TUI Group Case Study: Internal, Micro & Macro Environment Analysis

Business Environment

Introduction: Business Environment

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The case study develops a deep understanding of the domestic trade environment, which is a constituent of the production background composed of a variety of fundamentals present inside the organization, that can influence or can be exaggerated by, the choice, performance, and decisions of the organization (Holloway and Humphreys, 2022). The main focus of the case learning is on the tourism business and the factor that formed its operation, by analyzing the TUI Group's business environment within the United Kingdom and internationally. Business environment forces have a very important influence on the performance of a business, the strategic guidelines, and its relations with the stakeholders of the company. The necessity of analyzing the effects of environmental dynamics, instabilities, and uncertainties is becoming more critical than ever before because of the COVID-19 pandemic situation in the world (Liu and Cheung, 2016). The impact of performance on every business is affected by the micro and macro environmental factors. Micro environment refers to the background that is in direct contact with the business and affects the day-to-day performance of every business directly. On the other hand, Marco's environment is the environment in which major external factors or uncontrollable factors are considered which affect the decision-making process of the organization. 

Section 1: Summary of TUI Group

Business Overview

TUI Group is a German leisure Travel and Tourism Corporation that stands for Tourism Union Intercontinental, headquarters in Hannover and Berlin, Germany. There are 1600 travel agencies, five airlines with approx 150 aircraft, 16 cruise liners, an important online portal, over 400 hotels, and many inward agencies in around every major holiday destination all over the globe. TUI Group covers the complete tourism value chain beneath a single crown, this combined contribution allows it to afford around 27 million consumers with a great and unequaled holiday familiarity to its customers in around 180 regions (TUI Care Foundation, 2022). In the 2019 monetary year, the business had a headcount of approx 70,000 turnovers of about €19 billion, and in commission effect of €893 million, The company's distribution is listed as the FTSE 250 index, at citation Board of Open Market on the Frankfurt Stock Exchange and is synchronized promotional area of Hannover Stock trade. In the year 2021, the German corporate Governance code set out the TUI AG legal principle of the German Companies Act pursuant the section 161.

Figure 1: TUI Group Logo

Size

TUI has full pace out of the pandemic emergency with an approximately impartial fourth economic quarter of 2021. Because of the victorious recommencement of the sightseeing business, TUI is close to accomplishing the manager of the original EBIT at 97 million euros in Q4 of 2021. TUI Resorts and Hotels, a significantly important and very high profit-making division of the TUI Group, and also the TUI tour operates in the western and central area, reported optimistic fundamental periodical results for the first instance since the commencement of the pandemic. Cash flow before finance performance was also optimistic for the second quarter in a row. As of October 2022, TUI has a market cap of $2.44 Billion. This makes TUI the world's 3267th most valuable company by market cap according to our data. 

Figure 2: Revenue of TUI

Direct And Indirect Competitors

Several brands in the market are competing for the same set of customers. The company has several competitors which are direct as well as indirect; these are the companies that are part of the same market as the TUI Group and also deal in similar products or services as the TUI Group.

• Kuoni Travels

Figure 3: Kuoni Group Revenue

TUI Group's biggest competitor is Kuoni Travels, a travel company operating in several services like scheduled passenger airlines, charter, hotels, and cruise lines in places around the world. The company's headquarters is in Zürich, Switzerland, with annual revenue of CHF 5669 million, and an operating income is around CHF 154.2 million (Secinaro et. al. 2022)

• Booking Holdings

Is an American travel technology company established under Delaware General Corporation Law, headquarters in Norwalk, Connecticut, US. The company owns and operates several flagships like Booking.com, Agoda.com, and Kayak.com, flights which are cheap in rate as compared to others (Landau, 2020). The company's revenue is around US$ 10.96 Billion and its operating income is US$ 2.50 Billion.

Figure 4: Booking Holdings Revenue

Structure And Leadership Team of Organizational

The managerial structure of the TUI group is a hierarchical organization structure, it starts with the Executive Board of the company which consists of six members, next in line is the group administrative team consisting of 11 members, and at the last is the management Board of around 20 members. 

Section 2: Interpretation

The COVID-19 pandemic impacts on TUI Group’s Internal Environment.

All the industry cast lists are exaggerated by the impacts of COVID-19, as the weight is still heavy on the tourism industry for the future. The profitable time for TUI Group is around the 2^nd and 3^rd quarter of the year when the demand for travel and tourism services is highest. As the company reveals in its financial results report for 2020 there was a huge effect of Covid-19 on the financial performance of the company.

The TUI group has renounced cancellation fees and offered its customers a 20% bonus, on choosing to rebook the canceled reservations against refund. Because of COVID-19 companies, all packages were canceled and nearly 900,000 holidays were cancelled. The company has to bear a huge loss against all the cancelations and refunds, and also because of the COVID-19 impact, the internal environment was also disturbed as the employees were also getting affected by the virus and the company was not able to fulfill the needs and demand of such large organization. 

The UK Government’s Recovery Plan Impacts on TUI Group’s Internal Environment.

The tourism improvement arrangement of the UK’s administration shows the role of the government of the UK in supporting and accelerating the tourism sector revival from the impacts of COVID-19. In 2020 November, the Global Travel team statement made a promise to circulate a Tourism Recovery Plan in 2021. This plan shows a significant landmark in the improvement of the tourism industry of the UK from the effects of the coronavirus pandemic. The main objective behind this improvement map of the UK's government is to build a position of the UK as one of the generally attractive tourist destinations across the world (Kraja and Osmani, 2015). This tour improvement plan of the UK's supervision has a huge impact on the TUI group's center situation as it refers to the civilization, members, and various factor within the organization which has capabilities to influence the decision of the company. The recovery plan has a huge impact which is as follows:

• The company is focusing more on building its old image and position in the market and also focusing on making the UK the most desirable tourist destination across the world.
• An immediate recovery to the earlier level just like before COVID-19, the plan helps the company to maintain the level of tourism volume and visitor spending that further supports the internal environment of the business.
• The internal surroundings of the corporation are focusing more on building back better quality, more productive, innovative, and resilient tourism to attract tourists from all across the world (Cheung and Pires, 2015).

Section 3: TUI Group’s Micro Environment Impacts

UK Government's Recovery Plan Impact on TUI Group's Micro Environment

Micro environment is the environment that comprises all the factors of an organization's direct environment which further affects the routine of the company. These micro-environment factors affect the direct attitude of the company's daily business operations. The microenvironment does not affect all the other companies operating in the same industry, thus it is closely associated with the company itself. The government’s revival plan has provided immense contact on the TUI group, some important points are as follows:

• The TUI group has seen significant cash flow problems because of a fall in demand and also a large level of cancellation of bookings, and refunds requested by the customer. All these factors have a huge impact on the TUI group's micro background.
• The UK's government recovery plan is helping the tourism businesses to return to their place of profitability, this also affects the microenvironment of TUI group as this plan helps the company to recover back to its profitability place.

Impacts of the Covid-19 Pandemic on TUI Group’s Microenvironment

The Covid-19 pandemic brought a huge challenge to the tourism industry all over the world. This situation of pandemic has affected the livelihood of millions of people working in this industry or who are connected directly or indirectly to the tourism industry. The TUI Group has come up with The Tourism Recovery Programme, which is an initiative that supports around 415 diminutive and intermediate enterprises in commission with a variety of parts of the tourism industry in the world. The TUI group launched this program in August 2021 post-Covid-19.

COVID-19 brought extraordinary challenges for the TUI group and its microenvironment. The company’s employees, for instance, are on short-time work advantage schemes of the company and also other state-supported programs that have the main aim of saving jobs. The travel restrictions related to the Covid-19 pandemic have completed the new demands on the company's staff in their regular operations which are local as well as cross-border operations. Therefore the company had to develop the global orientation and networking of the company's markets, employees, and systems.  In the financial year review, the company's main focus was on launching suitable national or international functions. This is the company’s key theme for enduring transformation.

Section 4: Analyse TUI Group’s Macro Environment

The factors that affect the macro environment of the company are as follows:

• Tax policy –the tourists add to sales, earnings, tax proceeds, and profits in the area. The tourism tax strategy is to make sure that the nation accepts suitable policies to attain accurate goals. To expand the legal tender and environmental risk of the TUI group.
• Political durability – currently the TUI is focusing on the open market of the budding financial system by considering the ready money for the markets (Mbithi al. 2017). Political instability in various parts of humanity amplified intimidations which have an important unfavourable effect on the TUI group's fiscal situation and operation results.
• Interest rate – some tourists always have a preference to take advance travel loan facilities or any kind of public holiday loan. The macro-environmental factors like the high bank rate and high tourists will think twice before considering an ongoing holiday, which has an enormous collision on the TUI group.

The impacts of STEEPLE factors on TUI Group’s operations.

STEEPLE factors include the factors that are part of the external factors of the company which are Social, technical, economic, environmental, political, legal, and ethical (Saidova and Muminjonova 2022). The impacts of the STEEPLE factors on the TUI group’s operation are as follows:

• Social factor –the community factors connected with the TUI group are security, age distribution, health, lifestyle, and existence expectations.
• Technical factors – TUI has launched an implicit expedition operator TOUROPA.COM in Germany to export online and from end-to-end travel agents, TV advertisements, and call centres.
• Economical factors – trade and industry impact scrutiny of tourism activity generally focus on the alteration in profits, sales, and service in a section after tourism activity.
• Environmental factors –issues like global warming have a huge impact on the company because of the environmental protection law which is carbon emission limits, which restricts the quantity of carbon emission by Airlines.
• Political factors – political crises, wars, terrorist attacks, and other conflicts had a huge impact on decreased demand for the travel and tourism of the company.
• Legal factors –In the country in which TUI airlines function, an air transporter is legalized to function airline forces only if the majority is owned, and efficiently forced, by members of their nationals.
• Ethical factors –These factors are dependent on the ethical and cultural factors of the country the company is dealing with, which have a huge impact on the tourism sector.

Conclusion

The case study concluded that the TUI group has to focus more on its micro, internal, and macro factors to earn profits and attract tourists and also focus on encouraging tourism in the UK. TUI's main focus is to have a primary goal to expand the tourism business, shipping business expansion, grow its customer base, and most importantly improve its financial risk profile.

As it is concluded from the report that TUI has a lot of shareholder loans, the main focus of the company should be on repaying its shareholders and improving its image in front of its investors and shareholders. The other drawback that the company needs to consider is that the company does not have any cheap accommodations.

It is recommended that TUI group is required to focus on opportunities like expanding the company and creating value with the help of acquisition, the company should focus on flexible travel experiences for its customers, and most importantly company should look after changing customers' needs. 

Reference

Cheung, R.S.Y. and Pires, G.D., 2015. The role of power distance in the application of relationship marketing orientation to the internal business environment. Global Business and Economics Review, 17(3), pp.330-343.

Holloway, J.C. and Humphreys, C., 2022. The business of tourism. Sage.

Kraja, Y.B. and Osmani, E., 2015. Importance of external and internal environment in the creation of competitive advantage to SMEs.(Case of SMEs, in the Northern Region of Albania). European Scientific Journal, 11(13).

Landau, T., 2020. Action and progress on sustainability challenges: case examples from Marriott, Booking, and Soneva. Worldwide Hospitality and Tourism Themes.

Liu, S. and Cheung, L.T., 2016. Sense of place and tourism business development. Tourism geographies, 18(2), pp.174-193.

Mbithi, B., Muturi, W. and Rambo, C., 2017. Macro Environment Moderating Effects on Strategy and Performance.

Saidova, M.X. and Muminjonova, E.K., 2022, February. USING STEEPLE ANALYSIS IN BUSINESS PROCESS (IN THE CASE OF UZBEKISTAN). In International Scientific and Current Research Conferences (pp. 48-60).

Secinaro, S.F., Calandra, D. and Biancone, P., 2020. Reflection on coronavirus accounting impact on small and medium-sized enterprises (SMEs) in Europe.

Statista, 2022. Kuoni Group Revenue. Direct and indirect competitors. [online]. 

Statistica, 2021, booking holdings revenue. Direct and indirect competitors [online]. 

Statistica, 2022. Revenue of TUI Group. Summary of TUI Group. [online]. 

TUI Care Foundation, 2022. Tourism recovery program. [online]. 

TUI Group, 2021. TUI Group Board. Organizational structure and leadership team. [online]. Available through:<https://www.tuigroup.com/en-en/media/press-releases/2020/2020-10-07-transformation-of-tui-group-supervisory-board>. [Accessed on 16/10/2022].

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