Thomas Cook: Competitive Advantage Strategies in Tourism Sector

This project report examines Thomas Cook's strategies for achieving competitive advantage in the travel and tourism industry. It begins with an introduction highlighting the industry's growth, the role of tour operators, and the increasing competition. The main body delves into Thomas Cook's marketing strategies, including cost leadership and differentiation, and how they've adapted to industry changes like 9/11. The report applies Porter's Five Forces model to analyze the competitive landscape, including competition, supplier power, buyer power, the threat of new entrants, and the threat of substitutes. It also discusses the impact of technology, changing consumer preferences, and human resource management on Thomas Cook's market position. The report concludes that Thomas Cook has gained a competitive edge through effective marketing strategies and adaptability, recommending further strategies such as market development and enhanced safety measures. References to relevant books and journals are included.

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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
In recent years, travel and tourism industry is expanding at a very high rate. It is due to
increase in income level of people and flexibility in transportation system. Also, tour operators
have expanded their area of providing services. This has enabled people to get extra benefit on
travel services. Moreover, there has been a tough competition in this sector. Each tour operator is
providing large number of services to attract more customers. However, this has also enabled
new competitors to start business (Yunna and Yisheng, 2014). Besides this, tourism sector has
contributed in GDP of the nation. This industry is also impacted by various political conditions
of country. For this, they have developed strict rules and regulations that are followed by tour
operators. This report will throw light on how organisation gain competitive advantage with
marketing strategies. Also, what plans must be developed to become successful in tourism sector.
For undertaking present report, the organisation selected is Thomas Cook. The cited firm
belongs to travel and tourism sector and is operating its business all over the world (Xiang,.,
Magnini, and Fesenmaier, 2015).. The existence of the company on global level requires
effective marketing strategies to gain competitive advantage. Thus, this report will help in
developing a relevant one for the cited establishment.
MAIN BODY
Tourism industry is highly affected after the tragic incident of 9/11. This has enabled tour
operates as well as people to provide security measures in tour. Thomas Cook has represented
itself as a highly effective tour operator. It is because of the quality of services that are been
provided by them. Apart from this, they have positioned itself in the market that customers
automatically get attracted towards them. They are providing services to more than 4000 travel
agencies. An organisation can achieve its goals and objectives by effectively developing market
strategies (Ortega,, Jalón,. and Menéndez, 2014). This will enable them to gain and attract large
number of customers. However, for this they have to identify its competitors, target customers,
etc. It helps them to know its market position and brand image in the industry. With this, Thomas
Cook is able to identify its strengths and weaknesses. This helps them in developing strategies.
Competitive advantage refers to firm superiority over its rivals. It means what makes the
firm better from its competitors. This is identified by organisation services and market share.
Also, on what basis the firm has able to do this is considered. The basis can be of cost leadership,
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differentiation, etc. based on these strategies, Thomas Cook is able to build better brand image.
Also, it has helped them to differentiate it from its rivals. Therefore, the business strategies
followed by Thomas Cook are:-
Lower cost leadership- It refers to lowering the cost of products and services to gain more
market share. This strategy is followed when organisation is following cost effective techniques
to reduce cost per unit. With this, enterprise earns huge profits. This makes firm to gain
competitive advantage over its competitors (Riasi,. and Pourmiri,, 2015). It helps in attracting
customers who are price-conscious thus, leading to create a large customer base. Thomas Cook
engaged with different economies and accordingly, provides services to people. This has enabled
them to gain significant market share in tourism industry.
Differentiation strategy- This strategy focuses on how products have been differentiated by
organisation through identifying the demands of customers. This shows how a firm is able to
provide value of product to customers. In this, products are differentiated via other means like
quality and high class service. Also, it is not related to price of product but its way of marketing.
Thomas Cook is providing various packages like holiday, special packages, etc. It has created a
distinct image over its rivals like TUI in the market
Industrial competition- This means organisation’s marketing strategy consists of different
tactics to maintain competitive advantage. It includes several products through which the firm is
able to generate stable profits. Thomas Cook has taken made several changes in its services after
the incident of 9/11 (.Moreno-Izquierdo,, Ramón-Rodríguez,. and Perles-Ribes, , 2016). They
have improved security and safety measures for tourists. Along with this, they have enhanced its
services through e- commerce. This has increased its presence at global level. Furthermore,
Thomas Cook have introduced flexible payment system, this has allowed middle class people to
use their services.
Human resource management- Human resource plays a crucial role in maintaining competitive
advantage. Skilled and qualified workforce help in creating a better work culture within the
organisation. It helps in identifying customers’ demands by communicating with them. In
tourism sector, services are improved by taking feedback of customers. This is useful in
increasing customer satisfaction and retaining them. Thomas Cook has maintained experience
employees who are able to identify what customers’ demands are. This has allowed cited firm to
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improve its culture and build a better image. Effective training is given to workers to enhance
their professional level.
Now, for knowing Thomas Cook market position, Porter’s five forces model can be used.
This will show how entity is able to gain market share.
Porters five force model- This model analyses the forces that every industry faces. It helps in
identifying the strengths and weakness of organisation. This enables them to develop corporate
strategy to grow in the industry. Also, it determines the profits and intensity of competition
within the industry. The five forces are describes as below:-
Competition- It refers to the level of competition within the industry. It determines the number
of competitors and services and products offered by them (Yunna,. and Yisheng, 2014). It shows
how Thomas Cook in been affected by its competitors. Thomas Cook is facing high level of
competition from companies such as TUI, etc. Also, due to increase in high quality services,
payment methods, etc.
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Illustration 1: Porter's Five Forces Model
(Source: Ovidijus Jurevicius, 2013 )

Supplier’s power- This means that how suppliers can affects the price of goods or services
within the industry. Also, it shows how company can change its suppliers. Moreover, fewer the
number of suppliers more power will it hold. Similarly, company has to entirely depend upon
supplier to deliver their product to customers. Thomas Cook are having their own suppliers
Buyer’s power- This means that how buyers can affect the price of product. Having less
customer base will have more power to influence the price of product. Also, it shows how
customers are attracted towards other products. Thomas Cook is having a large customer base so
they do not have enough power to influence price of product (Xiang,., Magnini, and Fesenmaier,
2015). Moreover, many local tour operators are providing services to people that is giving stiff
competition to Thomas Cook. Thus, customer has high bargaining power that is giving
competitive advantage to organisation.
Threat of new entrants – It refers to new entrants that increases competition and reduces power
of company. It means a company with strong barriers imposed will restrict the new entry of
firms. Otherwise, it may influence firm position in the market. Thomas Cook is highly affected
by entry of new local tour operators. It has reduces company market share and position. For this
they have imposed barriers. But high class customers still prefers to sue company services. This
has enabled Thomas Cook to improve quality of services and attract new customers.
Threat of substitutes- This is related to replacing the product with its substitute. For example-
customers can use petrol instead of diesel. This depends upon the number of substitutes available
for that particular good. Also, the price that people can afford for that. This makes the company
market position weak. Thomas Cook is facing intense threat from its rivals who are offering
similar products (Ortega,, Jalón,. and Menéndez, 2014). The major threat faced by them is joint
venture. In this cruising has become very new holiday option. Also, the use of internet has
allowed customer to compare international tour packages. With this they are able to select the
cheap ones.
The recent position of Thomas Cook has change a lot. They have effectively utilised the
technology. By creating website they have increased their presence globally. This has enabled
them to provide better services to customers. Also, change in taste and preference of people have
been recognized by them. So they have segmented the market and on that basis created products.
Apart from this Thomas Cook have recruited new employees who are able to perform well while
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providing services. The communication is increased leading to get feedback. This has created a
platform to solve issues and problems. Also, firm have improved its service quality. Moreover,
by analysing need of customer they have developed marketing strategies. It gave them idea on
how different customers can be targeted. Also, their marketing strategies have created a distinct
image of Thomas Cook in the market. Therefore, firm have gained competitive advantage over
its competitors (Riasi,. and Pourmiri,, 2015).
Also, cited firm have expanded its business in various countries. With this customer base
is increased and profits have risen. They have lowered their cost to attract middle level
customers. A flexible payment structure has been established to allow customers to make
payment according to their suitability. This has attracted more customers towards them. Flights,
hotels etc. have been collaborated with Thomas Cook, this has given them a way of maintaining
their brand image in the minds of customers. It has made easy for firm to target only those clients
who wants high quality services. Thomas Cook has increased its speed in providing services to
people. In includes issuing visa, tickets etc. to people. With increase in speed customers trust is
been enhanced. Besides this, they have started providing cruising services to people. This has
add value to their products. Moreover, insurance facility is been started by firm to provide claim
in case of any damage. Here, customers can freely enjoy the trip. This has resulted in fulfilling
needs and demands. With this brand image of Thomas Cook is increased. Also, people are given
several types of services according to demands. Services are segmented in low and high class. So
this has effectively ease firm business.
In order to maintain stable profits and to sustain in the tourism industry, they must focus
on marketing its product in different way (.Moreno-Izquierdo,, Ramón-Rodríguez,. and Perles-
Ribes, 2016). For this, product and market development can be done. It will be useful in creating
new products in new markets. This will increase their customer base by fulfilling needs of them.
Also, Thomas Cook must provide safety measures to people. It can be done by collaborating
with different country government. Moreover, firm can develop different packages according to
needs of customers. This will allow them to earn profits. Furthermore, extra benefits can be
given to local customers. This will increase their satisfaction and retain them. Also, it will
generate stable profits and will help in surviving for long run. They can change this strategy in
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every 5 years depending upon the market condition. In this way Thomas Cook can gain more
market share to succeed.
CONCLUSION
From this report, it is concluded that Thomas Cook growth has been achieved by using
appropriate strategies. They have implemented strategies according to market condition. Also,
with cost leadership and differentiation strategy, entity is able to gain competitive advantage over
its rivals. This has made them the largest tour operator in Europe. Thomas Cook has represented
itself as a highly effective tour operator. It is because of the quality of services that are being
provided by them. Competitive advantage refers to firm superiority over its rivals. It means what
makes the firm better from its competitors. However, this is identified by organisation’s services
and market share. The basis of competitive advantage is cost leadership, differentiation, etc.
which has been elucidated in the given assignment.
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REFERENCES
Books and Journals:
Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of
the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics. 22(2). pp.293-310.
Ortega, A.G., Jalón, M.L.D. and Menéndez, J.Á.R., 2014. A strategic analysis of collective urban
transport in Spain using the Five Forces Model. Investigaciones Europeas de Dirección y
Economía de la Empresa. 20(1). pp.5-15.
Riasi, A. and Pourmiri, S., 2015. Effects of online marketing on Iranian ecotourism industry:
Economic, sociological, and cultural aspects. Management Science Letters. 5(10). pp.915-
926.
Xiang, Z., Magnini, V.P. and Fesenmaier, D.R., 2015. Information technology and consumer
behavior in travel and tourism: Insights from travel planning using the internet. Journal of
Retailing and Consumer Services.22. pp.244-249.
Yunna, W. and Yisheng, Y., 2014. The competition situation analysis of shale gas industry in
China: Applying Porter’s five forces and scenario model. Renewable and Sustainable Energy
Reviews.40. pp.798-805.
Online:
Thomas Cook. 2018. [Online]. Available through: <https://www.thomascook.com/>.
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