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SWOT Analysis of travel industry

Discuss about the Strategic Planning and SWOT Analysis.

Strategic development is a process in which management of organisation acquire relevant data and information for desired outcomes. The benefit of strategic development planning is that it facilitates effectiveness in decisions by selecting tactical option that leads to elevate the prospect of achieving stakeholder’s objectives and goals (McKay, 2001). There is no specific tool for strategic planning process, however, principle and steps laid in some of the strategy development tool help organisations to optimize the value of process. Among many others, SWOT, PESTLE and Five Force Analysis are the three most utilised strategic tools which will be discussed in this essay along with providing practical examples of it.

SWOT Analysis can be defined as a process of examining internal strengths and weaknesses of firms along with finding opportunities and threats present in external environment. Steps involved in it are collection of primary and secondary data after which those are analysed. (McKay, 2001)The data collected are sorted under four categories; weakness, strength, opportunities and threats.  Strengths in SWOT analysis refers to those factors that prompts company’s outstanding performance like assets, projects, quality improvement, etc. Weakness is those factors that reduces quality of organisation or those factors that makes overall cost for the company high. Inefficiency in work, poor communication, lack of financial resources, etc are few factors that generally comprises weakness of organisation. Opportunities according to SWOT are recognising new initiatives for growth of the business. Product development, acquisitions and mergers, along with gaining competitive advantage over competitors are few opportunities according to SWOT. On the other hand threats are those factors that can give negative effect in organisational performance. Political and economic instability, budget deficit, threats from competitors, etc are few threats that make organisations take necessary steps after analysis (Harrison, 2010).

With growing airline service around the globe, travel industry has become very significant and to get connected with passengers have become vital for travel agencies. Preparing SWOT analysis through strategic development tool will provide assistance to travelling business and promoting efficient travelling facilities. Strengths related travel agencies are that they can plan their own act according to the market needs. They are also capable to encourage people to visit tourists place in their country by providing extra facilities and convenience. Weakness lays here is that lack of infrastructure can sometimes affect agencies persona. Also, travel agencies are restricted to promote tourism facilities in selected regions only. Many new hotel and restaurants may be unknown to travel agents and thus they lack information by sitting in one place. Opportunities lies here are that travel agency are capable to flourish by making partners with other agencies and getting more knowledge of upcoming hotels and public interest places. Threats lies are economic crisis in the country. Also, lack of information and facilities does not attract visitors and can discourage them to visit in offered places. Government also makes fewer investments in these areas which are the reason that travel companies are unable to flourish (Haseeb, 2015).

PESTEL Analysis of Construction Industry

PESTEL is a strategic development tool used for evaluating political, economical, social, technological, environmental and legal factors related to organisations. It proves to be an effective tool for considering external environment at initial stage of business (Collins, n.d.). It identifies external or macro environmental forces that can affect the organisation. Political factors are those in which government of the country influences organisation like trade tariffs, fiscal policy, etc. Economic factors relates to impacts by determinants of economic performances like economic inflation in country, reduced GDP, etc. Social factors include consideration of social communities and people of the area where project has to be established. Fourth is technological factor that refers to the amount of innovations that are present in the market for the organisation along with considering the amount of technology the company can get involved with. Environmental factors directly relates to surroundings like climate, geography and weather. Lastly, legal factors accounts laws and regulations of country like consumer laws, safety standards, etc. (Galea, 2017)

Construction projects in every country are unique in nature but all of them require huge investments. Thus identification of external risk becomes necessary for the construction companies to take measures in progress.  Political instability is one major factor faced by every construction company as extended projects has to suffer many changes in nation. Any change in governmental policy affects the business to great extent. Economic factors also results difficulty for construction companies as any downfall in economic standard might reduce the projects value. Supply chain event will also get disturbed if income per capita is decreased. Any foreign trade investment is highly depended on external analysis for making investment in the construction company. Any unexpected sociological factor also affects social environment of Construction Company. Buying trend in more socially active and holiday staying countries will be more than the ones with socially disturbed countries. Technological awareness also affects Construction Company’s since they tend to evolve each day and making regular purchase of new machinery might affect cost turnover of the company. Legal factors like laws and regulations are also considered while making external analysis as fixing of project value depends highly upon it. Lastly, environment plays important role since serene whether can help in producing quality construction as compared to climatically disturbed country (TRIVEDI, 2016).

Porter’s five force analysis is one of the management tools that use industry forces to determine the strength of competitors of other organisation in similar industry. Threats of new entrants are one of the forces that recognise rivalries present in the market. If the company shows profiteering then this threat becomes more as it attracts rivals to enter into the industry.  Other factors that affect new entrants are lack of customer loyalty, no regulation in government, identical products, etc. Bargain power of suppliers is second factor as this determines the buying capacity of the firm. If the substitute is larger, this factor becomes threat as suppliers may switch to them. But if there are many suppliers available, this factor turns to be opportunity for the company. Bargaining power of buyers is also an important factor as it shows the power to demand high or less from industry. Lower price results in low income if bargaining power of buyers is strong. Substitute threat is a force that threatens companies to great extent as buyer can switch easily from one product to the other whichever costs little for them along with making comparison of quality. Rivalries among competitors determines how competitive or profitable the industry is and whether the industrial growth is possible or not (Jurevicius, 2013).

Michael Porter has suggested that to enable competitive market, agribusiness managers must consider industry forces and performing five force analyses determines ultimate potential in the industry. According to this tool, new entrants bring fresh capacity and competition for customers. This threat also depends on entry barrier thus makes difficult for outsides to enter this industry. Substitute products appears to be different but can satisfy customers needs many times. For example, switching from wheat to rice is easy and can be done according to the market value. Bargaining power of suppliers seems to be high if they are few in numbers wheras if purchasers are less in numbers, suppliers are weak. Bargaining power of buyers also affects the industry as it can force down the process of crops and play competitors against each other (Sorrentino et al., 2017). Rivalry among existing firms results in direct competition in industry. Where competitors are equal in sizes, they slow down the growth of industry along with reducing selling price of their commodity to compete with each other. Since the introduction of five force analysis in strategic tools, the future of agriculture business has perceived taking decisions after measuring external forces without which sustaining in their industry would not have been easy (Gray et al., 2004).

References:

Collins, R., n.d. Is There a Better Way To Analyse the Business Environment. [Online] Available at: https://users.ox.ac.uk/~kell0956/docs/pestleweb_thesis.pdf [Accessed 19 April 2018].

Galea, T.S.a.D., 2017. PEST analysis. [Online] Available at: https://www.researchgate.net/publication/257303449_PEST_analysis [Accessed 19 April 2018].

Gray, A., Boehlje, M. & Akridge, J., 2004. STRATEGIC POSITIONING IN AGRIBUSINESS: ANALYSIS AND OPTIONS. [Online] Available at: https://ageconsearch.umn.edu/bitstream/28666/1/sp040013.pdf [Accessed 19 April 2018].

Harrison, J.P., 2010. STRATEGIC PLANNING AND SWOT ANALYSIS. [Online] Available at: https://www.ache.org/pdf/secure/gifts/Harrison_Chapter5.pdf [Accessed 19 April 2018].

Haseeb, 2015. SWOT Analysis of Travel Industry. [Online] Available at: https://marketingdawn.com/swot-analysis-of-travel-industry/ [Accessed 19 April 2018].

Jurevicius, O., 2013. Porter's Five Forces. [Online] Available at: https://www.strategicmanagementinsight.com/tools/porters-five-forces.html [Accessed 19 April 2018].

McKay, E.G., 2001. STRATEGIC PLANNING: A TEN-STEP GUIDE. [Online] Available at: https://siteresources.worldbank.org/INTAFRREGTOPTEIA/Resources/mosaica_10_steps.pdf [Accessed 19 April 2018].

Sorrentino, A., Russo, C. & Cacchiarelli, L., 2017. Strengthening Farmers’ Bargaining Power in the New CAP. [Online] Available at: https://centmapress.ilb.uni-bonn.de/ojs/index.php/proceedings/article/viewFile/1713/679 [Accessed 19 April 2018].

TRIVEDI, N.R.a.M.K., 2016. PESTLE TECHNIQUE – A TOOL TO IDENTIFY EXTERNAL RISKS IN CONSTRUCTION PROJECTSi. [Online] Available at: https://www.irjet.net/archives/V3/i1/IRJET-V3I165.pdf [Accessed 19 April 2018].

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