Organizational Structure of Travel Group
According to the case, Travel Group is a large public limited company that is headquartered in Germany; it was formed four years ago due to a series of merger transactions. The company can be called an influential player in the world of global travel business – providing a wide range of services to more than forty million clients from different parts of the world, Travel Group is a tough competitor to other actors in the field. The total number of its employees exceeds fifty-five thousand people. Travel Group provides its services with the help of a high number of travel agencies located in different countries, a few thousands of hotels, passenger cruise liners, and airlines.
Regarding the organisational structure of the company that is suggested for the investigation, its analysis is fundamental for the improved comprehension of the basic concepts of the system theory and their application to real-life situations. Therefore, the systems theory considers all existing systems as the combinations of patterns and particular structures that can work as entities due to a range of dynamic processes (Van Stekelenburg et al. 2015). Applying this definition to the system model, we could compare any organisation to a living being that consists of several subsystems collaborating efficiently to guarantee the further development of the body and achievement of particular goals. The same goes for companies.
In this case, we present the ability of a system to reach the balance dealing with internal problems and mitigating external threats that exist in an organisation. Open systems differ from the close ones because they do not rely only on internal resources; instead, open systems use external resources and opportunities and turn them into benefits for themselves and the external world (Wiewiora et al. 2013). That is why Travel Group, which is analysed in the case, presents the entire network of travel agencies. Using the external resources such as space, the organisation makes efforts to apply them to create high-quality services for tourists and businesspeople. In the end, the corporation gets financial benefits while clients do not have to worry about organisational issues related to their trips. Therefore, it is clear that Travel Group is an example of an open system which introduces a hierarchical structure for all its subsystems to align their efficient cooperation and provide needed results.
Continuing the analysis of the case, we could distinguish several subtypes of organisational structure. In general, Travel Group seems to possess a divisional structure. As it follows from the information presented in the case, the structure of the corporation is hierarchical with several subsystems and support departments that are introduced to cope with all diversity of tasks that might appear in TGs functioning. The company has a few subsidiaries, and they fulfil their functions with the help of a range of operational divisions. For instance, when it comes to the subsidiary in the United Kingdom, it has several subdivisions like airline, commercial, and customer operations one (see the Figure).
These are introduced to distribute responsibilities and cope with different tasks that appear in the course of the companys development. Moreover, there are such support departments like finance, IT, marketing, public relations, and human that are supposed to accomplish the clearly defined functions. For this reason, the organisational structure of Travel Group could be defined as the complex one: every division is subordinated to the leading one and preserves a strict hierarchy. The implementation of this structure helps to avoid fatal or wrong decisions as a set of organisational rules along with the above-mentioned hierarchy determines the character of relations between all subdivisions. It means that only top managers are provided with an opportunity to make significant decisions while the rest of departments are responsible for their consideration and analysis.
The companys further development and evolution is another essential aspect that should be analysed in the given paper. According to Bastedo (2004), open systems have more opportunities to resist harmful external influences than close ones. Moreover, it has a unique ability to minimise undesirable outcomes and mitigate their negative impact (Bastedo 2004). It is achieved mainly due to the implementation of the open system approach to the functioning of the company. For instance, managers of all levels can rely on the existing hierarchy and organisational rules to act regarding the negative external impact. The use of stiff patterns contributes to the improved functioning of open systems as the collaborative approach to finding appropriate solutions demonstrates better efficiency (Bastedo 2004). At the same time, the adherence to the given pattern guarantees that top managers will be able to control working process in an effective manner which deprives subdivision managers of the ability to make crucial mistakes. Regarding the further perspectives of the company, the pattern could be considered a significant advantage as the adherence to this model cultivates better working culture and fosters cooperation between all organisations departments. Especially important the use of open system approach becomes in terms of complex entities consisting of numerous subdivisions like TG. The given structure creates a significant competitive advantage and stipulates the companys further growth.
The Influence of External Factors on Travel Group
There is a range of external factors that may pose a threat to business performance of Travel Group in the future. To analyse them and describe the situation for the organization in a detailed way, it is necessary to use models accepted in different countries.
PESTLE analysis helps to define factors related to different fields of activity that can have an influence on an organization (Zalengera et al. 2014). As it follows from the case, the most significant political factor influencing Travel Group is the threat of political instability and terrorism that reduces the return on sales. The case indicates that there have been a few cases when instability affected flights resorts and threatened the safety of tourists. Among the economic factors, it is possible to single out the currency rate of exchange that is rather unstable and may provide the opportunity for speculation. At the same time, not all the countries where the TG services are available are experiencing upturns in economic cycles – therefore, purchasing power of population in different countries may vary, and some services and destinations can remain inaccessible for certain social groups. When it comes to factors that belong to the social sphere, it is important to note that there are intercultural differences between employees in different departments that can cause conflicts in the company.
More than that, increased attention must be paid to career attitudes of employees: due to the fact that employment terms for specialists still depend on the company they worked for prior to the merger, there is a threat of strikes and protests caused by inequality that exists between employees. Also, the executive management needs to consider the prevalence of age groups among employees working for the company and design practices helping to prepare young specialists for the sphere. In terms of technological factors that may influence the business performance of Travel Group, they include improvements that need to be implemented in order to make working practices safer and less time-consuming. For instance, the use of e-ticketing systems has been introduced due to that reason.
The next group of factors that may have an influence on working practices and financial outcomes for Travel Group are legal factors; in the case of the company, it is clear that all practices used in departments and employment terms must align with labour law and be non-discriminatory for all the groups of employees working for Travel Group. In particular, the company has to give consideration to salary level of employees in order to exclude gender and racial wage gaps in the organization. Otherwise, it may have a detrimental influence on the social image of the company and cause unwillingness of young specialists belonging to minority groups to collaborate with Travel Group and their subsidiaries. At last, there is another group of factors that may have an impact on organizational performance of any company; these factors are related to the current environmental situation. Among factors belonging to this group that may pose a threat to the company, there are the necessity to reduce carbon emissions and the amount of waste that appears due to the activity of the organization. In addition, a wide range of environmental threats for the company exists due to unpredictable weather conditions in certain locations. At the same time, there is a threat of local contagious diseases that can be extremely dangerous for foreign tourists and even cause significant customer attrition.
According to the concept of five forces that has been developed by Porter, there are five primary factors that can have a significant influence on the organizational performance of companies (Dobbs 2014). The threat of new entrants and substitutes does not present significant risks for the company as it operates in different parts of the world and, therefore, its employees and department managers are able to keep track of the global situation. At the same time, there is still industry rivalry with other companies in the travel industry operating on a global scale; due to that, the company needs to ensure transparency and introduce innovations to remain competitive. The influence of suppliers (or business partners) and customers is manifested in growing power of labor unions, unstable purchasing power of customers that influences their purchase decisions, and demand for services that can change due to external problems such as wage levels, weather conditions, and political stability.
As is clear from the examples, there are various threats for different subdivisions such as the prevalence of political threats for airline or social threats for the HR department. To some extent, the PR department may face a combination of all threats considering that they are responsible for information exchange with the global community. Applying McKinsey 7S framework to the case, it can be said that establishment of shared values of Travel Group requires improvements associated with structure and staff (problems related to employee inequality must be prevented) (Singh 2013). –
Achievement of Sustainability: What Can be Improved?
Revolving around the case, it is critical to distinguish customer satisfaction, employee engagement, and sustainability as three main elements that prove the efficiency of TGs managerial efforts to improve the organisational performance and preserve leading positions. However, regarding the nature of the company and the industry in which it functions, sustainability becomes fundamental for TGs further evolution and preservation of its leading positions. Therefore, corporate sustainability of companies working in tourist sector depends on the use of proper destinations and the ability of tour operators to provide services that do not have a detrimental influence on the environment of the planet and health of employees and clients.
However, the enhanced sustainability could be achieved only by the company CEOs great effort and their focus on such elements of organisational culture as cooperation, communication, and values. The so-called McKinsey model suggested by Peters and Waterman support this idea and emphasise the role of skill, staff, shared values, strategy, and structures (Singh 2013). All these aspects could be considered in terms of sustainability which can be defined as the business ability to minimise the negative impact that working practices have on environment and quality of life of both employees and clients (Singh 2013).
At the same time, the principle of sustainability which is used by the company demands a specific culture of decision-making processes and subdivisions cooperation. Under these conditions, organisational culture becomes a critical element which should be given attention to achieve positive results. The fact is that the complexity of the companys structure and a significant variety of divisions in which TG operates, introduce a necessity to diversify approaches to the formation of a particular culture to meet requirements of each sphere. Nevertheless, the principle of unity remains important to the case of Travel Group as its subsidiaries work in different regions of the world. It also means a critical divergence in cultural norms and practices explored by departments. Under these conditions, sustainability could be achieved only if TGs approach to organisational culture is flexible enough to consider these aspects and encompass multiple unique features.
In such a way, there are two main ways to achieve sustainability, and they both are related to the organisational culture which means that it should be altered to attain success. First of all, innovativeness should become a part of managers mentality. It means that upper executive management should be provided with opportunities to foster innovation aimed at improving the efficiency of employees work and restructuring the company for it to become an environmentally friendly business. The information presented in the case evidences that TG has already started to implement technologies that reduce the negative impact of its activities on the environment and manage waste more efficiently. It demonstrates that the philosophy of the corporation starts to alter to improve the self-image and cultivate better relations with the outside world, which are important aspects of the organisational culture. For this reason, little change is needed regarding this aspect. The only recommendation for TG is to attract more specialists in maritime transport to monitor the state of facilities and eliminate the risk of water pollution.
However, the situation remains complex regarding the CO2 emissions caused by the use of fuel containing sulphur (Qin, Yin & Cao 2017). The given problem gains momentum nowadays and affects people living in seaport cities. Under these conditions, the only way to develop sustainability is to use fuel containing less sulphur. This strategic decision could be considered doubtful as it stipulates more substantial financial expenses and increased price for passengers; however, it is the only possible way for the company to evolve and improve its reputation among environmentalists and customers. Moreover, regarding the fact that there are numerous tendencies towards the deterioration of the environmental situation, the shift of priorities towards sustainable practices becomes the only alternative for TG (Wiewiora et al. 2013). For this reason, the organisation should also reduce carbon emissions and implement resource saving practices with the help of information technology. It includes the use of e-ticketing systems in all countries where Travel Group operates. It will help to achieve sustainability and differentiate itself among other influential players in the field of business. The use of innovation may cause certain implementation issues, and this is why the executive management may need to find additional external sources of financing.
Therefore, a proper organisational culture is another crucial aspect that will help the company to meet the requirements that exist for the industry and be included in the Dow Jones Sustainability Index (Van Stekelenburg et al. 2015). The case does not provide information that the company devotes specific attention to the formation of the appropriate atmosphere within the collective and cultivation of the appropriate culture. Thus, we could assume that it needs improvement and a radical change of this aspect is required. Any sustainable organisation should rest on cultural norms and values that are appreciated globally. These are equality, diversity, safety, and accessibility of services. The listed values should be protected by the executive management of Travel Group. According to the framework proposed by Quinn that introduces a two-dimensional pattern to analyze the current organisational culture of a company and assess its effectiveness, there are four components shaping this very culture (Wiewiora et al. 2013).
These are the hierarchy, adhocracy, clan, and market. The first component presented by hierarchy involves the use of well-defined policies, and Travel Group has already implemented a series of important decisions aimed at strengthening its multilayered structure by avoiding duplications of functions fulfilled by the subdivisions. However, the organisation does not adhere to principles of adhocracy that involves the establishment of structures that are extremely flexible – nowadays, the use of strong hierarchic structures seems to be a more appropriate alternative due to the specialisation of employees. Moreover, there is no strong corporate culture because of the nature of TG which appeared due to a chain of mergers. The case demonstrates that the inequality between specialists who used to work in different companies deteriorates the atmosphere within the collective and makes it impossible to establish the needed corporate structure.
For this reason, to achieve sustainability, ensure employee engagement, and, therefore, improve financial outcomes for Travel Group, the company should reconsider its current approach to the formation of culture. The radical organisational changes with regard to the principles of justice and equality should be made. The wage policy may need to be reconsidered so that all employees are paid in accordance with the amount of work they perform and the degree to which they are responsible for actions of other specialists. At the same time, sustainability could not be achieved if the significance of diversity is neglected; in fact, managers should do their best to exclude the possibility of conflicts based on intercultural differences and unequal attitude towards subordinates based on their heritage. Altogether, TG should introduce critical changes to its corporate culture to create the basis for its further evolution and achieve sustainability.
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