Strategic Analysis of Coaches Travel's Expansion into Southampton

This report examines Coaches Travel's strategic approach to expanding its business into Southampton through the acquisition of South Tours. It analyzes the external business environment using PESTLE and Porter's Five Forces, highlighting political, economic, social, technological, legal, and environmental factors impacting the UK transport and tourism industry. The internal environment is assessed through a SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. The report discusses the potential benefits and risks of the merger/acquisition, strategic trends, and concludes with recommendations for Coaches Travel to improve its management structure and achieve long-term success through strategic modifications and cost control. Desklib provides a platform for students to access similar solved assignments and study resources.

Organisational Strategy: Coaches Travel
1

Table of Contents
Introduction................................................................................................................................3
External business environment..................................................................................................3
Internal environment..................................................................................................................6
Merger or Acquisition................................................................................................................7
Strategic trends...........................................................................................................................8
Conclusion..................................................................................................................................8
Recommendation........................................................................................................................9
Reference list............................................................................................................................10
2

Introduction
In this jeopardised business environment, every organisation constantly struggles to stable
their market position through distinct strategic level. With the intense rise of competition,
through organisational strategy companies can implement positive action as well as
benchmarks for ensuring long-term goals. Coaches Travel is a UK based bus-operating
company. In the mid 1980, the organisation started their business through providing bus
services to local schools and city tours. Initially the organisation has started their business as
transportation to local schools but over last 8 years, they had experienced successive growth
in public sector tourism and transport.
In the current scenario, organisation is planning to expand their business into Southampton
through purchasing a local tour company South Tours. However, South Tours currently faces
financial difficulties and managerial drawbacks. However, external environment has created
various potential situations for Coaches Travels to maintain organisational work, such as
investment, acquisition and financing activities. Currently organisation’s strategic aim is to
maintain overall sustainability in both organisational and business level. It can be achieved
through understanding the major risk parameter.
Therefore, current report has enlightened the external and internal business environment with
more analytical discussion to recognise the possible strategic implementation. Through
understanding proper analytical framework, Coaches Travel can enhance their business
expansion strategy at all level.
External business environment
External factors in UK market have significant role in the business activities of Coaches
Travel. Through understanding the political, legal, social and competitive forces organisation
can understand their emerging risks in business process.
Pestle analysis
Political
UK’s transportation and tourism industry is efficient and effective at all level. However,
government has set various policy frameworks, where transport agencies can be affected by
the political changes of direction. For instance, change of government policy has switched
some resources in case of roads to rail transport (Gabdrakhmanov and Rubtsov, 2014). In this
3

context, government has given maximum priority towards tackling traffic congestion. It
creates impact on the part of company’s aim for delivering reliable energy. As per the case
study scenario, such impact creates impact on both private road users and the economy.
Government has introduced Air Quality Plan and B&NES has put forward this plan for
creating a Clean Air Zone. However, such introductory plan has created major challenge.
Southampton has already CAZ policy, where certain modification of government can create
issue in day-to-day operation as well as organisational strategy. In addition, improving road
safety is also another dimension, where department of transport has targeted to reduce
number of accidents. Key government policy also affected transport service for the reduction
of Co2 emission (transportknowledgehub.org.uk, 2018). Therefore, political challenges are a
derivative of environmental aspect for Coaches Travel. Through adoption of governmental
policies, Coaches Travel can ensure higher standard of service at all level.
Economic
Profit planning is the ultimate parameter of any business, where organisation has to pay
proper attention towards consumer satisfaction. Travel changes have created a switched
dimension among consumer demand. In United Kingdom, GDP from transport is gradually
decreased to 19154 GBP million in 2018 than the fourth quarter of 2017. GDP from transport
is on the positive field, after the organisational strategy to ensure public as well as
environmental safety. This factors also toed up with the economic contribution from tourism
sector. The potential economic impact of transport industry is both wide-ranging and
significant. Through developing a sustainable transport industry, alternate industries also face
benefits from both productivity and competitiveness (Le-Klähn et al., 2015). Congestion
charges in various cities have encouraged the drivers to switch from car to another mode of
transport. Therefore, Couches Travel can get sustainable market stability through contributing
support to overall business economy.
Social
In UK, number of older people is rising along with the increased population rate. As per the
recent survey, they are proffering bus services because current bus transports system of UK is
more convenient as well as safe. Government adopts different policies on environmental
sustainability due to changed trend of both climate and social commitment (Pagliara et al.,
2015). People are now well known about environment and they are become the green
consumers for transport service. As people are now more mobile and want to travel more,
4

Coaches Travel can get positive market attribute through maintaining the current trend of
green consumers.
Technological
In the transport industry, travel agencies as if Coach Travels are constantly try to create
advancement on their overall technological features. With the growing trend and adoption of
governmental policies, organisations have to make proper advancement in their service
approach. In this landscape, TFL service can operate flexibility in the area, where improved
public transport is required. In addition, as per the current report, TFL demand responsive
service can improve the public transport of Londoners. Therefore, during business expansion,
coach travels have to be since on current trend of modernisation in transport service for a
profitable open deck bus tour (passengertransport.co.uk, 2017).
Legal
Legal changes in transport service are closely related here with the both political and
environmental dimension. Government has enacted various laws for maintaining the
standards of transport vehicle emissions. Based on the Climate Change Act 2008 (c27),
government has prepared legislations for reducing own carbon emission rather than buying
carbon credits from other countries. This act commits that the overall reduction of green
house gas need to be sustained by 80% than the level of 1990 in 2050 (theccc.org.uk, 2018).
Therefore, for accelerating a smooth transport and tourism business, organisations has to
maintain this standard at all level.
Environmental
Environmental factors are not so much different from the legal parameters. In the current
period, government is tackling effective approach towards traffic congestion. Within the
status of change climate concept, governmental is to reduce UK green house gas emission by
2050. In this case, Coach Travel’s managers have to understand the requirement of carbon
budget for fostering standard business at all level.
Porter five forces
From this standpoint, Porter five forces analysis is required to understand the competitive
forces that can crate challenging image for Coach Travels.
5

In UK market, transport and tourism organisations have to face consequences from supplier
power, entry barriers, and substitute threats, Degree of rivalry and buyer power.
Supplier power Entry barriers Substitute
threats
Buyer power Degree of
rivalry
Moderate Moderate High High Moderate
 Threat
of
forward
integrati
on
 Supplier
concentr
ation
 Switchin
g cost of
organisa
tions
 Governme
nt policy
 Capital
requireme
nts
 Scale
economy
 Price
perform
ance
 Switchin
g cost
 Substitut
es
available
 Price
sensitivit
y
 Buyer
volume
 Rival
diversity
 Switchin
g costs
 Industry
concentr
ation
Table 1: Porter Five forces analysis
(Source: Ioncica et al., 2016)
The organisation has two types of service such as public transport and tourism. Fewer
competitors currently dominate the UK transport, where Coach Travels has to compete with
First Bus and TFL. Currently there is lower chance of other private companies who can
dominate this position (Rey-Martí et al., 2015). Therefore, threats of new entrants are in
moderate status. However, existing dominating companies have made high barrier for the
new entrants, where organisation can face various issues to maintain their proper stability.
Bargaining power of customer is also high as alternate mode of transportation is available in
UK. Currently consumers are more price and convenience conscious. Therefore, supplier’s
power of bargain is moderate in spite of fewer chances of transport alternatives.
Internal environment
6

It has been identified that external environment for business of Coaches Travel is positive but
inevitable at different level. Through discussing the SWOT analysis, internal business
structure can be compared with external dimension.
Strength Weakness
 Organisation can attain more than 2.3
billion customers per year, as
consumers prefer buses rather than
other commuting alternatives.
 Government has full support for the
private transport organisations for
maintain consumer’s perception at all
level.
 Currently organisation is only a part
of some local UK. Therefore after
expansion they can face the issues
from switching cost, policy
implementation
 Financial difficulties during
acquisition can create adverse impact
on overall service standards.
Opportunities Threat
 People are more price conscious,
where Coaches travel can afford
pricing strategies as per consumer
demand
 Higher chance of profit due to
moderate force from the alternative
competitors
 Financial difficulties and poor
management practice can create
operational consequence
 Environmental policy implementation
and its rapid circumstances can create
delay in decision and day to day
operations
Table 2: Porter Five forces analysis
(Source: Shimamoto, 2017)
Merger or Acquisition
As per the viewpoint of Bena and Li (2014), it is not unusual for the companies to pursue
merger or acquisition for expressing high hopes. In case of business expansion, such strategic
determination can create positive dimension on product combination, pipelines and people
that can structure the business angle towards profitable altitude. Coaches Travel has gained
positive market approach over 8 years through open deck bus tours. In the current scenario,
they are planning to follow acquisition through purchasing a local open deck tour company
South Tours. As per the report, this company is facing financial difficulties due to poor
7

management practice as well as increased competition. In the local area of Southampton, this
organisation has a 10-year-old identity and intense threats of competition have currently
made them vulnerable. Therefore, through acquisition, Coaches not only get supportive
attribute, space and stability in the new market but they can also get a community support,
who previously pursuing the services of South tours. Therefore, this acquisition is with South
Tours is highly effective for the Coaches Travel to get a market identity as well as
accessibility.
However, risks are also present in case of long run business with South Tours. As per the
current report, this company has poor management structure at all level, where existing
company employers can face issue to cope up with modified organisational strategy of Coach
Travels. Therefore, demerit of this acquisition could be caused due to such dimension. On the
other hand, financial difficulties are an issue, where South Tours cannot create balance within
liabilities and income.asa result such liabilities could face issue for the Coaches travel for
investing more resources. It can be the risk of this acquisition tactics of Coach Travels.
Strategic trends
It has been identified that, external environment can create the potential impact on Coaches
Travel’s organisational strategy. As per the Air quality, plan and B&NES local council, clean
air zone need to be structured, where Southampton has already a CAZ. In this context, during
acquisition Coaches travels are giving their entire priority on investment and day operations.
However due to impact of external circumstances business decisions are delayed. As a result,
they cannot get proper scope to prioritise their organisational strategy. It can create negative
impact at all level. In the current period, South Tours have poor management structure, where
Coach Travels have to modify their organisational strategy to gain long-term success
(Schmidt, 2015). Firstly, organisation is facing various challenges in two markets such as
tourism and travel. In case of expansion, strategic trend need to be driven as organisational
strategy for focusing on multiple resources based on a single goal. Through proper strategic
trend, South Tours support can be also valuable for the organisation to grab market share.
However, without proper management structure they cannot measure the success of
corporation.
Conclusion
8

It can be deduced that, organisational strategy has significant role to foster long-term business
success. In the current scenario, Coach Travels have to perform various investments,
technological innovation and cost control for maintaining both business as well as operational
standard. In case of strategic modification, organisation cannot get proper attention towards
their internal strategy, which is required to improve management structure of both South
Tours and Coach Travels. Therefore, they have to apply posture strategic trend to resolve
operational consequences and enhance long-term success in UK.
Recommendation
From the entire analysis, Coach Travels has to undertake following recommendation to
accelerate sustainable market growth in both internal as well as external paradigm.
 They can proceed with their decision on acquisition of South Tours Open Deck Tour
Company. However, they have to take sincere attention on the possible demerits of
purchasing
 They have to maintain the responsibilities of transport legislation for accelerating
travel and tours business in both Southampton and native region.
 Corporate strategy on management is required for achieving the current business
vision, through this strategy they can measure and sustain their long term growth in
both transport and tourism sector.
9

Reference list
Bena, J. and Li, K., 2014. Corporate innovations and mergers and acquisitions. The Journal
of Finance, 69(5), pp.1923-1960.
Gabdrakhmanov, N.K. and Rubtsov, V.A., 2014. Tourist and Recreational Positioning of
Tatarstan Republic: Cluster Analysis. World Applied Sciences Journal, 30(MCTT)), pp.202-
205.
Ioncica, D., Ioncica, M. and Petrescu, E.C., 2016. The Environment, Tourist Transport and
the Sustainable Development of Tourism. Amfiteatru Economic, 18(10), p.898.
Le-Klähn, D.T., Roosen, J., Gerike, R. and Hall, C.M., 2015. Factors affecting tourists' public
transport use and areas visited at destinations. Tourism Geographies, 17(5), pp.738-757.
Pagliara, F., La Pietra, A., Gomez, J. and Vassallo, J.M., 2015. High speed rail and the
tourism market: Evidence from the Madrid case study. Transport Policy, 37, pp.187-194.
passengertransport.co.uk (2017). Tfl-Could-Trial-Demand-Responsive-Bus-Service.
Available at: http://www.passengertransport.co.uk/2018/03/tfl-could-trial-demand-
responsive-bus-service/ [Accessed on 23/03/2018]
Rey-Martí, A., Porcar, A.T. and Mas-Tur, A., 2015. Linking female entrepreneurs' motivation
to business survival. Journal of business research, 68(4), pp.810-814.
Schmidt, B., 2015. Costs and benefits of friendly boards during mergers and
acquisitions. Journal of Financial Economics, 117(2), pp.424-447.
Shimamoto, K., 2017. The Factors That Influence The Boundary Between The Markets Of
Competing Tourist Destinations. Tourism and hospitality management, 24(1), pp.1-12.
theccc.org.uk (2018). The-Legal-Landscape. Available at:
https://www.theccc.org.uk/tackling-climate-change/the-legal-landscape/the-climate-change-
act/ [Accessed on 23/03/2018]
transportknowledgehub.org.uk (2018). Relationship-Between-Transport-Economy. Available
at: https://transportknowledgehub.org.uk/guidance-tool/relationship-between-transport-
economy/ [Accessed on 23/03/2018]
10