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

This study analyzes the impact of Covid-19 and UK Government's Recovery Plan on TUI Group's internal, micro, and macro environment. It also evaluates the impact of STEEPLE factors on TUI Group's operations. The report provides an overview of TUI Group's business, its size, sector, and competitors. It also discusses the organizational structure and leadership team of the company. The report concludes that TUI's profitability has been greatly affected due to lower confidence among customers to undertake travel in the post pandemic period.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION......................................................................................................................3
Section 1.....................................................................................................................................3
Business overview..................................................................................................................3
Size.........................................................................................................................................4
Sector & industry of operation...............................................................................................4
Direct & indirect competitors.................................................................................................4
Organizational structure & leadership team...........................................................................4
Section 2.....................................................................................................................................4
Impact of Covid – 19 on TUI Group’s internal environment................................................4
Impact of UK government’s recovery plan on TUI group’s internal environment...............5
Section 3.....................................................................................................................................5
Impact of UK government’s plan on TUI group’s micro environment.................................5
Impact of Covid – 19 on TUI group’s micro environment....................................................6
Section 4.....................................................................................................................................6
Impact of STEEPLE factors on TUI Group’s operations......................................................6
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
Business environment refers to the total of all the factors either external or internal to
the business organization affecting its operations and performance directly or indirectly. It is
a common term associated with the subject of marketing which is meant for affecting the
ability of the firm in building & maintaining successful relationships with the customers. The
aim of this study is to highlight how internal; micro and macro environment gets affected
with the advent of Covid – 19 with special reference to TUI Group. In addition to this, the
impact of government’s recovery plan over the group will also be studied here. With the help
of STEEPLE, TUI group’s macro environment will be analysed by highlights its impact over
the business.
Internal business environment is concerned with one of the components of business
environment where the elements concerning this environment are present within or inside the
organization and accordingly, gets affected or even affect the decisions, choices and activities
associated with the organization (Johann, 2022).
Micro business environment refers to those environmental factors which are in
direct contact with the organization and thus affects the business’s routine activities straight
away. Factors present in the micro environment are considered to be close to the organization
and thus is supposed to be affecting its performance as well as daily activities of the business.
Macro business environment can be defined as the conditions prevailing in the
economy as a whole and thus is not specific to any business or sector or industry. The factors
of these environment are external to the business and thus is not controllable through the
efforts and actions of management. The factors of this environment include political,
economic, technological, legal, social and environmental.
Section 1
Business overview
TUI group is a Germany based tourism, travel and leisure company. It is an acronym given
for Tourism Union International. The group is having its headquarter in Hanover, Germany.
The company was known as Preussag AG till 1997 when the company has shifted its
operation from mining to tourism. It is owning fully or partially several hotel chains, retail
shops, travel agencies and cruise lines. In addition to this, TUI group is owning five airlines

concerning European region (Secinaro, Calandra and Biancone, 2020). The products &
services of the company include hotels & resorts, Cruises, TUI Amusement, markets &
airlines, and products or services belonging from several other segments as well. Majorly, the
company’s business is focused on Holiday & experiences. The type of business TUI group is
that it is the subsidiary of TUI AG. Thus, the legal structure of the company being parent –
subsidiary.
Size
The annual revenue of TUI AG in 2021 was 33.9 euro million 13.1% less than the year 2020
when the annual revenue was 39 euro million. This was because of lower management
revenue. As of 30th September 2021, total number of employees hired by the company 50584.
The company is serving more than 21 million customers by operating 137 aircrafts, 414
hotels , 16 cruise ships and digital platform for activities & tours with a strong portfolio of
more than 215K offers. TUI group is operating on a global scale as an integrated tourism
(Pricope and Baltescu, 2021). TUI Amusement has ranked second in the market concerning
tours, activities & experiences.
Sector & industry of operation
TUI Group is operating in hospitality industry and specifically in tourism sector.
Direct & indirect competitors
The direct & indirect competitors of the company include Thomas Cook, Transat,
Holidaybreak, Sunwing, Dart Group, Sea link Travel Group, lastminute.com and Flight
Centre travel group.
Organizational structure & leadership team
The executive board of the company as on balance sheet date consisted of five board
members and CEO while the Group Executive Committee is having 11 members which
includes 6 executive board members chaired by Friedrich Joussen. The company
organizational structure is flat hierarchy which is supposed to be enhancing informed &
effective decision making and thus reflecting a culture of information sharing & openness.
Section 2
Impact of Covid – 19 on TUI Group’s internal environment
The factors concerning the internal environment of the TUI group involves its Value system,
mission & objectives, organization structure, corporate culture, etc.

With the advent of Covid – 19, tourism is one of highly affected sector among severely
affected sectors of the economy due to the pandemic. The crises occurs because of travel
restrictions, falling consumer confidence and flight suspension. TUI among those businesses
who gets severely impacted. Accordingly, the impact over the internal environment of TUI
group is as follows:
Value system: It refers to the ethical belief guiding business in attaining its mission &
objective. It indicates the behaviour of business towards its customers, employees & society
at large (Johann, 2022). The company’s value system gets affected because of pandemic as
now to provide higher value to the customers and society, company is required to introduce
social distancing measures and prohibit movement of people from one region to another to
keep up with the governmental instructions.
Mission & objectives: Every business exists with the objective to maximize its profits in the
long run. However, with the advent of pandemic in the year 2019, the hospitality is among
those industries whose profitability gets affected severely. With regards to the travel giant
TUI group, it has cancelled approximately 900000 holidays as a result of pandemic because
of the implication of travel restrictions affecting demand and the summer bookings goes
down by 59% as compared to the figures of previous year.
Corporate culture and style of functioning: With the emergence of pandemic and resulting
lockdowns, businesses across the globe the have adopted remote working policy and TUI is
no exception. Further, as the company is into the tourism business which is the most affected
sector of the economy has laid off many talent employees leading to reduction in the quality
of human resources available with TUI group.
Impact of UK government’s recovery plan on TUI group’s internal environment
UK has provided around £25 billion with respect to the support from the negative effect of
pandemic to the tourism, leisure and hospitality sector of UK to protect businesses & jobs ( Nazli,
2022). The funds was allocated towards Job retention scheme, bounce back loans and VAT cut.
Therefore, with this support, TUI can retain its talented employees along with stabilising its financial
position through loans offered at concessional rate by the government. In this way, TUI gets benefited
in terms of protecting its quality human resources and profit maximizing objective.

Section 3
Impact of UK government’s plan on TUI group’s micro environment
The UK government is attempting to stimulate the tourism demand through measures
including promoting consumer confidence & undertaking marketing activity through
campaigns such as VisitEngland and VisitBritain. These campaigns are meant for attracting
customers by building travel confidence in the post pandemic era. Accordingly, the TUI
group’s could be able to get back on the track in terms of its millions of customer serving
with these initiatives of the government. Also, UK government has allocated huge funds
towards the marketing activity and campaigns concerning the promotion of travel & tourism
in the post pandemic period. Accordingly, there would be tougher competition for TUI from
its competition. However, the government has undertaken the measure of VAT cut for
tourism & hospitality which would affect the cost structure of the travelling packages leading
to less expensive alternatives for customers. This would also be beneficial for TUI group in
terms of lower costs of supplies and greater customer attractions at lower prices.
Impact of Covid – 19 on TUI group’s micro environment
Micro environment of every business majorly concentrated to six factors which include
competitors, customers, suppliers, public, market intermediaries and worker & their union
(Filimonau, Derqui and Matute, 2020). Therefore, the impact of Covid -19 on these factors
with reference to TUI group can be discussed as follows:
Competitors: With the advent of pandemic, major competitors of the company has adopted
competitive pricing strategies and accordingly TUI faces the pressure of doing the same
leading to detrimental impact over the revenue of the company in the 2020 and 2021. The
prices are reduced to build confidence among travellers.
Customers: TUI has experienced 59% reduction in summer holiday bookings as compared to
previous year because of poor confidence among the customers. Also, the lower pricing
policy of the company’s competitors has affected TUI’s customer base severely.
Suppliers: The supplier has raised the cost of amenities they are supplying to TUI group.
This is because now in adherence to the government’s instructions, hospitality businesses are
required to ensure that they are encouraging use of sanitizers and masks among those availing
their services (Rudež, 2022). Therefore, these are additionally acquired to be accompanied
with core business activities leading to rising costs for the company.

Section 4
Impact of STEEPLE factors on TUI Group’s operations
STEEPLE model is widely used for understanding the impact of macro environment over a
industry say, hospitality industry. The factors concerning this model includes social,
technological, economic, legal, ethical, environmental and political. The impact of these
factors can be discussed as follows:
Social: The attitudes and beliefs of the consumers across the globe have a great impact on
how TUI will design its marketing message for the leisure & travel industry. Customers in
different nations have different preferences & expectations in terms of travel & tourism and
thus affects the performance of TUI group both positively & negatively.
Technological: With the advancement in technological environment, travellers are preferring
to get services at the comfort of their homes by booking tickets & hotels online (Aslan,
2022). Tour operators through online modes & social networking platforms are spreading
information excessively in an appropriate manner to conquer new group of customers. Now,
bookings has become so easy through mobile applications and the same needs to adopted by
TUI to sustain in the market.
Economic: The impact of this factor could be analysed from many aspects such as inflation
rate, interest rate, exchange rate, etc. for instance, TUI group is having operations in different
countries, if a major fluctuation in exchange rate would take place, then the profitability of
the company would get affected because of appreciation & depreciation of home currency
against other currency.
Environmental: TUI may face legal as well as governmental intervention on the ground of not
fulfilling the environmental responsibilities like excessive use of plastics, etc. also, while
setting out tour packages, it must consider the weather & climatic condition of travel
destination (Stevenson and Marintseva, 2019).
Political: As the company is having operations in different countries of the globe, there must
be a big influence of political environment existing within these countries and TUI is required
to abide by the rules & regulations set out by political parties of different nations.
Legal: TUI is having number of business in UK and it is necessary for it to obtain Air Travel
Organizer’s license for advertising or selling air inclusive holidays (George, 2021). There are
also several restrictions imposed by European and other nations of the world with respect to

owning aircraft. Accordingly, the impact of same could be losing airline operations. In
addition to this, due to having operations in many countries of the world, TUI is required to
abide by the laws & legislations association with each specific nation.
Ethical: TUI’s operation is affected by the ethical concern of customers belonging from
several nations. For instance, TUI must considers the health & safety of its customer
especially in the times of pandemic. If these concerns are not in place, then TUI would lose
its customers to the competitors (Kwong, 2021).
CONCLUSION
From above case study it has been concluded that business environment of any
concern could be understood from several aspect such as it internal environment consisting of
value system, mission & objective, corporate culture, etc. micro environment consisting of
customers, competitors, suppliers and the macro environment where the factors have been
categorised through STEEPLE model. Business have control over its internal & micro
environment while macro environment is out of the reach. In this report, the impact of Covid
– 19 has been evaluated with respect to the internal & micro environment of TUI group. It
has been identified that due to pandemic, TUI’s profitability has been greatly affected due to
lower confidence among customers to undertake travel in the post pandemic period. Also,
with the application of STEEPLE model, it has been determined that TUI’s operation gets
affected because of the application rules & regulation concerning different nations of the
globe as the company has its operations spread over number of different countries.

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