How Integration Improves the Tourism Industry

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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).

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