Strategic Management Report: Flight Centre Travel Group Analysis

This report provides a detailed strategic analysis of Flight Centre Travel Group (FCTG), examining its vision, mission, and goals. It delves into internal strengths and weaknesses, as well as external opportunities and threats, utilizing tools such as Porter’s Five Forces and PESTEL analysis. The report then presents a comprehensive SWOT analysis, outlining strategies to leverage strengths, overcome weaknesses, mitigate threats, and capitalize on opportunities. Furthermore, it explores FCTG's business and corporate-level strategies, including functional-level strategies, organizational structure, and financial performance. The report concludes with recommendations based on the analysis, offering insights into FCTG's strategic position and potential for investment.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction................................................................................................................................2
1. Vision, Mission and Goals.....................................................................................................2
2. Internal Analysis:...................................................................................................................3
Strengths and Weaknesses.....................................................................................................3
3. External Analysis...................................................................................................................3
Opportunities and Threats......................................................................................................4
Porter’s Five Forces Analysis................................................................................................4
PESTEL Analysis...................................................................................................................5
4. SWOT Analysis.....................................................................................................................6
5. Business Level Strategy.........................................................................................................7
6. Corporate Level Strategy.......................................................................................................8
7. Three Functional Level Strategies.........................................................................................9
8. Organizational Structure, Control Systems and Culture........................................................9
9. Governance Mechanism and Ethical Issues.........................................................................10
10. Financial Analysis of the Firm’s Performance...................................................................11
11. Recommendation................................................................................................................13
Conclusion................................................................................................................................13
References................................................................................................................................15

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Introduction
The main aim of this report is to recommend the correct investment decision while
taking into consideration all the necessary aspects. At the time to invest a substantial amount
in a particular firm, it is needed to take into consideration the analysis of the crucial factors of
that firm in order to obtain understanding about the overall strategic position as well as
performance. From this analysis, the investor can know about the company from different
dimensions such as strategic dimension, financial dimension and others. This report involves
in the analysis of different aspects of an Australian airline company named Flight Centre
Travel Group. There are certain parts of the report. One key part of this report involves in
internal and external business environment analysis of the chosen firm with the help of
appropriate strategic tools like SWOT analysis, PESTEL analysis and other. Another part of
this report involves in the analysis of both business level and corporate level strategy of the
selected firm. Moreover, this report also undertakes the analysis of financial performance of
the firm. A recommendation is provided based on the whole discussion.
1. Vision, Mission and Goals
Vision – The vision of Flight Centre Travel Group is to become the most exciting and
profitable travel retailer in the world through the delivery of amazing experience to the
company’s people, customer and partners (fctgl.com 2019).
Mission – The mission of the company is to open up the world for those who want seen. It
implies that the company is to provide opportunities to its people, employees and suppliers
through the business operations (fctgl.com 2019).
Goals – One of the major gaols of Flight Centre Travel Group is to ensure increase in
distribution in the lower cost model by the year 2022. This particular gaol is aligned with the
goal of gaining productivity in the company’s core consultant model in order to deliver a

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global net margin across all the leisure models. It aims at becoming the world’s largest and
most successful corporate travel firm having operation in 50 countries with 80,000 employees
all over the globe (fctgl.com 2019).
2. Internal Analysis:
Strengths and Weaknesses
Strengths Weaknesses
 FCTG has an effective distribution
network.
 FCTG has a comparatively low cost
structure.
 Strong financial position is a major
strength of FCTG.
 FCTG has a goodwill for successful
integration through merger and
acquisition.
 FCTG has a strong brand portfolio
which is majorly responsible for its
success.
 FCTG has a highly skilled employee
base which is a key strength.
 There is a lack of investment in
Research and Development in FCTG
as compared to other competitors.
 Lack of diversification in FCTG’s
workforce makes it difficult for the
employees with different racial back
group to adjust in the company.
 Less amount of investment in
Quality Control is weakness for
FCTG.
 Lack of investment in new
technology is a major weakness of
FCTG.
 High employee turnover rate as
compared to its competitor is a key
weakness of FCTG.

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3. External Analysis

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Opportunities and Threats
Opportunities Threats
 Opening op of the new markets due
to government’s free trade
agreement provides business
opportunities for FCTG.
 New customers from online channel
has opened new sales channels for
FCTG.
 Increase in average household
income and economic growth is
providing FCTG with major
opportunity to expand its business.
 Steady growth in population in a
positive rate increases the number of
potential customers of FCTG.
 Increase in competitors and major
technological development by the
existing competitors pose threat for
FCTG.
 The introduction of the Paris
Agreement (2016) as a part of the
new environmental regulation can be
a major threat for FCTG.
 The company exposed to risk related
to fluctuation in currency because
FCTG operates in many countries;
and this is a crucial threat.
 Rise in the fuel prices has increased
the input cost of FCTG and this is a
potential threat for the company’s
revenue and profitability.
Porter’s Five Forces Analysis
Threat of New Entrants – Due to huge capital requirement, it is difficult for the new
entrants to set-up the business where they need to incur high expenditure. In addition, it is
difficult for the new entrants to achieve the economies of scale. Thus, this force is low for
FCTG.

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Bargaining Power of Suppliers – The number of suppliers in the industry in which FCTG
operates is huge compared to the buyers which provides less control to these suppliers over
the price; and thus, the bargaining power of the suppliers is weak for FCTG.
Bargaining Power of Buyers – Since the number of supplier is a lot more than the number
of firms producing the products, the buyers do not have many firms to choose from and thus,
cannot control the price. Therefore, this force is low for FCTG.
Threats of Substitutes – This force is low for FCTG because of the presence of very few
substitute products in the industry.
Rivalry among Existing Competitors – There are very few competitions present within the
industry in which FCTG operates and thus, this force is weak for FCTG.
PESTEL Analysis
Political – FCTG is exposed to various political risks since the company operates in many
countries. For example, the introduction of carbon tax has negative impact on the airfares
because FCTG witnessed decrease in sales due to the introduction of this act. In addition,
strict competition work as barriers to gain competitive advantage.
Economic – The macro economic factors like interest rate, inflation rate, savings rate,
exchange rate and others have impact on the business of FCTG. In addition, incidents like
release of federal reserves, increase/decrease in disposable income and decrease in leisure
travellers affect the business of FCTG.
Social – Aspects like shared beliefs and attitudes of the population have major influence on
the market and business of FCTG. These social factors and trends determines the product and
service design of the company.

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Technological – FCTG has been affected by the recent technological developments of its
competitors. In addition, online services have affected the market share of FCTG.
Environmental – There are many environmental standards as well as legislations and FCTG
needs to comply with all these which increases the compliance cost of the business and works
as barriers of business success.
Legal – It is needed for FCTG to comply with many legal laws like Anti-trust law in
Consumer Service Industry, discrimination law, employment law, health and safety law and
others.
4. SWOT Analysis
i. Strategies to Use Strengths to Pursue the Opportunities
As a response to the free trade agreement of the government, FCTG has undertaken
the strategy to increase its distribution in lower cost models (fctgl.com 2019). In order to
acquire the online customers, FCTG has adopted the strategy to expand their business online
globally through the incorporation of start-up incubation, acceleration and investment arm
(news.com.au 2019). In addition, in order to acquire the customers due to increased
population, FCTG has targeted more customers in corporate sector, youth as well as student
sector, non-travel business sectors and others (fctgl.com 2019). These strategies support the
company’s pursuit for business opportunities.
ii. Strategies to Overcome Weaknesses Stopping from Pursuing Opportunities
FCTG is needed to undertake certain strategies for overcoming their weaknesses from
pursuing their opportunities. First, FCTG is required to ensure sufficient investment in the
Research and Development section for the development of innovative products and services.
FCTG has adopted the strategy to use different quality control solutions in order improve the

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quality of their products and services. For overcoming the weakness in technological
investment, FCTG has invested in two new technologies related to Artificial Intelligence (AI)
for including advanced technology in their operations (travelpulse.com 2019). Other
strategies include the introduction of Diversity Policy in the workplace (fctgl.com 2019).
iii. Strategies to Use Strengths to Minimise or Counter Threats
FCTG has adopted the strategy of expanding their business online globally along with
increasing investment in technologies like big data and AI with the aim to minimize the threat
facing from its competitors (moneyweb.co.za 2019). Moreover, FCTG has adopted the
strategy of hedge accounting with the aim to minimize the risk of currency fluctuation
(fctgl.com 2019). For further improvement, it is needed for the firm to ensure their
compliance with the rules and regulations of the Paris Agreement (2016).
iv. Strategies to Overcome Weaknesses that makes the Company Vulnerable to Threat
In order to gain the required competitive advantage from its competitors, it is needed
for FCTG to largely invest in Research and Development activities and technological
developments. Moreover, FCTG has introduced the employees Diversity Policy in order to
maintain a good workplace environment which is an essential component for reducing high
employee turnover (fctgl.com 2019). Moreover, another important strategy of FCTG is the
adoption of hedging strategy with the aim to minimize the effects of currency fluctuation on
FCTG’s business.
5. Business Level Strategy
1. Business level strategy of FCTG includes the investment of the company in order to
develop a diversified busies portfolio for catering to the needs of its vast customers.
Some of them are Universal Travel, Travelsmart, Executive Travel, Travel Money
and others (fctgl.com 2019).

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2. FCTG has adopted the strategy of offering their customers with guaranteed lowest
price as compared to its competitors and this strategy is a major driver of the
company’s revenue and profitability.
3. Providing excellent service to the customers is another crucial business level strategy
responsible for the business success of FCTG.
4. FCTG has adopted the cost leadership strategy with the introduction of their online
services which is based on online business.
5. FCTG has adopted the differentiation strategy where it has introduced those products
and services which generate value for its customers. This is a major strategy for the
business success of FCTG.
6. Corporate Level Strategy
The core business activity of FCTG can be seen in the retail travel sector. The main
corporate level strategy of FCTG is the development of new specialized brands that will help
the business in capturing as well as growing key market segments. As a part of this strategy,
there was a merger of six leisure brands of FCTG were merged with the aim to develop three
stronger and higher profile super network. For corporate expansion, FCTG has joined Sabre
in Beyond NDC program. In addition, different acquisitions and mergers are considered as
the part of the corporate level strategy of FCTG. For example, FCTG acquired 10% of the
share capital in Bespoke Hospitality Management Asia Limited (BHMA) and this was part of
the vertical integration strategy; FCTG also acquired 100% of the share capital of Olympus
Tours as a part of vertical integration strategy. These strategies provide the company with
major business advantage (fctgl.com 2019).

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7. Three Functional Level Strategies
1. The head of creative and content in FCTG has not adopted the traditional brand
building strategy. Instead, as a part of the content and customer engagement strategy,
the company has adopted the strategy of enunciating the reason behind the company’s
proposal for the modern customers. The main aim of this strategy is to build customer
relevancy (cmo.com.au 2019).
2. As a part of the financial strategy, FCTG has adopted the strategy of hedge
accounting in the global procurement business and the UK based Global Touring
Business. This strategy allows the company in entering into forward foreign exchange
contracts on the collation of customer deposits. This strategy is helpful for FCTG in
the reduction in variability on forecast-payment to the suppliers through entering into
forward foreign exchange contracts (fctgl.com 2019).
3. FCTG has adopted the strategy of proactively manage their organizational employee
with the aim to ensure avoiding the workplace conflicts in the correct manner. The
company has set up a goal in Human Resource Management to ensure that the experts
are the correct employees who are enthusiastic to assist to work to gain satisfaction of
the customers. This is a major functional level strategy of FCTG.
8. Organizational Structure, Control Systems and Culture
The organizational structure of FCTG is simple, lean and based on teams. Three to
seven members consist of a team. The presence of a hierarchy can be seen in FCTG which
includes the CEO, Chairman and Directors on the top. The organizational structure of
encourages team playing and contribution among the employees. The motivated and
empowered employees are promoted by the company and companies with good performance
are awarded on the basis of their performance. FCTG makes different training programs for
their employees for ensuring their professional growth. The company has a culture of

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promoting the existing employees to higher positions rather than recruiting employees from
outside.
FCTG has an effective control system where the employees and work groups work
under the control of the management who obtains the decision-making control. Instruction
comes from the upper side of the organizational structure and this helps in maintaining the
correct flow of power and information within the organization (fctgl.com 2019).
FCTG has been able in developing such organizational culture where there is respect
among the employees for each other. In addition, the presence of transparency can be seen
within the operations of FCTG that promotes positive workplace culture. This positive
workplace culture of FCTG makes the employees of the company more productive as well
enthusiastic towards their roles and responsibilities.
9. Governance Mechanism and Ethical Issues
It needs to be mentioned that FCTG has an effective corporate governance mechanism
that covers a vast number of corporate governance related issues. These issues are Anti-
bribery and corruption policy, Audit and risk committee charter, code of conduct, Corporate
governance statement, Remuneration and nominations committee charter, Share trading
policy, Communications and continuous disclosure policy, Risk management policy,
Whistleblowing policy and many others (fctgl.com 2019).
Ethics is considered as a crucial aspect in FCTG and there has been certain ethical
issues faced by the organization. For example, FCTG was accused of cheating their
customers along with underpaying their staffs. More specifically, FCTG was accused of
training their employees to mark up their clients at the time of booking which is an unethical
act (abc.net.au 2019). Another major ethical issue in FCTG is the underpayment of salaries to
the employees. The staffs of FCTG claimed that they were being underpaid at FCTG