Since July 2012 Thomas Cook is now seen to be on a more robust and sound footing since the new board was assembled. With its debt vastly reduced and re-financed and its first phase of change management behind them. Thomas Cook has now progressed into the 21st century with its next change programme ‘Wave 2’ – one of incremental long-term change.
Two of the major introductions of change in the past two years were Thomas Cook introducing its e-commerce platform and entering a stage of strategic alliances with businesses around the world rather than one of merger and acquisition. Thomas Cook has firmly put the ‘customer experience’ to the fore of what it does, with the added provision of letting the staff do what is best by decentralising decisions to do with the customer experience to the staff themselves.
The commercial drivers are now customer experience excellence ‘best in class’, a rebuilding of reserves and improving stakeholder relations.
1. Building on your teams assessment of Thomas Cook’s capabilities and competences, critically evaluateow change management models could have supported Thomas Cook's process and systems improvements to help ensure appropriate benchmarks were met ?
2. Marks for Academic Quality Student will need to choose a formal style of report in outlining their findings and results in answering ALL the questions above. This report style should be academic in style NOT commercial. Both a reference list and bibliography should be produced to the Harvard Referencing convention and should be grammatically correct and elementary spelling mistakes should be corrected ?
Thomas Cook Group PLC is a company which is worth €12 billion travel and Leisure Company which was created in the year 2007. The creation of the company was through the merger of Thomas Cook AG and MyTravel Group PLC. The company today employs about 35,000 employees globally and has a fleet of 97 aircrafts which serve to customers across the 7 continents. The group has been known to focus on transforming as well as energizing the business in the field of travel and leisure with an attempt of ensuring that the company exceeds the expectations of the customers in every aspect. In the recent times the company has made great achievements and changed their style of management by including hi-tech and latest style of management and services. The focus is definitely on making profit and the company ensures that its activities are in line with the objectives and provides them a long term sustainable growth (Thomas Cook Group 2014).
The important steps which the organization has undergone over the past few years includes the cost effective policies and an attempt of leveraging the brands for building their core products which could attract new customers and retains the existing base of customers. By the year 2012 the company had posed an operating profit margin of 1.6% with a gross profit margin at a strong 22%. The focus has shifted to reduce the cost of operations and making their services highly customizable as per independent client needs. The change which has been evident across the board has been inclusion of technology and the means of ecommerce to its services. The other approach which the company has followed is strategic partnerships with various businesses in all the regions it operates. It works on a strategic partnership model instead of merging or taking over smaller companies.
In an attempt to build a much more effective organization and gain trusts of the business partners the company had recently introduced a new as well as evolved Group Code of Conduct. The entire policies enshrine the trust commitments as well as the shared culture which indeed reflects the proud heritage of the company being among the well-known names when the list of travel and leisure companies is prepared. In the coming years the company aims at offering its customers values and commitments in each and every interaction. Recently the CEO of the company declared that the company believes in having its operations based on three pillars of sustainability i.e. economic, environmental and social. With the dynamic nature of the world business environment and the increased needs and demands of customers the company has taken efforts to offer a sustainable strategy which ensures and covers the aspect of environmental as well as social topics and hereby creating value for strengthening the trust towards the brand (Accenture n.d.).
The change management strategies which the company has deployed is directed towards the 2020 target of achieving ambitions goals which also lists down the key issues along with the risks across all segments. An initiative which speaks about their efforts is the drive for embracing Travelife Sustainability Systems at their hotels. Here they offer a wider supply chain as a part of long term program that benefits the customers and the suppliers. It in turn builds trust and increases efficiency and hence reduces the costs. The following report evaluates the change management strategies which the company has deployed over the past decade as an attempt to leverage upon the brand and grow as a comprehensive end to end travel service provider (Thomas Cook Group 2012).
Changes adopted over the last decade by Thomas Cook
Introduction of Ecommerce
Ecommerce today rules the world market in terms of any kind of business, be it global or local. Thomas Cook after it become a global body was aware of e-commerce platform being a potential business platform for the future business. Its management realized that it required building a custom built platform for itself and catering to all its criteria for providing the service. The company brought the skills and experience from Accenture Travel Distribution Services to help them create an on-line distribution channel (Thomas Cook Group 2013). The company as a change management strategy had the following requirements which needed to be integrated to its ecommerce platform:
- The platform needed to support all the prevailing booking functionalities and offer enhanced content management systems.
- The management wanted to integrate a feature which could accommodate rapid, efficient implementation of its dynamic products and services. This required to include sourcing 3rd party products sold as a part of the company’s package.
- The ecommerce platform need to recognize website visitors and track all the activities and behaviors
- Offer seamless integration with the complex IT architecture which would further be aligned with other IT plans inside the company.
- Create an ecommerce center of excellence which offered a full set of tools, features, contents, functionality as well as business services (Accenture 2013).
With all the above objectives to be achieved and Thomas Cook created an ecommerce platform which controlled the web distribution channel and the experience of the customers. The initial stage included development of the roadmap and selecting the ecommerce framework from ATG or Art Technology Group Inc. With this platform the company was able to bring its best practices from on-line retailing in Financial Services and telecommunications industry to the travel industry. This enabled a number of new as well as improved areas like the improved features like customer reviews and a feature which allowed the customers to compare the different package options available. The company also got the feature of strengthening the personalization aspect of the customers. Overall this change in operations and a shift towards online operations supported the business processes and the organizational structure of the company. The entire structure of change and shift towards the online ecommerce platform was created in collaboration with Accenture which was also responsible for reengineering the helpdesk, sales as well as content management processes (Cats 2013).
With Accenture taking care of the entire program management and system integration, Thomas Cook was able to utilize an onshore and offshore resource for optimizing its delivery capabilities. It’s major solution functional design work was completed onshore.
Strategic Partnerships with businesses
Thomas Group is known to have served to over 19 million customers till today. It has its own 3000 outlets in across the globe with over 97 aircrafts of their own. It employs more than 33,000 employees globally. However, the company largely depends on its strategic business partners which it has in almost every region it operates. After the initial formation of the company they have shifted focus towards growing strategic business partners instead of merging or taking over different smaller companies. In this way the company has been granted a huge market to exploit and hence a larger business territory. However, with its strategic business partners it practices the same Group policy which are exclusive to its services (LYXK 2013).
The company uses its network and clubs the services of the strategic partners to offer a wider choice to the customers. They have tie-ups with leading airline companies, hotels, local travel agents, and transportation service providers in different countries. Based on the customer’s needs and requirements the company offers the different packages which its partners have on offer. With a wide array of partners and from virtually every budget category, the company is able to cater to customers who want leisure or affordable travel options (Sourcing Focus n.d.).
Porter’s Generic Strategies for change management strategies
Analyzing the change management strategies within Thomas Cook using the Porter’s Generic Strategies model is due to the fact that the company shifted its traditional strategy of cost leadership to differentiation. This was seen an attempt for re-establishing the competitiveness for the challenging times and change in business environment. Thomas Cook had been in the news for several wrong reasons before it shifted its business strategy. That had led to a reduction of share prices and losses to the company in 2008. In travel industry, Consumer confidence plays a crucial role and the situation had put serious doubts about the company’s survival. This is when the company shifted its strategies towards differentiation and gave away with the cost leadership strategies and attempts practiced over the years (Cambridgeshire Chamber 2011). The components and drivers for the strategy can be summarized as below:
- High Asset Turnover: Thomas Cook had the ability of operating airlines which had high capacity utilization and intensively on the short haul routes.
- Low Operating Costs: This was achieved by the company by offering standardized products with few options for the customer personalization. AN example can be filling up of 3 Star hotels in Spain and Greece with passengers travelling in the same flight.
- Controlling the supply chain and high bargaining power over suppliers: Being a travel operator with over 3-5 million people for short haul trips in each season certainly gave it the ability of getting good bargains with the suppliers.
But the factors like the holidaymakers being more confident of going on foreign trips and having the ability of organizing trips independently meant the company had to look beyond just offering standardized services. This is here where the company made the 1st mover advantage by offering the aspect of personalization to customers and catering to individual needs. This was seen as a major driver for the change within the company after 2008-09 (Condor 2013).
Kotter’s Change Management Model contributing towards the strategic drift in strategies
In order to evaluate the role of change management models in the strategic shift of the business strategies by Thomas Cook we try to evaluate the changes by using the Kotter’s 8 Change Model.
1. Increase the urgency for change: Thomas Cook which followed the conventional approach of offering cost effective solutions was facing stiff competition and a market which was not suitable for the changing environment. The company was making losses and customers were themselves creating their custom holiday packages and travelling across. The simple structured and same for all packages which the company had been offering was not pleasing the customers. Seeking the shift in customer behavior Thomas Cook and its management was quick to respond and create an urgency to bring about change in their business approach (Cloud Front 2014).
2. Build a team dedicated to change: Once the company had the entire requirements before and understood the key requirements of its customers, it created its own dedicated team and partnered with Accenture to facilitate the ecommerce initiatives of the company. In collaboration with Accenture, the company had a professional as well as an experienced team to take care of the ecommerce needs and support the marketing systems. On the other hand, the company resorted to tie-up with regional travel agents, hotel chains, transport service providers, airlines, etc. to offer their services and cater to a larger network. It was exactly opposite of its previous approach of merging or taking over companies and creating its own dedicated service network (Cloud Front 2014).
3. Create the vision for change: Once the team was prepared and the partners were selected, the third step which this model suggests is creating the vision for the change required. The vision which the company developed was a differentiation strategy. It projected itself as a different player which offers differentiated services from its competitors. The different options of selecting dedicated package and the option to get it customized made all the difference. The company also introduced the feature of comparing different packages offered by itself through the ecommerce website (NCC Group n.d.).
4. Communicate the need for change: Thomas Cook made a series of advertisements, promotions, and deployed social media channels to promote its offerings. This facilitated them to reach to a wider audience through every means possible. Its own website served as a 24 hour office which offered the customers to choose compare and select their favorite travel options. Adding ease spread the message across and the company was able to quickly reach to a vast audience.
5. Empower staff with the ability to change: Thomas Cook empowered its employees with equal powers irrespective of the locations they had been operating from. Additionally, all the members, strategic business partners, and other associates of the company were collectively under the umbrella of the Thomas Cook Group. Accenture on the other hand was responsible for handling the entire online operations which extended from basic ecommerce website to marketing to social media promotions (Skift 2013).
6. Create short term goals: As stated in the annual reports of the company, the administration had prepared short term goals which ranged from a year to two. The achievements and the progress of the steps initiated by the company were also summarized in the annual reports.
7. Stay Persistent: Thomas Cook till today from the year 2010 has been persistent in its strategies. It captures a huge market through internet while it has consistently been increasing its strategic partners. On the customer front the company offers travel options to customers in virtually every domain which starts from the tour packages to as simple as car rental. Thus, it has remained persistent with offering a complete travel solution to its customers (Super Brands India 2014).
8. Make the change permanent: The 3 pillars which was referred to above i.e. economic, environmental and social is still the basis for operations of the company. The strategies have worked well with them and they have been consolidating on it while making the change permanent.
After evaluating the case of Thomas Cook we are pretty clear about the progress the company has made over the years. The porter’s generic study and the Kotter’s Change Model portrays that there was an urgent need of the company to change its strategy owing to the changing dynamics of the business in its domain. The changes worked wonderfully for the company and helped it grow by manifolds. Today, Thomas Cook is a leading Travel and Leisure Company which caters to virtually every need a customer might have. Additionally the company is a global name and present in almost all the continent (Boozallenm n.d.).
Therefore, it shows us that changing business strategies as Thomas Cook b any company is essential to stay ahead in the competition. First mover advantage like introduction of ecommerce and changing the business strategy to work in collaboration by the company shows that right changes at the right times would work wonders for the company.
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