Thomas Cook plays an important role in the tourism industry. It is a large tour operators often mergers with other companies so as to increase its market position. In the UK tourism industry, the process of merging is called integration which most of the large tour operators will integrate horizontally and vertically. Both integrations can help the companies increase their economies of scales. According to the case study “The Thomas Cook – MyTravel merger in 2007” (Page & Connell, 2009), Thomas Cook was horizontally integrated with MyTravel to form Thomas Cook Group plc. Later on, according to the case study “Thomas Cook pays top dollar” (BusinessLine, 2014), Thomas Cook was vertically integrated with Sterling Holiday Resorts which it is a hotel owned 19 companies. As these two result from the case study above, Thomas Cook had horizontally and vertically integrated with both tour operators and suppliers. Integrated with other companies can gain the most benefits because of owning different components in the chain of distribution and “offer the organization more strategic options in terms of market penetration and market-product development” (Trible, 1997). Horizontally integration can improve the market share by merging with small tour operators. Thomas Cook not only combined with MyTravel, but also merged with Co-operative Travel in 2008 (SMR, 2010) by attract more customers and make more profit. At the time of merger, “the shares had increased by 52% and 48% owned by the shareholders of MyTravel Group” (BBC, 2009). In the positive side, the market share increased because of the larger scales of the companies. Also, merger with other tour operators can reduce the cost of finding research, so more product produced to meet the cus... ... middle of paper ... ...ing the package tour because they have much more knowledge to do researching and development. Also, “integration benefit can help provide physicians with more income protection” (Sun Life Financial, 2010). From the PEST’s impacts above, risks which are tax, rate of currency and aviation fuel costs must be included and cannot estimate so Thomas Cook had using the process of hedging to minimize the costs. This process can protect the company and avoid away from the risks. Tour operators must have a financial evaluation before planning the tour products, account all the factors might be included from protecting own-self to make more stable revenue. So, “new product revenue growth, web integration, profit improvement programmes mixed with an intense business focus and financial discipline, all underpinned by the Thomas Cook Business System” (Thomas Cook Group, 2014).
Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of Colorado and California Pizza Kitchen – in order to expand the company’s restaurant business. If indeed PepsiCo decides to pursue the acquisition of one or both, they must decide how to align each of these business units in its historically decentralized management approach and how to forge relationships between the acquired business units and existing business units. In their evaluation, Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired business units, but must also take into consideration that the additional business units will not hinder the profitability of the existing business units.
Despite the growth in the market, Qantas International’s market share has been falling over the past 10years, from 34% in FY02 to 16% in FY13. The entry of Virgin Australia in 2000 in part explains this, however Virgin’s growth also coincided with the demise of Ansett in 2001 “… Virgin Blue will initially increase capacity on existing routes while evaluating what c...
Task 2B This diagram shows the vertical integration that Thomson used to expand as an organisation. Sector 2004 (Year) 2005 (Year) Airline Britannia Airways Thomson Fly Tour Operator Thomson Thomson Travel Agent Lunn Poly Thomson An example of Horizontal & Vertical Integration “The Big 4” World Of TUI Thomas Cook My Travel Group First Choice Airline Thomson Fly Thomas Cook Airways My Travel Lite First Choice Airways Tour Operator Thomson Thomas Cook Holidays Airtours First Choice Travel Agent Thomson Travel Thomas Cook Travel Going Places First Choice Travel Shops [IMAGE] Airline [IMAGE]
In the horizontal integration, the company product range is from a wide clientele. That is they sell product either clothing or luxurious foods from different manufacturers. These give them the edge since the products they offer a variety for the customers to choose from, and hence they can shop less than one roof (Cole, 1997). In the vertical integration strategy, the firm will deal substantial with products from a single supplier and M&S gets the exclusive rights to deal with the product and its supply to the market. This is necessary when the company aim is to serve an identified target market which is exclusive and has the potential to sustain and grow the company substantively. These employ a tar...
There have been reports which suggest the number of travel agents has increased steadily for the past 40 years. (Source: Vocational Learning; See Resources Section below) This has also coincided with the steady increase of package holidays. Jet2, being a low cost operator, has close links to the main four travel agents which organise these tour packages; Thomson Holidays, Thomas Cook, First Choice and My Travel. This benefits Jet2 as people...
The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers. The lack of success and synergies in such mergers is often based in a clash of completely different cultures, values, and styles, which make it difficult to establish effective common systems and structuresBased on the case study, extensive research and annual reports of AT&T the writer has mapped AT&T in the different domains. AT&T should strive to attain a perfect circle as close to the centre as possible, which indicates total synergy, order and equilibrium. Where the circle is skewed drastic change is needed as it moves closer to the outer ring of chaos:
According to a North American dictionary entry vertical integration is defined as “merging of companies in supply chain: the merging of companies that are in the chain of companies handling a single item from raw material production to retail sale” (“Vertical Integration,” 2009). Though the definition of vertical integration is quite simple the concept is much more complicated than one may think. There are four strategic factors that must be established by business leaders before the implementation of vertical integration can take place that must be well-thought-out in order to achieve any level of success. The factors that influence vertical integration are economic, market, operational, and strategic.
It has stayed relevant to the market through its propelled philosophy of relationships to generate profits in the business. Since its establishment in Monroe, Louisiana the once tiny airline has stretched to greater heights serving in 6 continents. It has also established a distinguishable name among its competitors with a reputation of leading customer services. However, even as an established venture, the company needs to maximize its profits in order to stay in business and expand in to new territories beyond its conquered boundaries. A strategic analysis was carried out by our team to establish the company’s current situation. A SWOT analysis was performed to come up with three referenced, strategic alternatives. This alternatives are meant to act as a strategic guidance to the company in order to enhance growth. The strategic recommendation provided will improve and enable the business to cope with the competitors while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the
...ther competitors by sharing scarce resources including brand assets and market capability, enhancing service quality and, thereby, improving profitability” (2000, p. 137). Airline alliances form to improve companies’ combines value by “(a) achieving or preserving greater economies of scope than they could do individually; (b) improving ‘seamlessness’ of their multiple offering; and (c) increasing their effectiveness by combining frequent flyer programs and airport clubs” (Kahn, 2004, p. 64). These alliances, in turn, expand each member’s routes beyond the normal range and allow for seamless service for customers (Oum et al., 2000, p. 138). None of this would be possible without a free market, however, and after 1978, the airline industry started to see a boom in revenues and inter-firm cooperation after the Airline Deregulation was passed (Smith & Cox, 2008, p. 1).
Additionally, deregulation and liberalization has accompanied the globalization of the airline industry, so that companies have had to compete against each other in new markets, as well as to gain entry into new territories. The rise of low cost local and regional airlines has made the competitive environment difficult to maneuver for large, formerly-state-subsidized national carriers. This has resulted in the need for strategic alliances between airlines in order to attempt to protect market shares and profits (Friehe and Curti, n.d.).
Degree of vertical integration: mixed; some have low cost reservation systems, alliances with regional and international airlines as well as hotels. Hedged fuel costs. Sabre Holdings and Galileo International connect airlines with travel agents. No mention of airlines employing in-house catering.
In his book, Air Transportation, Wensveen explains each of the four Ps of marketing—Price, Promote, Product and Place—and how they are used to make up what is known as the marketing mix, which “consists of the types and amounts of controllable marketing-decision variables that a company uses over a particular time period” (Wensveen, 2011). In 2012, Lufthansa implemented a marketing strategy called SCORE (an acronym for synergies, costs, organization, revenue and execution) with a goal of increasing Lufthansa Group’s operating result up to €1.5 billion by 2015 (Lufthansa Group, 2013). This paper will explore how Lufthansa applies each of the four Ps in its own business practice, SCORE being its main instrument of success.
Organisational change can arise due to a change in strategy and this begins with examining capabilities and the internal environment. This is portrayed in the Strategy diamond. Firstly through arenas the organisation can plan where they will be active in and which part to place most emphasis on for example technologies or value creation strategies. Only after determining this can they implement a positive change, leading to the next element, vehicles to get them where they need to be such as alliances. This can lead to change in management along with strategic partnerships, and the way managers transition to this change will determine if the strategy impacts on the overall organisation in a way that reinforces its purpose and goals. Partnerships indicate how an organisation can strengthen its capabilities by merging with businesses who possess the skills they lack. (Carpenter et al. 2010)
According to Leiper “Transportation is the only link between the tourist-generating region and destination region”[2]So, transportation was a more interesting sector to discuss in the report but I tried to find a company which is related with all these main sub-sectors discussed above in the report. I have decided to look in the U.K market for such company because “Tourism is one of the largest industries in U.K, worth approximately 75.9 £ Billion to the U.K economy in 2002 and supporting around 2.1 million jobs.” [3] During my research on internet I found many companies offering services in the tourism of U.K but I have decided to choose “Simply Travel” because of its variety of services offering related with the accommodation, transportation and attractions.
When entrepreneurs plan their business future they will consider how they can increase their business size or profit in a short period. Entrepreneurs may consider growing their business or company by using a merger or an acquisition. These methods can be a speed up tool and a short cut to enlarge their business. (Burns, 2011) Also they can reduce competition, make it easier for entrepreneurs to think about the market and product development and risk reduction. Furthermore, some lesser – known companies can improve their firm’s image and market power by using merger and acquisition with larger firms. However, there may be risks associated with merger and acquisition related to lack of finance and time. (Burns, 2011) This essay will discuss more deeply the advantages and disadvantages of using mergers and acquisitions, showing how it can affect firms and market with the case study.