Introduction
Today, many organizations focus on sustainable business environmental dynamics and ensure that they can positively affect their performance locally and internationally. In a tourism business, evaluating internal and external factors is effective to learn what has major effects, what aspects can be neglected at the moment, and what issues are obligatory for organizational operation. TUI Group is one of the global leading tourism organizations aiming to discover the world and explore new horizons with happy customers and satisfied employees (TUI Group, 2021). Because of COVID-19, many traveling agencies had to change their working processes and activities and follow the necessary restrictions. Many other macro and micro-environmental factors determine tourism companies’ internal and external environment, including customers, suppliers, competitors, politics, society, and the economy. The internal environment is a critical business element, focusing on the organization’s structure, functions, and overall management (Worthington, 2018b). The microenvironment covers all stakeholders who might affect the company’s routine activities, while the macro environment consists of various social, economic, political, ethical, and legal factors (Worthington, 2018a). The goal of this case study is to examine TUI Group regarding its internal, macro, and micro environments, the impact of the Covid-19 pandemic, and the UK government’s recovery plan.
TUI Group Summary
TUI Group is a public limited private business organization operating in more than 180 countries and delivering leisure activities for populations. It cooperates with millions of customers across the globe and operates about 16 cruise ships, 137 aircraft, and 414 hotels (TUI Group, 2021). Its services are based on a strong digital platform that allows becoming a leaner and more efficient business player (TUI Group, 2021). TUI Group operates in the leisure, travel, and tourism sectors and has already become a fully integrated tourism business. In 2021, its annual revenue decreased by about 40%, which was $ 4.7 billion, compared to $7.9 billion in 2020 (TUI Group, 2021). The number of employees increased from 48,000 in 2020 to 50,500 in 2021 (TUI Group, 2021). This decision to manage the negative pandemic outcomes by addressing the UK government’s recovery plan helped increase share prices from €1.732 to €3.192 in one year (TUI Group, 2021). Despite certain achievements as a leading tourism organization, TUI Group should continue assessing internal and external factors in its operations.
Tourism is one of the most competitive business sectors locally and globally. The Covid-19 pandemic has raised multiple concerns, promoting the worth of sustainable tourism experiences, attention to aging populations, and the recognition of climate changes (Department for Digital, Culture, Media & Sport, 2021). Direct competitors of TUI Group are agencies that work in the same sphere, including HIS Group, InvitedHome, and CWT Group. Indirect competitors are private hotels, lodging companies, and media organizations offering information about recent travel destinations and the cheapest choices for tourists. The World Tourism Organisation, Travel Weekly, and FVW Medien offer publications that might compete with TUI Group.
The company has effective leadership and management for holiday experiences and airline services. TUI AG is a parent company headquartered in Berlin and comprises 272 direct and indirect subsidiaries (TUI Group, 2021). The company works under German law, and its structure has remained unchanged over the last several decades. The legal structure consists of the executive board (several CEOs and managers) and the supervisory board (20 members and 20 shareholder and employee representatives), guided by responsibility and corporate governance principles (TUI Group, 2021). Key people are Friedrich Joussen (CEO) and executive board members, namely Peter Kruger (strategy), Sebastian Ebel (finance), and Sybille Reiss (human resources). Unique leadership teams are created in Northern, Central, and Western regions to cover all segments in the chosen industry.
The Impacts on TUI Group’s Internal Environment
The main idea of the internal analysis of TUI Group’s business environment is to identify resources that add a competitive advantage value to the company. According to Worthington (2018b), the internal context includes the organization’s structure and functions to balance the existing influences and external circumstances. TUI Group’s employees, goals, frameworks, and management activities have to be assessed through the prism of the two major factors: the COVID-19 pandemic and the UK government’s recovery plan.
The COVID-19 pandemic has already provoked many social and economic emergencies. The tourism industry is probably one of the most challenged sectors because of travel restrictions and obligatory closings. Foreign travel has become a preserve of only several groups of people, and international arrivals have been down by about 85% (The Economist, 2021). TUI Group had to follow governmental and healthcare recommendations to protect its customers and employees from the infection. Travel restrictions not allowing importing COVID-19 from other regions changed the initial functioning of the company. Employees had to re-organize their routines, which led to remote work, smaller teams, the loose connection within the organization, formalization, and individuality. HR departments must reduce staff costs, initiate restructuring projects, and apply digitalization strategies in the leadership and workplace modules (TUI Group, 2021). When the decline in earnings was observed, employee turnover was still insignificant because people had no other places to go.
Today, the UK Government participates in many social restructuring processes to minimize the impact of the pandemic on citizens and local companies. Its recovery plan for the tourism industry was initiated in 2020 and officially introduced in 2021. Tourism is defined as an economic asset and a social and cultural benefit (Department for Digital, Culture, Media & Sport, 2021). The government’s plan provoked several positive changes within the internal environment of TUI Group. The contributions to the economy and employment included the creation of resilient and sustainable offers for domestic traveling. The plan supported employing more than four indirectly employed young people and women in the tourism sector (Department for Digital, Culture, Media & Sport, 2021). This possibility helped TUI Group hire the new personnel and maintain the same functional structuring within each segment where specialists and line managers cooperate with their subordinates. The government promoted apprenticeship and training for employers to create safe workplaces and strengthen cooperation. This achievement was beneficial for TUI Group to develop professional skills, devotion, mutual support, and motivation.
The Impacts on TUI Group’s Micro Environment
The micro-environment includes stakeholders who affect decision-making and determine performance levels. In this case, competitors, suppliers, and customers are the major elements for analysis. TUI Group (2021) cooperates with more than 20 million customers and offers more than 400 hotels in different parts of the world. However, it was impossible to continue cooperation with many individuals and companies because of the pandemic restrictions and reduced international traveling. TUI Group’s competitors faced similar challenges, assessed their services, and frozen supply chains. Still, organizations with local suppliers concentrated on residents to increase their incomes and promote safe trips. When the COVID-19 rates declined, international agencies could restore their practices and offer new ideas to recover from the pandemic depression and social isolation.
Many countries with land borders did not consider social isolation as an obstacle. Some traveling agencies re-organized their conditions and facilitated entries for vaccinated tourists (The Economist, 2021). Britain was one of the countries that did not exempt travelers from all countries, including Indians, whose vaccine was used (The Economist, 2021). That governmental decision was provocative for TUI Group because it was hard to find enough customers and cover their organizational costs, explaining the revenue decline of more than 40% between 2020 and 2021 (TUI Group, 2021). The company initiated responsible social policies to attract new supply chain partners and uphold corporate responsibility (TUI Group, 2021). Reliance on suppliers was a serious risk for TUI Group, which led to regular monitoring, the stabilization of working relationships, and the creation of joint venture partner hotels as the major solutions and risk mitigation strategies.
The UK government’s plan predetermined most of TUI Group’s activities to improve the damaged supply chains. According to Worthington (2018e), politicians significantly impact local organizations at the macro and micro levels, including their decision-making, management strategies, and treatment of their employees, suppliers, and customers. Help in returning to profitability by paying debts, developing new job retention and income support schemes, and restarting grants allowed private organizations reopening, so TUI Group could resume its business contacts (Department for Digital, Culture, Media & Sport, 2021). For example, the duty rates on alcohol drinks were frozen to reduce unjustified payments for hoteliers and other accommodation businesses (Department for Digital, Culture, Media & Sport, 2021). Many government decisions facilitated the obligations of the stakeholders in the hospitality industry at least for one or two years until the number of tourists was improved.
The Impacts on TUI Group’s Macro Environment
STEEPLE analysis is a tool for organizations to examine their external environments through social, technological, economic, environmental, political, legal, and ethical factors. Differences in social norms usually regulate companies’ behaviors and attitudes toward tourists (Hamilton and Webster, 2018). Demographic and cultural changes are the elements of the social aspect of the marketing strategy that promotes many new ideas for the macro-environment. In 2021, the age and sex distributions of the population in the UK underwent certain changes: the increase of older female adults by 22% and the decrease of young females by 12-17%, and the decrease of males in all age groups by 13-18% (Worthington, 2018c). Thus, the main social factor for TUI Group to consider is the increase of the aging population as their potential customers.
Technological and environmental issues significantly affect the company’s performance and promote the necessity of innovations in both spheres. TUI Group should address the advances in information technology to improve its communication, data distribution, and electronic transfers (Britton, 2018). People who do not obtain what they want in a short period are eager to address another organization and use the Internet to fulfill their purposes. At the same time, many technological shifts have already increased the population’s awareness of natural resource depletion, the worth of conservation, and other environmental harms produced by humans (Britton, 2018). Therefore, the major environmental impact on TUI Group is the necessity to consider the protection of natural resources. The UK government introduced the Green Recovery Challenge Fund to support organizations in creating jobs to promote nature-based projects (Department for Digital, Culture, Media & Sport, 2021). TUI Group could rely on this policy to invite more individuals to support its technologically advanced and environmentally friendly working intentions.
The government plays an important role in understanding and applying economic, political, and legal factors in organizational development. Covid-19 has damaged international trade for many tourism facilities, including TUI Group (Worthington, 2018a). Laws governed the relationships between customers and suppliers to ensure social restrictions and vaccination importance (Morgan-Taylor, 2018; Worthington, 2018e). Compared to the factors that are usually associated with obligatory changes and challenges, the ethical environment strengthens social responsibility and interpersonal relationships. Ethics introduces a system of values for identifying the company’s right and wrong decisions (Morrison, 2017; Worthington, 2018d). When TUI Group follows basic rules of respect, integrity, and equality, all employees, customers, and other stakeholders successfully co-exist in the macro-environment.
Conclusion
Before the pandemic, the travel market was growing fast and fulfilling the needs of diverse individuals. However, following COVID-19, TUI Group, as well as other organizations in the tourism and hospitality sectors, must recover and integrate specific models and strategies. TUI Group has already survived multiple events since the beginning of the 20th century and introduced a strategy to enhance its sustainability and quality. To improve its macro-, internal, and micro-environments, TUI Group has already chosen the right directions in terms of innovation, digitalization, and human resource improvements. With the help of the UK government’s recovery plan, the company might focus on covering debts and attracting new customers into a safer environment. More attention should be paid to preserving natural resources and recognizing the population’s needs and expectations. Online communication plays an important role in finding and maintaining a solid customer database that brings high incomes and further motivation. Some social restrictions have been removed, but people should never forget how dangerous health problems can be. In addition, TUI Group must concentrate on technological issues and investigate the tourism market from multiple perspectives. The more innovative ideas and support are offered, the more positive outcomes and feedback will be obtained.
Reference List
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