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PEST Analysis of Thomas Cook Essay

PEST Analysis is mainly used to scan the environment. PEST refers to political, economical, social and technological factors. Thus Pest is used to analyses and scans the general environment surrounding Thomas cook. It is through PEST that the company will be able to detect as well as monitor the weak signals in order to recognize the fractures which shape the environment.

Political Factors

The UK travel and tourism industry has faced immense pressure from the government as it has introduced tourism tax and has said to affect all the travel and tourism business including Thomas Cook. The travel agents had opposed to the proposal of bed tax which the government had levied £1 per head per night from the visitors staying in the local hotels. The proposed bed tax is said to increase the domestic price and keep the foreign visitors from holidaying in UK (The Guardian, 2012). The potential tax of about 5% to 10% would make England the proposed bed tax is said to increase the domestic price and keep the foreign visitors from holidaying in UK (The Guardian, 2012). It is one of the highest taxed holiday destinations in whole of Europe (BHA, 2012). Thus with the rise in tax, business like the local shops, the restaurants and the travel agencies are said to be affected.

Economic Factors

During the past few years the tourism sector have faced hard times due to challenging economic times and have largely impacted the global travel market but however there are signs of recovery within the consumers. The travel and the leisure sector were impacted mainly due to the consumer’s disposable income, unemployment rate, fluctuation in the rate of currency and the oil price. All these drives have hugely impacted the travel and leisure industry. The GDP declined by 6% in the year 2009, the rate of unemployment has increased to about 2%, the price of oil continued to be highly volatile. In addition to the above factor, there are other factors which have impacted the global travel market. Global terrorism has impacted the confidence of the consumers from travelling along with the swine flu in Mexico which had similarly affected the travel planes along with an increased taxation the economic conditions seems to get worst. Therefore due to these challenging economic conditions, the travel market over the past few years has significantly declined in the travel market (Thomas Cook Group Plc, 2009).

Social Factors

The economy of UK is one of the strongest economy in Europe where the disposable income of the consumers are at a rise and thus the expenditure made on leisure is growing at about 6% and thus has higher level of expectation from the travel and tourism sectors. Most of the people will at least go for one holiday to abroad, thus increasing the demand of the travel and tourism industry. In addition one of the important markets in travel and tourism is the grey market which mainly comprises of older people who are healthy and fit and as such has plenty of time along with funds to spend on travelling.

Technological Factors

Technological factors refer to the use of internet which has allowed the people the opportunity to become much more independent and make plans according to their desire. Thomas Cook aims to be among the top online service provider and it can be done through modified and advanced technologies.

SWOT Analysis of Thomas Cook
Overview

A business analysis of Thomas Cook Group PLC, a leisure travel company which offers package tours and holiday components, is provided, focusing on its strengths, weaknesses, opportunities for improvement and threats to the company. Strengths include benefits derived from its strong brand recognition, asset light business model and product mix. Weaknesses include its overdependence on European markets. Opportunities for improvement include acquisitions, strategic planning and trends in independent travel business. Threats to the company include impact on its operating margin due to volatility in the fuel cost and intense market competition.

Strength

Thomas cook has a strong brand name and image and is one of the leading leisure travel agencies in the world. It offers various package tours and other holiday components and other services. The group has recorded revenue of about £9, 808.9million during the financial year 2011 The company has managed to show an increase of about 10.3% from the previous financial year 2010 (Research and Markets, 2012). The group continues to build upon the strengths which the company has created over the years which include strong financial position, trusted brand portfolio and the ability of the company, with its flexible model, to manage the business so that the group is able to meet the needs of the customers in the future (Thomas Cook Group Plc-c, 2009).

Weakness

One major weakness lies is that with a economic slowdown the travel agencies have experienced a huge break down in the number of consumers travelling from one place to another. This has impacted Thomas Cook Group.

Opportunity

With a rise in the disposable income of the consumers a huge opportunity lies with Thomas Cook to expand itself into various other countries and help the consumer experience the pleasure of travelling. Technology being an upper hand for the travel agencies, the online market is said to flourish which makes it easier for the consumers to select from various options made available from the travel agencies.

Threats

Threat lies from the other competitors which has been doing equally well in the travel and tourism sectors. With many travel and tourism agency, the customer’s gets a wide variety to choose from the best options and this tends to increase the competition among the travel and tourism industry. Also shift in the consumer behaviour also poses a threat for Thomas Cook.

Major Challenges of Thomas Cook

Thomas Cook has been facing some tough challenges which include financial consolidation as well as restricting. The CEO of the company, Manny Fontenla-Novoa resigned which took the company as a surprise. Another set of challenges is the growth of the company through acquisition. Growth by way of acquisition was one of the core strategies together with strict cost in order to improve the profit margins. In recent years Cook had sealed its market entry in Russia by a majority of stake in tour business operator. But at the same time, both internal as well as external problems have increased in Thomas Cook and it becomes a huge challenge for the company to undergo its operation when the environment is not healthy. The demand has slowed because of the weak economy of UK and also its strong focus on cost cutting, UK invested little in IT and product which left Thomas Cook positioned poorly in the market (FVW, 2011). The oldest travel agency has also seen a drop in summer holidays by about 10% which is one of the core businesses of Thomas Cook of sending the families off to destinations like Balearics and Canaries. The shares of Thomas Cook have also slumped to about 86% but still many of the problems of the company tend to persists.

Future plans

Thomascook.in planning to focus more on domestic tourism & B 2 B segment Portal currently offers flights, rail, hotels, cruises & other facilities TCIL planning to add more destinations online
Aiming to focus on B2B segment for travel agents & corporates.
Planning to sell flight tickets online
Planning to sell tour packages online

Conclusions

Thomas Cook is one of the most successful travel agency which meets the travel need of the customers. Thomas Cook is the leading travel groups with flexible business model and also focused strategy and has a team of more than 31000 people who are equally committed towards the vision of the company. It can be said that the company has been performing well in the financial year and plans to do well in the near future but with changing market environment along with the demands and needs of the customers Thomas Cook needs to adapt to new technologies and serve or provide its customers with the wants and requirements.

Thomas Cook has been facing few challenges as mentioned and it should take the necessary steps to avoid problems which could hamper the business of the organisation. Over the years Thomas Cook has been able to create a reputation of being the world leading travel group and thus have been able to achieve the trust and loyalty among its customers. Although there are many competitors in the market but with its competitive advantage and good service it still remains to be the best travel group across the world.

Recommendations

Based on the above findings and analysis it can be said that Thomas Cook remains to be the top leading travel group across the globe but still faces few challenges. It is recommended to take care of the challenges in order to ensure a better service to its customers. Thomas Cook should provide respond to the feedback to those customers who make reservation online; it can provide discount on its holiday’s packages in order to attract more number of customers as with the recent recession people has become more careful on spending their money so valid and proper scheme which says to save money would surely attract more customers.

It can offer the customers with exciting packages so that the customers feel satisfied of the amount paid by them and enjoy the pleasure of travelling with Thomas Cook. In addition it should tackle the changes in demand along with the shift in the consumers demand and needs. This way it will be able to gain loyalty among the customers and stay ahead of its competitors.


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