SWOT analysis for TUI Travel PLC

TUI Travel PLC is organized through the merger between TUI Tourism & First Choice Holidays PLC on 3 September 2007 and listed as “TT” on the London stock exchange in FTSE100. TUI Travel’s headquarter is in UK. The company itself operates in mainstream sector, and specialist sectors that includes accommodation & destinations, specialist & activities. Today, TUI Travel PLC, the success leisure travel company, have around 27 key source markets, 500 000 people that they employed, and operate their business in more than 180 countries with 30 million customers. TUI Travel PLC (2010)

SWOT analysis

Strengths

-Well recognized brand

-Superior management team & effective operations

-Market leader & well responsible corporate governance

-Good marketing skills & economies of scale

-Good financial stability.

Weaknesses

-Heavy reliance on technology

-Capacity-led volume reductions backfire

-Diverse portfolio and potential risk to cost of financing.

Opportunities

-Expand Low-Cost Airlines/ form Alliances

-Doing Investments

-Market Specific Targeting (Ecotourism, Medical Tourism)

Threats

-Climate change

-Hedging and exchange rate

-Geopolitical/ natural catastrophes/ pandemic, supply chain / product failure

-Supply Chain / Product failure

-Aviation cost flow fund of capital cost

-Economy decline and impact of consumer demand & capacity commitment

-Decline in market share

Strengths

There are five strengths of TUI. First, TUI Travel PLC has more over than 200 brands. Most of the brands are well recognized such as TUI, Thomson, Fritidsresor, Jetair, etc. And most of these brands are the trusted brand that leading in the market place. Second, they have many experienced leaders and also they have around 50,000 colleagues that commit to TUI Travel PLC where the company builds a better working condition for employee such as reward, employee’s survey, etc. Through their superior management team, the company has an effective operation which are flexible business model where they can adapt and meet to the changes happen, strong performance, synergy, and merger integration processing well. TUI Travel PLC (2009)

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Third, they are the number one travel websites in UK & Germany by visitor numbers, number one in water based holidays, snow sports, adventure, etc. TUI Travel PLC (2010) shows that TUI Travel PLC was a market leader. Since they are the market leader, they are well responsible in governing their corporate business which is being ethical such as controls the usage of carbon emissions. Fourth, TUI segmented their market into niche market that provides product differentiation. Their distribution strategies are through internet, call centre, and retail shop. Since, they are the largest distributor in the large market, it is certainly benefits them such as supplier advantage, innovation/ R&D, and cost reduction. Therefore, company has effective marketing skills with an efficient distribution channel which helps them to reach customer satisfaction. And Fifth, TUI Travel PLC maintains their finance stability through hedging by a group of expertise and cash balances from the strong relationship with banking & financing partner. TUI Travel PLC (2009)

Weaknesses

There are some weaknesses that we have identified. First, TUI is highly relying on technology to operate their business in servicing and trading around 27 key source markets. So if there is any faulty, it may interrupt the business activities. Second, their results in planning on increase volume of sale which offers low price bid are not to their expectation, they get wrong speculation on the market situation. Third, risks such as liquidity and cash management may happen when company’s expansion grow so fast and diversify. TUI Travel PLC (2009)

Opportunities

Some opportunities may happen such as profit margins will be increased if take chance of low-cost airlines such as Air Asia, Etc. or forming alliances since people likes to travel in budget airline with their limited budget. Second, doing some investment and expansion since there is growing markets around such as in South East Asia, Africa, Middle East, Etc. that have a good infrastructure and destinations. Third, target new market segment since ecotourism and medical tourism are emerging because people wants to travel for their own purpose such as want various adventure and have treatment.

Threats

Company need to look forward the threats which are climate change due to the global wastes such as carbon emission that will affect the travelling activities. Next, fluctuation of foreign exchange and fuel prices that may interrupt hedging process and unstable economy that may cause cost base increase. Third, political instability such as riot, natural disaster such as tsunami/volcano eruption, and diseases such as H1N1 will affect the operation to the desire destination and safety of customer. Fourth, even though TUI is a big distributor, building relationship with supplier is still important so that they able to maintain their supply chain and provide the qualified product to customer. Fifth, if not able to secure the fund and capital cost of aircraft it may cause a lot of expenses. Sixth, company need to be prepared that there might be economy decline that bring impact of consumer demand & capacity commitment. Seventh, TUI is not the only one that keeps progress in the tourism industry; there are many competitors that TUI needs to be aware. TUI Travel PLC (2009)

Recommendation

Since there is booming in the tourism industry, competition is arise. And TUI Travel has their main competitors which were Thomas Cook, MyTravel Group, ReweTouristik, and First Choice Holidays. To be able to maintain their position, my recommendation to TUI travel are international strategy and differentiation from their competitors in attract customers, gain market share, and growth where there are opportunities that actually can be apply from my SWOT analysis such as alliance, target to new market segment, expansion in other country, Etc.

TUI Travel is a big company and operates in many sectors. They have big responsibilities and challenges in running a big company. My recommendation to TUI travel is monitor well their business performance such as add value product and service in achieving customer satisfaction and loyalty, innovation, social responsibility, build better working conditions, and upgrade technology changes in achieving better information.

Reflection

From this report, it is compulsory for TUI Travel PLC to analyze and make sure to have a good research before take any strategy action. Through analyzing and understanding the PESTEL and SWOT analysis, I believe the company can still continue to emerge with the opportunities that they can get, handle their challenges, and develop their business. Because through analyzing, company is aware of what’s happening and will able to find solution in different challenges that they may face.

I have recommended some solutions through the capability that the company did not aware and it can be works on it. It will be successful solved the situation if the company implement and monitor it well. And through this report, I learn and experience a lot in how to analyzing and conduct TUI Travel PLC’s SWOT, PESTEL analysis, and recommend solutions after a better understanding in the lesson of SWOT, PESTEL analysis, and discussion of group presentation.