Strategic Management Plan for TUI: Business Strategy Analysis Report

This report provides a comprehensive analysis of TUI, a multinational travel and tourism company, focusing on its hospitality business strategy. It begins with an introduction to TUI and the importance of business strategy in the hospitality sector. Part A includes a PESTLE and SWOT analysis to assess the macro and internal environments, respectively, along with an examination of TUI's capabilities using the VRIO model. The competitive landscape is analyzed using Porter's Five Forces model. Part B evaluates different strategic directions available to TUI, recommending growth platforms and strategies. The report concludes with a strategic management plan, including strategies, objectives, and tactics. The report utilizes frameworks like McKinsey's 7S model, and benchmarking. Overall, the report offers insights into TUI's strategic planning and its position within the competitive travel and tourism market.

Unit-41
Hospitality Business Strategy

Table of Contents
Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART A...........................................................................................................................................3
PESTLE and SWOT analysis of the organisation and an analysis of the organisation’s
capabilities..............................................................................................................................3
Analysis of the competitive environment using Porter’s Five Forces model.........................7
PART B............................................................................................................................................8
Evaluate the different types of strategic directions available to the organisation..................8
Justify and recommend the most appropriate growth platform and strategies.....................10
Produce a strategic management plan with strategies, objectives and tactics......................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The hospitality business strategy plays the crucial role as it helps the hospitality
businesses to make more revenue by enhancing the booking capacity. The different business
strategy must get used by businesses in terms of different tactics by which the systematic profit
will get gained by which more competitive profit will obtained from the competitive
marketplace. Business strategies will get used by the hospitality service provider by which the
continuous success and better development will get induced with more perfection and to achieve
that effectual set of strategy will get induced (Altin, 2018). It will helps to make the appropriate
improvisation in the services that get directly associated with sales and profit. This report is
based on the TUI that is the world’s largest tourism business and have a larger family and having
70,000 colleague all across 180 worldwide destinations. It is the multinational travel and tourism
company that was founded in 1923 and have serve different products as like schedule and
charted passenger airlines, cruise line, hotels and resort and the package holiday as well. This
report includes impact and influence of macro environment, internal environment and
capabilities, porter’s five force model and different methods, concept and theory to devise
strategic planning.
MAIN BODY
PART A
PESTLE and SWOT analysis of the organisation and an analysis of the organisation’s
capabilities
PESTLE Analysis: It is an external analysis that has the direct impact on the productivity
and performance of TUI and as explained below as:
Political: The UK has more stability in terms of political aspect and in this travel and
tourism will make the better contribution within tax policy in terms of sales, profit, income, tax
revenue and in this TUI and other hospitality businesses ensure that UK adopt the better strategy.
TUI has made the acquisition with divest business thus they will be in profit while protecting the
easy accessibility of a capital market (Cheah, 2018).
Economic: The tourism sector will generate the better revenue as like from restaurants,
lodging, amusements, transportations etc. and have direct impact on the economy generation of
UK. Most of the travellers take the bank loan and if it is with high interest rate then it may
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influence the behaviour of tourist. UK will spend on tourism with price sensitivity thus more
innovation will get implement by TUI.
Social: It will basically consist of the need and size of the customers thus TUI always
follows the health consciousness, age distribution and have more focus on safety as per
increment of the lifestyle and better expectancy.
Technological: In this TUI has launched the TOUROPA.COM that is the tour operator and it
will be sale out from the television, call centres or from the traveller agents as it helps the TUI to
become the leader of sales generator.
Legal: The airline of TUI they only has permission to manage the air carrier if that get
majorly owned as it will get operated by the European Economic Area (”EEA”). TUIs manage
the majority and operate the airline with route license as it restricts the license of granted rate
that cost more to TUI airlines.
Environmental: To manage the environment protection as from the global warming and with
this the carbon emission in some of the areas restricted the TUI airlines and that will decrease the
profit share (D’Annunzio-Green, 2018).
SWOT Analysis: It is an internal analysis which affects recital of TUI and it explains
below as:
Strength TUI has the most established distribution channel and the most well acquired by
the better players with support to this they have improvise the customer services
on continuous basis with diversifying the range of products and services.
Weaknesses TUI travel and tourism spend lesser amount on research and development but it
is a fastest growing aspect within travel sector. Thus adequate gap is developed
in between the sold and required product thus it has negative impact over the
productiveness of business.
Opportunities As the demand and need of the customer will get changes and in support TUI
have provide the wider range of services with flexibility experience while
travelling. TUI makes more acquisition in order to expand their services by
which more values will get transmitted (González-Rodríguez, 2018).
Threat The economic condition of UK is biggest challenge as it restricts the capacity
management of TUI by which the employee has the lesser job security.
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These are the internal and external factors that has direct influence over the working
behaviour and performance of TUI and also help to make better strategy by which the better
advantage will get attained.
VRIO Model: It is the model which shows resources and capabilities of TUI as it helps to
achieve the target in timely manner and as explain below as: Valuable: It will defines the better strengths of the TUI as their financial resources are
being more vital and it is achieved by gaining better advantage in terms of sales. The
valuable resources provide TUI more powerful impact by which they could easily get
over from the marker threat. In this TUI provides effectual training and development to
its employee so that they could further attain the better profit with more perfection and on
timely basis as well (Njoroge, 2019). The patent of TUI is also be more valuable as they
have the effective brand value and their services will get lead in market and they provide
the access to other business on leased by which more revenue will get developed. Rareness: The financial resources be more valuable for TUI as with support of it they get
achieved all their task within the assigned period of time by which have accomplished the
target with more efficiency. Hospitality services are not much valuable as there are other
hotels and leisure travel as well that provide similar services but their employee are rare
as TUI provide special training by which have uses the effectual working approach. Their
patent is rare by which their service accessibility will get safe their brand name and
service only get used with license approval. Imitable: The financial resources are imitable as it developed by inducing continuous
efforts and along with this its patent also be more imitable thus its authority will get
transferred by TUI as per legal basis (Okumus, 2019).
 Organisation: The financial resources of TUI are more organised and get produced and
developed by making more effort on incessant manner.
Resource/
Capabilities
Valuable Rare Difficult to
imitate
Is it organised
Hospitality
services
Yes
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Employees Yes Yes No
Patent Yes Yes Yes No
Financial
resources
Yes Yes Yes Yes
It is analysed that financial resources of TUI will help to maintain long term
sustainability and equilibrium in the selling.
The capabilities as well as internal environment has reflect strength of the hospitality
organisation and in this the aim, vision, mission, goals, actions plan of TUI will get affect the
working nuances of the business. TUI will develope various strategies and in support gain the
better competitive benefits and affect the values and image of the business.
McKinsey's 7S model: It is a model that state several factors by which TUI measure better
growth and development too and is as describe below as:
Strategy TUI must have uses the cost leadership strategy and in support of it they are capable
to attract the larger number of customers as with this have worked with the
acquisition as like First Choice so that their market values and image will get
developed (Konovalova, 2018).
Structure TUI is the larger hospitality organisation and own the retail stores, hotels, airlines,
cruise ships and the travel agency and with this have uses the hierarchical structure
with this adequate information get circulated from higher to lower level authority.
Systems TUI has manages the employee performance by providing them rewards and benefit
as it helps to keep motivating them by which their working ability and attitude will
get improvised.
Skills It is dependent on the ability of the employees through which working efficiency of
the business is getting enhanced in constrained manner.
Style TUI uses steering wheel cycle that helps to make better changes and innovation so
that they have achieve their target and objectives in timely manner.
Staff TUI has worked with 70,000 employees as in 180 worldwide destinations.
Shared TUI worked on to provide better experience to customers by which they always get
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values more satisfied and more values will get generated (Melissen, 2018).
Analysis of the competitive environment using Porter’s Five Forces model.
Porter's five force model: It is a model through which TUI develop various strategy to
make their services different from competitor by which better competitive benefits will get
attained and as described further as:
(Source: Porter's five force analysis, 2019)
Bargaining power of buyers: The tourism sector has been gone through with lot of
competition thus the customer will have the high bargain power thus in this TUI develop loyal
customer with the inelastic prices by which more profit will get gained by the brand and that all
created by using the attractive marketing strategy (Papaioannou, 2018).
Bargaining power of suppliers: In this the bargain power of supplier is very less thus TUI
has enjoys the advantage of diffident assimilation that is associated with them from many of the
years.
Threat of substitute: The entry in tourism industry brings the minimum threat and with this
TUI doesn’t affected and their market share remain same and the new business will not get easily
accepted by the customers thus TUI makes more profit as per this norm.
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Threat of new entrant: There are some airline companies that compete with the TUI while
making the successful routes at minimum prices. In this in 2004 TUI will reduces the cost from
airline Thomsonfly in UK and in this it is not possible to make the competitive cost structure as it
decreases the cost and benefits.
Rivalry among the existing competitors: TUI faced higher competition in market and has
fierce marketplace by which have reduces the cost by inducing cost cutting programmes and
target the larger number of public.
It is used to make suitable strategy as TUI compared all its working with its competitors
and with their own previous strategy as well. It helps to make better interpretation so that
profitability will increases on repetitive basis (Reilly, 2018).
PART B
Evaluate the different types of strategic directions available to the organisation
Macro environmental factors are the different factors that have the direct impact on the
performance of the hospitality services profit and also get influenced the working culture as well.
It includes some of the different factors as like internal and external that get as described below
as:
Different strategic planning techniques
 Benchmarking: It is a technique in which business must set standardised result that must
get attained by them within the particular period of time by inducing the best efforts
(Boella, 2019). TUI perform this to manage their skills and with this try to gave better
competition to their competitors as like Thomas Cook, Marriot international etc.
 Business analysis: It is an analysis that performed by TUI and in this they have analyse
the different strategy that could be used by them and by their competitors by which the
appropriate method will get used with more perfection by which more sales and profit
will get attained.
The TUI uses some frameworks and is as explain below:
Stakeholder analysis: It is an analysis which is used by TUI in which they have analyse
all the individual that are associated with their hotel and helps to make better changes in the
project and also get used to make the better relationship with several stakeholders.
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(Source: Stakeholder analysis, 2019)
STEP 1: In this step TUI will analyse all of their stakeholders as like the customers,
suppliers, employee, government, buyers etc. as they have shown their interest toward the differ
projects of TUI.
STEP 2: It is a step in which the TUI will differentiate the stakeholders as per their interest
and that will be on the basis of the power-grid analyses as it is define below as: High power, high interest: TUI must get specifies the diverse stakeholder according to
their interest includes those individual in this group that has higher involvement by which
performance of TUI get developed (Bratton, 2018). Low power, high interest: It will include the stakeholders that have better interest but
low involvement on with this TUI provides them the required information in effective
manner. High power, low interest: These are those stakeholders that has better power but lesser
amount of interest thus TUI provides needed information to them.
 Low power, low interest: In this the stakeholder that has lesser power and less amount of
interest will get specified in this and TUI provide them the information as per necessitate
STEP 3: It in step the TUI will make the better understanding of stakeholders and with this
they have maintain the better connection with them and thus emphasis the market value of the
hotel by which positive effect on the sales will get measured.
Porter's generic strategies: It is the strategy which is used by TUI to analyse different
factors that has better contribution towards the success and development and it is as defined
below as:
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Cost leadership: It is a strategy of TUI by which they operate their business to enlarge the
economy of scale. TUI is the largest travel agency and has worked over larger range by which set
the prices of different services and also offer special discount by which more customer will get
attracted (Dubey, 2018).
Differentiation: In this TUI have targeted the better range of customers by which have
provide the diverse range of services as like family trip, picnics, business tours, honeymoon
package, cruise stay solution and also offers booking facility as well.
Focus: It this TUI uses both cost and differentiation focus both by which have offered the
products and services at minimum project by which larger market will get attracted that helps to
maintain more stability.
Justify and recommend the most appropriate growth platform and strategies
Ansoff growth vector matrix: It is a matrix that is used to measure market impact on the
business and its strategy and it is as defined below as:
(Source: Ansoff matrix, 2020)
Market penetration It is a strategy that is less risky as it controls the different resources of
TUI as the market will get developed on continuous basis and in this to
maintain the market share is more important. In this TUI uses the
different strategy as one after the other to maintain the balance within the
business.
Product
development
In this TUI has maintain the focus on current market products and
services thus TUI makes the acquisition as per requirement of the
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demographic impacts by which they get protect their market share and
values from the downsizing (Aldea, 2018).
Market development TUIs must uses this to get develop the offered services by which their
core competency will get developed by which the specified market will
get segmented and act as the better strategy. It will also develop higher
risk while expanding the business in new market as TUI major strength is
to strengthen the customer rather than the product.
Diversification It is more risky strategy for growth as it includes the market and product
development and it is only be measurable when risk will get compensate
with the high return.
The TUI will uses market penetration strategy throughout by which their productivity and
profitability will keep on increasing.
Produce a strategic management plan with strategies, objectives and tactics.
Bowman's strategic clock
It is the clock that shows the cycle of the different strategy that is used by the TUI to gave
tough competition in the marketplace and as defined briefly below as:
Low price and low value added: It is more probably didn’t get used by TUI because by
offering service at lower price may reduce the image of the business.
Low price: It gets used by the TUI to offer the different services at lower prices that is so as
to attract more customers.
Hybrid: In this strategy TUI provides the served the services to the customer with low
pricing strategy to get the better return on their investments.
Differentiation: In this TUI provide the diverse range of services to the customer to fulfil
all their need and requirements.
Focused differentiation: TUI uses this by maintain the focus to offer the variety of services
by which the customer always get attracted (Lozano, 2018).
Risky high margins: In this TUI will induce the constant development as with support of
making innovation and creativeness.
Monopoly valuation: In this only one business will lead the other by managing the pricing
of different services and that get followed by others.
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Lack of market shares: It will induce the negative impact on performance of TUI as its
share will get decreases.
These all will get used by TUO to manage the standardised outcomes by which they have
accomplished their targets in timely and systematic manner.
Strategies: TUI uses the market development strategies and with this induces better
development and success on repetitive basis.
Objectives: TUI work with the objective to offer best services to customer with appropriate
pricing.
Tactics: In this TUI will uses different strategy to attain their objectives in effective manner.
Product TUI served diverse services to customer by which they always get satisfied as their
demand and requirement will get fulfilled.
Price TUI use cost leadership strategy and raised own price that is with reasonable prices
by which more customer will get attracted (Yeow, 2018).
Place TUI uses the offline and online both the medium as with this prefer the enhanced
market acceptability by which their reach towards custome gets enlarged.
Promotion The digital platforms get used by TUI promote their services more in the market
and that is from the agents, own websites, search engine etc.
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