in the
environmental scanning component of strategic management. It is an acronym for a tool used to
find out the external forces facing a company. The brief description of this analysis in reference
to TUI Group is as under:
Political- This component include factors like government interventions, trade
restrictions, political stability of stability, foreign trade, tax policies and many more. In TUI,
Brexit is the key component which highly affects the business in term of making change in tax
policies and government rules and regulations that directly and indirectly affect the commerce of
particular firm in unenthusiastic structure (Bratton and Watson, 2018). Political instability in
many parts of world, maximised threats of terrorism have an important unfavourable infleunce
on TUI.
Economical- It consist diverse component such as interest rate, currency rate, economic
development, exchange rate, inflation or deflation, economical recession, employment and
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unemployment rate etc. Due to Brexit the business of respective firm influence in unfavourable
manner cause of inflation. Apart from this COVID19 is another factor due to which suppliers
raise the cost of their commodities which affect economic condition of TUI.
Social- This component plays an essential function in the development and success of
organisation. It includes different factors such as culture, values, beliefs, needs, demands,
demographic factor and taste & preferences (Cheah, Ho and Li, 2018). TUI Group is focused on
customer satisfaction and managing revitalising there business strategy with changing social
values and consumer needs. The respective firm offer services as per its target audiences needs
such as now these days’ people prefer online booking so it offers online booking service to its
consumer.
Technological- It includes several factors such as technical innovation, technical
advancement, artificial intelligence, advance technology and research & development etc. In
TUI, this component impacts the commerce of respective enterprise in favourable and
unfavourable way. The organisation company is also managing a high-quality appearance and
interactive website in this reference. Online reservation service or use of mobile application also
helps in retaining customers because currently individual prefer these kinds of facilities.
Environmental- The care of environment and social responsibility are included as the
main phase of customer’s expectations. In present time consumers are highly attentive and
normally support the ventures that concern about atmosphere. This factor comprises weather,
conditions, ecological laws and others. The immense importance on CSR is one of the major
core capabilities of TUI. To attain sustainability TUI is continually developing on environmental
execution and concentrates on ISO 14001 environmental standards. The management of
respective company strongly supports the environmental protection policies such as species
protection, nature security and landscape protection.
Legal- It considers all these rules and regulations that are developed and formulated
through national authorities to that firm which operate in hospitality industry. It considers
employment act, consumer protection laws and health and safety act (Peters and Kallmuenzer,
2018). TUI’s hotels and destination agencies are subject to a number of laws and rules in the
nations in which they run and on a periodic basis, must acquire several licenses and permits. The
firm also offer protection to workers and protecting data of customer by offering protection to
them which favourably affect establishment.
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Explaination of micro environment and capabilities of firm
SWOT Analysis
It is a method and approach which is used and implemented by the administration of a
commerce firm to analyse the interior capability of administration in structure of strengths,
weaknesses, development chances and risks (Altin and et. al., 2018). The description of this
strategic structure in respect to TUI is s below:
Strengths
 Respective business firm has strong global presence which includes of immense tour
workers, 1600 travel agencies and important online portals, 5 airlines with approx 150
aircraft, more than 400 hotels and 17 cruise liners etc.
 The company also offer unique and customisable holidays to target audiences. There are
approx 50,000 employees make their contribution in running the business of respective
venture.
Weaknesses
 The main weakness of company is limited brand loyalty cause of strong competition in
market from other hospitality firms.
 The organisation operate its business internationally cause of which it suffers cultural and
social problems in administrating offices.
Opportunities
 The management of company can make development in its business by offering
applications for reservation and booking vacation.
 By starting business operations in emerging markets to tap the potential and making
development in its business.
Threats
 The major risk that is suffered through administration of TUI is pandemic of COVID19
because duet to which the trades and returns of corporation affect in negative manner.
 Changes in government policies and laws, foreign exchange risks, interest risk and
political polices of nations also generate issues for commerce of particular enterprise
(Okumus and et. al., 2019).
VRIO Analysis
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It is a tactical method and framework which is used to identify internal assets in the firm
and abilities that offered long term competitive advantages. In considers four components such
as value, rarity, inimitability and organisation (Moro and Rita, 2018). In TUI, the management
of firm can adopt this tool to analyse intrinsic resources and find out whether these assets
survived for long term in a competitive environment.
.
Resources Valuable Rare Inimitable Organisable
Brand image Yes No No No Competitive
disadvantage
Technical
capability
Yes No No No Unused parity
Financial
resources
Yes Yes Yes No Competitive
sustainable
Human
resource
Yes Yes Yes Yes Temporary
parity
Valuable- The brand image of respective firm is valuable in competitive marketplace
because its services and commodities are familiar to its target markets. The technological ad
financial resources that are used by establishment are also valuable as it use features to offer
services and operating the business for development respectively. The manpower of company
makes its effective contribution in running the business of TUI so it is valuable for it.
Rare- Technological capability of TUI is not rare because the firm utilise techniques in
its promotion activities and customer services that can also be utilised by other ventures in easier
way. Fiscal assets of respective firm are very rare as it has immense sources to raise fund and
only few companies can acquired it. Workforce of organisation is also rare as each individual has
its own capabilities and competencies.
Inimitable- TUI monetary source is extremely expensive that is complex to emulate. It will
bound new competitors and companies acquire more profitability. Technology that is utilised by
management in endorsement and contribution consumer facilities are imitate because there are
different other firm in similar industry (Ahmad, Bakar and Ahmad, 2018). Manpower of
organisation also has several complexities and information which is not easier to copy by others.
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Organisable- The financial resources of business firm are administrated to incarcerate the
worth because the company use assets deliberately and devote on accurate position as this will
produce development chances and reducing threats (Font and Lynes, 2018). By organising
teaching, learning and expansion programmes, the employees and manpower of TUI can be
managing and controlling through the management of respective company in efficient mode.
Evaluation of competitive forces of company
Porter’s Five Forces Analysis
This strategic tool is used through an establishment to analyse the rivalry in a scrupulous
business sector in which corporation running its trade. The method of five force analysis is
framed by Michael Porter in 1979 to comprehend the five rivalry components that affect the
business of a sector. This framework fundamentally implements with establishment to recognize
a commerce industry’s organization to decide the business plan of action. The brief explanation
of this technique in reference to TUI is as below:
Threats of new entrants- The hotel sector globally classified by high capital costs i.e. the
total fund that is required to project a commercially operable position. To ascertain commerce in
respective business sector is not easy as there is need of large amount of capital and there are
numerous government laws and regulations that are obligatory to deem in form of protection and
safety of target audiences and many more. Apart from this effective running of business in this
industry, gaining consumer trust ad loyalty is also hard so that risk of new entrants is low for
TUI group.
Bargaining power of suppliers- The authority of dealers over hospitality sector is
comparatively low. Hotel sector is only subjected to the influence of the labour, skilled
workforce and the industry has an immense obligation of them. Hotel firm like TUI are not
subjected to the negotiate supremacy of providers and it has less and roundabout power of their
rivalry. For a sustainable commerce plan of action over long term a hotel will have to preserve a
enduring comfortable recompense over possible competitors in advanced tactical groups.
Bargaining power of buyers- When the attentiveness of buyers is high than the market
players then the trade sector is subjected to the immense authority of purchasers. In hotel sector,
convinced units of purchasers exercise capability over the business when the sales of hotel rooms
in bulk are required (Murphy and et. al., 2018). These units contain home and global airlines,
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tour operator and standard organisers and the hotels are in force to administrate their brand
individuality.
Threats of substitutes- This factor influence the business of hospitality sector companies
like TUI lees and the risk of substitutes is comparatively less. Individual searching for cheap
lodging that can easily opt to live in hotels, motels and relatives like TUI utilise competitive
pricing strategy use to which this threat less influence the business of company (Melissen and
Sauer, 2018). This market is price sensitive and the hotel’s target audiences become the cost
aware people. However, in case of lodging, large number of people such as travelling group and
business travellers. The hospitality firm does not suffer a threat of alternative however it faces
competition of separation.
Rivalry among existing competition- The competition in hotel sector is high as the cost of
product and services separation and switching cost is low. The business growth requirement is
greater than the rate at which the business is improving. TUI is an origination where there is high
cost of capital, the force to sell the ability by price cutting is high and rivalry becomes strong.
There are number of hotel industry companies such as Marriott, Holiday inn, Intercontinental
and many others that are generating high degree of competition regarding TUI Group.
PART B
Application of range of concepts and models, interpret and frame strategic planning
To sustain and survive in rivalry marketplace, environmental analysis is crucial for each
company so that it can run its business in right direction and attain its set business aims in
granted time duration. In term of make growth and development, the administration of TUI can
adopt Ansoff matrix which is formulated for the development of company. This model considers
four strategic directions and the description of them as under:
Market penetration- It is the foremost growth option which can be implemented to increase
the sales of firm (Law and et. al., 2018). In reference to TUI, the administration can accept this
development strategy as there is not risk because existing goods and services are offered to
customer of exiting market by making innovation in promotional tools and changes in pricing
strategies with the purpose of increase sales and profits.
Product development- It is another strategic option of development which can be accept
by TUI with the purpose of maximising customer base and increasing profits as well as
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improving bran image. This strategic direction is risky than market penetration as in this new
products and services, are launched in to existing market so it is not sure that people will these
innovative commodities and facilities, by executing research and development to produce new
goods and facilities to offer in current marketplace.
Market development- In this growth option, the company can attain development by a new
market with its existing facilities and products. In TUI, the firm can make expansion in its
business in developing nations like Asia, Africa and China etc. so that it can increase its sales
and improve market position by providing its services in that market as per necessities and
demands of consumers of that country (Boella and Goss-Turner, 2019). This plan of action is
risky more than product development as the business makes expansion to new market so it is
hard to analyse about the needs of customers that facilities will provide satisfaction to them.
Diversification- This development and strategic option is highly risky as by accepting this
strategic direction, the company can offer its new product and facilities in to new market so it is
not ensure that innovative commodities and services of TUI will liked by consumers of new
marketplace. This growth strategy can be accept by establishment to maximise sales and profit
margins, improve customer base and development in productivity of business firm.
From the above mentioned information, it has been justified that this concept is crucial for
the development and growth of business. In TUI by adopting Market development option, the
management of firm can make expansion in developing nations like Asia, Africa and China etc.
It will assist in improving its profit margin ratio, brand image and market position.
Strategic Management Plan
Background- Strategic management plan indicates to a written document that can be develop
and accept by organisation to communicate and help in framing aims, plan of action and setting
priorities etc. this document consider information about strategies, objectives and tactics of
making improvement in business. TUI is a British-German hospitality company which operate
its business globally more than 50,000 employees and number of locations (Ivanov and Webster,
2019). The explanation of this strategic plan in reference to market development option in
developing nation like Africa, China, Asia etc.
Mission- The main motive of this company is to connect holidaymakers to good causes, the
company foster education and the wellbeing of children and youth, the protection of nature and
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environment and the favourable influences of tourism on individual and places in destinations
cross wise the world.
Vision- The purpose of the organisation is to discover the world’s diversity, exploring new
horizons, experiencing foreign nations and cultures, travel broadens individual’s minds
(Kandampully, Zhang and Jaakkola, 2018).
Objective- The SMART objective of TUI Group is as under:
 To increase the sales of the firm by 8% within 10 months by offering effective lodging
facilities.
 To maximise 6% profitability of business organisation within next 11 months by making
expansion in business in new market place.
Strategies- It refers to those activities and plan of actions that are used and implemented by
Business Company make growth in business and improving bran image as well as market
position of business venture. The explanation of some strategies as below that can be adopt by
respective firm
STP- It indicates to segregation of marketplace as per demographics like age, sexual category,
education, occupation and livelihood, geographic by country and state, psycho graphically like
thoughts, standards, threat and others. When TUI will enlarge in new marketplace then it can
segmented consumer on the base of cost cognisant team. They can aim all income group people
by using effective pricing strategies in term of business expansion. Respective organisation deals
in hospitality sector and providing accommodating services to its target audiences so the venture
concentrates on its consumers and their choices. TUI has a good market position but making
more improvement it can use innovative technology in term of online booking and reservation
etc.
Marketing mix- By adopting this plan of action, the firm can provide brief information
about its products and services in to new market under product option of this strategy. In price
factor it can describe its cost and pricing strategies and the area where it operate as well as online
accessibility options can be explain under place component. In promotion aspect, it can define its
marketing channels where from information about organisation is available.
Implementation- By adopting these appropriate tools and strategies, the administration can
effectively get attention of consumers by defining its products and services (Bratton and Watson,
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2018). These tools also help in increasing number of consumer, sales and enhance productivity
as well profit margin ration.
Evaluation- It can be analysed that if the management of TUI will accept and implement these
strategies then the company can attain it’s establish aim and objective adequately. In it, the firm
can measure that the plan of actions are implement in accurate form or if there are any kind of
issues are occurred then they can be resolved on time so that they can not affect other area of
business in unfavourable manner.
CONCLUSION AND RECOMMONDATIONS
This has been summarised form the above mentioned content that business strategies refer to
effective plans and activities that are perform through administration for efficient organization of
corporation. By using different external and internal environmental models like PESTEL and
SWOT analysis, the impact of extrinsic factors and capability of intrinsic atmosphere can be
determine. VRIO analysis assists in analysing capability of business and by implementing
Porter’s five force analysis level of competition can be determined. Ansoff matrix and strategic
management plan assist in making development in business and improvement in its business
operations in effective manner.
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REFERENCES
Books & Journals
Kandampully, J., Zhang, T.C. and Jaakkola, E., 2018. Customer experience management in
hospitality. International Journal of Contemporary Hospitality Management.
Bratton, J. and Watson, S., 2018. Talent management, emotional labour and the role of line
managers in the Scottish hospitality industry. Worldwide Hospitality and Tourism Themes.
Cheah, S., Ho, Y.P. and Li, S., 2018. Business model innovation for sustainable performance in
retail and hospitality industries. Sustainability, 10(11), p.3952.
Peters, M. and Kallmuenzer, A., 2018. Entrepreneurial orientation in family firms: The case of
the hospitality industry. Current Issues in Tourism, 21(1), pp.21-40.
Altin, M. and et. al., 2018. Performance measurement and management research in the
hospitality and tourism industry. International Journal of Contemporary Hospitality
Management.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Moro, S. and Rita, P., 2018. Brand strategies in social media in hospitality and
tourism. International Journal of Contemporary Hospitality Management.
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Ahmad, S.Z., Bakar, A.R.A. and Ahmad, N., 2018. An evaluation of teaching methods of
entrepreneurship in hospitality and tourism programs. The International Journal of Management
Education, 16(1), pp.14-25.
Font, X. and Lynes, J., 2018. Corporate social responsibility in tourism and hospitality.
Murphy, K. and et. al., 2018. A review of high performance work practices (HPWPs) literature
and recommendations for future research in the hospitality industry. International Journal of
Contemporary Hospitality Management.
Melissen, F. and Sauer, L., 2018. Improving sustainability in the hospitality industry. Routledge.
Law, R. and et. al., 2018. Systematic review of hospitality CRM research. International Journal
of Contemporary Hospitality Management.
Boella, M.J. and Goss-Turner, S., 2019. Human resource management in the hospitality
industry: A guide to best practice. Routledge.
Ivanov, S. and Webster, C. eds., 2019. Robots, artificial intelligence and service automation in
travel, tourism and hospitality. Emerald Publishing Limited.
Online
About TUI Group. 2020. [Online]. Available Through: < https://www.tuigroup.com/en-en/about-
us/about-tui-group>.
Analysis of The TUI Group. 2020. [Online]. Available Through: <
https://www.ukessays.com/essays/tourism/an-analysis-of-the-tui-group-tourism-essay.php>.
TUI Travel SWOT Analysis. 2020. [Online]. Available Through: <
https://www.mbaskool.com/brandguide/tourism-and-hospitality/13802-tui-travel.html>.
Porter’s Five Force Model of Hotel industry. 2020. [Online]. Available Through:
<https://www.porteranalysis.com/porters-five-forces-model-of-hotel-industry/>.
Ansoff Matrix. 2020. [Online]. Available Through: <
https://www.tutor2u.net/business/reference/ansoffs-matrix>.
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