Introduction Of Strategic Management: A Case Of Tui Airlines
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In the present corporate world is becoming complex and, in this situation, it had difficult for the businesses to operate in an effective manner and sustain. In this era, it is important for the organisations to have effective business strategies. This can help them in operating properly and lead the firm towards a strategic direction. Business strategies are referred as the actions and decision taken by the organisation for leading the firms towards their business objectives and goals(Velikorossov, et. al. 2020). In the present report the researcher would focus on explaining different concepts related to the strategic management. For explaining these concepts, the report will consider the case of TUI Airlines which is aBritish charter airline. TUI is offering wide range of services to the customers across the globe as they are offering services to 80 destinations. Managing such an organisation is not an easy task one needs to focus on developing various strategies that can help them in managing the business operations in an effective manner. The researcher would discuss the strategic purpose, strategic analysis, strategic options, and strategic implementation as well.
TUI Airways is a British charter company that is offering airlines services form UK and Republic of Ireland to different nations. The chosen company is having an effective market position in the airlines industries. It is considering as world’s largest charter airlines and fourth largest airline service offering firm in UK. TUI is focusing on offering one of the best exploring experiencing to peoples across the world. TUI is offering airline services from UK and Republic of Ireland to the destinations such as Europe, Africa, North America, and Asia(Murphy, 2018).
The mission statement of the company reflects that they are focusing on creating unforgettable moments for the customers across the glove and making their dreams come true. For this they are making continuous improvement in their services for leading the firm towards their mission and goals.
The major stakeholders of the company are airlines itself, employees, their passengers, government authorities, local communities, suppliers, unions, and media as well(Mukhezakule and Tefera, 2019). TUI is developing effective strategies that are helping them in fulfilling the needs of all the stakeholders and running the firm in an appropriate manner. TUI is having effective plans for motivating the employees, rewarding them, and satisfying them with their job roles. Also, the company is following all the legal regulations that are being made by the government of the nations in which they are operating. All the stakeholders are important for TUI as they are operating in a complex industry that requires support from all the stakeholders for running the firm in an effective manner. While offering airline services, TUI needs to focus on all the stakeholders as they are having a major influence on the working and profitability of TUI.
The company is operating in a customer centric industry and their employees are directly in contact with their customer and because of this they need better employees. TUI is focusing on having effective workplace culture that can help them in offering better services to their customers. TUI is having effective and positive organisational culture that helps them in developing better cooperation, collaboration, and teamwork among all the team members. Along with this the company emphasis on managing positive relations in the workplace among the employees thatsome help them in creating better culture in which all the employees support each other. It can be said that due to effective culture of TUI is helping them in offering better services to their customers and maintaining the market position of the firm(Bose, 2018).
The value of TUI focuses on developed better trust among all the stakeholders. Better trust among all the employees of the firm is helping them in developing better teamwork among them. The leader of the company emphasis on developing effective teams and inspiring the employees. Better leadership helps the firm in leading all the employees towards the aims and objectives of the company.Leader is focusing on developing goals and objectives for the company as per the vision of the firm and motivating the employees to lead the firm towards their mission.
For developing better trust among the customers,TUI is focusing on offering best customer services to all the passengers. This is helping them in developing better customer base, attracting the potential customers, and retaining the existing customers as well. Also, the company focus on developing better strategies and plans for creating best travel experience for their customers. In present COVID-19 situation the company had faced financial loss because the aviation industry is also one of the highly affected industry(Mhalla, 2020). But the company is focusing on offering more safe journeys to their passengers. It can be said that the company is concern for their customers and this is helping them in developing and maintaining better trust with their customers.
Business world is becoming complex day by day and because of this it had become important for the firms to develop effective strategies that can help them in operating in an effective manner. TUI needs to focus on making different strategic decisions for making effective strategies that can help them in leading the firm towards their goals and objectives. All the firms operating in the aviation industry are highly affected due to the different factors of internal and external business environment(Baum and Auerbach, 2017). It is important for the businesses to evaluate that how these factors are affecting them and then based on it firms need to make better strategies for managing the business operations in an effective manner.
There are different strategic analysis tools that are being used by the businesses for strategic analysis and for evaluating that how internal and external factor is affecting them. In this report for strategic analysis of TUI airlines the researcher is using different strategic analysis tools such as PESTLE analysis, SWOT analysis, Core competencies, Value chain analysis and BCG matrix for the case company. These tools are widely used by the businesses for evaluating the impact of business environment so that they can make better strategic decision for their firm.
PESTLE Analysis of TUI airlines
Pestle analysis is an effective tool that is used by the firms for evaluating that how the different factors of the external business environment are affecting their business operations. This analysis focuses on six important factors of external business environment(Perera, 2017). PESTLE analysis for TUI airlines is mentioned below such as:
These factors are having a major impact on the business operating in the aviation industry as they affect theprofitability of the company. Being an airline service offering company the TUI needs to pay the taxes and the different tax policies are having a higher impact on the firm. Along with this the political crisis and the risk of terrorist attacks is also an important political factor that is having a higher impact on the travel and tourist and this would affect the aviation industry negatively. The political stability of all the different nations in which the case company is operating is having a major influence on the firm and their business operations as well(David, 2019).
The economic development and growth of UK is having a significant positive impact of TUI airlines as this is helping them in generating higher revenue. As the low-cost airlines are increasing in UK this is increasing the economic risk for the case company and affecting them in a negative manner. But the increasing GDP and economic group of UKs support the case company. In the present era because of COVID-19 the economies across the world had affected to a greater extent and aviation industry is one of the worst hit industry. Due to this reason, it is also having a negative impact on the case company as well. This economic slowdown had also affected TUI because the demand of air travel had decreased become of it.
Different factors of social environment are having an impact on the firms operating in the aviation industry. Demographic factors are having a major impact on the travel and aviation industry. The demographics are having an impact on needs of the customers and this varies from person to person. Also, the airlines customers focus on brand appeal while using the airline services and this affect the firms operating in this industry. In the present era due to the risk of spread of covid-19 disease the customers are preferring to stay at home and not to travel. This is having a major negative impact on the TUI as this is affecting the sales and profitability of the company(Iacus, et. al. 2020). Along with this now the passengers are more concern for their health safety and for this the company needs to invest money in using all the different equipment for ensuring proper safety of their customers.
For the firms operating in the aviation industry this is an important factor. Like other companies TUI also needs to invest better capital in their R&D department as this would help them in bringing great technological advancement in the services offered by them. The technologies used in the aviation industry are changing continuously and for this the company needs to be more technologically advanced(Zahari and Romli, 2019). TUI focuses on using the best technologies that can help them in offering best service quality of flights and better and safe travel experience to their passengers.
For offering air travel servicesTUI is following a lot of rules and regulations that are being imposed by the government of nations in which they are operating(Ho, 2014). In the European countries to which TUI is offering airline services they need to have the permit to operate the airline services and for this they must meet certain criteria. Also, the company needs to have the route license for offering the services in different nations. It can be said that legal factors are having a major impact on the case company.
Aviation industry is having a significant negative impact on the environment and due to this reason, the firms operating in this industry needs to follow different rules and regulations related to the environmental safety. TUI needs to develop better strategies for environmental safety and needs to show that they are concern for conservation of environment. Also, they need to use the engine technology that focuses on reducing the fuel consumption and energy consumption as well(Stevenson and Marintseva, 2019).
SWOT Analysis of TUI Airlines
SWOT analysis is an effective strategic tool that is used by the businesses for evaluating the different factors of internal business environment. This analysis focuses on analysing the strengths, weaknesses, threats, and opportunities for the organisation. SWOT analysis of TUI airlines is mentioned below such:
Strengths:TUI is having an effective market position in the airline industry and this is one of the major strengths of company. Along with this the company is also having great customer base and this is also an important strength of the company. Strong brand image of being a world’s best leisure airlines and largest charter airline is also a strength for the company. Also, the effective customer service offered by the company can also be considered as their strength as it is adding value to their brand image(Murphy, 2018). The growing profit of the company and their expansion in developing nations is also a strength for the firm.
Weaknesses:Competition faced by TUI is an important weakness for the company as it affects their brand loyalty and revenue generation as well. TUI is facing tough competition from competitors such as Thomas Cook India, Sunwing, SunExpress, Condor, Transat and many more. The airline industry is highly depended on the tourism and economy, so this is a weakness for the company. All the competitors are offering similar products and services and due to this reason the company face issues in attracting the customers and manage competition in an effective manner.
Opportunities:the company is having a better opportunity to expand their airline services in the developing nations that would help them in leading the firm towards success and their goal as well. Emerging markets are having a great opportunity for the company to generate higher profit. They are also having better opportunity to develop tie ups with the tourist destinations, and this would help them in increasing their sales also(Essay Company, 2018). If TUI would be entering into new markets then it will help them in gaining competitive advantage over others.
Threats:The different factors of political and economic environment of the nations in which TUI is operating is having higherimpact on the business operations of the aviation industry(Gupta, et. al. 2019). High level of competition faced by other firms such as Jet2.COM, Lastminute.com, Flyglobespan, Thomas Cook India and others operating in the industry are threat for the case company. The present covid-19 situation and the travel restriction are also a threat for the company as they are reducing sales and affecting the profitability.
Core competencies of TUI Airlines
TUI airlines are operating under TUI group and this is an important capability of the company because TUI group is having great market position and is one of the world best tourist business that is having around 1600 travel agencies, 6 airlines, 300 hotels and a great customer base across the globe as they are offering services across the globe. This is offering competitive advantage to TUI airlines over others(UK Essay, 2017). The company is also offering 3-star leisure airline services to their customer and working for offering best customer experience and travel experience to their passengers. TUI is having great resources to expand themselves and offering airline services to their customers. Along with these effective strategies of the company are also an important core competency that is helping them in driving customer satisfaction and retaining the customers by offering best services to the customers.
Value Chain Analysis of TUI Airlines
Value chain analysis is an effective tool that help the firm in analysing their internal strengths that can provide competitive advantage to the firms over other businesses. Both primary and supporting activities are having a major impact on the firms and for this reason it is important to analyse these activities in an appropriate manner.
- Inbound Logistics:the company is having better relations with their global suppliers. The firm is focusing on developing better relations because there are limited suppliers in the aviation industry.
- Operations: for managing all the different operations the company is having different departments in which all the employees are having clear roles and responsibilities. TUI is focusing on managing all the service operations in an effective manner so that they can offer better services to their passengers.
- Outbound Logistics:the company is managing their operations through online mode as their ticketing is done online. Also, the company is focusing on using best technologies that can help them in offering safe airline service to their customers.
- Marketing and Sales:TUI is having strong market presence and brand value but then also the company invest a lot in their marketing strategies for attracting all the potential customers.The company is having customer centric marketing strategy that helps them in targeting different customers in an effective manner(Byrne, 2018).
- Services: TUI is focusing on offering effective services to the customer when they are using airline services and at the airports also the company focuses on offering them best customer experience.
- Firm infrastructure:TUI is focuses on effective planning and making strategic decision that is helping them in developing a team that is offering best services to their customers.
- Human resource management:TUI is having highly skilled employees and effective leaders that are leading the firm towards their aims and objectives in an effective manner. The effective customer service and satisfied customers reflect that the company is having better human resource which is offering better services to their customers.
- Technology development:TUI is investing better capital in their R&D department so that they can reduce their operating cost and can use latest technologies for offering more safe and effective services to their customers(MBA Skool Team, 2020). The entire value chain is depended on technology so the firm needs to be technologically advance and should use best technologies for their all-business operations.
BCG Matrix of TUI Airlines
BCG Matrix is an effective tool that helps the company in developing an effective strategic plan for the company that can offer long term benefits to the case company. There are four sections of the BCG Matrix such as cash cow, the dog, the star and the unknows(Mohajan, 2017). BCG Matrix for the case company is mentioned below:
- Cash Cows: the unique and low-cost airline services offered by the company are cash cow for them as it is helping them in generating higher revenue and profit and leading the firm towards success.
- The Dogs:the management department of firm is facing issues in managing the different cultural and social issues among the employees in the workplace and this is affecting the firms negatively.
- The Star:the business operations of the company in emerging economies is a star for case company that can turn out to be a cash cow in future for them.
- The Unknown:The R&D department of the company is unknown for the company.
The company is having effective strategies that is helping them in maintain their market position in an appropriate manner and offering services to their customers.TUI had always focused on offering a unique service to their customer that helps them in gaining competitive advantage over others.TUI focuses on working on their quality and improving the quality of the services offered by them(Schafer, 2020). This is an important part of their growth strategy and the company is focusing on reaching to new markets and entering into the emerging markets. Basically, the case company is having a hybrid strategy that focuses on product differentiation, price, and cost control. It can be said that this is an important success factor that helps them in leading their firm towards success and development.
Product differentiation is an effective strategy that enables the firms in gaining competitive advantage over others.It can be said that the company should focus on investing better capital in their R&D department that can help them in using the latest technologies so that they can offer more safe and unique services to their customers across the world. With the help of the concept of offering unique travel experience to their customers they have created a great customer base and had build brand loyalty as well. This is offering competitive advantage to them over others(Saeed, 2017). It can be said that they need to work on this strategy further so that with the technological update in the aviation industry they canbring further improvements in the services offered by them.
The company is having an effective strategy for cost control that is helping them inreceiving better profits. For increasing their profitability, they are focusing on cost efficiency so that they can generate better profit and can lead the firm towards success and development. Based on this it can be said that the company needs to focus on developing better strategies and using big data for understanding the latest and new trends(Viardot, 2021). If they start offering the services based on the trends, then this would help them in attracting the potential customers. Also, the parent company TUI group is having an effective market presence in the tourism industry and this would also help the case company in doing business effectively and increasing the sales of the company.
TUI is having effective strategic for attaining sustainability in the industry and operating in an appropriate manner. It can be said that the company is having effective strategies for developing strategic initiatives and corporate goals that can help them in leading the firm towards their goals and objectives(MBA Skool Team, 2020). TUI being an one of the world’s leading tourism business is focusing on making the sector for sustainable for this they are developing different strategies. The company had developed the TUI sustainability strategy 2020 which is well explained in the image mentioned below:
Figure 1: Sustainable strategy of TUI
(Source: TUI Group, 2021)
TUI is focusing on offering effective training to the employees and making all the resources available that can help them in implementing the strategies in an appropriate manner. The company had developed an effective organisational culture that promote better change management. Aviation industry offers a lot of changes and the chosen company needs to make several changes in their working processes and business operations as well. Effective change management help the company in implementing the change in awell-planned and appropriate manner.
Along with this the company is using effective tools for evaluating performance and outcomes of these strategies in an appropriate manner. The company focuses onMarketLine Premium’s company strategy that can help them in evaluating their performance in all the different key geographies in which they are operating. This also helps them in evaluating their financial performance and growth of the firm in all the different markets respectively. The company also focuses on their key performance indicators for evaluating the performance of all the different strategies and plans implemented by the company(Marketline, 2017).
The company needs to follow the trend and bring changes in their business practices as per the needs of their stakeholders that can help them in offering high quality services in an effective and appropriate manner. Due to novel corona virus disease, Aviation industry is one of the worst hit industry and this disease had transformed the aviation industry to a greater extent(Dube, et. al. 2021). The case company also needs to make effective changes in the firm and the way in which they are offering airline services to their customers. Legal regulations made by the government bodies needs to be followed by TUI airlines and they must bring changes in their working pattern based on it only. The company needs to ensure that they are offering safe and secure services to their customers with the least risk of the spread of the covid-19 disease. They must bring significant changes in their organisations. It can be recommended that they can use the effective change management models such as Lewis change management model, McKinsey 7s model or the Kotter’s theory that can help them in implementing these changes in an effective manner(Sharma, 2019).
The above-mentioned report had described regarding the concept of strategic management in the businesses and for this the report had focused on the case study of TUI airlines. On the basis of the report, it can be concluded that it is important for the businesses to focus on analysing the internal and external business environment in an effective manner. As per the different factors of the aviation industry the case company needs to have effective strategies that can help them in operating in an effective manner. Along with this the organisation also needs to focus on implementing and monitoring the strategies and the outcomes of the strategies in an effective manner. Thus, it can be said that strategies are having a major role to play in the success of company and leading the firm towards the growth.
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