TUI Group's Response to Inflation: Models, Theories, and Strategies

This case study analyzes the impact of inflation on TUI Group, a leading tourism company, and explores the strategies and models employed to mitigate its negative effects. It identifies key periods of inflation affecting TUI and discusses the causes, such as increased money supply and supply chain challenges. The study highlights the adverse effects of inflation on TUI, including decreased profits, reduced workforce productivity, and challenges in managing customer expectations regarding pricing. To combat these issues, TUI utilizes price models, considering customer perception, production costs, and cost-plus pricing. Additionally, the company employs Six Sigma methodologies to identify and rectify inefficiencies. The analysis concludes that through strategic operational management, TUI has successfully navigated inflationary pressures, enhanced its competitive advantage, and maintained a positive brand image. Desklib provides access to similar case studies and solved assignments for students.

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POSTER
INTRODUCTION
Tourism sector falls under the category of those leading industries in the market, that
gained unpredictable benefits in form of competitive advantages. The current assessment
will be based on TUI group, which falls under the category of leading tourism
companies in the UK. The study will explain an overview of chosen firm and products or
service it provider to the target audience. It will explain period and cause of inflation that
firm experience in the past and also justify the reliable sources that determines models
and theories that used to eliminate the impact of inflation and increase positive impacts.
Providing an overview of TUI and their services/products
TUI group is German travel agency providing travel and tourism service to the
customer, that in turn provide unpredictable benefits to them. This brand has global
footprint of providing the best tourism service along with leisure and
accommodation. Headquartered in Hanover, Germany, TUI is leading travel agency
around the world. TUI group comprises more than 400 group of hotels around the
world allowing guest to choose the best destination for their travelling, this travel
brand tied up with hotel brands including Hilton, Premier Inn and Holiday Inn.
Online partners may include Booking.com, Agoda and AirBnB. In the tourism
sector, organization conduct its practices for purpose of aim achievement and that is
to create the best moments for the target market. At initial level, firm can take
initiative to establish its existence in the five nations such as Portugal, India, Spain,
Malaysia and Brazil, where success and growth chances are accessible in the bulk.
There are certain type of service offered by TUI group, these are:
Hotels and resorts
Cruise trips
TUI amusement
tour operator
and even travel airline
TUI group usually focuses on creating unforgettable experiences and moments for
the target market, across the whole world, so that it can make the dreams of
consumers come true, in real manner. The main motive of chosen tourism company
is to enhance the satisfactory level of individual guest, in form of providing services
and products such as food items according to their needs and requirement.
2- Determining the period and causes of inflation
that TUI group experience in the past. Inflation is
one of those external factors that impact the world
business, along with economic growth, in the
adverse manner. The main reason behind inflation is
supply of money is increasing more the
accessibility of goods and services in the market,
which creates unpredictable challenges. It can be
said that there were six periods in which inflation
has been occurred, and these are 1946-48, 1950-
51,1969-71, 1973-82 and 2008. The rise in the
amount of money in the context of supply of
products, can become the main cause of inflation,
that can impact TUI in negative manner.
TUI group experience unexpected situation at the
time of inflation in term of managing the flow of
demand related to goods, that they expect from the
suppliers to provide firm on time. It can create
challenge for the company to fulfil the needs of each
guest, who expect to take great experience while
visiting in the hotel in form of enjoying meal that
food & beverage department prepare for them. TUI
impacted at the of inflation in negative manner, in
term of decreasing customer base, which is not
suitable for the rapid and competitive growth of
hotel, in the tourism sector, where number of
external factors accessible in the bulk. Due to
inflation, individual person in the world, are facing
issues to purchase goods, as they are unable to spend
money on such things, including services that they
prefer to use, like accommodation, tour and travel,
etc. in the tourism sector. It leads to decrease the
sales and profitability of TUI, as customers are less
interested to visit a location, where the expenses are
higher than the saving. It is fact that the inflation
is a significant force that affect tourism
demand and industry, as well as TUI, because
it has established its brand in the similar
industry, for purpose of running venture into
number of developing nations. Inflation in
the world of travel and tourism can become
the major cause of distress among the
business travel and leisure, which means,
TUI struggle a lot of to sustain for longer,
with wide customer’s base, among which
each guest is able to conduct word of mouth
promotion.
There are different ways, in which inflation had impacted on TUI group, such as
decrease the profits and revenue, that firm expects to increase more than last few
years or months, than the rivals, who are also running their ventures in the same
market. The productivity and performance level of TUI group is also being
impacted negative, because of inflation, in term of decrease the workforce. As
each candidate place demand of increasing salary, because they are unable to
manage their life, due to facing challenges of increasing products price. Thus, it
creates challenge for the management to focus on this thing as well, along with
other issues that occur due to inflation. It drives the attention of management in
the TUI group towards taking key actions to eliminate the impact of inflation that
can be more adverse than the other things.
3- Determining the models and theories that can be utilized to reduce the
negative impact of inflation and increase the positive impacts. During the
time of inflation, there are different types of practices and activities,
companies while running businesses and operating functions in the tourism
sector has been conducted. Along with that, they took some models and
theories into consideration, like TUI in appropriate manner. For purpose of
reducing the adverse impact of inflation, chosen company take price model
into its consideration, which is quite essential and beneficial for rapid growth
of venture in the competitive and complex market. In the world of business,
price model is utilized as strategic method that aid firm to determine the right
price for its products that it can utilize to provide better consumer experience,
after transforming the purchase item, such as raw material to prepare meal for
the individual guest. The selected model takes certain factors into
consideration such as customer perception of its value, form of items, and
cost of producing meal, according to the target market requirement. TUI
Group can use price model, in term of reducing the impact of inflation, by
taking right decision to purchase raw material, that they can further offer to
people after appropriate transformation of that. Organization can utilize cost
plus pricing model, so that management can set the price of goods, with
calculation of total cost of materials, worker overhead that go into making an
item and then adding a mark-up, which make them capable to earn a profit.
In the context of inflation, another concept can TUI group and its
management consider along with above model and that is Six sigma, which
falls under the category of leading operational management theories. The
chosen theory is considered as statistical & data driven procedure that works
in term of reviewing the limitation, defects and mistakes. Six sigma concept
encompasses different stages, actions or practices that help TUI group to
increase the positive impact and eliminate the adverse effect of inflation upon
its venture. It is quite essential for the management according to the key
stages of theory is to identify the issue behind the impact of inflation upon
business, because it can give them clarity about the extent to which the factor
affect and in which manner.
After passing the first phase, they can move to the
next one, which is to measure the current procedure,
such as food and beverage or meal production, in the
hotel, where employees focus on preparing meal for
each guest, by considering their preferences and
demand. It can enable them to eliminate the negative
impact and increase the positive influence. It also
helps management to offer services to the target
customer, in budget friendly manner, so that
individual guest can take decision to visit TUI group,
by reaching at specific location, where firm has set
up its venture. After the two most important stages,
they can move further towards the process of
analysing the cause of issue and then improve the
process appropriately, without making any mistake
that create more issues for the management to
handle.
CONCLUSION
On the basis of above discussion, it has been
concluded that by developing the best operational
management strategies, company has increased the
positive impacts, after facing the worst situation in
the world of business, due to inflation. It has
developed the best tactics and has taken strategic
decisions, that contributes in the context of gaining
competitive advantages and building positive brand
image in the market. Furthermore, from above
analysis, it has been determined that utilization of six
sigma, price model and other operations' management
theories, contributes to eliminate the adverse impact
of inflation. It has enabled leaders and managers to
achieve the key aims of company.
REFERENCES
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Mesa, F., 2021. Predicting the future price of a
commodity using the OWMA operator: An
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