Strategic Management on Luxury Holiday

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Contents
Introduction3
Task A4
PESTLE Analysis: The impact of the industry key drivers; Economic, Environmental,Technological and Legal4 Five Forces Analysis6
Critical Success Factors involves8
Weaknesses in the luxury holiday10
Recessions impact on growth possibilities11
The weakened “right now” trend11
Retirements11
Family lifestage growth11
Age of austerity12
Future Opportunities13
Summary of Task A13
Task B14
Value Chain15
Competitive Advantage16
Thomson Platinum benefits16
Financial Analysis18
Strategic Resource Capability – The terminology20
Task C21
Strategic Direction22
References25

Introduction

This strategic report is an analysis of a travel operator, Thomson Holidays. They are UK based and is part of TUI Travel PLC. Before 1997, the company is known as Thomson Tour Operations but was renamed thereafter. Founded in 1965, the company provides package holidays that fits for all class range of living and for all types of holidays. It was owned by Thomson Corporation of Canada until it made its way to London Stock Exchange with a value of £1.7 billion. In 1972, the company was restricted and soon became UK’s largest chain of travel agents. Renamed from Lunn Poly to “Thomson Holidays”, it set its objective to become a “powerbrand”. Thomson Holidays now runs mostly on the web but is still the “go-to” brand on the high streets of the UK. This report will base its analysis partly on package holidays which the main focus will be upon; Luxury holidays, using PESTLE, Porter’s Five Forces Analysis to create a critical in depth analysis on their success factors. In addition to focuses on the Travel company while analyzing its competitive advantage, and how it has become UK’s largest chain and a “go to” brand. Lastly, the report will conclude Travel Holiday’s strategic management. Task A

PESTLE Analysis: The impact of the industry key drivers; Economic, Environmental,Technological and Legal

Figure 1: Impact of PESTLE factors on the luxury holiday packages (0=no impact, 5=huge impact) Figure 1 above shows how the PESTLE factor has relative impacts on luxury holidays and how the recession affects the holiday market. Below is an overview of the key drivers of the above table. Economic aspects – impact 5 of 5

* Economic Climate: Impact upon the fluctuating of personal disposable income (PDI) * Exchange rates: In determining patterns in holiday-making * Demographic changes: Decrease in volumes for air travel but “slow travel” or better known as cruise holiday increase to 21%. Cruising is also considered as a long haul luxury holiday. * VAT increase

* Fuel Prices: Decrease in flights due to an increase of fuel costs by 5.5%

Environmental aspects – impact 4.5 of 5
* Natural disaster: due to recent natural disasters in recent months, travel issues arise Technological aspects – impact 3 of 5
* Web 2.0: embracing internet 2.0 technology through blogging, travel guides and webcams * Independent travel:with online purchases and savings, people opt for independent travels rather than package holidays Legal aspects – impact 5 of 5

* Travel Insurance: the need to increase a proper insurance cover due to travel threats and security issues Socio-cultural aspects – impact of 5 of 5
* Top earning, socio economic group type AB bands contribute the most in the luxury holiday market. * Approximately 5% of the luxury holiday market gained market share even during the recession * One in four of these socio classes prioritize luxury holidays after bills and other obligations.

Five Forces Analysis

Figure 2: Graph showing the industry’s Five Forces distinct by Porter (0=no threat, 5=very high threat) The above figure shows findings that determines impact upon Luxury Holiday using Porter’s five forces. Threat of Substitutes – High due to competitions

* Independent Travels: Continue to grow as population chooses...
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