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Thomas Cook: Business Model and Product Offerings

Questions:

Part A of your report is the evaluation of strategic decisions. You need to evaluate recent strategic decisions that have been made by

• Thomas Cook– a outbound tour operator
• STA – a specialist tour operator

You will need to examine at least two decisions such as

• Pricing strategies
• Choice of product in relation to customer portfolio,

Part B of your report is to compare the tactical responses and decisions that could be taken by a STA and Thomas Cook in certain situations.

You will need to examine at least one responses to

• Competition
• Price wars
• External factors

You will then need to examine at least two tactical decisions such as

• Fluid pricing,
• Yield management

Strategic decision

Strategic decision involves the whole environment in which the business functions. It also includes the resources as well as the people (Greer, Greenwood & Patterson, 2002). It involves harmonizing the organizational resources and capabilities with the opportunities and threats of the business.

Thomas cook is one of the leading travel groups in the world. The company has a portfolio of leading brands in the market. It also has a business model that is flexible, and a focused strategy for business. The company has a large team of 31000 people, who are constantly making the vision of the company come true (Evans, n.d.).  Thomas cook is also fulfilling the dreams of their customers as well as providing sustainable value to the shareholders. Recently the Thomas cook group has announced that it will unify the entire brands under the common symbol of the ‘sunny heart’. The logo came into operation in the 2013, 1st October (Beech & Chadwick, 2006). The unification of the various brands of the company will make it even easier for the customers so that they can understand the full strength of the business. They can even understand the innovative offerings of the products and services, and they will get an inspirational experience.

The vision of the company has always remained clear. They always make their dreams come true. They focus on strengthening the existing business and also invest in their future growth. The company has sales which is over 8.5 billion pounds and has more than 20 million customers. The company constantly tries to improve the product mix while trying to reduce the cost. By doing so, they try to improve the cost and profit margin.

The group runs a fleet of 93 aircrafts which carries 17 million passengers. The fleet has four airlines: the German airline, the Belgian airline, the UK airline and the Scandinavian airline. The combined airlines have saved an amount of 19 million pound by the end of the previous year (Travelweekly.co.uk, 2015). Recently Thomas cook has moved to a single pricing strategy across the online channels to reduce the confusion of the customers. The biggest travel retailer of UK has decided to introduce a same price for its packaged holidays that will be booked online at the website of the company which is Thomascook.com. This facility is also available for bookings in their store or via their call centers. The same pricing strategy will be applied to their brands such as Thomas cook, Manos and Airtours.

Organizational Changes at Thomas Cook

The company have now made available to its customers, a wide range of products to satisfy their customer needs and preferences. The holiday packages of the company they offer are villa holidays, city holidays, cheap package holidays, cruise and luxury holidays. The range of products also includes hotels and cheap flights (Thomascookgroup.com, 2015). The company always puts their customers in the front and always looks at the needs of the customers. Keeping in mind the busy customers they have even come up with the ‘last minute holidays’ apart from their ‘family holidays’. People often worry about not booking their holidays in advance, but Thomas cook has come up with a solution. They provide great destinations like Egypt, and Turkey in the last minute booking. The company even provides summer and winter holiday packages.

STA Travel is a travel retailer. They consider them to be different from others in the business. They have an experience of more than 35 years as experts in youth travel. The company provides the students and youth to explore the globe which will create an everlasting experience (Evans, n.d.). They claim that the experience will be filled with personal growth, adventure and discovery. The company is currently operating in 60 countries which have 200 retail locations. They have a customer base of 6 million and more (Beech & Chadwick, 2006). The company wants to provide an epic adventure to their customers. They try to get students, teachers and recent graduates and offer them exclusive discounts on hotels tours, flights and more (Statravel.co.uk, 2015).

One large initiative taken by the company recently is that they have stopped the tours on Elephant Rides and in Thailand as well as the Tiger Temple. The trips in Orlando, the Sea World has been stopped, which has led to drop in their revenue. The company wants to set an example of responsible tourism to the world as well as the other companies.

STA travel provides various products and services like, student airfare, discount cards global cell phones, adventures, travel insurance and also online visa application. Their ‘Student exclusive ticket’ gives students a competitive pricing in airfare. They get unmatched ease and flexibility while they book their tickets. For the students the company provides various options to choose from: they are tours, voluntary programs, accommodation and work. This makes the students plan their trips smoothly. The company provides special discounts for the international students and also the teachers. They have partnered with Apple store, The Body Shop, Target.com etc for these discount cards. STA travel also provides travel scholarships to the university students, so that they can subsidize their travel costs so that students can travel.

The company provides a personal Travel Expert who will guide the users to book their travels. They have even plans which will provide a discount to the students as well as the youth a discount of 40%. The company enjoys buying powers with the best airlines of the world, the accommodation suppliers and the transportations on land.

STA Travel: Business Model and Product Offerings

Tactical decision

These decisions are related to the implementation of the strategic decisions of the business. It is directed toward the development of the structuring workflows, acquisition of resources such as money, materials and men (Mjigal, 2010). These decisions are the decisions of the middle level management.

Tomas cook which is one of the oldest travel agency in the world has taken drastic steps recently. The company has decided to cut 2500 jobs in Britain. The company has also decided to close 195 of its high street agencies. This was done to make the administrative cost of the company lower. The company has a debt of summing to 1.5 billion Euros (Phelan, 2008). The cutting of the jobs accounted to 15% of its employees. In 2013 august, the company moved to a new location where the rent was cheap. On November 23, an emergency was declared and the company was racing to gather funds in order to avoid bankruptcy (Travelmole.com, 2015). The unplanned removal and loss of the experienced talent from the key positions have led to adversely damaging the business both on a medium and a short term basis. The downturn of the economies of the source market of Thomas cook has led to a reduction in the demands of the services and products of the company (Thomascookgroup.com, 2015). Moreover there was threat from the internet distributers and the other low priced airlines which have tremendously caused a fall in the traditional package tours of the company.

The company has initiated a fluid pricing system called the fluid pricing in which the company reduces the initial prices of the tickets. The cost of the tickets remains low when bookings are made way in advance. The price of the tickets rises when the deadlines of the bookings come. Moreover the company has decided to merge with a company called My Travels so that it can cut its cost. The reduction in the cost or the total savings is expected to be 75 million pounds. The initiative was taken to combat the completion from the low cost airline companies and also the web based travelling agencies.

The STA travels has in the year 2010 has launched a travel brand called the ‘Bridge the World’ which was its first ever initiative outside the student and youth market. The company faces a stiff competition from the American Express Company. The company constantly tries to provide a cheaper pricing strategy to its customers (Mjigal, 2010). They have now introduced a price beat guarantee scheme. This will not only assure a low price but is a commitment to provide the cheapest tickets in airlines for international flights. This was done to combat the tough competition it was facing from the other travel agencies. With more and more competitions coming into the business, the market is becoming homogenous. This has allowed the customers search several alternatives, while choosing a perfect travel agency (Statravel.co.uk, 2015). Thus the company always maintains its low price strategy so that the name STA Travels comes to the minds of the people while booking cheaper tickets for students and youth.

The company has unveiled a new look flagship store to mark its 35th year anniversary in London. They always wanted to enter into the retail chain. The stores had Travel clinic associated with it (Vanhove, 2005). It was done so that the customers get a health related advice while in the stores. The company provides special discounts for the international students and also the teachers. They have partnered with Apple store, The Body Shop, Target.com etc for these discount cards. Moreover to stop the exploitation of the marine creatures they have stopped selling tickets of some of the parks having those businesses.

References

Beech, J., & Chadwick, S. (2006). The business of tourism management. Harlow, England: Financial Times/Prentice Hall.

David, F. (2005). Strategic management. Upper Saddle River, N.J.: Pearson Prentice Hall.

Evans, N. Strategic management for tourism, hospitality and events.

Greer, D., Greenwood, P., & Patterson, R. (2002). Designing Teaching Strategies. Burlington: Elsevier.

Mjigal, T. (2010). Tactical management in the secular bear market. [S.l.]: Authorhouse.

Phelan, T. (2008). Emergency management and tactical response operations. Amsterdam: Butterworth-Heinemann/Elsevier.

Statravel.co.uk,. (2015). STA Travel | Crisis archive. Retrieved 16 February 2015, from https://www.statravel.co.uk/crisis-archive.htm

Thomascookgroup.com,. (2015). Thomas Cook Group – New Growth Strategy. Retrieved 16 February 2015, from https://www.thomascookgroup.com/new-growth-strategy/

Travelmole.com,. (2015). Travel industry news and job listings. Retrieved 16 February 2015, from https://www.travelmole.com/

Travelweekly.co.uk,. (2015). Travel Industry News and Travel Jobs from Travel Weekly - www.travelweekly.co.uk. Retrieved 16 February 2015, from https://www.travelweekly.co.uk/

Vanhove, N. (2005). The economics of tourism destinations. Amsterdam: Elsevier Butterworth-Heinemann.

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