Business Environment Case Study Sample

Introduction - Brexit and TUI: Corporate Tax Impact Explained

The business environment means the sum total of people, organization as well as other factors that are outside the business but have an impact on the business. The report is based on the TUI Company of UK. The aim of the case study report is to know the impact of the corporate tax after Brexit on the internal, micro and macro environment. The Internal business environment refers to the sum total of individuals containing employees, management mainly business culture that defines the behavior of the employee. The internal environment includes value, mission , organizational structure, culture, human resource as well as technological resources. The Micro Business Environment means an environment that remains within the organization and has an impact on the regular operations of the company. The micro environment is a gathering of forces and factors that are closely related to the company and have an impact on the performance and day to day activities.

The Macro Business Environment refers to the external factors that have intense impact on the success, decisions as well as strategies of the business. These factors have high influence on the business but there is lack of control over these factors (Sheng et al ,2020). The factor includes economic, political, legal, social, competition, environmental and so more.

SECTION 1

Company’s overview

The TUI Company is a company that operates a business of tourism and caters its services to around 21 million customers every year. It furnishes a huge range of services related to holiday and travel. The TUI refers to Touristic Union International, it operates in public and private sector both. The business of company contains cruise ships, hotels, resorts, touristic airlines and tour operations. The Company known as Preussag AG till 1997 when the company makes changes in activity from mining to tourism. It has headquartered in Hanover, Germany. The aim of the TUI Company to make the travelers exploring new experiences, discovering the diversity of the world and giving the experience of foreign countries and their cultures through tourism. The company has 400 hotels, 16 cruise ships, 5 airlines with 130 aircrafts. It has 1200 travel agencies and has a digital platform for greater than 160000 tours. The revenue of the TUI Company for the year 2023 is € 20,665.9 million and gross profit is €455.7 million (ANNUAL REPOR, 2024). The company has total number of employees are 65,413. In the June 2023, the TUI Company run 300 outlets in all over UK, it make it the leading travel company in the UK.

The legal structure of TUI, there is 5 members in Executive Board, 12 members in Group Executive Committee as well as 20 members in Supervisory Board. There are many competitors of the TUI Company that includes HIS, Norwegian Cruise Line, Odense Marketing Group as well as Norwegian Cruise Line Holdings. The TUI Company use hierarchical structure in the organization in which chain-of-command follows means from top management to regular employees. This structure aids in the organization in understanding the relationship with each other and assists in making effective decisions (Aburumman, 2020). The leadership style of the company is open and comprehensive. The management of the company give importance to the voice of the employees and involve the employees of the company in the decision making process. The organizational and legal structure of TUI assists in achieving goal and objectives of the business as it guide in taking important decision like raising capital, making budget, decision related to make payment of taxes and so more. It provides clarity related to responsibility within the company.

SECTION 2

Impacts of increasing corporate tax rate after Brexit on TUI`s internal environment

The internal environment includes people, employees of the company, assets, mission, objective and goals. Due to Brexit, there is increase in the rate of corporate tax which significantly impacts the working of the firm. The increment in corporate tax leads to decrease the overall profits of the company (Zwick, 2021). The TUI has to make changes in the operations due to Brexit. This leads to increase the concern of the TUI Company that previously benefited from this. Increase in the corporate tax make an increment in the cost of operation, to make adjustment the burden of this shift on the consumers in the term of expensive prices.

This increment indirectly impacted the employees of the TUI Company as this leads to decrease their remuneration as the company profits declines (Khan et al, 2020). Thus, the corporate tax increment after Brexit directly and indirectly impact the internal environment of TUI and because of this the employee will get less money in terms of wages, salaries, the partners return on profits impact as well as the objectives and goals of the company will also curtail.

Recommendations to recover from challenges using internal environment

To recover from the challenges, the company must emphasis on the internal environment of the company. The company should use the cost reduction strategies so that able to manage its profitability. In this the TUI should cover all aspect of business including recruiting employees for booking flights, reduce expenditure that not added any value to customer satisfaction. The company should focus on improving their efficiency by allocating the resources in an effective manner so that there is no duplication and wastage (George., 2021). This aids the TUI to conduct business efficiency with the management of cost, so the profitability of the company not hindered.

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The company can minimize its cost by making partnership with the suppliers to supply them necessary items like raw material for hotel business and fuel in a minimize cost. This helps the TUI business in maintaining profits and successful achieving its goals (Buijtendijk, van Heiningen and Duinevel, 2021). The corporate tax rate of each country is different, the TUI company must evaluate this, so that there is no problem occur at the time of making payment. If the company fail to do this than it significantly impacts its financial position.

SECTION 3

Impacts of increasing corporate tax after Brexit on the Micro environment-

The withdrawal of United Kingdom from the European Union has made significant impact on every business. There is one of the main impact is that there is increase in the corporate tax after the Brexit, this affected the businesses as well as the TUI company. The micro environment of the TUI includes factors such as suppliers, competitors, customers, public and marketing intermediaries. The increase in the corporate tax makes difficult for the TUI Company to do business in the cost-effective manner. It leads to increase the cost of supplies like fuel, it is an important factor for the tourism business. This increases the cost of doing business and make expensive for the TUI to buy supplies.

The company has to take corrective action to being in a good position in respect of its competitors. If the competitors charge less prices for its services than the customer shift to competitive company and this make more worst situation for the TUI company as its profits decline more (Álvarez-Martínez et al, 2022). The burden of the increasing corporate tax ultimately shift to the customers as to adjust the cost of the operation, the company increase the price of tickets and its services. But this has negatively impact the TUI as the demand of the customers decrease because it is not possible for them to pay high prices. Therefore, the profitability and productivity of the TUI Company largely impacted.

Recommendations to recover from challenges in Micro- environment of TUI

The TUI Company has to find some ways to recover from the challenges. The company makes some appropriate decisions to decline its operating cost. The company should use technology so that able to effectively manage its operations as well as this means that there is lack of need of manual power. This aids the TUI Company to accomplish work with less cost. As the demand of customer decrease due to increasing price, this challenge overcome by the TUI by offering best services to its customers by providing them best travelling experience (Cubells and Latorre, 2021). This will help the company in attracting more customers towards the company and this will give the competitive advantage as well. As the price of the fuel supplies is major part of the cost, the company should use sustainable fuel which cost minimum as well as there is a less impact on the environment.

SECTION 4

Impact of PESTLE factor on the operations of TUI

Macro-environment factors that impact TUI are as follows:

• Political- The political factor plays an important role as it directly impacts the profitability of TUI. The company operates business in tourism and leisure in numbers of country and has to follow the rules and regulations of that country (Slyvenko and Slyvenko, 2020). It needs to pay tax according to different tax policies and rate, this significantly impact TUI.

• Economic – The economic factors includes tax rate, inflation, interest rate, government expenditure and so more. The increment in the tax rate leads to impact the working of the TUI (PESTLE Analysis Of TUI, 2024). It leads to increase cost of the company because off this the demand of the customer decreases.
• Social- The social factors influence the tourism business of the TUI company. The social factors includes like changing demand and preference of the customer (Van Hooijdonk, 2021). Now the customers change their attitude to wait and see means purchasing the tickets at the last minute. It affects the working of the company.
• Technology- The use of technology is increase in each sector. The use of technology by the TUI gave the boost to the tourism business in reservation as well as administration operations. With the help of technology the company can share the information and can attract the customers.
• Legal- The legal factors includes laws and regulations related to tourism. There are many restrictions of European and national on the TUI that make loss to airline and route license which adversely impact the business (Cowell et al, 2021).
• Environmental- As the tourism business have significant impact on the environment. To reduce the impact every business has to adopt right practices. The TUI constantly enhance environmental performances, it emphasized on ISO 14001 standard of environment (Liu et al, 2022). Therefore, it is by using protection policy support the environment.

Recommendations to recover from the challenges of Macro-environment of TUI

The TUI Company should remain aware of the political changes like rules, regulations of the different country, this will enable the business to deciding in advance any changes in its operation (Hassan et al, 2020). By evaluating the tax rate of different country at the right time, the company able to determines price for its services so that the profits of company not hampered.

The company should furnish services according to the demands of the customers so that able to attract customers on high prices. As there are various legal factors, the TUI should analyze this like routes of travelling in advance so there is no breach of law(Gaspary, Moura and Wegner, 2020). The company should follow environment friendly practices, it will competitive advantage as more customer attracts due to this.

Conclusion

To sum up all, it is concluded that the external factors that remain outside the business but have a significant impact on the working of a business. The report based on the TUI Company. It can achieve its goal by improving its operations while considering internal, micro and macro environment. By making partnership with the IBS Software, the TUI Company can maximize its IT airline operations. It assists the company in improving scalability, influencing market speed while enhancing experience of customers.

To overcome this, the TUI Company use to make budget in which there is estimation of all cost and revenue. This helps the company in overcoming the problem of cost increment so there is no direct impact on the profit of company as well as on the operating cost. Also, the company do market analysis so that it aware about any situation that may have significant impact on company`s activities. This leads to assists company in preparing in advance to the unforeseen events in the near future. the company also take continuous feedback from the customers, it enables in furnishing demand of customers and able to give services in cost-effective manner. Thus, analysis of business environment is important to conduct a business successfully.

References

Books and Journals

• Aburumman, A.H., 2020. The concept of global governance in tourism franchises: a case study of TUI group. Entrepreneurship and Sustainability Issues, 8(2), p.1321.
• Álvarez-Martínez, M.T., Barrios, S., d'Andria, D., Gesualdo, M., Nicodème, G. and Pycroft, J., 2022. How large is the corporate tax base erosion and profit shifting? A general equilibrium approach. Economic Systems Research, 34(2), pp.167-198.
• Buijtendijk, H., van Heiningen, J. and Duineveld, M., 2021. The productive role of innovation in a large tourism organisation (TUI). Tourism Management, 85, p.104312.
• Cowell, M., Corsi, C., Johnson, T. and Brinkley?Rubinstein, L., 2021. The factors that motivate law enforcement's use of force: A systematic review. American Journal of Community Psychology, 67(1-2), pp.142-151.
• Cubells, J.F. and Latorre, M.C., 2021. Brexit deal done! A detailed micro-and macroeconomic analysis of its fallout. Economic Systems Research, 33(2), pp.171-196.
• Gaspary, E., Moura, G.L.D. and Wegner, D., 2020. How does the organisational structure influence a work environment for innovation?. International Journal of Entrepreneurship and Innovation Management, 24(2-3), pp.132-153.
• George, R., 2021. The Tourism and Hospitality Marketing Environment. In Marketing Tourism and Hospitality: Concepts and Cases (pp. 183-219). Cham: Springer International Publishing.
• Hassan, T.A., Hollander, S., Van Lent, L. and Tahoun, A., 2020. The global impact of Brexit uncertainty (No. w26609). National Bureau of Economic Research.
• Khan, K., Su, C.W., Xiao, Y.D., Zhu, H. and Zhang, X., 2021. Trends in tourism under economic uncertainty. Tourism Economics, 27(4), pp.841-858.
• Khan, N., Hassan, A.U., Fahad, S. and Naushad, M., 2020. Factors affecting tourism industry and its impacts on global economy of the world. Available at SSRN 3559353.
• Liu, Z., Lan, J., Chien, F., Sadiq, M. and Nawaz, M.A., 2022. Role of tourism development in environmental degradation: A step towards emission reduction. Journal of environmental management, 303, p.114078.
• Sheng Fang Chorching Goh Mark Roberts L. Colin Xu Albert Zeufack (2020) Female Business Leaders, Business and Cultural Environment, and Productivity around the World. World Bank Group Development Economics Development Research Group.
• Slyvenko, V. and Slyvenko, O., 2020. Economic security of tourism in Germany: models for overcoming the crisis. European Journal of Management Issues, 28(3), pp.110-120.
• Van Hooijdonk, C., 2021, June. Chatbots in the tourism industry: the effects of communication style and brand familiarity on social presence and brand attitude. In Adjunct Proceedings of the 29th ACM Conference on User Modeling, Adaptation and Personalization (pp. 375-381).
• Zwick, E., 2021. The costs of corporate tax complexity. American Economic Journal: Economic Policy, 13(2), pp.467-500.