Financial Analysis and Business Development Strategy for Thomas Cook

Based on the provided content, this summary aims to provide a brief overview of the projected financial performance and potential growth of Thomas Cook's travel agency business. The report highlights the company's strong potential in the tourism industry, with projected profits increasing from £23,000 in Year 1 to £615,200 in Year 3. The main sources of finance for the agency are expected to be bank loans and owner capital. The report also emphasizes the importance of a clear vision, hard work, and strategic planning in achieving business growth. The overall conclusion is that Thomas Cook's travel agency has tremendous potential for growth, with opportunities for expansion and diversification.

Travel and
tourism
entrepreneur
1

TABLE OF CONTENTS
Introduction .....................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Skills required to become a successful entrepreneur ...........................................................3
1.2 identification of my strength and weakness .........................................................................4
Task 2 ..............................................................................................................................................5
2.1 Business development strategy of Thomas Cook..................................................................5
2.2 Success of Thomas cook's business.......................................................................................6
3.1 Sources of funding ................................................................................................................6
3.2 Justification of the success ....................................................................................................8
3.3 Effective business plan..........................................................................................................8
Conclusion ....................................................................................................................................10
References......................................................................................................................................11
2

INTRODUCTION
In modern era, travel and tourism sector is considered as one of the most potential and
growing sector of the world. Further with the increase in number of tourist year after year, this
sector provides enormous opportunities for growth and development. The present report
demonstrate skills required to become a successful entrepreneur in travel and tourism sector.
Along with this, the report also explains the business strategy which has been chosen by Thomas
Cook to become one of the most successful entrepreneur. Further this report also demonstrate an
operation plan and financial projection with regards to my new business of online travel agent.
TASK 1
1.1 Skills required to become a successful entrepreneur
A entrepreneur is the one who takes financial risk and starts a business. In order to
become a successful entrepreneur lot of skills and efforts are required (Komppula, 2014). The
process starts with generation of idea and then converting it into an profitable business. I have
personally observed that the travel and tourism industry has very potential opportunities for a
business to grow and develop. Due to this reason I am planning to start an online travel agency,
in which I will provide various tour and travel related services to people. The skills which I will
need in order to achieve success in this industry are below stated as:
Skills
required
Description Rank/Rating
Decision
making skills
As a entrepreneur I will be required to make most
effective and appropriate decision at regular intervals and
thus decision making skills are one of the most essential
skills.
9
Time
management
skills
Time management skills will assist me in organizing and
scheduling of tours in best possible manner. It will also
support me in managing my time in effective manner.
7
Market The competition among businesses in travel and tourism 8
3

research sectors is so intense that in order to survive I will be
required to deliver services only as per the need and
trend of market. Therefore, market research skills are
essential to become a successful entrepreneur
Traits required to become successful
Traits required Rank Importance of the skill
Risk taker 9 To become a successful entrepreneur I will be
required to take a lot of risk in order to make
bold decision. Therefore, one needs to have risk
taking abilities in order to become successful.
Self Confidence 8 During the initial stages it may happen that I do
not receive expected response from people with
regards to services which I am going to offer. In
such hard times self confidence is very essential
to become successful.
Hard-working 9 Success can be achieved only through efforts and
hard work. I need to focus on my goals and need
to work hard to achieve them.
1.2 identification of my strength and weakness
Strengths
 My strength is that I am not afraid to
take risk and it has always helped me
to achieve my objectives easily.
 I am very good at decision making and
have the abilities to make the best
Weakness
 I am not having skills regrading market
research which can create barriers in
my growth and development
 Less experience of travel and tourism
industry is also one of my major
4

decision based on situations.
 I also posses effective communication
skills which makes it very easy for me
to deliver my ideas and messages to
others.
weakness.
TASK 2
2.1 Business development strategy of Thomas Cook
Thomas Cook is considered as very successful brand name in the travel and tourism
industry of the world. The group is provides various kind of travel related services and it is also a
listed enterprise in London Stock exchange. It was the efforts and hard-work of a single person
names Thomas Cool who is the founder of Thomas Cook group (Hallak, Brown and Lindsay,
2012). He was the first child of Elizabeth and John, who was born in the year 1808. At the age of
3 years, he lost his father and his mother got remarried. When Thomas Cook was 10 years old,
he started to work as a garner in local market and after that he also worked as a cabinet marker
(Hartman, 2011). During his childhood days only Thomas was well equipped with the qualities
such as hard working and dedicated towards his works. Along with this, start from the beginning
he was always in favor of education and has always promoted the same.
The story of founding Thomas Cook company begins when Thomas Cook was waking on
the roads of Leicester and got a idea to merge the power of railways and locomotion's. He
through that this will be a great social reform and will support the development of society. He
called a meeting and presented an idea of starting a train from Leicester to Loughborough
(Gustafson, 2012). All the people which were the part of meeting appreciated the idea and efforts
of Thomas cooks. Further the train was arranged and it was the beginning of his such a big
empire. This idea became great success for Thomas Cook and after this a series of trains were
arranged between Birmingham Leicester, Derby and Nottingham (Thomas cook, 2015). The trip
which he arranged to Liverpool in 1845 is termed as his first commercial venture. One of the
most impressive thing about him was that rather than focusing on one single venture he always
looked for diversified areas (Pritchard and Howard, 2015). The development of his business was
5

only because of his risk taking abilities, innovative thinking and efforts. Most of the time
Thomas Cook was in the favour of participative style of leadership where he used to encourage
the views and suggestions of employees towards accomplishment of the aim of business.
2.2 Success of Thomas cook's business
Thomas Cook was achieving success year after year and in the year first ten years only
his company grown really when in areas of UK. Further he not restricted his vision and was
looking forward to start his operations in Europe also. He saw a great opportunity in one of the
international exhibition which happen in Paris during those days. Thomas Cook tried to
communicate with the companies but his offer was rejected. But rather than taking this rejection
in negative manner and getting dispersed he started focusing on other alternatives. The route
between Harwich and Antewerp was another opportunity lying in front of Thomas Cook and he
grabbed the same. On the other hand, he also started escorting people as a tourist to Europe. He
never stopped and always tried to expand his operations in different countries of the world.
Task 3
Business objectives and goals
I am looking forward to start my own online travel agency and want to become one of the
best and most successful UK's online travel service provider. Establishing a new business is not
easy and I need to put lots of time and efforts to achieve success. Some of the objectives of my
online travel agency which I have developed are stated below as:
 To attain high level of customer satisfaction
 To carry out enormous advertisement and promotions
 To deliver high quality and effective services to tourist
 To grow with the rate of 10% every year
All these objectives can be achieved only with hard work and efforts. I need to stay
focused on my goals and objectives. Along with this, I am required to always stay positive and at
every level I need to ensure that my services quality is the best among other players in market. I
am well aware of the fact that the level of competition is very high and in order to gain
competitive advantage, creativity and innovation in services is also required.
6

3.1 Sources of funding
Every individual is required to define what are the sources of finance or funding is
available to them (Peters and Schuckert, 2014). Further a new venture always require lot of
human and financial resources during its early stages. I am planing to start an online travel
agency. The reason why I have selected this business is that the use of internet is increasing day
by day. In addition to this, the scope of online travel agents is also very high. In this process I
will establish a online website through which I will be promoting and providing travel related
services. What I will also tie up with various hotels and airlines in order to make sure that my
services run smoothly. I have personally observed this thing that all the travel agents are
providing same kind of services to guest. Rather than providing common services I will be
focusing on three main areas which are adventure tours, wild tours and honeymoon tours on
romantic destination. I will also carry out promotional activities on social media sites such as
Twitter and Facebook.
Sources of finance
Before starting my travel agency I need to identify and evaluate various sources from
where I can raise funds fro my new venture. The sources are mentioned below as: Bank loans- I can get finance from various banks of UK in order to establish my
business. Further I think that it is one of the best option available as I will easily get funds
and I will require to repay that amount in installments and with interest. Venture capital- It is a process in which some investors, invest in your project by
providing required amount of funds (Hall and Page, 2014). Mostly such kind of capital is
provided by parties or individuals. I think that getting funds in terms of venture capital is
not a good option for me because in such kind of funding a person is required to pay low
interest in initial stage but when the business grow, one needs to pay very high interest.
 Owner capital- It is the source in which the business owner invest his own money in the
new project (Kim, Kim and Han, 2007). When I got this plan of establishing a travel
agency, I have started to save money and arrange finances. This is also a very good
source of funding as I wont be required to pay any kind of interest and there won't be any
kind of pressure on me regrading repayment of the amount.
7

After identification and evaluation of various sources of finances, I think that owners
capital and bank loans will be the best ways of getting funds. In addition to this, 30% of the
funds will be raised by me and the remaining 70% will be taken as a bank loan.
3.2 Justification of the success
After the analysis of market, I have observed that rather than looking forward to satisfy
the need and demand of all the people in market, it is better to satisfy the needs of particular
market segment. Most of the youngsters in schools and colleges seeks for wild and adventurous
tours but they are not able to find a travel agent who can satisfy their need (Charypar and Nagel,
2005). I will not provide any kind of holiday packages but will focus on satisfying the needs of
the above stated people. I will offers wild and adventures tours which will be also considered as
my specialty. Along with this, I will be also providing separate honeymoon packages for
couples. This will help me to cover one more market segment and grow in effective manner. My
plan can be termed as suitable, affordable and feasible in every aspects. It is suitable because
there are no entry barriers in travel and tourism industry. Further I have observed that there are
potential opportunities for growth and development in this industry. On the other hand, it is
affordable because I wont have any kind of problem in arranging finances and banks will easily
get agree to finance my venture. In the end, it is also feasible because I wont have any kind of
difficulties in executing my project.
3.3 Effective business plan
A business plan has been developed by me in order to start my travel agency. The plan is
discussed below as:
 Business concept- The entire concept of my business will be unique and creative. I am
not going to focus on satisfying the need of entire market and I would concentrate on
meeting the specific needs of people in market. I will create an online website through
which I am going to promote and sell travel related services. I will be focusing three main
areas which are wild tours, adventurous tours and honeymoon packages. The package
will include food, accommodation and transportation.
 Products and services characteristic- At the time of delivering services I will always
make sure that they are unique and innovative. I will select most wildest and adventurous
places for my packages. During the initial level I will charge nominal process and various
8

discounts and schemes will be also provided. In order to gain high degree of customer
satisfaction I need to ensure that satisfactory services are provided to them. Along with
this the customer is going to always find the services as value for money. Market potential- Travel and tourism industry is highly potential and this statement can
be justified by the fact that it contributes more than 8% of the UK's total GDP (Travel
Statistics for Tour Operators, 2015). Most of the business which are operating in this
industry are growing with a very good pace. The market is also full of potential
customers and not they have started to purchase travel related services (Wolfe, Hsu and
Kang, 2005). Other than this, the students in schools and colleges are fond of wild and
adventurous tours. Thus, I have an opportunity to target these people by providing them
with such kind of tour packages. UK is also considered as eight largest destination in
terms of number of travelers (Zhang and Zhang, 2006). This fact also reflects how
potential the market and the industry is.
Plan for operations
I have also developed an operational plan for my business. The plan is below discussed
as:
 Identifying the needs of people- In order to become successful in market, each and
every entrepreneur is required to deliver services as per the need of market (Mancini,
2012). Therefore, during the initial stage of my operational plan, I am going to identify
what are the need and demand of people in market. At the regular intervals I will be
modifying and making changes in my existing services. This will help me in achieving
higher sales and profitability.
 Pricing- The price of tour packages will depend on the nature of the package which the
customer has opted for. Further during the initial level, the prices will be nominal which
will assists me to penetrate the market. Other than this, discounts and loyalty bonus will
be also provided to customers in order to encourage repeat purchase from them.
 Planning the tours- the third step of my operational plan will be of planning of tour in
which I am going to make arrangements for food, accommodation and transportation. I
am also going to book the tickets for the places where the customer wants to visit.
9

 Briefing them about the tour guidelines- I will be going to provide the customers with
tour guidelines which very customer will need to follow. It will contain some rules and
regulation which needs to be addresses by the travelers.
 Implementing the plan- It is the final stage in which the tour will begin as per schedule.
Further there will be a tour guide assign for tours such as wild and adventurous tours.
After completion of tour I will personally take feedback from the guest and will work
upon the feedback provided by them.
Financial projection
Projected Cash flow
statement
Particulars Pre-operating year (£)
Year 1
(£)
Year 2
(£) Year 3 (£)
Cash Inflow
Opening balance 0 11000 34000 69680
Cash sales 0 350000 420000 504000
Bank Loan 100000 0 0 0
Owner's capital 150000 0 0 0
Total Cash Inflow 250000 361000 454000 573680
Cash outflow
Fixed Assets 100000 0 0 0
Infrastructure 80000 0 0 0
Market research 5000 0 0 0
Legal charges 1000 0 0 0
Cost of Tourist services 0 175000 210000 252000
Marketing &
Advertisement 15000 6000 6300 6615
Website & Mobile app 5000 5000 5250 5512.5
Office &
Administration Exp. 18000 5000 5250 5512.5
Salary 0 120000 132000 145200
Interest 0 10000 10000 5000
Misc. Expenses 15000 6000 6600 7260
Tax 0 0 8920 15380
Total Expense 239000 327000 384320 442480
Closing Cash Bal. 11000 34000 69680 131200
10

Projected Profit & Loss
Account
Particulars Year 1 (£) Year 2 (£) Year 3 (£)
Sales 350000 420000 504000
Less: COGS 175000 210000 252000
Gross profit 175000 210000 252000
Less: Operating Expenses
Marketing & Advertisement 6000 6300 6615
Website & Mobile app 5000 5250 5512.5
Office & Administration Exp. 5000 5250 5512.5
Salary 120000 132000 145200
Misc. Expenses 6000 6600 7260
Total operating expenses 142000 155400 170100
Operating profit 33000 54600 81900
Less: Interest 10000 10000 5000
Profit before tax 23000 44600 76900
Less: Tax 0 8920 15380
Net Profit 23000 35680 61520
Projected Cash flow
statement
Particulars Pre-operating year (£)
Year 1
(£)
Year 2
(£) Year 3 (£)
Cash Inflow
Opening balance 0 11000 34000 69680
Cash sales 0 350000 420000 504000
Bank Loan 100000 0 0 0
Owner's capital 150000 0 0 0
Total Cash Inflow 250000 361000 454000 573680
Cash outflow
Fixed Assets 100000 0 0 0
Infrastructure 80000 0 0 0
Market research 5000 0 0 0
Legal charges 1000 0 0 0
Cost of Tourist services 0 175000 210000 252000
Marketing &
Advertisement 15000 6000 6300 6615
Website & Mobile app 5000 5000 5250 5512.5
Office & 18000 5000 5250 5512.5
11

Administration Exp.
Salary 0 120000 132000 145200
Interest 0 10000 10000 5000
Misc. Expenses 15000 6000 6600 7260
Tax 0 0 8920 15380
Total Expense 239000 327000 384320 442480
Closing Cash Bal. 11000 34000 69680 131200
CONCLUSION
From the above report it can be concluded that the travel and tourism industry is very
potential. After assessment of the business development strategy of Thomas cook, it can be
concluded that in order to grow one has to possess a clear vision and need to be very
hardworking. Furthermore, it can be concluded that bank loan and owner capital are the two
major sources of finances which I am going to use for my online travel agency.
12

REFERENCES
Books and journals
Bailey, M., Mendez, J. and Zhai, J., 2014. Leadership Profile: Conrad Hilton. Perspectives in
Asian Leisure and Tourism. 2(1). pp. 8.
Charypar, D. and Nagel, K., 2005. Generating complete all-day activity plans with genetic
algorithms. Transportation. 32(4).pp.369-397.
Gustafson, P., 2012. Managing business travel: Developments and dilemmas in corporate travel
management. Tourism Management. 33(2). pp. 276-284.
Hall, M. C. and Page, S. J., 2014. The geography of tourism and recreation: Environment, place
and space. Routledge.
Hallak, R., Brown, G. and Lindsay, N. J., 2012. The Place Identity–Performance relationship
among tourism entrepreneurs: A structural equation modelling analysis. Tourism
Management. 33(1). pp. 143-154.
Hartman, R., 2011. Leaders of the Hospitality Industry. Da Vinci’s Vault, 68.
Kim, D. J., Kim, W. G. and Han, J. S., 2007. A perceptual mapping of online travel agencies and
preference attributes. Tourism management. 28(2). pp.591-603.
Komppula, R., 2014. The role of individual entrepreneurs in the development of competitiveness
for a rural tourism destination–A case study. Tourism Management. 40. pp. 361-371.
Mancini, M., 2012. Access: Introduction to travel and tourism. Cengage Learning.
Peters, M. and Schuckert, M., 2014. Tourism Entrepreneurs' Perception of Quality of Life: An
Explorative Study. Tourism Analysis. 19(6). pp. 731-740.
Pritchard, M. P. and Howard, D. R., 2015. Measuring loyalty in travel services: A multi-
dimensional approach. In Proceedings of the 1993 World Marketing Congress (pp. 120-
124). Springer International Publishing.
Wolfe, K., Hsu, C. H. and Kang, S. K., 2005. Buyer characteristics among users of various travel
intermediaries. Journal of Travel and Tourism Marketing. 17(2-3). pp.51-62.
Zhang, Y. J. and Zhang, R., 2006. What affects travellers' preference of e-travel or traditional
travel agencies: an empirical study. International Journal of Services and Standards.
2(4). pp. 385-399.
Online
Thomas cook. 2015. [Online]. Available through: <https://www.thomascook.com/thomas-cook-
history/>. [Accessed on 4th December 2015].
Travel Statistics for Tour Operators. 2015. [Online]. Available through:
<https://www.rezdy.com/resource/travel-statistics-for-tour-operators/>. [Accessed on
4th December 2015].
13