Impact of Business Environment on TUI Group: Analysis of Covid-19 Pandemic and UK Government's Recovery Plan

This report analyzes the impact of business environment on TUI Group due to Covid-19 pandemic and UK government's recovery plan. It covers internal and micro-environment, STEEPLE factors, and concludes the importance of analyzing business environment.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................2
SECTION 1......................................................................................................................................2
Background Information About TUI Group...........................................................................2
SECTION 2......................................................................................................................................3
The impacts of the Covid-19 Pandemic on TUI Group’s internal environment....................3
The impacts of the UK government’s recovery plan on TUI Group’s internal environment.4
SECTION 3......................................................................................................................................4
The impacts of the UK government’s recovery plan on TUI Group’s micro-environment...4
Impact of Covid – 19 on TUI's micro-economic environment:.............................................5
SECTION 4......................................................................................................................................5
The impacts of STEEPLE factors on TUI Group’s operations..............................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
1

INTRODUCTION
All the internal and external forces which can affect the decisions and operations of the
company including employees, customers, management, supply and demand of the product
called Business environment (Bao, 2019). The main objective of this report is to determine the
importance of the analysis of business environment by the organisation that how business
environment can affect the operations of the business from inside and outside if they did not
analyse or evaluate the environment properly.
Internal business environment refers to those factors which can affect or change the
decisions of the business from internally called Internal business environment. Some of these
factors are members, culture of the organisation, work process etc. Members can be related to the
business directly and indirectly such as Employees, owners, shareholders, investors, managing
director, board of directors. These factors can be controlled by the organisation and they change
their functions also so that the businesses can make the decisions whatever they want.
Micro business environment is related to those factors which can affect directly to the
business such as competitors, suppliers, market mediators, and customer of the business.
Macro Business Environment refers to those determinants which can influence the decision
making of the businesses and these factors cannot be able to control by the control by the
organisation (Bhatnagar, 2019). Some examples of these determinants are political and legal
actions, new tax policies, demographic conditions, technological changes etc.
SECTION 1
Background Information About TUI Group
The TUI Group which is based in UK and founded on 1 September, 1923. This company
is also known as Tourism Union International. This company provide tourism packages to their
customers and also facilitate cruises or flights for their vacations the consumer can use their
services by help of contacting with their agencies. This company have over 1,800 agencies which
provide their services all over the world. This Group is very big and also operating their
businesses in different industries like Tourism, Aviation, Hospitality etc. Their aircraft and
charted plains are flying in more than 180 destinations worldwide. UK and France are biggest
and fastest growing market for TUI. They have 30 million customers worldwide which proves
their dominance in this industry. This organisation has own TUI airways, TUI fly, TUI fly
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Belgium, TUI fly Netherlands, TUI fly Nordic and also acquired 2 companies and the most
recent one is Musement which was bought on 14 September, 2018. This Musement company
also engage in the activities of tours, ticket or just ideas of night-out (Centobelli, and et.al.,
2020). The revenue of the TUI Group in 2021 was € 4,731.6 million and suffer operating loss of
2,012.8 € million (euros) and net loss of 2,075.5 million euros. Maximum number of shares of
this group are hold by Unifirm limited which 27.2%, Severgroup LLC-3.7%, Riu Hotels2.2%
and private and institutional investors is 66.9%. There are 50,584 people work in this company
as an employee and operating the business activities smoothly and efficiently because there is no
middle man between the lower level management and top level management by the help bothy
them can communicate with each other and reduce the chances and situations of the confusion in
the organisation that's this Group is able to maintain their position in the market since 1923.
The main competitors of this Group are Transat, Thomas Cook groups Sunwing, Dart
group, Sealink Travel group, flight centre travel group, lastminute.com, Holiday break, etc. All
these companies are also reasons for their losses because they take their so price low which
attracts the consumer and they easily get shift towards their services. And the another reason for
their loss is being a tourism brand they face a problem in managing the offices due to the cultural
and social activities of the businesses.
SECTION 2
The impacts of the Covid-19 Pandemic on TUI Group’s internal environment.
This Covid-19 pandemic affects every industry whether it's tourism, manufacturing,
construction, trade, transport etc. But the industry which have a major impact of this pandemic is
tourism industry because during Covid-19 most of the countries have a lockdown situations and
due to this most of the countries imply ban on the on those flights which are come from another
country due to this the tourist was not able to travel in other countries as a result many people
lost their jobs who are employed in the Tourism company because Tourism companies are not
able to pay them their salary and wants to reduce their cost so that they can maintain their
positions in the market(Hossain, and et.al., 2020).
TUI Group which is completely engaged in tourism sector also get affected by the Covid-19
which can be proved by their annual reports of last three years in which they have only suffer
loss Because the customers have cancelled their booking and ask their refunds from the company
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which leads to decreasing in cash reserves and they don't able to cover their fixed costs like
maintenance of the aircraft and cruises which contains a very big amount. So to tackle these
situations TUI provide 20% extra discount to their customer if they rebook their ticket from them
and also provide some offers in their hotels so that the customer can attract towards them. All
these offers did not affect in short-term period but their affects can be seen in long-term that's
why this company is still suffering from loss even after two years.
The impacts of the UK government’s recovery plan on TUI Group’s internal environment.
To get back the economy on track of the country UK government makes a recovery plan
in which they know if they want to get back their economy they have to give support to their
industries so for giving support they reduce the tax burden of the industries which helps the
industries to take their price low for the consumers so that they can attract the consumers towards
their services and the industries like TUI also starts to get their position back in the market. With
the help of this plan the consumer also get some advantage (Lu, Papagiannidis and Alamanos,
2018).
So, as a result it can concluded that they recovery plan of the government was very helpful for
the TUI group due to this they increase their sales to some point but still they have to make the
new strategies so that they can bring back their legacy in the market again.
SECTION 3
The impacts of the UK government’s recovery plan on TUI Group’s micro-environment
TUI Group have a positive impact of the government recovery plan due to this plan both
the main components of micro-environment whether it's internal and external are started working
properly which helps the organisation to do their operation smoothly without any rigidity. By the
help of this recovery plan TUI Groups provide various kinds of offers to their customer so that
they can increase their revenue and productivity and consumer also enjoy their services at low
price (Miri-Lavassani and Movahedi, 2018). The another positive impact of this plan is that due
reduction in the taxes and increasing in revenue and sales the TUI group starts recruiting of their
ex-employees in organisations. By the help of which they organisation can achieve their target
and also recover the losses which they suffer during Covid-19. The investors who withdraw their
money during Covid period to save themselves from loss also starts re-investing their money in
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the organisation through which the organisations can expand their operational activities all over
the world.
All micro-environment's components of the TUI Group's such as Customers, Investors,
Government policies, Employees etc. helps the organisation to grow and improve their
businesses activities. And also have a positive impact of the government recovery plan.
Impact of Covid – 19 on TUI's micro-economic environment:
Micro-economic environment of TUI Group have a very drastic impact of Covid-19
because of the lock down and Quarantine situations in many countries and the tourists are not
able to come in UK due to this, the TUI group is not able to render their services to their
costumer and it leads to loss suffer by the organisations, low availability of cash, discontinue of
their business activity as a result their fixed costs are increasing continuously like maintenance of
cruises, air-crafts, and hotel management costs like electricity bill, payments to employees and
many others (Nataliia, Dmytro and Igor, 2018). So to tackle all these conditions the TUI group
starts reducing their costs by removing their employees and paying half amount of salaries to
them so that the organisation can be able to pay their fixed costs in the organisation. The
shareholders and creditors starts recollecting their money from the company so that they can save
that money from any kind of loss.
SECTION 4
The impacts of STEEPLE factors on TUI Group’s operations.
To analyse TUI Group’s macro environment organisation use STEEPLE analysis:
 Social Factors- It include the taste, preferences, culture and attitude of the people in the
country so the organisation have provided their goods and services according to the
customer. By the help of STEEPLE analysis, the TUI group starts providing their
services according to the culture and nature of the country which also leads the
organisation to get success in their strategies and helps them to analyse the mistakes
which they have done in their past.
 Technological Factors- TUI Group is engage in the tourism segment which contain air-
crafts, cruises, and luxurious hotels and all these facilities helps the organisations to grow
their business. The facilities which they provide also have to be update because an
updated versions bring comfort and safety both. The technological elements that are
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concerned in the STEEPLE analysis are the advancement and trends of the technologies,
activities for research and development, automation, technological incentives, and the
rate of change in the latest technologies (Slagmulder and Devoldere, 2018).
 Economical factor- It refers to those factors which cannot be able control by the
organisation and depend on the economic performance of the company all these kinds of
factors are known as economical factor. In the case of TUI Group the company losses
there almost over 20% of their customer due pandemic and this situation cannot be
controlled by the organisation.
 Environmental Factor- Those factors which are not controlled or predicted by the
humans called Environmental factors. The TUI Group which is providing services of
flights and Cruises to their customer for their travelling all over the world. These kinds of
services are mostly depending on environment (Zameer and et.al., 2020). For example, if
any flight of TUI Group is flying from one country to another country and during
travelling the weather turn out into bad condition. Then it can bring consequences for the
travellers and if any accident happens due to bad weather then it can also bring loss for
the company. So STEEPLE analysis helps the company to take precautions before
providing any services to their customers.
 Political Factors- It refers to the government policies, rules and regulations which can
affect and influence the operations and decisions of the business. These factors can be
good or bad for the organisations but in case of TUI it affects positively because after
Covid-19 the government of UK reduces the Tax burden from the company which helps
the TUI Group in rendering their services at low price so that they can bring back their
position the market. The STEEPLE analysis helps the organisation to make their
strategies according to the new political changes done by the government.
 Legal Factors- These factors refer to those obligations which have to be completed by
the organisations for example protection act, competition law, legal restrain and
regulations, and health and safety policies of the employees. TUI also have perform all
their legal obligations but during the period of Covid the organisation keeps removing
their employees for the cost reduction so that they can maintain their Assets like air-
crafts, cruises, hotels etc. But due to this they loss their goodwill in the market and also
get criticism from their customer and people of the country.
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 Ethical Factors- The last factor of STEEPLE analysis is ethical factor it helps the
organisation to evaluate their activities that what they are doing is correct or not and if
they are not correct then they have to rectify their mistakes (Zhou and Wen 2020). The
TUI Group is doing their work ethically they provide best quality of services to their
customers, provide better environment to employees for their work, and also give fair
chances to all the employees of the organisation.
CONCLUSION
As per the report it is proved, that the analysis of Business Environment is very essential
for the organisation because if they did not analyse the environment of the organisation, then the
organisations can face losses and consequences in the future. The TUI Group which is working
or engage in the activity of Tourism have a very bad impact due to pandemic situations and they
suffer huge loss and also have to refund the money to their customer because of the cancellation
of their booking. Due to all these conditions the organisation have to remove their employees so
that they can reduce their costs which helps them to maintain their flights, air-crafts, hotels etc.
After the Covid pandemic the Government of UK bring a recovery plan and reduce the tax rates
which helps the TUI Group to sustain in the market. But to bring back their position in the
market perfectly the TUI have to make new strategies which leads them to achieve their goals.
They also have to provide their services outside the countries so that they do not have to depend
on one nation and also help in increasing the profitability. The STEEPLE analysis helps the
organisation to analyse the situations from internally and externally.
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REFERENCES
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business literature from the user and organisational perspectives. Technological
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