Impact of Pandemic and Government's Recovery Plan on TUI Group's Environment
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Added on  2023/06/10
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This report analyzes the impact of environmental dynamics during the Covid-19 pandemic on TUI Group's internal, micro, and macro environment. It also discusses the UK government's recovery plan and its impact on TUI Group's environment.
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TUI GROUP
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Table of Contents. INTRODUCTION..........................................................................................................................3 MAIN BODY...................................................................................................................................3 1. Overview of TUI Group...........................................................................................................3 2. Impacts of pandemic and government's recovery plan on TUI group's internal environment. ......................................................................................................................................................4 3. Impacts of pandemic and government's recovery plan on TUI group's micro environment.. .5 4. Analysis of TUI group's macro environment...........................................................................6 CONCLUSION................................................................................................................................7 REFERENCES................................................................................................................................8
INTRODUCTION Business environment refers to the collection of all the factors which beyond the control of an organization but plays a crucial role in the growth and success of that companyOral, (2019). The aim of the report will be to determine and analyse the impact of environmental dynamics or uncertainties during the Covid-19 pandemic which aid the organization to deal with the contemporary issues. In this report the chosen organization is Tourism Union International (TUI) Group, established in 1923 is a travel and tourism company. The internal business environment comprised of elements within an organization that can influence the decisions and activities such as corporate culture. The elements and factors in an organization's immediate environment which impacts the decision-making and performance of the organization is known as micro business environment.Such elementsare company's competitors, suppliers, customers, public, marketing intermediaries which are under the control of the organization or organization has an influence on these elements. The external forces such as economic, technological, demographic, social, environmental, cultural, legal, political etc. which are not under the direct control of the organization are known as the macro business environment. These are the factors which have impact on company's performance and growth. MAIN BODY 1. Overview of TUI Group Till 1997, TUI was known as Preussag AG which was operating as a mining company but after that it was named as TUI Group being headquartered in Germany is one of the world's leading tourism businesses and gathered under the umbrella including 1600 travel agencies, five airlines having 150 aircraft, more than 400 hotels, 16 cruise liners and other agencies which are working around the globe in all the tourist destination cities. The business type of the TUI Group is particularly tourism and hospitality industry. It entirely covers all the tourist requirements under one roof. All the distribution takes place through the window of TUI Musement, websites, apps, B2B partners which includes world's top OTAs. The key characteristic of the quoted company's corporate culture is having a responsibility for the environmental, economic and social sustainability. The legal structure comprised of two bodies namely Executive Board which includes 11 members and Supervisory Board consist of 20 members which are being complied by the Integrity Passport and TUI Code of Conduct that is applied on the members as well trainees. Targetted market of the quoted company would firstly focus on the family-oriented,
younger group, empty-nester older people, wealthier families which covers most of the market share. The 2019 financial results of the TUI Group with a turnover of about€19bn and operating revenue of €893mAburumman, (2020). The quoted company was listed on the number of platforms such as FTSE 250 index, Frankfurt Stock Exchange and Hanover Stock Exchange. Company's workforce strength have a more than 50,000 employees working in the organisation. Due to surge of Covid-19 pandemic the market share of the TUI Group has been significantly reduced due to the effect of macro and micro factorsJohann, (2022). The competitor is based on the revenue, employeeand market share which directly & indirectly raise various opponents suchasCarlsonWagonlitTravel,ThomasCookPlc,TravelportLtd,LastminuteLtd, Jet2holidays Ltd and Travelsupermarket Ltd. The quoted company is following the hierarchical organisational structure because of the quick and clear line of authority, communication and decision-making. Friedrich Joussen is the CEO of the quoted company and is leading the Group since 2013 with a clear vision to grow the company and having all the essential qualities of a greatleaderi.e.strategicthinking,accountability,flexibility,innovative,authenticityand interpersonal communication skills which provide priority to the collaboration within the team. 2. Impacts of pandemic and government's recovery plan on TUI group's internal environment. Impacts of pandemic: In 2020 when covid hit the world, it wrecked the economic havoc and affected almost all industries in the world but by far the most impacted industry is tourism sector. When pandemic was declared and world went into lock down, people stopped travelling or spending leisure time altogether. As there were many governmental rules and regulation were implemented on tourism industry, it made even survival of the many firms, businesses difficult. TUI is world's one of the leading tourism group, it provides various services like hotels, resorts, aviation, tour operators, cruise, everything related to holidaysVlados & Chatzinikolaou, (2020). Pandemic affected each and every service it caters to the customers. Internal environment of TUI was highly impacted by pandemic. As people stopped holidaying or spending leisure time which lead to no occupancy in hotel rooms this ;lead to , international and domestic travels were completely stopped which lead to no business in aviation and cruise. With lower or no occupancy rates in hotel rooms, many hotels stopped their business as they could not manage operating cost of the business. Small tour operators stopped working as they could not have customers to plan holidays for. TUI had to lay
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off many employees as there was no need of such huge staff because of pandemic. TUI also had to change many of its policies to keep the operations afloat in covid times. Impact of UK government's recovery plan:looking at the widely disrupted business in tourism industry, UK government in June 2021 published a tourism recovery plan, it created a framework and established the role that it will play in accelerating and assisting the tourism industry's recovery. This has helped the TUI's internal environmental aspects like company policy, assets, employees thrive back to the business. Governments policy to reduce tax rates and provide tax ease to the corporate sector has motivated TUI to keep its operations of few under performing assets like aviation which was badly affected by the covid stay afloat. Government reduces the tax rate to as low as 19% which is the 6thlowest tax rate in the worldSalim, Ab Rahman & Abd Wahab, (2019). Further government's assistance in running a huge vaccination drive in the county, which leads to the let go of people's reluctance about travelling and spending leisure time at hotels and resorts and it also gave competitive advantage at global level. These measures have helped employees hired back to the company. 3. Impacts of pandemic and government's recovery plan on TUI group's micro environment. Impact of pandemic:Pandemic has severely impacted the micro environment of the TUI. Micro environmentofthebusinessincludesfactorslikesuppliers,resellers,public,competitor, customers. Due to pandemic suppliers of the industry were impacted, suppliers in tourism industry are tour operator, food beverage supplies etc. as people were reluctant to travel, tour operators under TUI had to close the operations for a short period which lead to lay off of staff members and cutting down of cost which resulted in minimal to no profits. Andthetoiletries,foodandbeveragesuppliescutdownassupplierswerenot manufacturing due to pandemic and hotels and resort also did not require the supplies due to lack of customers. Due to the covid TUI lost touch of many customers which made a strong customer base for the company. After covid company had to rapid it's marketing process in order to revive the tourism in the country and this lead to huge marketing cost to the company. Also, company had to made so many changes in the way it operates due to the pandemic and established new ways of conducting the business, serving customers by taking covid norms and protocols in mind Ebrahimi & Banaeifard, (2018).
Impact of UK government's recovery plan:Tourism sector is one of the biggest source of revenues generation for the country. There is codependency in the economy as tourism sector itself consist of food, beverages, raw material, furniture, human resources etc. UK's government helped tourism sector's micro environment in many ways. The entire recovery plan established by government was to bring back the customers therefore the government body gave a customer centric approach to the plan. Government established norms and protocols keeping in mind the inclusivity at global level, making visa application process easy for tourist and launching tourism campaigns across the globe, easy booking process for domestic touristRashideh, (2020). The major objective was to change the customers' mindset towards safe and covid free tourism concept. Therefore, government made it mandatory for hotels to have a vaccinated staff, mandatory covid leaves in case of getting infected, sanitized rooms, sanitization of each place or things used by customers, staff working in shifts. For aviation industry, running on 40% to 50% capacity to maintain distance while travelling. The business of supporting industry such as food and beverages, toiletries etc. also thrived because government cooperated with tourism industry. 4. Analysis of TUI group's macro environment Let's analyse the macro environment of TUI group with the help of STEEPLE analysis. As the industry seen many changes during pandemic, therefore companies should continuously analyse external factors that could affect the business. It has 7 vital factors which are as follows. Social:Social factors such as lifestyle, fashion, income groups, demographic changes affects the business of TUI. Pandemic has changed the game for the business, the change in lifestyle habits of the people due to the pandemic such as sanitization, hygiene and healthy food has increased the operating cost of the business due to extra measuresPencarelli, (2020). Technological:New inventions and developments have flooded the tourism industry. TUI is more automated and digitalized than ever, as the customer's expectation for an easy online hassle freebookings,pricecomparisons,cancellations,membershipplansetc.anothersuch technological innovation is maintaining of customer database, as this helps TUI in knowing it's customer better and catering services to customer satisfaction. Economic: Economic factors like inflation and unemployment has impacted tourism industry negatively. Due to pandemic most of the people had financial set backs due to lose of jobs, medical bills, business loses etc. therefore it reduces people's power to engage in leisure
activities and travelling. Further inflation has made the operating cost of the tourism industry very high impacting rise in prices of hotels and travellingLu and et.al., (2022). Environmental:TUI's most holiday destinations are natural attractions which makes it more responsible towards the nature. Various pollution and zero waste related norms has to be taken care of by the company to maintain a respectable image in the country. Political:These are the factors which determine the government's attitude towards the business. Due to the Covid-19, tourism industry seen a huge set back and in order to deal with this, government rolled out a recovery plan for tourism industry which benefited the TUI with tax relaxations and bring customers back with marketing campaigns etc. Legal:Various norms related to health & safety have been implemented on tourism industry. Ever since covid came, there are so many regulations that needs to be complied with by TUI. Running business operations and providing customer services according to the covid_19 norms etc.Yeh, (2021). Ethical:social values which shapes behaviour of the business are ethical factor. Ethical values of thenationandthecustomershouldbealignedwithorganizationalethics.Factorslike discrimination based on gender, age, race should be avoided in the organization as people from different background are the customers of TUI. CONCLUSION The abovereport comprehensivelydiscussed theTUI group'smicro,internaland macro environment. Report highlighted pandemics impact on tourism industry and TUI. Various areas and segments where company was impacted has been brought to light. Further, how government prepared a structured framework to assist the tourism industry by launching a recovery plan ha been elaborated. Looking at the various micro, macro and internal analysis it can be said that there are various ways in which TUI can improve. Company can take the cost-cutting approach and divert the resources towards the marketing. It can also Focus on the ways and strategies for marketing and positioning of the hotel, resorts, cruise, flights in an attractive way. Putting more efforts towards customer service satisfaction to deal with consumer reluctance to travel post pandemic. And TUI can also use it's strong brand image to have more customers onboard. UK's government recovery plan has helped the industry in so many positive ways. Reduction in corporate tax rates which is as low as 19% has to be one of the greatest assistance provided. Further, introducing different safety standards
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for the industry to have more customer trust and more customers onboard. All these things have helped the tourism business thrive.
REFERENCES Books and journals Aburumman, A. H., (2020). The concept of global governance in tourism franchises: a case study of TUI group.Entrepreneurship and Sustainability Issues.8(2). p.1321. Ebrahimi, A., & Banaeifard, H. (2018). The influence of internal and external factors on the marketing strategic planning in SNOWA Corporation.Journal of Business & Industrial Marketing. Johann, M., (2022). CSR Strategy in Tourism during the COVID-19 Pandemic.Sustainability. 14(7). p.3773. Lu, J., et.al., (2022). The potential of virtual tourism in the recovery of tourism industry during the COVID-19 pandemic.Current Issues in Tourism.25(3). 441-457. Oral, M., (2019). Meaning management: A framework for leadership ontology.The Journal of Values-Based Leadership.12(2). p.11. Pencarelli, T. (2020). The digital revolution in the travel and tourism industry.Information Technology & Tourism.22(3). 455-476. Rashideh, W. (2020). Blockchain technology framework: current and future perspectives for the tourism industry.Tourism Management.80.104125. Salim, N., Ab Rahman, M. N., & Abd Wahab, D. (2019). A systematic literature review of internal capabilities for enhancing eco-innovation performance of manufacturing firms. Journal of cleaner production.209.1445-1460. Vlados, C., & Chatzinikolaou, D. (2020). Methodological Redirections for an Evolutionary ApproachoftheExternalBusinessEnvironment.JournalofManagementand Sustainability.9(2). 1-25. Yeh, S. S. (2021). Tourism recovery strategy against COVID-19 pandemic.Tourism Recreation Research.46(2). 188-194.