Achieving and Maintaining Leadership in the European Tourism Industry - Case Study Example

Business strategy A) Achieving and maintaining leadership in the European tourism industry. TUI is a German travel and tourism multinational company with its headquarters in Hanover. Previously it was called Preussag AG before it transformed itself into a tourism and logistics company (Luck, 2008). TUI is now considered to be the largest tourist firm with its interest being primarily in Europe (Botten, 2000). One of the major subsidiaries that TUI has is the TUI AG airlines and the company also boasts of having the cruise ships, hotels and travel agencies. This has enabled the company be a major player in the European tourism industry. This success however has come about because of the strategy that the management of TUI has been able to employ over the years. Macro economic factors influencing TUI PEST analysis There are many factors that influence the decisions that managers make in the organization. To have an understanding of these factors they are categorized using the PESTEL model. As a player in the European tourism industry TUI is affected by the following factors: Political environment Most countries in Europe are stable politically and they therefore are not a political risk (Courtis, 2006). Government interference is minimal because of the free market economy that exists in these countries (Campbell et al., 2001). The European Union has uniform standards applied for all industry players in the European Union have been helpful in minimizing government interference. Economic factors Germany is an economic powerhouse in Europe. This is mainly because it has had a stable economy for a very long time. The government has worked to ensure that it has a stable economy to support its industries because they are the drivers of the economy. TUI being a German company has benefited largely because of this. Germany is a member country of the European Union which is has provided the member countries with a platform to expand their industries and a larger market. The economic partnership that led to the integration of currencies has further worked out for the company (Fine, 2009). The euro which is a currency that is used by all countries in the euro zone has made doing business even so easy because now the costs of changing a currency to another has is now non existent. The integration has made it easy for companies in the euro zone to operate in all the euro zone market easily because barriers no longer exist (Worthington and Britton, 2009). With this partnership that exists in Europe TUI was able to exploit it to its advantage by ensuring that it expands to most of Europe. The economic partnership has enabled the labor to be mobile in this region and so has enabled TUI to get the best workforce from this region. The economic environment in Europe has therefore enabled the growth of TUI in Europe and the rest of the world (Burnett et al. 2010). Social factors Trends in society affects the way businesses operate this is because some social trends may affect the labor practices of an organization and demand for certain things (Fleisher, 2008). Society provides business and labor to the organization and so if changes occur in society then it is likely that these changes will affect the organization (Worthington and Britton, 2009). Europe has a population that has a high number of retirees and the old people who provide a market for the holiday package offered by TUI. Being aware of the trends in society enables a company to position itself well in the market. Technological factors Over the years the world has experienced a surge in the advancement of technology, tourism has not been left behind (Fine, 2009). TUI being in the service industry has to adopt the latest technology as regards its service delivery to its customers in terms of ticketing and reservation of rooms in their vast chain of hotels (Kern, 2001). As the technology is advancing some of it is rendered obsolete and so the company has to be able to acquire the relevant technology in its operations, technology that has an effect on the reduction of costs and improves the quality of service that TUI provides to its customers. Environmental factors The weather pattern in Europe is almost the same through out the year. TUI is therefore able to make policies that protect the environment that will work in all countries because of the similar weather pattern. Legal factors TUI operates in the euro zone countries where some are members of the European Union and some are not. This therefore puts to play a very complex legal environment (Fine, 2009). Regulations in the European Union countries may have been harmonized such that they are the same for all operators but this may not be so in the non member countries where TUI operates in. Legislation in terms of operations such as licenses, taxes and laws that protect consumers affects organizations. These macro economic factors drive competition in the tourism industry in Europe because of their direct impact on business. B) Industry dynamics in the HiFi sector SWOT analysis of hi-fi firms, Linn hi-fi, Naim audio and Meridian. Strengths High quality products Availability of resources Weaknesses Few suppliers Poor marketing criteria Opportunities New markets Affordable technology Threats Innovation Internet (online music on the rise) Lower demand caused by competition from iPods and MP3 Strengths High quality products These firms produce very high quality products and so have been able to establish themselves in the market as such (Pigneur and Osterwalder, 2005). These hi-fi systems have good sound quality as compared to other products. Availability of resources These companies have the necessary resources to acquire the appropriate technology to improve their products (Kern, 2001). These companies have the resources to employ the best and skilled workforce to continue the heritage of quality products. Weaknesses Few suppliers Having a steady and continuous supply of raw materials helps in keeping production going. This ensures that there are no shortages during production (Bohm, 2009). But a situation where the suppliers are few jeopardizes this. Also few suppliers limit the choices that manufacturers have for alternatives and so the manufacturer sticks with a supplier because he has no other option. Poor marketing criteria Having a good marketing strategy enables a manufacturer penetrate areas that otherwise seemed impossible. These firms have a poor marketing strategy and so are not able to reach other market segments. Opportunities Affordable technology As technological advancements are being made every day it will become cheaper to acquire technology that was once seen as expensive at affordable prices (Ess et al., 2010). This is because firms invest heavily in research and development of new technologies and if this cost is reduced the money that was used can be channeled to other areas the company needs to improve. New markets Every industry has prospects of new markets opening up for its products. These hi-fi companies have prospects of new markets opening up in other areas apart from Europe. Threats Innovation New innovations are rendering hi-fi systems obsolete. The competition from products such as MP3s and iPods has reduced the demand for hi-fi systems significantly. New innovations in the future may render these systems completely obsolete. Internet Internet has made the demand for online music to increase while the demand for CDs and other audio devices to decline (Jansen et al. 2007). Hi-fi systems play music in CD format and so a decline in their demand leads to a decline in the demand for hi-fi systems. Linn hi-fi, Naim audio and Meridian companies have the capabilities to harness the opportunities the future holds (Ess et al., 2010). Affordable technology means cheap and quality products. Quality products work both ways, for the manufacturer and the consumers because products become accessible to consumers and manufacturers are able to penetrate the market. With new markets these companies can open more retail stores in many parts of the world and not only in Europe and Asia. New markets offer opportunity to make more sales d these systems. Ansoff matrix and strategic options The Ansoff matrix presents the firm with the options for growth in its existing products and new products and also in new markets and existing markets. It offers a combination of four possible outcomes. It is a simple tool for understanding the generic options while defining the business future direction. By using this model a company identifies clearly the key factors of marketing that is what product is sold and to whom the product is sold to. Existing products new products Existing market New market Market penetration Product development Market development Diversification These four strategies are: Market penetration This strategy firms try to achieve growth in their current market segments with their existing products. For the three firms the aim will be to increase their market share and so engaging in vigorous advertising will be beneficial for Linn hi-fi, Naim audio and Meridian companies. This strategy aims at maintaining brand loyalty among its customers. Market development With this strategy firms aim at new markets. New markets are those markets that are currently not being catered for by the firm (Ess et al., 2010). Linn hi-fi, Naim audio and Meridian companies can open new retail outlets in areas where they have not normally been in operation. Africa, Asia and South America are place where these companies can open new retail stores. Franchising can also be way that they can use to capture these markets. Product development Product development is when firms develop new products for the existing market. This strategy aims at giving the customers something new as well as maintains brand loyalty (Stone, 2001). For the hi-fi companies product development for them may be to give their products enhancements for example head phones which can be used together with their products (Osborne and Brown, 2005). Developing new products helps companies to remain relevant and at the same time competitive. Diversification In this strategy new products and new markets are the target. This strategy is considered to be the most risky because the company goes beyond its core competencies. This high risk may be compensated by high returns if it works out well. For the three companies diversifying into other products and markets for example new markets such as schools. Business models A business model is an expression of how the company will make money from the venture it undertakes, its value addition to the customer and allocation of the resources needed to make the venture successful. For any web based business venture, how it fulfills the above aspects in its business model is important. Some companies choose to make money the old-fashioned way that is through advertising. Apple’s business activities with regard to music Apple is an IT company specializing in the sale of software technologies but recently it acquired an online music store. Digitalization of music was not easy because of the copyrights and the issues of piracy bedeviling the music industry (Green and Williams, 2007). However when this was all settled apple was able to start its operations in the industry. In the music industry apple operates the iTunes online music store and the iTunes applications in its iphone and through the internet where a person can access the music that he or she likes with these devices. Initially the business was gears towards hit songs only and this made customers to only demand for their favorite songs and not the whole album (Ess et al., 2010). With the decline in album sales apple had to change this model. Currently apple uses the subscription model for their online music store iTunes. This is a change from the model of ‘a la carte’ where customers only paid a flat rate for every song bought. Apple now charges extra to the customers who use their iphone and iPod music devices for them to access the iTunes music library. This model makes them more money because customers are happy and this pushes the sales up. The opportunities for apple in the music industry are tremendous because right now the music industry is open to the idea of digitizing music (Bensoussann, 2008). By combining the applications of the iphone, iPod and iTunes apple is in a place of advantage. For a person to download music from the iTunes music library one must have the iTunes application to access it and this makes apple to have the advantage. With the inventions, that apple has made such as the iPod, ipad, iphone and iTunes has made the use of hi-fi music systems to be almost obsolete and the popularity of these devices to rise. Digitalization is the new in thing and apple has capitalized on this new reality. As software and technologies, provider apple is a force to reckon in the industry (Ferrell and Hartline, 2008). References Bensoussann, B.E. 2008. Analysis without paralysis: 10 tools to make better strategic decisions. London. FT press. Bohm, A. 2009. The SWOT analysis. Norderstedt: Grin Verlag. Botten, N. 2000. 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