In-Depth Analysis of TUI Group's Business Environment and Strategies

In-Depth Analysis of TUI Group's Business Environment and Strategies

Introduction: In-Depth Analysis of TUI Group's Business Environment and Strategies

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The dynamics of the business environment appear to pose a significant impact on the overall performance of the business along with its relationship with stakeholders and the associated strategic direction. The global pandemic seems to have made the need to analyse the impact of environmental dynamics more crucial. This may also require a better understanding of the operational segments of the business. Apart from that, this may also play the keenest role in systematically dealing with the associated contemporary political, socioeconomic, and legal factors. Thereby, the internal business environment refers to the aspects that pose a direct impact on the day-to-day activities of the business venture. The main segments of the internal environment of business are suppliers, consumers, shareholders, employees and many others. Furthermore, the micro business environment seems to be the elements or the factors within the immediate environment of a business which may affect decision-making as well as performance.  The macro-environment systematically refers to the general environment that may originate outside the organisation and indirectly it may impact the operations and the business may not have any kind of control. Thus, the study is going to vividly demonstrate the analysis of the TUI group's internal, macro and micro business environment.   

Section 1

Overview of TUI Group

TUI group appears to be a German-based leisure, travel and tourism company it is an acronym for "Touristic Union International". Apart from that, the TUI group seems to be one of the leading tourism groups in the globe. It consists of 1600 travel agencies, leading online portals, and five airlines with almost 150 aircraft. Similarly, the group consists of 400 hotels, 16 cruise liners and many other incoming agencies in all major holiday destinations in the world. The key feature of the company's corporate culture is the global responsibility for social, economic and environmental sustainability. As per the viewpoint of Johann, (2022), this seems to be reflected in the commitment of more than 20 years towards sustainable tourism. Accordingly, in the financial year, 2019 TUI group seems to have a headcount of 70000 and the recorded turnover was 19 billion Euro. and an operating result of 893 million Euros. In addition to that the share of the “TUI group” appears to be listed on the “FTSE 250 index, and that too on the quotation board of the open market on the “Frankfurt Stock Exchange”, thereby the regulated market of the “Hanover Stock Exchange”.

On the other hand the direct, as well as indirect competitors of the TUI group, tend to be “Kuoni travels”, “Barr head Travels”, Cox and kings, Thomas Cook, and many others operating in the same industry. Most importantly, the full system integration of the tour-operating cruise ship as well as the operations seems to be the main reason for the agile framework of the business venture. Alongside following the successful integration as well as the merger of the business the AG of TUI and the former TUI travel Plc. the executive board of the company accelerated the design layout of acceleration of simplified organisational culture. Nevertheless, according to the report of Ghandour et al. (2021), the executive board of TUI AG consists of six members the group executive committee of 11 members and the supervisory board of TUI group consists of 20 members.

The above figure displays the organisational structure of TUI group the chief executive officer (CEO) of TUI group is Sebastian Ebel, the member of the CEO markets and airline is David Burling, the chief financial officer (CFO) is Mathias Kiep, the Chief strategy officer and CEO of holiday experience is Peter Krueger and the Chief people officer and labour director is Sybile Reiss.    

Section 2

The impact of the global pandemic on the internal environment of the TUI group

The world's largest travel operator TUI group appears to have seen a 98% drop in turnover because of the strict imposed restrictions of the global pandemic. Accordingly, as per the viewpoint of Jones and Comfort, (2021), the group posted a loss of 1.42 billion euros between “April and June” 2020 as per the announcement made by the company in Hannover. However, in the same period of the financial year 2019, the company appears to have displayed a profit of 22.8 million euros. Thus it can be said comparing the tenure of “April and June” 2020 and “April and June” 2019 the turnover of the company collapsed by 98.5%. Accordingly, the company tends to be forcefully bound to waive the charges of cancellation and offered the consumers a 20% bonus in case of rebooking the cancelled holiday rather than opting for a refund. Furthermore, according to the reports of Pricope and Baltescu, (2021), in alignment with the guidelines of ABTA the consumers were provided with a 20% extra credit note. This has been done by the company to conserve cash in intermediary travel. Approximately 900000 have been cancelled by the company due to the hazardous impact of the pandemic.      

The impact of the recovery plan of the authorised government body of the UK on the internal environment of the TUI group

The recovery plan of the authorised government body of the UK helped the business venture to secure nearly 3 billion euros that systematically play the keenest role to survive the pandemic-induced obstacles. On the other hand, the company got access to an extra 1.05 billion euros from the "German Development Bank". Alongside, according to the report of Andjelic and Ilic, (2022), it also secured 150 million euros in the form of convertible bonds from the federal government fund allocated for the coronavirus economic stabilisation. Thereby the governmental bodies also become co-owner of the TUI group with approximately 9% of shares. However, the economic assistance from the authorised governmental body of the United Kingdom helped the company to mitigate the hazardous financial obstacles of the global pandemic.    

Section 3

Impact of the recovery plan of the UK government on the microenvironment of TUI Group

The expenditure of the UK government on the IT infrastructure provides safety assurance for the sustainable tourism industry. This particular segmentation helps the TUI group and the consumers to restart the industrial activities again for recovering the situation. However, the amount dropped by around 640 million British pounds as compared to the year 2019 which has shown in the below graph.

Information technology provides safety and automation in the entire infrastructure which helps a lot to make the recovery plan as successful as possible.

The above graph shows that the pandemic situation causes a 1.5% fall in the UK's GP rate thus the Government wants to recover the situation with the application of a suitable plan.  The microenvironment of the TUI group is impacted by the UK government as the TUI AG group had included the German-based TUI travel agency for the core business to concentrate on tourism-related activities for many years. Moreover, consumer trust systems, co-creation, and communitization are also impacted by the UK government for changing the vision of tourism marketing. The recovery plan of the UK government ensures the tourism sector contributes enough for the conservation and enhancement of the country's natural, cultural as well as historical heritage and minimizes the damage to the environment. This particular plan helps a lot to attract travellers to enjoy their trip fully. Moreover, safety assurance has become one of the priorities for travellers after the pandemic situation. More than that, ensuring the recovery benefits to every nation and region has grown the accommodation occupancy rate easily.

The impact of Covid-19 on the microenvironment of TUI Group

The covid-19 pandemic situation hit the tourism sector very hard between 2020 to 2021. The travel group TUI AG also had to face huge changes in the annual revenue percentage worldwide. The income generated by resorts and hotels dropped by 39% in 2020 as compared to the previous years (Statista Research Department, 2021). However, the recovery plan after the pandemic situation has gradually increased the revenue rate. The microenvironment of the TUI group especially the consumers or the travellers has benefited hugely from this recovery plan as they get safety assurance can explore more cultural and historical heritage can enjoy sustainable and world-leading tourism services with minimum expenses and many more.

Section 4

The impact of the STEEPLE factors on the TUI group’s operations

Social

Social factors include employment levels, population growth, income level, education and career trends, social and cultural conventions, and many more (Aburumman, 2020). The positive impact of teaching people and tourists about the country's history helps many poorer countries to develop their economic standards through the tourism sector as well. TUI Group has supported those programs which educate young people as well as train them to work in the tourism industry as well.

Technological

Germany is the fifth best technologically advanced country and has a global market share of sound 14% this country is also leading in developing green services as well. Thus, TUI group has committed to making more sustainable services by reducing the environmental impacts of the holidays, creating positive changes for the people, and so on. This group uses a broadband connection to allow the safety of people on hips, and hotels and also allows seamless communication between different countries and different hotels, international subsidies, cruise ships, pilots as well as staff anywhere in this world.

Economical

Economic factors play a huge role in the success of the tourism business (Antošová et al. 2021). The employment rate, inflation rate, and interest rate of Germany along with those countries where this organization operates putting into account the growth of this industry. However, TUI group implemented technological advancement for competing with other competitors such as Expedia, and Trivago by focusing on online procedures to increase the market share every year internationally.

Environmental

For sustainability, environmental factors play an essential role. Similarly for the TUI group, 83% of its hotels and resorts have now become sustainably certified. It is worth mentioning that, 10% less carbon dioxide, 23% more green energy, and 24% fewer waste volumes can be seen in these certified hotels. This company successfully maintains less carbon emission (22% from their offices as well as travel agencies as ordered by the governments of different countries where they operate (TUI GROUP, 2022).

Political

Moreover, Political reasons are also the factors of legislation that are passed in various countries. The German government can anytime increase or decrease the corporate tax, the value-added tax on various products, and business rates which causes the increase and decrease of the tax rate of holiday packages and operation costs as well. Government rules of various countries also affect flight sales, which hinder the tourism sector and thus cause huge losses for many tourism industries like the TUI group.

Legal

Legal factors are those external factors that are affected by the law of business such as product transportation, profit margin, the viability of a certain market, customer demand, and so on. Moreover, recently this tourism group has been facing a threat related to its increasing interest rate and it would deliberately affect its fiscal policies and spending of its budget.

Ethical

Ethical factors for business opportunities and business ethics of tour operators, this company focuses on sustainability transformation, extensive reduction of emissions, and many more. According to Jones and Comfort (2021), the modern slavery statement in the tourism sector is also another business ethical for maintaining sustainability in the entire business operations.

Conclusion

In this concluding section, it can be stated that the entire findings is focusing on the business environment for the TUI group. The operational segmentation of this company has been illustrated in the entire study as well. The effect of the pandemic situation as well as the recovery plan on how much impact this particular company's micro and macro environment has been described vividly throughout this particular study. In more detail, the decision is related to the overview of this TUI group, the organizational structure of this organization, the impact of the pandemic situation on the internal and external environment, the impact of the UK government recovery plan, and many more. This particular business segmentation also includes the impact of the covid-19 pandemic on the microenvironment of this organization, STEEPLE analysis of this TUI group to provide in-depth information related to its operational structure as well. Meanwhile, the micro business environment and the legal, social, economical, ethical, and technological factors which are essential for the tourism group have been illustrated here with a detailed description. This particular study thoroughly incorporated the information related to the business opportunities and business segmentation for the TUI group to recover from the loss of the pandemic situation as well as effectively increase the profit margin.

References

Journal

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Andjelic, S. and Ilic, B.S., 2022. Management in Tourism and Integration of the Tourism Demand Segment. Journal of Economic and Social Development (JESD)–Resilient Society, 9(2).

Antošová, G., Vogl, M. and Schraud, M., 2020. Challenges for the Visegrad Group–the coronavirus crises and its impact on tourism. Visegrad Journal on Bioeconomy and Sustainable Development, 9(1), pp.28-32.

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