Environmental Analysis of Flight Centre Travel Group (MGN409)

This report presents an environmental analysis of Flight Centre Travel Group (FCTG), a major player in the Australian travel industry, utilizing the PESTLE framework. The analysis examines the political, economic, social, technological, environmental, and legal factors impacting FCTG's operations. Political factors, including government policies and travel restrictions, are assessed, along with economic influences such as industry growth and exchange rates. Social trends like the increasing number of corporate travelers and the shift to online platforms are considered. Technological advancements, environmental concerns, and legal changes, particularly in employment law, are also evaluated for their impact on FCTG's performance. The report concludes by highlighting key opportunities and challenges for FCTG, emphasizing the need to address political, economic, and legal factors to ensure sustainable success. The analysis draws upon various sources, including annual reports, industry publications, and academic research to support its findings.

RUNNING HEAD: ENVIRONMENTAL ANALYSIS
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Environmental Analysis

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Introduction
Flight Centre Travel Group operates in the travel industry and becomes the largest travel
agency in the segment in Australia. The company headquartered in Australia and founded in
1982. At present, Flight Centre Travel Group has 2,800 offices and stores under many corporate
brands and retail brands (FCTG,2020). The company has a presence across many countries such
as the US, India, the UK, Singapore, and the UAE. Further, the company has a travel license for
80 countries under the brand FCM travel solutions. In the travel segment the company has the
following brands; the Liberty travel, GOGO, Student Universe, ciEvents, Corporate traveler, and
Campus traveler (Annual Report,2019).
PESTLE Analysis
Businesses are mainly influenced by the environment in which they operate. All the
situational elements which determine day to day environment impact business operations. Due to
that, businesses analyze the environment in which they operate in order to identify opportunities
and threats (Hiriyappa, 2018). In the below section FCTG environment analysis for Australia
travel industry is done.
Political: Political elements include political stability, government policy, taxation policy
and trade restrictions (Joshi & Mittal, 2018). Australia is a politically stable country and there is
no such tensed situation in this country that trouble the travel industry. But due to changes in
travel and tour policies by the government this industry impacted negatively as there is a high
level of restrictions for tour operators and agents in Australia. As per Australian consumer law,
there are guidelines for online bookings, holiday deals and group buying, component pricing and
contracts and receipts (Peres, & Friel, 2019). Due to these high restrictions, it is quite difficult
for travel and tour operators to operate in Australia. Further, at present, the government
announced a travel ban in China, Iran, and South Korea. Hence, these types of decisions by the
government impact direct to FCTG and due to that, the company struggles to compete and
maintain its financial performance.
Economic: Economic elements that impact companies are the growth of the economy,
lifestyle, and price fluctuations. The determinants that might impact FCTG performance are the

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growth of the travel industry across the world, price fluctuations, and exchange rates. In 2019,
the travel and tourism industry contributed $44.6 billion and this includes businesses of travel
agents, tour operators, and tourism in the country (Figure 1). This indicates that the travel
industry in Australia is struggling because of bush fire and various other incidents there is no
such tremendous growth in the market (Ulubaşoğlu, Rahman, Önder, Chen, & Rajabifard 2019).
As because of slow growth airlines are affecting, hotels are struggling (Dhiman & Kumar, 2019)
and thus FCTG performance also gets influenced.
Figure1: Growth of travel and tourism in Australia
Source: (Pham,2020).
Social: In recent years, the industry gets many opportunities because of social elements.
Some of the social elements that impact on the FCTG are related to characteristics of the target
market. The company target high and medium class people, business executives, corporates, and
people of age group 22-65 (FCTG,2020). Social elements from that benefit the company are
increasing the number of business tourist or an increasing number of people that visits Australia
and travel across the world for business purpose. As, in 2019 there were 8.5 million visitors and
from that 2.5 million travel for business purposes (Charles-Edwards, Bell, Panczak, & Corcoran,
2020). Due to that travel and tour industry focus shifted to targeting corporates. Further, the
buying pattern of buyers shifted as thy starting to use digital platform and want services such as

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easy to buy forms in order to avoid inconvenience as in 2019, 68% people used online platform
and 32% through offline stores (Charles-Edwards, Bell, Panczak, & Corcoran, 2020). Hence, all
these open opportunities for companies to invest in the online platform and in targeting corporate
executives.
Technological: Technological elements include R&D, innovation, and internet
infrastructure. In the tour and travel industry, technological elements prove to be favorable and
impact favorably as this helps companies to attract more customers by reaching to more
customers through the internet and by offering innovative services and packages (Joshi, &
Mittal, 2018). Some of the changes that have been observed in the Australia technological
environment include the use of a global finance platform for the overseas transaction, and the
installation of new in-store systems by companies (TTS, 2019). .All these require huge
investment for FCTG but this will develop a favorable condition for the company to compete in
the market with high security, privacy, and access across the world. This will help the company
to reduce costs and ensure efficiency in its operations. Hence, travel technology and innovation
prove to be beneficial for Australia travel companies.
Environmental: The environment aspect highly affects operations of companies as any
shift in sustainable policies and practices impact on the structure, profits and working of
organizations (Hiriyappa, 2018). In Australia, because of natural calamities and incidents like a
bush fire, the government introduced many projects that focus on CSR activities such as “Good
Practice Good Business” that focus on providing practical guidance to businesses about
eliminating waste and developing an attitude for renewable energy (Luu,2020). Due to that
FCTG operations impact as the company change its CSR activities such as opt for sources of
renewable energy and to focus on delivering the values that are expected from the company in
order to be sustainable in the market (Dhiman, & Kumar, 2019). Thus, environmental elements
might influence the performance of FCTG.
Legal: The legal elements that impact on the organization are changes in discrimination
law, employment laws, consumer protection laws, and safety laws. As recently 22 changes were
done in employment law in Australia such as; now it is the duty of the employer to ensure that
employees don’t get below minimum wage if they work more than 38 hours in a week, and

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paying overtime salary to employees on time (Employsure, 2020). All these changes impact
FCTG and the company leads to amend its human relation terms and conditions and if any
employee is getting minimum wage it is the responsibility of the employer in FCTG to increase
its salary. Hence, all these impacts on the payment structure of the company and impact on the
motivation level of employees.
Conclusion
From the environment analysis of Flight Centre Travel Group (FCTG) using the PESTLE
Analysis framework, it is identified that the travel industry is changing and there are various
elements from the company get benefits. The technological elements such as the use of the
internet, using global finance platform leads to positive outcome and efficiency in operations for
FCTG. On the other side, social elements such as an increasing number of corporate visitors help
the company to increase its customer base along with that shift of customers to online platforms
and change in buying patterns leads to high investment in online platforms by companies. Hence,
all these changes in these environments are considered as opportunities. However, political
elements, economic elements, and legal elements are areas where the company needs to focus on
in order to succeed. Government decisions like a ban on traveling to Iraq and South Korea
impact directly on the company operations and resultant in a reduced customer base. Further,
slow growth of the travel industry and high legal restriction such as changes in employment laws
increase expenditure for the company and reduce profitability. Hence in order to ensure that
these changes have less impact on the company’s operations mainly the company needs to focus
on these three elements.

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References
Annual Report,(2019). Annual Report FCTG 2019. Retrieved From: https://www.fctgl.com/wp-
content/uploads/2019/09/Computershare-FLT-Final-Annual-Report.pdf
Charles-Edwards, E., Bell, M., Panczak, R., & Corcoran, J. (2020). A Framework for Official
Temporary Population Statistics. Journal of Official Statistics, 36(1), 1-24.
Dhiman, M. C., & Kumar, R. B. (2019). Building Foundations for Understanding the
International Travel Agency and Tour Operation. In Handbook of Research on
International Travel Agency and Tour Operation Management (pp. 1-13). IGI Global.
Employsure,(2020). Changes to employment laws in 2020. Retrieved From:
https://employsure.com.au/guides/employment-contracts-and-legislation/employment-
law-changes/
FCTG,2020. About Us. Retrieved From: https://www.fctgl.com/about-us/
Hiriyappa, B. (2018). Strategic Management and Business Policy: For Managers and
Consultants. PublishDrive.
Joshi, A., & Mittal, A. (2018). Strategic Management-The Strategies that Leads Sustainable
Competitive Advantage. Journal of Research in Business Economics and
Management, 8(9), 1-7.
Luu, T. T. (2020). Integrating green strategy and green human resource practices to trigger
individual and organizational green performance: the role of environmentally-specific
servant leadership. Journal of Sustainable Tourism, 28(8), 1193-1222.
Peres, A., & Friel, M. (2019). Futurism: New maps for the travel industry. EGEA spa.
Pham, T. D. (2020). Tourism Productivity Theory and Measurement for Policy Implications: The
Case of Australia. Journal of Travel Research, 59(2), 247-266.
TTS, (2019). Travel Technology in Australia. Retrieved From: https://www.tts.com/blog/travel-
technology-in-australia/

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Ulubaşoğlu, M. A., Rahman, M. H., Önder, Y. K., Chen, Y., & Rajabifard, A. (2019). Floods,
bushfires and sectoral economic output in Australia, 1978–2014. Economic
Record, 95(308), 58-80.