Report: Strategic Direction Analysis of the Travel Industry and TUI

This report provides a comprehensive analysis of TUI's strategic direction within the travel and tourism industry. It begins with an overview of the travel industry, followed by an application of the Kubler Ross model to understand organizational change. The report then undertakes a PESTEL analysis to assess the external environment impacting TUI, followed by SWOT and Porter's Five Forces analyses to evaluate its internal capabilities and competitive position. An Ansoff Matrix is used to explore growth strategies, and recommendations are made regarding competitive advantage. The report concludes with a summary of findings and references, including an appendix providing a company overview. The report is a detailed exploration of TUI's strategic approach, considering both internal and external factors influencing its performance and future direction.

Strategic Direction

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Overview of the travel industry...................................................................................................3
KUBULAR ROSS MODEL-......................................................................................................4
PESTEL ANALYSIS OF TUI.....................................................................................................6
SWOT Analysis -.........................................................................................................................8
Porter's Five Forces-....................................................................................................................9
Ansoff Matrix............................................................................................................................11
Recommendation and competitive advantage-..........................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
Appendix A: Company Overview.................................................................................................16

INTRODUCTION
The Term business environment is referred to the surroundings in which a business
operates. The business environment can be effected by many activities such as political factors,
competitor strategies and other factors. The business environment is basically divided into two
components namely, Internal environment and external environment (Bokareva, 2019). The
internal environment consists of the forces and conditions that are present within the company.
The external environment is related with the factors that are outside the business and
organisation which can affect the company in many ways. The business creates various strategies
and tactics which are required to opt, so as to perform effectively and efficiently.
MAIN BODY
Overview of the travel industry
The Tours and travel industry includes various sectors including various factors such as,
accommodation, services and food and beverage services. The travel and tourism industry has
been effected in many ways after the COVID-19. The travel industry is considered s one of the
widest and diversified industry, which has various aspects and components to look after. The
global pandemic has a great impact on the tourism sector as the certain restrictions and
regulations were imposed and they also effected the tourism industry in many ways. After the
pandemic, many companies who are involved in tourism activity has experienced severe changes
in their operational activities.
William Bridge's transition models is concerned with the changes which a business
organisation may experience from different external environments. These changes may affect the
working of the firm in various ways and fluctuate the profit earning capability. TUI is one of the
famous travel agency, whose headquarter located in Germany. In last few years, there are various
alteration which company has developed in its managerial activities, in order to bring the
effectiveness and remain competitive in the market. With the help of transition model company
can build necessary evaluation regarding internal work environment of the company. TUI must
focus on identification some issues or problem which may affect the working of the overall
working structure of the company and affecting the growth of the company. After pandemic
company may have to develop some important framework to motivate their workforce to
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perform better in the company. With the internal examination of the company's functional
structure, it will become easy to know about the weak points of the management which needs to
be change. In the transition model, different stages have been used to examine changes which
needs to develop in any institution. These stages of model is discussed below-
 Ending- In this phase, company focuses on finding out those opportunities which their
employees are losing due to the changes in the management process. During pandemic,
TUI implement remote working in the organisation which forces employees to do work
from home which has severely affected their competitiveness and create work imbalance
in their life. (Colucci, 2018).
 Losing- This stage of the model explains the situation which lies between ending of
certain things at the work place and analysing the new job roles of the workers. TUI must
provide a friendly environment to their employees which will allow them to become
more expressive regarding their issues which they are facing in the company due to the
variations of changes. Such practices will help the higher authority to make such structure
in the management which will allow these employees to accept these changes without
losing their effectiveness (Galli, 2018).
 Letting go- It is about accepting new opportunities, attributes and behaviour at the
workplace which encourage the employees to represent better work skills in the
completion of task to improve the functioning of the firm. With growth in the digital
technology TUI can take help of online platform for promotion of their offerings and
travel packages to their connected customers. It will also help in improving the creativity
of the employees by using various digitalisation methods to upgrade the business
activities by reducing the cost (Asan, 2022).
KUBULAR ROSS MODEL-
When there are some changes occur in a business organisation then it may interrupt the
emotional aspects which may result in showing disapproval towards the specific alteration. But
these conditions in the firm can be controlled by the heads who are involving in implementation
of such changes in the firm. Use of different models which has been constructed for such
changes can support the firm to keep employees motivated towards the work in such dynamic
situation. Kubler ross change curve model was designed in the year 1969 by Elisabeth Kubler
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Ross who was a Swiss American psychiatrist (Kearney and Hyle, 2006). Under this model five
stages of sorrow have shown which is being experienced by an employee when he faces some
changes in his workplace. Many professionals believe that this model is related to the describe
the obstacle of changes. (Godlewski, and Zalech, 2022).
 Denial- In the first stage, employees strictly refuse such changes which are prevailing in
the business environment as they might feel that these modifications can hamper their
working behaviour (Inkson, and Minnaert, 2018). In such happening, employees may
lose their productive skills which may result in delays in functioning of company. TUI
must build such business strategy to overcome this stage by providing optimum support
and motivate the employees at the time of pandemic.
 Anger- When changes actually take place in the firm it turns workers down and they feel
angry and become afraid to accept these circumstances which may convert their
enthusiasm in fear and they interpret different thoughts and views regarding the changes.
It is not necessary that each employee in the firm have potential to adapt in these changes
which TUI has implemented in the management for this company need to communicate
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their employees in order to identify their issues regarding the changes. (Shayan and Kim
2022)
 Bargaining- After the second stage of the curve, employee reach to the third phase where
they start looking for those side of the changes which could make their career growth
better and provide them new ways to perform their tasks. In short they start negotiating
with those changes and move forward in order to reach the desired goal of the firm. In
this situation, TUI can offer more beneficial programmes to their employees which will
make them positive for these changes.
 Depression- According to this stage, an individual start feeling low and demotivated, as
it become very tough for him to cop up with such changes in the business entity.
Employees of the company should focus on developing their internal skills and
adaptability which will make them ready to accept more unexpected situation in the
future (Li, Luo, and Song, 2022).
 Acceptance- The last stage of the model defines the positive attitude of the employees
towards the changes in the firm by approving them and look into innovative possibilities
through these events.
There are various favourable outcomes which TUI may experience by using this model of
change management as it will assist in discovering the various area of the tourism sector which
can be moulded in different ways to gain the productivity and attract the maximum range of
customers towards the business. Description of stages in the curve model is very simple and easy
to use which give TUI enough chances to speculate the behaviour of the employees according
the relevant changes which are prevailing in the business environment. Uses of such model to
control the negative impact of the changes may help the company to retain their employees for
the long period of time (Luo and Cheng 2022).
PESTEL ANALYSIS OF TUI
 Political- These factors are related to the governmental rules and regulations along with
the current political landscape which allows businesses to conduct their operations in a
given location. The Brexit policy has effected the tourism sector in various ways such as
trade barriers and other factors such as the effect on the relationship with different
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countries has laid down an impact on the travel ism industry. The tourism sector should
focus on the political factors so that it can stay well flourished in the long run. (Toaff,
2022).
 Economical- These factors are related to the current economic conditions of the location
in which the firm operates in terms of the economic condition of the population and the
GDP of the country. There are various economic components which have enough
potential to affect the performance of the firm in the long run, it is essential for industries
to follow all the trends which are prevailing in the economy. Acknowledging the lifecycle
of the industry of travel and tourism and various sectors so as to bring such practices
which are important for the development of the company. The Overall GDP of the
country will help in examining the company's power in the formulation of the planning
for the growth of the business. The industries in UK should consider the Economic
factors so that they can maintain their position in the industrial sector.
 Social- These factors are related to the broad outlook and traditions of the society
alongside the ongoing major trends which shape businesses and the industry. The
different organizational cultures have strong impact on the social culture and the society.
The demographic trends, power structures, consumers buying behaviour are some of the
social factors which can affect the business and the organisation in many ways. The
companies should choose effective marketing messages and fulfil each and every
corporate responsibility and obligations which can be an effective way to build the
relationship with the customers (Gardini, 2020).
 Technological- These factors of the PESTLE framework deal with the way in which the
technology affects the particular business outlook and the business operations. This is the
most important factor in the Pestle analysis, the technology is changing at a fast pace
nowadays, people are getting more techno-friendly. The technologies are upgrading day
by day A detailed analysis of the technological efficiency and various other aspects of
technology can be helpful so as to k ow about the technological upgradation and other
factors that are required to change in the field of technology, UK is a well-developed
nation having advanced technologies and excellent software programs which can be
effective and efficient for various business and the organisation to grow and achieve
success. (Markova, 2019).
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 Environmental- These factors are related to the way in which the business is committed
towards the wellbeing of the environment and highlights their sustainability quotient. The
Environmental concern are growing nowadays, people are being more concerned and
aware about the environmental concern. The business and the organisation should
consider their activities in such a way so that their various functions and other aspects
should not harm the environment and other constitutions of the surroundings in a bad way
(Marques, 2020Nowak, 2022). The various industries in UK Are opting various method
acting and proficiency so that it can deliver the best possible result for the environment,
by encouraging innovative recycling methods and waste management practises which can
help in the betterment for the environment and the surrounding as well (Gardini,2020)
 Legal- Legal factors are related to the laws and lawful regulations that businesses must
comply with in order to stay afloat and out of controversy in relation to their business
operations and the target market. The Legal is the last and relevant term of the PESTLE
Analysis which is necessary for the business which should be considered in an effective
way. The organisation must follow the legal policies and regulations so as to protect the
Administrative system and other laws, which are important to be considered by very
Industry in UK (Brown 2019).
SWOT Analysis -
 Strengths- The various activities and automation has brought the TUI company and the
products has enabled the company to boost up and scale down based on the demand
conditions in the market sector. The TUI group has strong brand portfolio as over the
years TUI has increased its brand image and brand portfolio. The brand portfolio can be
helpful for the organisation so as to expand their business into new ways (Pucciarelli, and
Kaplan, 2021). According to the external analysis conducted, TUI can take advantage of
the growing need of customization in the industry and make better tour packages.
 Weakness- The TUI is only compatible with the present business model and their various
limitations with various segments. The company is also not able to tackle the challenges
that are at present by the new entrants and has lost the small market share in the various
categories.
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 Opportunities- The Organisation can get new opportunities that will create a level
playing field for all the competitors in the rival market. This will give various advantages
so as to gain new market share. The TUI can also get various opportunities to invest in
the different product segment. As with more cash in the bank the company can also open
a new market segment and new window for TUI (Reas, 2020).
 Threats- The TUI group can face lawsuits in various markets which can lead to
continuous fluctuations regarding the product and services standard in the market. The
New environment regulations under the Paris agreement 2016 can act as a threat to the
certain existent categories and services, as the environment concern of the people are
growing nowadays and people are being more aware about the environmental conditions.
The growing political instability of UK highlighted in the PESTLE analysis is a big threat
which TUI must look to avoid by diversifying its product offerings.
Porter's Five Forces-
Porter's Five Forces is a model that determines and analyses five competing forces that
form every business and helps to determine an industry's weaknesses and strengths. Five Forces
analytic thinking is often used to determine an industry's composition so as to determine the
corporate plan of action. Porter's model can be applied to any section of the economic system to
realize the level of competition within the business and enhance a company's long-term profits.
The amount and power of an organization's competitive rivals, possible new market entrants,
suppliers, customers, and substitute good that influence the company's profits. Five Forces
analysis can be utilised to guide business organization and in opting various strategies to increase
the competitor advantage for the company. Given below is the Porter's five forces analysis in
context to TUI.
 Competition- This factor defines the various competitors of the company and their
potential to undercut its current and future operations. The Competitors of the TUI are
quite few in numbers, most of the industries are very large in size. Companies like
Thomas Cook and Transat are especially vicious due to their large market size and
esteemed brand value. The firms in this segment approaches in a different way, the
competitors are engaged in different ways so as to maintain a specific position by
achieving the targeted goal. The industry in which the TUI is growing every year, the
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positive industrial growth means that there are like to have less competitors to engage in
the competitive activities and other areas as well, The TUI is also creating great impacts
on its competitors (Atherton,2019).
 Threat of new entrants- This force measures the potential for new companies to enter
the market and disrupt the business operations of established companies such as TUI. The
economies of standard are reasonably hard to accomplish in the business in which TUI
attempts to flourish. This makes it easier for those producing big qualify to have a cost
advantage. It also makes the manufacture more expensive for fresh newcomer. This
makes the danger of new entrants comparatively a weaker force. The product distinction
is strong inside the business, where firms in the industry sell differentiated products
rather a standardised product. Customers also look for distinguished products. There is a
strong emphasis on advertising and customer services as well. All of these elements make
the threat of new entrants a weak force within this industry.
 Power of Supplier- This force measures the power that suppliers hold over the business
consideration and the bargaining power which they possess in the business context. Tui
employs both a global and local supply chain to ensure that the tourism demands are
regularly met. When it comes to strength of suppliers to control the availability and
supply of product, then it is relatively low. As TUI is quite famous travel agency which,
with a large section of loyal customer base which make it easy for the company to
dominate their suppliers and can switch to other in case of need. Company can negotiate
with their current supplier, to achieve their desired goal in minimum cost, this will also
help TUI in maintaining enough profit in management (Schmalz, Ringbeck and Spinler,
2021).
 Power of customers- This force measures the way in which a business can get
influenced by customers and the power they hold on its business operations and strategic
decision making. The target audience of TUI is the youth and middle aged men with
families looking for a vacation and this sector is entirely customer driven which is why
this force is quite high. The amount of suppliers in the business in which Tui operates is a
lot more than the figure of firms producing the good. This means that the buyers have a
few firms to decide from, and therefore, do not have much power over cost. This makes
the negotiation power of the buyers a weaker force inside the business (Seal, 2018). The
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commodity discrimination within the industry is quite high, which states that the buyers
are not capable to find alternate firms producing a specific good. This difficulty in
changing makes the negotiation power of buyers a weaker unit inside the business.
 Threat of substitute products- This force measures just how many substitutes for a
particular product line exists in the market and high level of substitutes can potentially
weaken the outlook of a business such as TUI. There are many substitutes for travels and
tours such as ones being made by Thomas Cook which the company should disrupt by
making more innovative offerings. The substitutes available for the industry are very low
as compared to the other industries in which the TUI operates, there is also no price
ceiling at which the firms are earning and selling their products and services in the
market. The effective pricing policies of TUI made it the more powerful source in the
travel industry and making the substitute force weaker. The substitutes of the travel
industry as compared to TUI are comparatively low as it offers the high quality services
in convenient prices as well (George 2021).
Ansoff Matrix
This model is used to identify the market growth and necessary plan of action which a company
can adopt to ensure its development in specific market against their competitors.
 Market Penetration- Under this TUI try to promote or launch new offerings and
packages to their customers in the existing market which will support the company to
increase their loyal customer base. For this company may increase its capability to
produce more which will ensure the availability of services for the customers at the time
of requirement (Sedra, 2018).
 Market development- TUI should focus on expanding their business in new market
which may contribute in raising the various other ways to support the profitability of the
company, along with company may focus on controlling the maximum market share
which is necessary to face the competition in the market and covering off the losses
which company is suffering in its home country. (George 2021)
 Product development- This matrix is about launching new product in the existing
market, it could help TUI to understand the customers and what trends are currently
flowing in the market. It requires full contribution of research and development team of
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the company who focus on doing significant analysis of the market (Ambrose and
Waguespack 2021).
 Diversification- In this TUI may introduce new product in the new market, which will
allow business to explore new area and get the opportunity to make new resources of
revenue. Company can also go for formation of partnership which will introduce new
plan of action for further expansion of business (Robinso and Smith 2020).
Recommendation and competitive advantage-
Based on the above conducted PESTLE, SWOT and Ansoff matrix analysis of the TUI
group, the main completive advantage of the company which has come forward is the mass
network of suppliers and tours and travel agents it has across the globe allowing it to undertake
high level of customer service. The other sources of competitive advantage that the firm can
build upon is by improving its strengths which are in the field of marketing and designing
innovative and cheap packages and removing some of its weaknesses such as weak supply chains
by making them more sustainable and leaner going forward.
In relation to TUI, they should provide a friendly environment to their employees which
will enable them to become more expressive regarding the issues they are facing in the
company due to the variations of changes (Galli, 2018). Such practices will help the
management team devise a structure in the management that will allow these employees to
accept these changes without losing their support
In order to tackle the above discussed weaknesses of TUI, company should start focusing
on the small market as they can develop the goodwill of the company in those areas which may
support in generating good returns on the investment by attracting maximum customers. Most of
the people are keeping themselves away to travel and showing less interest in planning any tour
activities after COVID situation. TUI needs to follow safety measures in their functioning and
start developing such programmes which will make sure that company is initiating in safety and
hygienic condition for their customers. Use of digital technology in the travel industry is current
trends which support any organisation to bring simplicity in their method of functioning. Use of
voice tracking technology to guide the people in order to discover new places and get
information about the social and economic culture of different area. All these activities can be
used by TUI as an instrument to secure a good position in the travel and tourism industry. Apart
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from all this company can take necessary steps regarding the sustainability and make people
informed about this (Chikovani 2018).
One of the main strength of the company which help company to stay competitive in the
market is that all the activities in the company is taking place by keeping customers satisfaction
as their main aim. Company has developed its website to update about the plans and innovative
offering to attract the online users. TUI make sure to give good experience to their existing
customers as they could act like promotional tools by sharing good reviews regarding the
services rendered by the company. Another thing which will help TUI to achieve growth in the
market is making necessary research on their competitors about their plans and offerings to the
customers (Baporikar and Fotolela 2021).
CONCLUSION
From the above report it is concluded that trends which has been experienced by all the
companies which are operating in travel and tourism industry. It states about the change model
and its different aspects in the context of TUI, which is one of the famous travel agency
operating successfully after pandemic. Company is able to cop such changes because of its
various effective strategic planning which has helped to motivate their employees and develop
such working condition which make internal structure of the firm efficient. Various model for
the examination of internal and external environment of the company has been used and in last
recommendation has been given to solve those weaknesses which can obstruct the functioning of
TUI.
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Appendix A: Company Overview
TUI (2022) (Cui et. al., 2022). is a UK-based travel group established in Crawley. The TUI
travel group was the result of the merger of First Choice Holidays PLC and the Tourism Division
of TUI AG. TUI operates in almost 180 countries and has a wide customer base. There are
millions of customers to whom the company has access. The company occupies 20 per cent of
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the market share approximately in the UK (Tui and et. al., 2022). In Europe, TUI is the largest
travel group has nearly 562 stores across the UK. TUI is a public travel group and is listed on
London Stock Exchange. The company has various airlines established in different countries
such as France, Belgium, Germany, Russia, etc. The policy of the company, primarily, states the
challenges and opportunities in the tourism sector and the ways to tackle them.
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