Overview of Thomas Cook Travel Group - Essay Example

Analysis of Thomas Cook Introduction: overview of Thomas Cook travel group Thomas Cook travel group has been second leading travel industry in the UK. It commands a 27% market share (Thomas Cook Para 3). The company is ranked as the leading travel service provider. The company gained its competitive advantage in 2007 when it merged with My Travel Company. The merger was considered ideal in regard to reducing debts and cutting down costs. The main competitor of Thomas Cook has been TUI AG. In 2010, Thomas Cook merged with the cooperative group, a move that was seen as the bid by Thomas Cook to turn into being the biggest tour operator in the UK. Such moves by Thomas Cook have been seen as part of its strategy to eliminate competition and expand in a horizontal way. Thomas Cook has 19000 employees with 800 stores. It owns popular travelling brands such Airtours, Direct holidays, Cresta, Sunworld and Sunset. The company has also vertical integration strategy denoted by its ownership of 44 aircrafts to its fleet. The company has also other plans apart from the travel plan including financial services such as foreign exchange and Thomas Cook credit card. In 2012, the company was an official Olympic and Paralympics supporter by offering accommodation and transport. The success of Thomas Cook is denoted by number of sales, revenue and market share (Thomas Cook Para 4). SWOT analysis Strengths Thomas Cook is better placed in terms of commanding the travel and tourism industry. The company is considered very reliable in terms of customer service. Being an old player in the industry, Thomas Cook has been able to build trust to its customers. For instance, in 2009, the company was trusted by over 22 million passengers. A total of 9 billion pounds was added to the trust as a way of assuring its customers that the company cannot go into bankruptcy. The other strength is the fact that the company has been at the top by its strategy of eliminating competition by horizontal integration. Additionally, the company has been able to comply with the laid down laws and regulations that govern operations of travel and tourism firms. The UK travel industry is controlled by strict rules and regulations. Any tour operator is required to sell a package approved by a DTI approved body. Several insurance requirements must be adhered to by any tour operator. With all these regulations, the company has overcome them and this places it at a better position to compete with its opponents effectively. The command of the market denoted by its 30% market share is critical in that the company has an advantage of effectively controlling the market. Studies have documented that organizations that have big market share are better placed in terms of maintaining competitive advantage (Duhaime 25). This is unlike those organizations that have no command or with little market share that prevents them from having a chunk of the market cake. It is apparent that the advantage of having a big market share helps organizations in making large returns thus increased profits. It is also much easier for such companies to diversify and increase their market base because they have enough resources to enable them doing so. Having 30% market share is an indication that the company has been able to satisfy many customers thus winning their trusts. Duhaime (26) argued that every organization has to understand the importance of customer satisfactions as one of the ways of making it remain relevant in a highly competitive market. In addition, this is seen as a way of assuring customers that the organization is in a position to satisfy them. Another great strength of Thomas Cook is that the organization enjoys the strength of its brand name. Brand name has been found to be a strong factor that makes organizations to enjoy loyalty of customers as well as different aspects of growth. Building strong brand name is an indispensable aspect of growth that encompass of different components. For instance, brand identity is one aspect of building brand name. This comes in terms of organization’s trademark, communications as well as other visual appearance of the organization. In fact, Evans, Stonehouse and Campbell (32) argued that brand identity is a way of communicating to customers about what the organization is all about. It is argued that brand identity helps organizations to set a range of facets that would help it in meeting customer expectations. Brand image is another component of building brand name. Brand image should be positive and one that people can easily remember for its services and satisfaction. Brand personality is another component of building brand name. Brand personality should speak to the target audience. TV programs are an example of how organizations can communicate to their audience. Additionally, even after all is done, it is also critical to have brand experience. Customers have to feel, visualize and actually use the brand. This experience is what they believe to be true as far as the brand is concerned. In this regard, it is indispensable for organizations to have all components of building brand name polished in order to have brand experience. In light of this, it becomes necessary to have brand management in place to take care of the organization’s objectives. The management is mandated to carryout brand awareness and recognition. Thomas Cook is an excellent example of an organization that has built its brand name with all its contents well articulated upon. Thomas Cook’s brand name has gradually been built through greater experience and better service (Thomas Cook Para 5). Strength of the Thomas Cook is also based on the fact that the company has strong financial strength. In the travel industry, it is indispensable for organizations to have stable finances that would enable them to take care of their customers. It would not be a good thing for organizations to leave customers stranded especially during unpredicted circumstances. For instance, during the 2010 Ireland volcanic eruption, Thomas Cook stood by its customers through a risk management program. The fact that Thomas Cook is an international brand is a strong point for the company. Travel and tourism industry deals with both local and international customers. Besides, the company’s main market is Europe and has also other subsidiaries in other parts of the world. Thomas Cook owns 1200 distribution channels in over 21 world markets. Weaknesses Although Thomas Cook is a well established brand with many brands in the diverse market, the company has not been able to market them appropriately. In fact, presence of these many brands have led to confusion as far as customer’s perception is concerned. In addition, although Thomas Cook has vast of fixed assets, managing them have been problematic to the company. With the latest development and diversification, it means that the company has more people to serve. This calls for more employees to manage its operations. In light of this, the apparent thing is that the company needs more resources to be able to handle its operations. Therefore, this translates to high cost of running its operations. This comes in terms of administrative operations as well as high marketing costs. Opportunities Since Thomas Cook has adequate resources and which the company has used over years for mergers and acquisitions, the company can use its resources in venturing into unexplored markets. Luiz (3) observed that organizations that want to diversify and grow must use their resources in research especially on target groups that pose as potential customers. Without enough resources, this fact inhibits organizations from achieving this objective. For Thomas Cook, this is a strong point since it can use its resources in venturing into foreign markets. Tourism is considered as a global aspect. Therefore, Thomas Cook stands a chance of using its resources in reaching new markets. For instance, in some areas, customers fail to travel because of the fear of travelling alone without the aid of travel agents. There is a notion that travel agents have wide understanding of destinations and should be used by people that do not have knowledge of some destinations. With its resources, Thomas Cook can take advantage and increase customer reliability by acquiring small tour operators that are being kicked out of the market due to their economic inefficiency. Threats The continued mergers of Thomas Cook and other operators pose a threat to employees. This comes in terms of employees losing their jobs. This can lead to employees tarnishing the company’s name especially if they lose the job as a result of the merger. This can be used as a fighting tool by its competitors. The other major threat to Thomas Cook is its competitors such as TUI AG. Being no 1 in the market, TUI is the major threat to Thomas Cook. If Thomas Cook fails to study TUI’s strategies that put it at the top, it is faced with the threat of slowly being eliminated from the market. Conversely, other emerging companies also pose as a threat to Thomas Cook. Luiz (2) argued that one of the strategies by new entrants to conquer the market is by studying old giants’ weaknesses and devise ways of eliminating them. This way, the new entrants can win the confidence of the customers and probably get a share of the market from the already existing ones. In this regard, it would be critical for Thomas Cook to check its weak points and devise ways of overcoming them so that it can escape the trap by its competitors. Decline in demand is also a major threat not only to Thomas Cook, but to all other tour operators. Decline can come in terms of lack of security or security threat of certain destinations that Thomas Cook operates. Travel advisories have been used by governments and other stakeholders in situations where security of their citizens can be put at risk. Outbreak of diseases can also lead to decline in demand especially on areas affected. Emergent of new entrants poses as a threat to Thomas Cook since this translates into sharing the available market while the demand is still static. New entrants come with astonishing strategies including low rates and other incentive sand enticing strategies. In this regard, if Thomas Cook does not put effort to increase its customer base and maintain its competitive advantage, the company stands to lose when new or its competitors bring in new ideas that entice customers. Just like any other tour and travel agency, Thomas Cook is faced with the threat of losing market due to depletion of environmental products, which most of the tour and travel operators depend on. For instance, poor weather conditions can hamper airline operations thus loss of business (Evans, Stonehouse and Campbell 30). Generally, some natural environmental conditions cannot be avoided. This is a great threat to Thomas Cook as well as other travel and tour operators. Conclusion Thomas Cook has advanced its operations and managed to be at the top of the game. Mergers and acquisitions have helped the company to increase its market share thus diversity and more returns. Its strong financial base is attributed to the strength of the brand. However, even with all these strengths, the company has its own challenges that need to be looked at if the organization has to continue shining in the market. Threats of its main competitor, THUI and others including new entrants in the market is a push for the company to devise mechanisms of overcoming any potential threat. Good management and close monitoring of its weaknesses can help the company in maintaining its competitive advantage. With the current performance, Thomas Cook is expected to exemplary continue performing well even in the future. The availability of its adequate resources is a strong factor that the company can rely on in coming up with effective mechanisms to continue being the leader in the industry. Innovative products can help the company in staying at the top. Bringing in new innovations especially in regard to its operations and customer experience can help the company to continue being relevant even in the future. Reliable management is critical as this determines the success of the company. The old reliable managers needs to be encouraged to continue working hard as they mentor new managers that would continue driving the company in the development path. Works cited: Evans, Nigel; Stonehouse, George and Campbell, David. Strategic Management for Travel and Tourism. London: Taylor & Francis, 2012. Print. Luiz, Moutinho. Strategic management in tourism. Cambridge: CABI, 2010. Print. Duhaime, Irene et al. Strategic Thinking: Today’s Business Imperative. New York: Routledge, 2012. Print. Thomas Cook. About us. Web 10th October. Read More